world governance » JM Simon

Assesment of DURBAN COP 17 – from a model of league of nations to a Global Communitty for the Environment

Environment, world governance No Responses »

Jan 232012

Yet another Conference Of Parties (COP) finished in Durban in December 2011 with yet another decision to postpone action. Like in any European Council summit, after more than a fortnight of multilateral negotiations most national and regional delegations returned home and claimed victory in silence while, once again, the common interest was the main loser. A deafening silence that was reported as such by the national and international media who, after the failure of Copenhagen, have learnt to keep expectations low and dance along to the tune of the climate change requiem.

The expectations were so low that this time only 12 heads of state assisted to the negotiations, not a single one from the G20, meaning that none of the leaders among the big polluters bothered to show up.

If we look at what was politically possible, the outcome of Durban can be qualified as acceptable; the process is alive and continues to move forward. Concretely, the COP17 succeeded to “agree to launch a process to develop a protocol, another legal instrument or a legal outcome under the Convention applicable to all Parties” (art 2) and it gave itself 4 years to do so “no later than 2015 (…)” although a very late date to enter into force; “and for it to come into effect and be Implemented from 2020.” (art 4). It also managed to create a Green Climate Fund, with the World Bank as a trustee, which is supposed to receive $100bn a year but, with the exception of South Korea, Germany and Denmark, nobody has yet committed to chip money into it.

As a result, the Kyoto Protocol will expire leaving it up to the countries to voluntarily reduce their emissions until 2020. The Kyoto protocol, with all its weaknesses of enforcement and limited scope, was the only legally binding treaty for its signatories. However, Canada for instance didn’t hesitate to stab the dying protocol on the back with her withdrawal from the treaty right after Durban in order to avoid paying $14bn for having increased its emissions in one third –according to the protocol it should have reduced them by 6%-. The move from Canada reminds us that no matter how lengthy the negotiations, there is no guarantee that countries won’t walk away from their commitments later down the line.

Indeed, even if Canada had opted for staying inside the Kyoto protocol and refused to pay the $14bn there is little the feeble Compliance Committee could have done other than naming and shaming. After all, one may wonder whether the end of the Kyoto protocol is so sad when the case of Canada illustrates very well how, regardless of the commitments, it is up to the inner motivation of the parties to reduce emissions. The EU is a good example of how what matters when reducing emissions is the political will and not the protocol itself. It is an illusion to think that an international treaty can compel national decision makers to cut emissions faster than their domestic populations are willing.

On the other hand, if we look at the results of Durban from the point of view of what was necessary to avoid catastrophe the results are, once again, an unacceptable failure. While total emissions continue to grow there are no short or mid-term legally binding measures to reduce or stabilise them.

If we take a step back to observe the evolution of the climate change negotiations it is fair to claim that the weak link between the problem and the solution is the inadequate governance structure under which the negotiations take place. The current methodology consisting in identifying a common problem –excess of emissions- and trying to agree on national emission limits -the final enforcement of which falling on the country itself – is just not working.

In fact, this methodology can be compared with the methodology that was used in Europe to manage a common problem –war- after World War I; the creation of an organisation –League of Nations- where countries would discuss matters and settle multilateral agreements the enforcement of which was inapplicable. In both cases the methods have proven inadequate; the CO2 emissions, far from stabilising, have increased dramatically same as the League of Nations couldn’t settle the disagreements which led to the World War II.

Same as in the post-WWI period, national governments lack the will to challenge entrenched constituencies to change their ways of life and their vision of the world. And even if one would dare to, this is a clear “prisoner’s dilemma” case in which in the short term there is incentive to collaborate and it rather pays off to free-ride on the good behaviour of others.

Another parallelism we can draw between the League of Nations and the UNFCCC is that in both cases the only way for the parties to cooperate, to overcome the prisoner dilemma’s syndrome, is after the cost of non-cooperation has revealed to be higher than the cost of cooperation. It took the Europeans two world wars to politically accept that the risks of integration were worth to be taken. However, so far the price of the cession of sovereignty to create a World Community for the Environment is considered to be higher than the costs of global warming. Considering the scientific evidence and the impressive costs associated to the effects of climate change (according to Lord Stern they amount to 5 to 20% of the world GDP) it is very telling that the national governments regard their sovereignty as something even more precious!

There is still one more thing about the European experience that can be extrapolated to the problem of global climate governance; that is the difficulty of providing common supranational goods without a supranational checks and balances system –judiciary and legislative- and above all without a supranational government –executive- and, as a consequence, a supranational budget. The current European economic crisis highlights how much the lack of an European government and of an European budget are responsible for inadequate action. The parallelism is valid for the UNFCCC negotiations; firstly, without a judiciary capable of penalising those countries breaching the emission limits there is no enforcement capacity. Secondly, without a body representing the citizens of the world –the Conference of Parties represents the governments of the world and as such it can’t represent the common will of the world peoples- the global interest is not pursued. Reality illustrates very well how the sum of national interests is far from being the global interest, rather the opposite. Thirdly, without an empowered global executive, accountable to a global parliamentary assembly, taking the lead and showing the way towards decarbonisation of the world economy it will be in the hands of the G20 –and in the end the G2, China and US- to continue hijacking the fight against global warming. And finally, because if we don’t have the last three institutions it will be very difficult to have a proper budget to invest in the transition to a new industrial model. So far, the absence of a global budget to fight climate change has meant that the financing has gone through bilateral deals in the Clean Development Mechanism and carbon markets which have ended up increasing emissions and fuelling speculation in these very lucrative markets.

The UNFCCC negotiations are providing acceptable deals as regards what is politically possible but continue to fail to provide what is actually needed. Emissions continue to increase and speculation in carbon markets is more profitable than ever. Durban confirmed once again the frightening limitations of the UNFCCC model. In this sense, the precedent of the League of Nations can be a useful example to illustrate what could be the fate of the UNFCCC. The question that humankind faces once again is whether it will take a climate catastrophe of the scale of a world war to realise the real risk of non-integration, to build the political momentum among the peoples of the world and its leaders necessary to create a World Community for the Environment.

Repeating mistakes? A reminder from Charlie Chaplin…

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Dec 152011

Charlie Chaplin in the movie “The Great Dictator” (1940) gives a brilliant speech which surprisingly it can be applied in times of World War II as it can be used today. So little have we changed? Indeed, the underlining problem hasn’t changed; the fiction that the national differences are a reason for exclusion rather than an important added value of the world we live in, understanding that, after all, the borders are there to separate and not to unite and that, like it or not, in the long run we either learn to live together or we’ll perish separately.

At the end of the day, a call to create a place beyond national interests where the global goods can be discussed and the national differences properly managed and turned into assets. A real Global Democracy instead of a circus where national interests engage in what, in the long run, is always a lose-lose situation.

Global Democracy – from utopia to necessity

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Oct 122011

The US and the EU are going separate ways. And contrary to what it may seem, the room for political manoeuvre is smaller in the US than it is in the EU, despite the fact that the toolbox in the hands of the former is richer than the one in the hands of the latter.

Indeed, the US has a federal budget and a treasury, federal bonds and federal taxes and a more integrated market and political governance when the EU only has the monetary leg at the European level and other budgetary and economic legs at national level. However, politically the US finds itself in a narrowing corridor that is effectively handicapping the country’s chances of successfully tackling the crisis.

