Paris summit aims to overhaul global financial system for ‘climate solidarity’ with South

Some 50 heads of state, as well as representatives from international institutions and civil society, will attend the summit hosted by French President Emmanuel Macron in Paris on Thursday and Friday. Their goal is to build a new global financial system so that the most vulnerable countries can better cope with poverty and climate change.

The world’s richest countries are showing a “wave of solidarity” with those most vulnerable to climate change, said Cecil Duflot, president of the non-governmental organization Oxfam. Some 50 heads of state and government, representatives of international financial institutions, members of the private sector, climate experts and members of civil society will attend the summit hosted by French President Emmanuel Macron in Paris on June 22-23.Ambitious conference aims to “in [the global] North and South”, according to the Elysee Palace.

Macron announced his intention to host the summit as early as the end of COP27 in November 2022. Environmentalists are not happy with the outcome of the climate talks. But in the final hours, a historic agreement was reached to provide for a fund to compensate developing countries for the effects of climate change.Initial goals for this week New Global Financing Agreement Summit The goal is to develop concrete measures to finance the fund. “From now on, the fight to eradicate poverty, decarbonise the economy and protect biodiversity will be closely linked,” Macron said at the time.

In the months since, countries in the southern hemisphere will only be at greater risk from the combined effects of the Covid-19 pandemic, the war in Ukraine, the climate crisis and soaring inflation. At the Palais Brongniart on Place de la Bourse, once home to the stock exchange in the 2nd arrondissement of Paris, hundreds of participants will try to lay the groundwork for a radical overhaul of the entire global financial system with a restructured financial system. Base. The Bretton Woods institutions – the International Monetary Fund (IMF) and the World Bank – respond to today’s challenges.

On Wednesday, a group that included Macron, U.S. President Joe Biden, German Chancellor Olaf Scholz, British Prime Minister Rishi Sunak and Brazilian President Luiz Inácio Lula da Silva Thirteen political leaders wrote that they were “urgently working to end poverty and inequality.” contribute French daily Le Monde.

“Climate change will produce bigger and more frequent disasters, and disproportionately affect “These challenges transcend borders and pose existential risks to societies and economies,” they wrote.

“We want our system to do more for the planet.”

great financial need

The financial needs of countries in the Global South are enormous.A group of independent experts specializing in climate finance and working under the auspices of the United Nations estimated last year that the world needs to allocate $1 trillion per year Developing countries other than China address the climate and biodiversity crises between now and 2030.

Oxfam estimates $27 trillion needed mobilize “Eradicate poverty, inequality and climate change in developing countries” between now and 2030, or about $3.9 trillion a year.The World Bank pushed that estimate even higher, outlining $4 trillion a year in its 2021 climate action plan need Build infrastructure that meets the needs of developing countries between now and 2030.

Governments at a summit on a new global financial agreement this week will not make financial commitments but are expected to discuss the most efficient means of financing. The first items on the agenda are those based on commitments already identified.

“The developed world has pledged to allocate 0.7 percent of its wealth to developing countries and to contribute $100 billion to climate change. But at present, these funds are allocated only in part, if at all,” said French-speaking Africa on Tuesday at the Global Reflection. At a press conference held by poverty NGO ONE.

G7 countries to consider in 2021 Reallocate $100 billion exist special drawing rights Special Drawing Rights (SDR) is a reserve currency provided by the International Monetary Fund to developing countries in proportion to a country’s capital.

“The measure has been stymied in the euro zone, but this can easily be resolved with a political decision,” said Asogbawi, who called for the blockade to be lifted “before the end of the year”.

“On the last day of the summit, we hope to be able to announce very clear mechanisms so that every commitment can be implemented.”

Taxing major polluters and financial transactions

At the same time, new sources of funding need to be explored. Within civil society, some associations and NGOs have come up with some ideas. First, they called for a tax on the biggest polluters, especially fossil fuel companies, because “they are historically responsible for climate chaos”. In early June, 12 associations signed the petition Ask Macron to tax the fossil fuel industry. As of June 21, they had collected over 31,000 signatures. “This tax will allow us to raise up to $300 trillion,” said Fanny Petitbon, advocacy director for the NGO CARE France.

“Why not also introduce a Financial Transaction Tax, which will raise $440 billion? asked Petitbon. The rationale for such a tax is simple: Given the size of the transactions that take place in the financial markets, even a very low tax rate would help raise significant tax revenues without any impact on the financial markets. How the market works.

Ahead of the Paris summit, there appears to be only agreement on a tax on maritime transport, which, according to the World Bank, could generate between $6 billion and $80 billion a year. “This topic will likely come to fruition at the IMO meeting in July,” Pettibon said. “However the question of how the money will be used has not yet been decided. While some advocate that the money should go to developing countries, others call for it to be used to decarbonize the maritime sector.”

debt relief

Besides the main issue of financing, another issue on the table is the debt owed by developing countries. “Debt servicing in developing countries is at its highest level since the late 1990s, with 93% of countries the most vulnerable Lison Rehbinder, Development Finance Advocacy Officer, CCFD-Terre Solidaire NGO, said:

“Countries in crisis today are forced to pay back debts to creditor countries, financial institutions and private banks, preventing them from investing in public services or fighting climate change,” she said.

Rebinder said the plan being discussed is to introduce clauses in loan contracts that would allow repayments to be suspended in the event of a climate catastrophe. This measure, taken by G20 countries during the Covid-19 pandemic, will become automatic. “But we need to go further and consider debt cancellation on a large scale,” she said. “That’s the only way countries are going to get out of this mess.”

Harjit Singh, director of global policy strategy at the International Climate Action Network, agrees. “The wealthiest countries continue to provide most of the lending to countries in the South – in 2020, grants accounted for only 26% of climate finance pledged,” he said. “The fight against climate change must quickly move away from this profit-driven logic.”

These associations believe that all these measures will only be possible if the major multilateral development banks, mainly the World Bank, adopt bolder lending policies.

political desire

But France conceded that Paris would not be able to make any concrete decisions at the summit. According to the Elysee Palace, the main purpose of the meeting was to develop a guide for the next G20 summit in India in September, the IMF and World Bank annual meetings in October and COP28 in Dubai in early December. use.

“This event will put many important issues at the center of the international discussion,” Duflo said. “Unfortunately, while we can’t wait to implement far-reaching solutions, it is still too unambitious.”

“What is missing is not money, but political will. The heads of government must now shoulder their responsibilities,” Pettibon said. “Because apart from the money, it’s all about rebuilding trust between the North and the South.”

This article has been translated from the original French text.

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