The Obama administration wants to reduce the deficit and trigger growth but with the Republicans blocking any tax-increase in Congress the only fiscal measure to reduce the deficit is cutting expenses. This is why, before the impossibility of using effective fiscal policy to fight deficit and reduce debt –cutting welfare will help figures look better but it will cost more in the mid/long-term- the only way to stimulate the economy is the old strategy of use-and-abuse of US monetary policy, i.e. printing money and making the rest of the world pay for it. The US Federal Reserve has kept the interest rate at low rates (0,25%) to inject liquidity in the economy and stimulate demand in the hope that this will trigger growth with which it can reduce unemployment and deficit. So far, the success has been rather moderate (1,3% growth) and the Obama administration knows very well that they can’t continue fueling the world economy for long. The Triffin dilemma according to which the country providing liquidity to the world cannot keep the value of the reserves is once again very relevant to understand the nature of the problem and predict further developments. The current US expansionary monetary policy is damaging the reserves in dollars of its creditors whilst continues to increase the US deficit. The fact that world reserves in euros are on the rise shows that despite the problems in the eurozone there is a growing tendency to move away from the dollar as a reserve currency. Moreover with the decline of the US economy the policy of having the American debt financed by the rest of the world will become increasingly untenable.

Arguably, the US economic policy is a result of the internal political circumstances. This doesn’t mean that Obama’s economic choice is the best one, it’s just the only one possible. The flaw of this false form keynesianism is that as long as poor and middle-classes lose social benefits and unemployment stays high the injection of money will not reactivate the domestic demand nor it is succeeding in increasing external demand either. Hence the US is turning to the EU to ask for help to stimulate demand, but Europe is against any expansive measures before deficit is under control. Indeed, Germany has been very vocal against expansionary monetary policy and the resignations of German representatives in the ECB reiterate this approach.

One must bear in mind that the effects of expansionary monetary policy in Europe are very different from those in the US. Since the 70s the rest of the world has been financing US deficit thanks to the fact that the Federal Reserve could afford to print money without generating inflation or bringing down the currency value. The EU cannot do that. If the EU follows an expansionary monetary policy the Euro will go down and inflation soar and it is not clear that the EU is in a situation of generating growth to compensate the increasing prices. Therefore, although it is understandable that Obama is putting pressure on the EU to gear up the European economy, it is equally understandable that the EU doesn’t want to go along the US lines.

How to marry the US and the EU monetary and economic policies? The only room for manoeuvre lies at European level. The creation of European federal state is the only way to raise global demand by generating supranational income (taxing speculative capital transactions, EU project bonds…) and placing better value-for-money investments.

The creation of the United States of Europe can be the solution that can match the needs of both the EU and the US in the short/mid term. However, as much as Europeans and the rest of the world can benefit from it, the truth is that it will not be able to solve the Triffin dilemma nor will it guarantee the adequate distribution of food, energy and materials among the peoples of the world.

The closer we get to the creation of some sort of United States of Europe the clearer it is that this alone will not suffice; if a better world is to emerge from the crisis a radical reform of world governance is needed. Indeed, the solution to the economic problem will need to be political; sooner or later the people of the world will need to sit down around the same table to agree how big is the cake we have to share – for sure smaller than what we thought it was some time ago- and decide how do we want to share it. World democracy is quickly moving from the stage of utopia to the stage of necessity.

Joan Marc Simon

An EU seat in the Security Council as first step towards a democratic organisation of world security

world governance No Responses »

Jun 142011

The reform of the UN Security Council (UNSC) is one of the ever-pending issues of world governance. Set up in 1946 , by the winners of the WWII, the UNSC represents a world order that no longer exists – that of France, UK, US, China and Russia as world “gendarmes”. Although outdated and unbalanced in representation, the UNSC continues to be the only global body charged with the duty of dealing with world security issues.

The UNSC is not –and was not meant to be- democratic, accountable, representative, or transparent. This has justified many claims for reform. The main obstacles of reforming this body are two; firstly, those in the Security Council (SC) are not willing to give up or share their veto power and secondly, there are so many pretenders to enter the club that opening the body without changing the veto right would make the SC simply unworkable.

Amid the more general debate on UNSC reform there is also the discussion on whether the EU should become either a member or an observer in the SC. This option has a lot of opposition, both from within the EU (France and UK) as well as from outside. Alternatively, some experts have been proposing a reform of the SC in which the EU and other regional organisations alike could sit to discuss world security issues. This option has been widely regarded as visionary and politically unrealistic. However, the latest developments in the world and the growing regionalisation in South-America, Africa or Asia start to hint a tendency which could change world politics as we know it. The question arises on how would a change from a SC composed of a selected and privative club of 5 countries evolve into a council of world regions.

Changing the institutional structure of the UNSC

The architecture of UN, and more specially of the UNSC, is a lot weaker than that of the EU. The fathers of the EU wanted –as Jean Monnet put it- that the “institutions survived them” in a sense that the institutions would be able to carry the European integration forward after the founding fathers died and when the memory of the war would have faded. Indeed, the EU institutions have been designed in a way to allow for enlargements, democratisation upgrades, changes in distribution of power, and other changes. The UNSC is exactly the opposite. It is a body that was designed for a very different historical reality and is as such not prone to enlargements or democratisations. With the veto power as its main decision-making characteristic, the architecture of the SC doesn’t provide any incentive for change permanent members, such as France or UK who will hold on to privileges regardless of how unfairly they represent their current weight in global politics.

Germany has been intermittently pushing to have a permanent seat in the UNSC since 20 years and after the likely failure of the G4 initiative (Germany, Brazil, India and Japan push to get permanent seats) it looks like the biggest European economy will have to look for an alternative strategy to make its voice heard in the UNSC. Germany has always stated that its goal was to obtain a European seat in the SC but in view of the negative response from UK and France to give away their seats this was seen as a mission impossible.

A seat for the EU in the SC

What are the arguments for the EU to have a seat in the UNSC? Unlike with trade policy the EU doesn’t have single foreign and defence policy. Thus, many claim that this is a reason not to change the status quo. However it might well be that the EU seat in the UNSC could be a mean rather than an end in itself; by being in the SC the EU would be forced to craft a more cohesive foreign policy in order to speak with one voice.

Another consequence from the EU being in the SC would be the first injection of world regionalism into the SC. Such move could open the door for other world regions such as the African Union to enter world governance structures. At the same time, it is unlikely that world regions such as the EU could obtain veto power, unless France or UK would resign their privileges –which they won’t do in the near future-.

The main practical reason behind the EU wanting a seat in the SC would be to give Germany indirectly a seat at the SC table. This is particularly relevant after its last decade’s frustrated attempts to obtain a seat.

Notwithstanding the motivations, it is a generally agreed that any change of the status quo that requires opening the UN charter is very unlikely to happen in the short term. More pressure from the emerging economies to shift the balance of power in the world governance bodies is needed before the SC fortress can be cracked.

Workable short term reform of UNSC

In order to work out a realistic short term solution while continuing the discussion on the development of the world regionalism, we should take into account the following factors: Firstly, as discussed above, it is unthinkable that France and the UK will give away their seat in the SC freely. Secondly, it is in the interest of the EU to find an answer to the calls for a more balanced and updated representation of world powers -and the sooner the better because its decline on the global stage is associated with the decline in its bargaining power-. Thirdly, that a solution has to be found to accommodate Germany in the new world order especially after the failure of the G4 experience. Fourthly, that outside Europe the perception is that “too many Europeans” are already in the global institutions. And finally that whatever solution is found it is preferable that it doesn’t require amending the UN charter for it can mean opening the Pandora’s box.

Bearing in mind these conditions, a workable short term solution for the EU –and more concretely for Germany- would be to merge the two European regions with rights to nominate non-permanent SC members (western Europe has the right to select 2 non-permanent members and Eastern Europe 1) and merge them into one “EU + others” group but giving only 2 rotating non-permanent seats to this new region. This option would allow the EU to arrange at least 1 of these 2 representatives and hence give priority to Germany so that it could effectively be present in most UNSC negotiations –although without veto right. Moreover, it would decrease the “European” presence in the UNSC –it would have 2 instead of 3 non-permanent members- which would make this proposal acceptable for other world countries who believe that the European representation should be scaled down. Finally it would give the option to the EU to work better as coordinator of this new “UN grouping”.

Rise of world regionalism

In a more long term and sustainable vision for the SC we should note a growing tendency to regional integration around the world. Oddly, it is in times in which the European integration project finds itself in its lowest popularity levels when one can find progress in supranational integration and/or coordination elsewhere.

In Latin-America the last decade has brought an unprecedented rapprochement between countries and leaders which has been materialized in an ever-increasing cooperation. For instance the Mercosur, a free-trade area between southern-American countries founded in 1991, saw a big push in 2005 when it decided to start electing its members starting from 2011 and organise a simultaneous elections in 2014. In the African continent the African Union, founded only in 2002 and composed of all African countries except Morocco, has also made unexpected progress and in less than a decade and following a different a new path is advancing towards a political union without having built on the economic free-trade leg first. In Asia what started as club for South-Eastern Asian countries (Asean) in 1967, has seen an increasing interest from the rest of the continent and although it is mainly an economic organization without foreign policy ambitions it is a fact that it has been instrumental for the advance in the regionalization in the area.

These are just three examples that mark a tendency; that of a growing regionalisation in the world. They are in different stages of development, follow different models, and they are still very far from achieving the degree of integration of the European Union. However, the tendency matters and justifies exploring the option of a future regionalisation of the world which could be useful to envisage a new kind of global governance, particularly in the future of the SC.

A SC composed of World Regions

The advantages of having a SC composed of international organisations are significant. Firstly , this would allow for a better and bigger representation of the world community which increases the legitimacy of the body. Secondly, even in the case where veto prevailed the limited number of members –world regions would not be more than 10- would make the organization more workable than the current options of enlarging the SC. Finally such a structure fits the –so far unbeaten- traditional logic of state organization in which the SC could become an upper chamber representing the states via the international organisations and allow for the development of another chamber representing the people –a world parliament in the way proposed by the UNPA campaign-. The distribution of voting rights and composition of both chambers in order to be representative is a technical matter that falls out of the scope of this article. However, the EU is a good example of how to distribute power in order to accommodate states of different populations and GDPs.

Advancing in the path of world regionalism

The idea of having a SC composed solely of international organisations following the EU model is still far but considering the rise in world regionalization it should not be considered anymore as too visionary. In fact, it is necessary to set a goal of this kind in order to orientate the UNSC reform in a way that allows progress to be measurable and defines a final destination that can be acceptable and desirable by the international community.

Two requisites have to be met for a SC composed of international organisations to be feasible; first, these international organisations should have the capacity to speak with one voice and second, they have to be able to implement the decisions taken in the SC. Currently the EU has the power to implement the decisions , such as sanctions. When it comes to speaking with one voice, the EU also fulfils this condition in most of the cases, although it is also true that the EU tends to be split in most important decisions-. However neither of these two conditions are yet met by any other regional international organisations. It is therefore necessary to wait until organisations such as the African Union, Mercosur, Asean and others can reach the minimum level of integration that would make such a SC acceptable and functional.

The role of the EU in changing the UNSC reform

Advancing towards a SC composed of world regions will be slow and cumbersome. Changing the status quo is never easy. However the EU has an important role to play in this transition. Being the most developed world region in terms of political and economic integration, the EU could start by asking for a permanent observer seat in the SC with the condition that other world regions who want and can be represented would also be allowed to join the SC as observers when they fulfil at least one of the two conditions mentioned above (capacity to speak with one voice and to implement decisions). This last condition consisting in opening the door to other world regions is a must; first because most countries oppose the EU seat in the SC because of the current over-representation of Europeans and they could only support this option if the door is open for their region too. Second, because the participation of the world regions as observers would have an effect in developing procedures and mechanisms to organise common positions and the implementation of the decisions among world regions. The learning by doing would be important to pave a future in which the SC could be composed solely of world regions.

This change consisting in inviting world regions to participate as observers would not require amending the UN charter in the short term, as long as the regions are only observers. And only when the world regions have evolved sufficiently would be time to consider amending the charter to replace the current SC with a new one composed of world regions –and eventually a big state such as the US, China or Russia.

A forum for world regions outside the UN system

The other option is to create a forum outside the UN setting where the world regions can start to interact and negotiate as well as exchange best practices. In the beginning, and because of the different levels of integration it need not take binding decisions but in a not too distant future it could be possible to envisage developing commonly agreed legislation and taking decisions applicable in those countries bound to the regions represented. It could be the embryo of a world upper chamber that could one day replace the SC. In this case the leadership of the EU in setting up this forum would be welcomed and recommendable. By inviting other world regions to sit down as equals around the same table, it would help combat the negative perception from the rest of the world of what some call the “European moral superiority”.

The difficulty of both options –besides the still insufficient integration of world regions- are the opposition from the current members of the SC who undoubtedly will be suspicious of any initiative that can hinder their privileged position. However, there are more countries outside the SC than inside it and with the emerging economies there can be a good consensus to push in the direction of a reform that is acceptable for the majority.

Europe’s last chance

The times are changing, we find ourselves in an age of multipolarism in world relations. Some European states refuse to accept that the world has changed and their weight in the world has been considerably reduced. The current financial and economic crisis combined with the developments in the rest of the world are shaping a new global order in which European countries will no longer be superpowers. Only under the umbrella of the EU they can continue to influence world politics and hence it is crucially strategic that the member states and the EU itself change their approach to world politics.

We might be facing the last chance for Europe to enter the history as a generous player rather than a loser. In situations like these, in which power is shifting, it is always better to give away power than to have it taken away. The EU had a first taste of how it feels to be pushed aside during the Climate Change negotiations in Copenhagen in which the final deal was stricken without the EU inside the room. Hence there is certain urgency for the EU to act while it can still do it. If the EU waits too long it might see how the opportunity to get a decent compromise is gone forever.

The EU needs to change its policy in world politics and stop angering other countries by pushing forward with more European over-representation. Instead, the EU should think long term and help the articulation of its natural partners; that is other world regions. No doubt building world regions will take time and patience but this long-term goal would be the most stable, legitimate and democratic alternative to current world governance, especially as far as UNSC is concerned. The EU should encourage and assist the development of these world regions and lay the ground for a new and more democratic level of world governance.

Article published in Europe’s World, June 14th

CLIMATE CHANGE – FROM AGONY TO EPIPHANY?

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Jan 082011

“Cancún may have saved the process but it did not save the climate.” Said a Greenpeace activist at the end of the last Cancun Conference of Parties (COP) 16 Climate negotiations in December 2010.

True. Broadly speaking, what was agreed in Cancun’s COP16 is to continue working together, with more transparency, more cooperation in technology transfer, more money on the table but without the commitment to neither reduce emissions to a level that could keep global warming under the catastrophic 2 degrees nor targets and rules on how to organise the global transition to low carbon economy. To put it simply; the success of Cancun was to avoid the end of multilateralism in climate negotiations. There were no commitments to replace the Kyoto protocol except for its financial mechanisms. The Kyoto protocol, which back in 1997 was seen as nothing exceptional, is now seen as the panacea and few countries are willing to go beyond it even when knowing that Kyoto is insufficient to save us from climate change.

The process was saved but the world citizens continue to lose. The negotiations didn’t collapse but they are far from being able to provide what would be the minimum compromise acceptable for the world citizens: keep global warming below 2 degrees Celsius -the agreed text could allow global temperatures to increase by more than 4 degrees which estimations show that could increase climate-change related deaths from current 300.000 to 1 million-. In the current format of intergovernmental negotiations the world citizens are not present in the negotiation table, hence it should surprise no one that they were the losers of the successive COP 15 and 16.

Should we be happy that UN-type multilateralism survived one more round? Arguably this is the best system that we have and although it has not served the purpose of uniting the world against climate change it is our only tool in a “politics as usual” scenario. The problem is that in a “politics as usual” scenario the humankind has little chances of surviving.

If the Cancun agreement had been about global disarmament and not climate change an equivalent of the shady results could be accepted. Some players such as the EU pushed a bit more, some others such as Japan tried to stop it, but overall the result is not a step backwards and hence an acceptable outcome. Fair enough. We can always trust that if we survive another world war we can try to learn the lessons as we partially did after World War II. The problem with climate change is that if the scientists are right and we are facing severe irreversible changes in the climate the result of Cancun is as insufficient as unacceptable. If achieving the maximum of what is politically possible is not enough to save the planet there is a need to change the rules of the game or the game itself. In other words, if we accept Bismarck’s quote “politics is the art of possible” to explain the climate change negotiations, then we have no option other than changing politics until we can make possible what is necessary.

International politics as usual can’t be an option if we want to meet the minimum conditions to have enough chances to survive. A change of the magnitude of what happened in the post-WWII is needed: At the end of WWII the world was split as ever and there was an attempt to unite it with the creation of the UN. However, the high conditionality, the absence of real integration, the veto power, the lack of democracy and the persistent intergovernmental approach made the UN weak and irrelevant when important issues were at stake –wars and others kind of major crisis like climate change-. What history teaches us is that UN kind of multilateralism is not enough to deliver systemic changes.

The other side of the coin was Europe, where a core of countries decided to move ahead with the revolutionary proposal of creating the European Coal and Steel Community (ECSC), a common project with common institutions that with limited but real power managed to achieve a common goal. Had the ECSC waited for the United Kingdom to start the process that was to lead to what is today the EU, we would probably not have the EU today. A parallelism can be drawn for the global Climate Change action, the US threat to block the process has conditioned 20 years of negotiations. The system of cap and trade and offsetting of carbon that we have today and which is failing to reduce emissions -but succeeding in creating lucrative speculative carbon markets- is the only concession given by the US. If the US had continued to play the positive role that it played in the WWII period we would probably have established a system of emission limits managed by a small supranational body that would have delivered a lot better results than the current system. But the US has not been in favour of democratic international institutions since 1946 and we have been paying a high price for it. Likewise, currently the emerging economies might be blinded by the illusion of power and not willing to join a supranational institution at once.

It is necessary to move on.
There are three possibilities to move ahead; the first and full-blown possibility is the creation of a Global Community for the Environment (GCE) to manage the emissions, the transfer of technology and the common actions in a democratic and accountable way. It would follow the model of the ECSC; creating of a communitarian body that takes care of the global common interest, a bi-cameral legislative assembly composed of representatives of the people of the union and a council representing the member-states and finally a judiciary with the role of settling disputes. This would be the optimal way to approach a global problem; with democratic institutions that can take democratic and accountable decisions minimising the danger of blockade.

A second possibility is the creation of a World Environment Organisation whose structure would resemble the current World Trade Organisation. It could be created with a treaty and it could do the job if it managed to put in place a good system to settle disputes. This is an old proposal retaken by the German and French leaders, Merkel and Sarkozy, which was proposed to the SG of the UN without much success. The draw-backs of such as solution are; that it only includes the interests of the states but neither the interests of the citizens nor the global interest, that if it is to follow the WTO system the communitarian body –the secretariat- would be too weak to steer anything and that it would be a lost opportunity to engage the citizens in the fight against climate change. The WTO doesn’t have a good reputation among citizens; it is perceived as distant and surrounded by demonstrators and riots. The fact is that despite the procedures can be democratic; the decisions are taken in the intergovernmental limbo far away from the citizens.

A third option is the International Court for the Environment (ICE) following the precedent of the International Criminal Court. A global judiciary on climate issues –ruling on the jurisdiction provided by the convention and protocols- is indispensable to avoid the current lack of enforcement of the policies. The ICE would be a first step towards communitarianism from which it would be possible to evolve towards a democratic and accountable system of world relations.

All three options have no chances to succeed in the short term if all the countries are expected to sign in. It is necessary that a group of countries decide to move ahead –like France, Germany, Italy and the Benelux did 60 years ago with the creation of the ECSC- and set up institutions that are capable to deal with global problems. If we study the impact of the ECSC we see that building a communitarian approach to fight climate change would not only benefit those who are in the union, it would also benefit those who are outside. For instance; the UK, Poland or Spain profited from the stability, common understanding, vision and good management of resources of the European Community even before they joined the EU. The same would happen for the US and the few other countries who would decide to stay out of the first Global Community for the Environment.

For instance, the US, the first polluter per capita in the world, would benefit not only because they will profit from the effort of the others to fight climate change but also because they would understand that it is in the interest of everybody to change the current fossil-fuelled economy into a more efficient and decarbonised one. It is a paradox that a country with a structural fear to state intervention approves that the government continue to use the tax-payers money to subsidise fossil fuels. This is not only against free-market but also against the world interest. For what matters a Global Climate Community would foster pooling of research and technologies and by bringing in the concept of supranational solidarity and thanks to the economies of scale it would allow rapid decarbonisation of the world economy. From the competitive point of view, any country that continues to subsidise fossil-fuels would be interested in joining the community, same as the UK decided that joining the EU is better than staying outside, because of widening technological gap. A coherent and responsible communitarian management of the transition to low-carbon economy would spark a lot more innovation and productivity than an economy that subsidises fossil fuels. The US would have to join the Global Climate Community before the Tea Party can imagine.

What about China and India? They are becoming the biggest world polluters and hence it will be difficult to strike a deal on capping emissions. However their opposition to a better governance solution is not of the same nature as the one from the US. A communitarian approach to GHG emissions, eco-efficiency, resource use, biodiversity, energy savings, transnational infrastructure and renewable energies as well as a progressive deal in worldwide converging emissions per capita are possible positive outcomes of setting up a communitarian system based on trust and equality between the members. The EU enlargement process is a good example of the positive and quick spill-overs of political and economic union. However, whilst the EU is a good benchmark of the positive effects and externalities of setting up a communitarian system, the UN system and more concretely the UNFCCC is a benchmark of how little can be achieved in horse-trading deals in intergovernmental forums.

In order to solve the current challenges it is important to leave intergovernmentalism behind and find ways for human-beings to work in the same direction, towards the same goal. For diplomats and politicians the climate negotiations are seen as a battle-field where there are winners and losers –funnily those who think they are the winners are those manage to continue to pollute and the losers those who have to cut emissions-. The truth is that with the current system all the world citizens lose and as we start to feel the effects of climate change so does the faith in democratic institutions and politics in general as an instrument to serve the citizens problems.

Let us not be blinded by the change of mood after Cancun’s COP 16. World emissions continue to increase and the rhetoric of world cooperation and leaving the solutions to the carbon markets will not suffice. The current economic crisis proves that markets alone –be it financial or carbon markets- will not work; it is the combination of market tools with regulations, democratic control and political leadership that have the power to get us out of the current financial, economic and ecological crisis. And this combination cannot happen without global institutions. Like 60 years ago, history is pushing humankind to the “unite or perish” dilemma. May we be wiser this time.

COP16 Cancun – All for one and one for all

Environment, world governance 2 Responses »

Nov 262010

A communitarian approach is the only way to save us from Climate Change

The expectations about the outcome of the COP16 in Cancun are low. A sad prospect if we think Climate Change is the biggest threat to our future and we have very little time to solve it. A change of approach is necessary; we need a common solution for a common problem.

Despite the multiple rounds of negotiations since the creation of the UNFCCC the GHG emissions haven’t stopped increasing and there is no sign that the tendency is going to be reversed in the near future. In fact, the only tangible outcome of all these years of negotiations has been the creation of carbon markets and financial mechanisms such as the Clean Development Mechanism. Neither of them have been a big success and it is a fact that lucrative parallel markets to speculate with carbon credits have been created. Many polluters are richer than ever whilst total emissions have not decreased…

The current system needs to be changed. And the solution is not in creating another treaty outside the UN framework, such as the last proposal of the US to work on a kind of new Montreal treaty. Behind the ecological and economical problem lies a governance problem that is blocking the process from moving ahead. And the problem lies in the incapacity to turn rhetoric into action; if Climate Change is a global problem it has to be treated with a global solution. And so far Climate Change has been addressed only from the national level. It is important to remind ourselves that the same way that the addition of national interests doesn’t result in the global interest, the sum of national actions is not a global action.

If we look into history, at the end of WWII the world was split as ever and there was an attempt to unite it with the creation of the UN. The high conditionality, absence of real integration, veto power, lack of democracy and persistent intergovernmental approach of the UN are the reasons of its weakness and irrelevance when important issues are at stake –wars and others kind of major crisis like climate change-. The other side of the coin was Europe, where a core of countries decided to move ahead with the revolutionary proposal of creating the European Coal and Steel Community, a common project with common institutions that with limited but real power managed to achieve a common goal. Had the ECSC waited for the United Kingdom to start the process that was to lead to what is today the EU, we would probably not have the EU today. A parallelism can be drawn for the global Climate Change action, the US threat to block the process has conditioned 20 years of negotiations. The unaccountable and inefficient system of cap and trade and offsetting of carbon that we have today is the only concession given by the US. If the US had continued to play the positive role that it played in the WWII period we would probably have established a system of emission limits managed by a small supranational body. But the US has not been in favour of democratic international institutions since 1946 and we have been paying a high price for it.
It is necessary to move on. The effects of a war can be reversed but those of Climate Change cannot. It is necessary that a group of countries decide to move ahead –like France, Germany, Italy and the Benelux did 60 years ago- and set up institutions that are capable to deal with global problems.

There are three possibilities to move ahead; the first and full-blown possibility is the creation of a Global Community for the Environment (GCE) to manage the emissions, the transfer of technology and the common actions in a democratic and accountable way. It would follow the model of the ECSC; creating of a communitarian body that takes care of the global common interest, a bi-cameral legislative assembly composed of representatives of the people of the union and a council representing the member-states and finally a judiciary with the role of settling disputes. This would be the optimal way to approach a global problem; with democratic institutions that can take democratic and accountable decisions minimising the danger of blockade.

A second possibility is the creation of World Environment Organisation whose structure would resemble the current World Trade Organisation. It could be created with a treaty and it could do the job if it managed to put in place a good system to settle disputes. This is a proposal that the German and French leaders, Merkel and Sarkozy, have already proposed to the SG of the UN without much success. The draw-backs of such as solution are; that it only includes the interests of the states but neither the interests of the citizens nor the global interest, that if it is to follow the WTO system the communitarian body –the secretariat- would be too weak to steer anything and that it would be a lost opportunity to engage the citizens in the fight against climate change. The WTO doesn’t have a good reputation among citizens; it is perceived as distant and surrounded by demonstrators and riots. The fact is that despite the procedures can be democratic; the decisions are taken in the intergovernmental limbo far away from the citizens.

All three options have no chances to succeed in the short term if all the countries are expected to sign in. More importantly, it is very unlikely that any of the three options will be supported by the US. Indeed, the US since the end of WWII has opposed any step in the direction of supranational democracy, in 1948 it initially didn’t accept the disputes settlement mechanism of the GATT –precursor of the current WTO- and the US is one of the few countries in the world that has un-signed the Rome Statute which founded the ICC.

There is no reason to believe that the US will be willing to change its policy in the short term, yet in the short term action is needed. A good number of countries in the world are ready to move ahead with a more democratic and communitarian approach for world relations when it comes to Climate Change. Same as with ECSC building a communitarian approach to fight climate change would not only benefit those who are in the union, it would also benefit those who are outside. For instance; the UK, Poland or Spain profited from the stability, common understanding, vision and good management of resources of the European Community even before they joined the EU. The same would happen for the US and the few other countries who would decide to stay out of the first Global Community for the Environment.
For instance, the US, the first polluter per capita in the world, would benefit not only because they will profit from the effort of the others to fight climate change but also because they would understand that it is in the interest of everybody to change the current fossil-fuelled economy into a more efficient and decarbonised one. In a way, the US is committing economic suicide with their reactionary policies of protection of the status quo. It is a paradox that a country with a structural fear to state intervention approves that the government continue to use the tax-payers money to subsidise fossil fuels. This is not only against free-market but also against the world interest. For what matters a Global Climate Community would foster pooling of research and technologies and by bringing in the concept of supranational solidarity and thanks to the economies of scale it would allow rapid decarbonisation of the world economy. From the competitive point of view, a country like the US that continues to subsidise fossil-fuels would be interested in joining the community, same as the UK decided that joining the EU is better than staying outside, because of widening technological gap. A coherent and responsible communitarian management of the transition to low-carbon economy would spark a lot more innovation and productivity than an economy that subsidises fossil fuels. The US would have to join the Global Climate Community before the Tea Party can imagine.

What about China and India? They are becoming the biggest world polluters and hence it will be difficult to strike a deal on capping emissions. However their opposition to a better governance solution is not of the same nature as the one from the US. A global approach to GHG emissions, eco-efficiency, resource use, biodiversity, energy savings, transnational infrastructure and renewable energies as well as a progressive deal in worldwide converging emissions per capita are possible positive outcomes of setting up a communitarian system based on trust and equality between the members. The EU is a good benchmark of the positive effects and externalities of setting up a communitarian system, on the opposite the UN system and more concretely the UNFCCC is a benchmark of how little can be achieved in horse-trading deals in intergovernmental forums.

In historical moments like the one we find ourselves in it is necessary to take a step back and observe our history; understand that humanity has advanced when it has worked together and has failed when it has been split. In order to solve the current challenges it is important to leave intergovernmentalism behind and find ways for human-beings to work in the same direction, towards the same goal. For diplomats and politicians the climate negotiations are seen as a battle-field where there are winners and losers –funnily those who think they are the winners are those manage to continue to pollute and the losers those who have to cut emissions-. The truth is that with the current system all the world citizens lose and so does the faith in democratic institutions and politics in general as an instrument to serve the citizens problems.

Changing the course of history is not easy but if we continue the route of intergovernmentalism is at our own peril. Thomas Jefferson said “One man with courage is a majority” let’s hope we can find one among the hundreds of leaders in Cancun that dares to go for a communitarian solution.

Good news from Copenhagen: how a colossal failure opens new doors to reform

Environment, world governance No Responses »

Dec 212009

I have to admit that this time our politicians surprised me (which is something very difficult to do). Having spent last week in Copenhagen and last years following climate change negotiations I could have never expected that our politicians could have dared to craft such a disastrous non-existing deal. I just couldn’t even dream that they could be so bad.

Years and years of meetings and negotiations between more than 150 countries have been wasted and in the end US and China decided that the rest of the world can go to hell and decided to pull the hand-break. Copenhagen is an amazingly fabulous failure; a betrayal to the purpose our politicians are elected for.

This exercise of prepotence and dismissal from the US and China towards the rest of the world will have deadly impacts in the trust in international multilateral negotiations. I analyse this in a former post of mine.

But this colossal failure has the potential of bringing to the stage a major problem to which nobody wanted to pay attention to: the way negotiations take place are key to understand why the outcome has been nothing but a waste of time, resources and trust (link a l’article sobre trust I climate change). The UNFCCC is not the right institutional setting to deliver the appropriate decisions and provide its implementation and enforcement.

It was very sad to see that during the negotiations the “relevant” countries were negotiating among themselves bypassing the other countries –even the EU!- and even the UN, the facilitator of the whole thing, didn’t know what was going on.

The UNFCCC has lost all credibility as manager of international relations to fight climate change.

The role of the UNFCCC right now can be compared with the League of Nations during the years preceding the WWII, when Hitler was occupying Austria and Czecoslovaquia the other nations were wasting their time in the multilateral talks in the League of Nations. Menawhile, Hitler and Mussolini were fooling Chamberlain and Daladier in bilateral negotiations. This is why the European Union was created after WWII; as a result of the experience that integration works but cooperation clearly doesn’t. If we want the world to be able to face the threats of Climate Change it needs to integrate and that can only be done by creating global democratic and accountable institutions where the world interest is represented. To know more about the details go here.

Once again Copenhagen has demonstrated that the sum of the national interests is very far from delivering the world interest. It is hence vital that we build institutions that allow the world interest to be represented. A first step in this direction would be to constitute a “world parliament” in line with what the UNPA demands (link to Leinen’s declarations). The second step would require the reform of the world financial institutions (IMF and World Bank) so that they can levy taxes and democratically administer a budget aiming at reducing emissions. The third step would be the creation of a kind of a world government (replacing the security council) charged with the mission to deal with the crisis situations that climate change is causing.

Some environmentalists like Lester Brown argued that the problem is so immediate and huge that we don’t have time to reform the world institutions; we only have time to act! Well, the result of Copenhagen proves them wrong. These are the sad good news to be learnt from the Copenhagen failure.

Obama can’t save the world, neither can the EU nor China. The world can only be saved if we act together, and we can’t act together in the frame of UNFCCC. It is mandatory that UNFCCC is abandoned –it is no longer trusted big majority of the countries- and a new setting is created, a setting capable of providing democratic and accountable results. It is the time for world democracy! I know it is difficult to have world democracy stemming from non democratic countries but no matter how imperfect it can be, it won’t deliver less than the last 2 years of negotiations of UNFCCC.

But this colossal failure has the potential of bringing to the stage a major problem to which nobody wanted to pay attention to: the way negotiations take place are key to understand why the outcome has been nothing but a waste of time, resources and trust. The UNFCCC is not the right institutional setting to deliver the appropriate decisions and provide its implementation and enforcement.

The UNFCCC has lost all credibility as manager of international relations to fight climate change.

The role of the UNFCCC right now can be compared with the League of Nations during the years preceding the World War II, when Hitler was occupying Austria and Czecoslovaquia the other nations were wasting their time in the multilateral talks in the League of Nations. Menawhile, Hitler and Mussolini were fooling Chamberlain and Daladier in bilateral negotiations. This is why the European Union was created after WWII; as a result of the experience that integration works but cooperation clearly doesn’t. If we want the world to be able to face the threats of Climate Change it needs to integrate and that can only be done by creating global democratic and accountable institutions where the world interest is represented. To know more about the details go here.

Once again Copenhagen has demonstrated that the sum of the national interests is very far from delivering the world interest. It is hence vital that we build institutions that allow the world interest to be represented. A first step in this direction would be to constitute a “world parliament” in line with what the UNPA demands . The second step would require the reform of the world financial institutions (IMF and World Bank) so that they can levy taxes and democratically administer a budget aiming at reducing emissions. The third step would be the creation of a kind of a world government (replacing the security council) charged with the mission to deal with the crisis situations that climate change is causing.

Obama can’t save the world, neither can the EU nor China. The world can only be saved if we act together, and we can’t act together in the frame of UNFCCC. It is mandatory that UNFCCC is abandoned –it is no longer trusted big majority of the countries- and a new setting is created, a setting capable of providing democratic and accountable results. It is the time for world democracy! I know it is difficult to have world democracy stemming from a mix of democratic and non democratic countries but no matter how imperfect it can be, it won’t deliver less than the last 2 years of negotiations of UNFCCC.

Climate Change and the will to exist

Environment, Political campaining, world governance No Responses »

Dec 092009

If I take a step back to look at the historical moment we find ourselves in, I have to say that the negotiations in Copenhagen are different than any other negotiations I’ve ever assisted to.
Political negotiations are about compromise between the parts, it is about agreeing on the kind of grey that will rubberstamp the agreement. Survival negotiations are not negotiations; they are black or white. In Copenhagen there are two kinds of people; those who take this as a political negotiation and those who take this as a survival decision. Needless to say, a compromise will be more than difficult.

But, as I said, I wanted to look at this with a certain distance; humankind finds it self in a religious moment, in a purely philosophically existential dilemma, in a maturity test, in a “to be or not to be” situation…

We are in a religious moment because the world is about to “flood” for a second time (according to the old testament), the “sinners” have been warned by science (!) that if we continue with our life-style, with the business as usual, we will be flooded. Fair enough. The human race didn’t listen to the warnings of God the first time, the earth was flooded but God gave us a second chance. If we prove again that we are incapable of listening, of taking action to save ourselves… why should nature (or God for that matter) gives us another chance?

We are in a philosophical existential dilemma because as a race, as the big herd that we are, we have to choose between survival and extinction. The evolution of our philosophy has produced a society built on the basis of individuals, with irrational and artificially created material needs, and in which short term profit is put before the preservation of the species. Our philosophical evolution has also equipped us with phantastic logic reasoning, common sense, prudence. What will prevail?

We are in a maturity test because nature is testing our sociological and psicological evolution as a “team” to see if we are ready to survive as a whole or we rather prefer to test our luck. This means that blinded by the short term profit we chose to play our long term existence in a Russian roulette which in the best case will mean the sacrifice of some of us for the sake of the rest but which in 9 out of 10 cases means the disappearance of us all.

It is a “to be or not to be” situation because we have to take a common decision to “be”; to “exist”. Even if climate change would be an invention what is at stake in Copenhagen negotiation is the trust in ourselves as human beings beyond our national borders. If the developed and most polluting countries chose to abandon the developing countries with another treachery compromise the situation will deteriorate and the trust gap will increase. The south will become more and more suspicious about the north; whatever is left of trust will evaporate. And lack of trust in the team is the root of serious and long-lasting conflict.

Sadly, the text leaked today in which Denmark, US and UK worked behind all the other countries is a perfect example of how to destroy confidence with an otherwise very logical short-sighted move from the developped countries.

As redundant as it might sound humankind can only get out of this as a team… Today in Copenhagen I could see Africans screaming and crying out of rage, desertification is literally killing them. It is the second day and this risks getting emotional. Emotions? That animal instinct?

In my opinion the only way we will get anything useful out of Copenhagen is if our repressed animal instinct comes out and we make the irrational decision that “YES! Even though it will cost us money, sacrifice, power, you name it we still want to take the irrational decision to exist.”
Will we be that illogical? I doubt it…

Dirty tricks in Climate negotiations

Environment, world governance No Responses »

Dec 072009

The US has been giving the impression that they were taking the climate change negotiations more seriously than in previous times. And they do. To the extend of influencing the composition of the delegations that other countries are sending to the COP15 in Copenhagen so that they can get their way easily by taking out those negotiatiors known to be a pain.

The ultimate example of this sabotage strategy is the “coincidence” of the visit of US Secretary of State, Hillary Clinton to the Philippines with the destitution of Bernardita de Castro Muller as climate-change advisor of the Philippine Department of Foreign Affairs and coordinator for the G77 (group of the 77 development countries) and China Group in the climate-change talks.

Bernadita has been one of the main responsibles that the heterogeneous group of G77+China managed to articulate a strong and united message that tells the inconvenient truths that the developed countries don’t want to hear. Hence, the US thought it would be a good idea to get her out of the way so that the Copenhagen talks can be more “peaceful”. The 20 years experienced diplomat and her whole team were removed from the Philippine delegation, which at the same time left the G77+China without spokesperson.

The surprise came when right before the negotiations the Sudan delegation announced that Bernadita de Castro Muller would be representing the country which happens to chair the G77. Other members of her team appeared representing countries such as Bolivia. The “Ditas” team was back in the game!

The Philippino government made a fool of itself when it came out that the US strategy to behead the G77+China backfired and as Muller declared: “By serving as the negotiator for Sudan/G77, we will all be proving a point to the Annex 1 countries. Vulnerable countries, despite their “vulnerability”, can and will stand as one and be strong for each other and for the entire humanity.”

The US and the EU have been repeatedly trying to torpedo the unity of the developing world so that they can continue polluting whist at the same time even manage to make some money out of it. The old “divide and rule” tactic is being used over and over again.

It is true that the G77 is extremely heterogeneous and that countries like Saudi Arabia or Kuwait are radically different than countries such as Ruanda or Bangladesh but it is also true that the only way the G77+China can push the US and the EU to face its responsibilities is by staying together and acting as one. Having the experienced Bernardita Muller back in the negotiations, despite the efforts of the Americans to get her out of the way, will definitely help to bring in realism to Copenhagen.

Rich countries pay your climate debt The US has been giving the impression that they were taking the climate change negotiations more seriously than in previous times. And they do. To the extend of influencing the composition of the delegations that other countries are sending to the COP15 in Copenhagen so that they can get their way easily by taking out those negotiatiors known to be a pain.

Climate Change and the Story of a Distraction

Environment, world governance No Responses »

Dec 012009

Copenhagen negotiations are starting in one week and everything is set for the big show of business bullying the world, fantastic magical solutions and great speeches.
All in all a lot of distraction from what is really the problem:
1- How to effectively reduce emissions
2- How to change the business as usual in the scale proposed by Lester Brown in Plan B 3.0

All the rest is mainly distractions. The video below is an excellent and understandable explanation of what is important and what is superfluous about the historical negotiations we are about to assist to:

Lost Generation

Environment, Filosofia, world governance No Responses »

Nov 202009

I am part of a lost generation
and I refuse to believe that
I can change the world
I realise this may be a shock but
“Happiness comes from within.”
is a lie, and
“Money will make me happy.”
So in 30 years I will tell my children
they are not the most important thing in my life
My employer will know that
I have my priorities straight because
work
is more important than
family
I tell you this
Once upon a time
Families stayed together
but this will not be true in my era
This is a quick fix society
Experts tell me
30 years from now, I will be celebrating the 10th anniversary of my divorce
I do not concede that
I will live in a country of my own making
In the future
Environmental destruction will be the norm
No longer can it be said that
My peers and I care about this earth
It will be evident that
My generation is apathetic and lethargic
It is foolish to presume that
There is hope.

And all of this will come true unless we choose to reverse it.
Read the message, then read it again in reverse.

By Jonathan Reed

The new world monetary order and the need for EU foreign monetary policy

Europe, Europe english, Financial crisis, world governance No Responses »

Sep 222009

Why the EU needs to reflect on the role of the euro in world politics

The monetary policy is an exclusive competence of the eurozone of the European Union, yet it is unclear what role the European currency is to play in the world, in comparison to other important currencies, or what is the strategy of the EU regarding the current reshuffle of world power relations. Even more worrying is the fact that in the current discussions on the programme that the European Commission should implement during the next 5 years not a single word is mentioned about this issue which, if excluded, on its own, can do away with all the EU’s efforts to get out of the crisis.

In any normal state the currency is one of the main tools of foreign policy, for devaluation can increase exports, for it can attract or repel investments or when used as reserve currency it can help finance national debt. Any remotely good school of economics teaches its students that the equilibrium of balance of payments is one of the most important tools for the stability of a country. The EU seems to have forgotten that even though it is not a state, having a common currency means that it needs to act as if it were one when it comes to using monetary policy with its relations with the world.

Indeed, most of the trade of the EU countries takes place within the EU which might give the false impression that the role of the euro as tool of foreign policy is not that important. Are we, Europeans, reading the historical moment we find ourselves in correctly?

The 20th century has seen the rise and consolidation of the US as the world superpower which has been interlinked with the establishment of the dollar as the world currency. The current economic crisis, with the US decline and the emergence of new world powers, is leading towards a multipolar world and this will result in a new world monetary order which will re-shape economics, internal policies and international relations for years to come. During the last decades the US has been exploiting the condition of the dollar as a reserve currency to run colossal deficits in its trade and current-accounts with which it has financed its economy and has managed to keep its status of the world superpower. This time it looks like the dollar domination is over and during next years most probably we will assist to the birth of a new monetary world order.

We are observing how the continuous depreciation of the dollar is having devastating effects in the reserves of most world countries which are held in this currency. Most importantly, countries such as China which have huge surpluses in their trade account with the US see the fate of their economies linked to the strength of a currency whose strength diminishes whilst being forced to buy US debt to avoid further devaluations of the dollar.

Paul Kennedy in his article published in the New York Times on 28 August rightly pointed out two facts which signal an important change: during the G20 meeting in London of April the IMF received an allocation of 250 billion $ in Special Drawing Rights (SDR) and two months later a meeting of the BRICs –Brazil, Russia, India and China- debated shifting currency holdings from the dollar to these IMF units of account in order to diversify risk.

The debate on the post-dollar era and with it the new world monetary system is something that is happening, even if the EU wants to ignore it. We are assisting to the most important change in world monetary policy since 1944 when in Bretton-Woods John Maynard Keynes proposed the creation of a “bancor”, a world currency unit based on the average price of 30 commodities, and the US opted for a monetary system based on the gold standard linked to the dollar which effectively turned the dollar into the world currency. Back then nobody could challenge the strength of the American currency, fair image of the then most powerful world economy. This is no longer the case and the emerging economies don’t want to see its efforts to develop go up in the air with the destruction of its reserves whilst continuing to finance the US economy.

The United States have a clear interest in keeping the status quo in the world monetary relations, since this allows them to get their economy financed by the rest of the world. The Chinese have an interest in changing the rules of the game but they are not against the dollar per se because they indeed have most of their reserves in this currency. However they do understand that if things go bad and the Americans start printing money to finance their way out for the crisis this will lead to inflation and subsequently to a depreciation of the dollar which will decrease the value of the chinese reserves and do away with their development effort of the last decade. A similar reasoning applies for other emerging economies such as India or Brazil.

Also the European Union is and will continue to be severely affected by this constant depreciation of the dollar, since the comparative strength of the Euro will render the European exports more expensive and hence move jobs and economic activity out of the EU. There is a lot at stake for the EU in this game and if we look at the current state of affairs and the discussions taking place between the European Commission and the European Parliament on next years programme, it seems that neither have a clear understanding of the stakes in the game.

What should the role of the EU be in this new monetary world order? There are some reasons why the EU should take the lead in proposing a new system:

First and foremost, because it is easier to push for an equitable, democratic and transparent system in a multipolar world than in a polarised world. History teaches us that the predominance of a currency tends to be proportional to the power of the country that issues it. The end of the US hegemony will bring with it the end of the dollar hegemony and the new multipolar world will bring with it a new distribution of power that will be reflected in the monetary strength. Now is the time when emerging economies can agree to a compromise, in 10 years it might be too late. It is strategically important to take advantage of the moment to work out a plan from which all can benefit in the years to come. China may join a world system today but it won’t do it once it is doped with the taste of power.

Secondly, as indicated above because the current status-quo damages the competitiveness of the EU and unless it is reversed it can seriously harm the recovery of the EU economy. If we add a strong exchange rate and political disunion in monetary policy to the lack of a coordinated recovery plan and the inability of the EU to properly finance itself we have the ingredients for a troublesome future.

Thirdly and finally because if the EU doesn’t take (or join) the initiative the world will move on without and the cost of hopping on the train once it has started moving will be higher than being in the vanguard. Clear signs that the train is moving is when in March this year Zhou Xiaochuan, head of the Chinese central bank, called for an overhaul of the global monetary system by replacing the dollar for a world unit composed of a basket of the most important currencies (SDR). As explained before the talks among the BRICs after the 250 billion $ in SDR given to the IMF to guarantee stability also show a tendency.

The EU, except some timid initiatives taken by the French presidency a year ago, did not react to these declarations and signs and instead we continue to behave like if we were in the 20th century.

At present the EU 27 holds most of the voting power in the IMF and if acting together it could even decide to move the siege of the organisation to Europe. This simple example shows the power that the EU still has, although not for long, in influencing world monetary policy. The EU‘s weight in the IMF is disproportionate to its economic and demographic size and it will be corrected soon.Why not taking advantage of the last moments “in power” to give the right steps to create a more representative, fair and above all stable and robust monetary system? Isn’t it in our interest? The euro can not and should not be the new world currency; instead the European experience of monetary integration could be very useful for the setting up of a new world monetary system based on SDR. Why does Europe stay silent when the status quo is harming European interests?

The eurozone has delegated competence in monetary policy and the council can decide by qualified majority on a proposal from the European Commission: it is therefore in the hands of the European Executive to put together the EU monetary plan. Ideally, the newly elected president of the European Commission should seize initiative and put the European Union at the forefront of these crucial negociations for the world governance. The role of the euro in the new world monetary order should have a prominent place in the program that Barroso will present for approval in front of the European Parliament together with the new European Commission in December 2009 or January 2010.

May the Barroso program fail to tackle this vital point for the future of Europe, the European Parliament should better start looking for another candidate to lead the EU executive.

Climate Change fever: without a World Environmental Communitty temperature will go up!

Environment, Europe, Europe english, world governance 1 Response »

May 042009

As the economic downturn and the swine flu dominate the pages of newspapers a lot more important issue, for it affects our long term survival in this planet, disappears from the media: the fight against climate change.

In December will take place in Copenhagen the next United Nations Framework Convention on Climate Change (UNFCCC) in which the new rules and targets will be laid to replace the Kyoto protocol. The Kyoto treaty was based on 5 principles: commitment to reduce greenhouse gases, implementation measures, minimization of impact in developing countries –via adaptation fund-, accounting reporting and review and compliance.

A decade later evidence shows that worldwide emissions have increased by 38% and even though the EU15 did a good job in stabilizing the emissions the increase of emissions in China (+150%), India (+103%) or the US (+20%) among many others has caused the emissions to grow.

Hence, the Kyoto protocol, albeit its concretion in what needs to be done is failing to deliver what it was designed to do. And what is worst, we are not learning.
The relative failure of Kyoto can be due to the wrong setting of objectives or to the inadequacy of the tools used to meet the objectives. I believe the objectives, although sometimes arbitrary and not scientifical enough, are not the problem. The instruments we use are clearly failing.

The weakest point of Kyoto, same as any international treaty, is its implementation and enforceability. Who does what, how, and who monitors that job is done properly and has the power to sanction it when this is not the case.
The EU offers a good example about implementation and compliance: whilst cooperation has proven its inability to deliver, integration has clearly been the key to success. Once something is agreed among the 27, implementation takes place –at European, national or regional level- and enforceability is monitored and the European Court of Justice can sanction the non-complying member states. This effective system of supranational governance descends from the European Coal and Steel Community, where the 6 founding states decided to put under a supranational democratic rule what they considered was a public good, and which had been the cause of disputes and wars over the years. From this milestone the successful story of European integration unfolded.

The EU is the most successful example in the history of supranational governance for it has had the capacity to deliver. Yet, the virtues of the model have not been followed by other supranational structures. Kyoto has had a very weak mechanism of enforcement; a feeble compliance committee has been deciding on who was following the commitments. For instance: Greece was excluded of the Kyoto protocol in 2008 due to unfulfilled commitment of creating mechanisms of monitoring and controlling emissions and reporting false data.
Excluding countries from the protocol is not the way to guarantee enforcement; it is just a declaration of impotence to manage the system.

Environment is a common public good for humankind; pollution doesn’t stop at the borders, can’t be fought with weapons but it has the potential to exterminate us. It is therefore high time to get organized to fight climate change effectively and this can only be done with the right tools. Never before we have known so much about the threat before us. Yet, knowledge is a mighty two-faced asset for it gives us the false impression that we control the situation: We know what is happening, we know what we need to do and hence we might think that we can solve it. But we can’t.

Whatever objectives the world community sets for itself in Copenhagen, they can only be met if we manage to set up an institutional structure where global interest is put before the national interests. This world institutional setting that we could call “World Environmental Community” would treat environment as a global public good and would have a “High Authority” which would care only about the global interest. The national interests could be represented in intergovernmental meetings such as UNFCCC or in a more formalized body. However, the “High Authority” should be supervised by a body not representing the states but the global interest and the members of which could be elected or appointed by the states. The system would need of a Court of Justice able to guarantee the enforcement of the decisions. Such a structure would create the space and the tools where a system of global taxes could be set up –if needed- and properly managed in a democratic and transparent manner.

What stays on the way?
The will of the our elected governments who have to decide what is the best way to defend the national interest: by not letting go in the short term and putting our survival in danger in the mid term or by ceding a bit of sovereignty in the short term to be able to have a long term at all.
Also, Environmental NGOs should look at broader picture and along the world emissions targets; ask for a governance deal that empowers the treaty to deliver.

History shows that humans always learn the hard-way. Sane decisions tend to take place after disasters such as WWII.

Would we be the first generation to anticipate and prevent the disaster?

The world has climate change fever and temperature keeps going up. We have all the symptoms to get pneumonia soon and we continue to stay alone in the cold.

Until when?

JM Simon

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