All decisions at these U.N. climate conferences – always – are promissory notes. And the legacy of climate negotiations is one of promises not kept.
This promise, welcome as it is, is particularly vague and unconvincing, even by U.N. standards.
Essentially, the agreement only begins the process of establishing a fund. The implementable decision is to set up a “transitional committee,” which is tasked with making recommendations for the world to consider at the 2023 climate conference, COP28, in Dubai.
Importantly for wealthy countries, the text avoids terms like “liability” and “compensation.” Those had beenred lines for the United States. The most important operational questions were also left to 2023. Three, in particular, are likely to hound the next COP.
1) Who will pay into this new fund?
Developed countries have made it very clear that the fund will be voluntary and should not be restricted only to developed country contributions. Given that the much-trumpeted US$100 billion a year that wealthy nations promised in 2015 to provide for developing nations has not yet materialized, believing that rich countries will be pouring their heart into this new venture seems to be yet another triumph of hope over experience.
2) The fund will be new, but will it be additional?
It is not at all clear if money in the fund will be “new” money or simply aid already committed for other issues and shifted to the fund. In fact, the COP27 language could easily be read as favoring arrangements that “complement and include” existing sources rather than new and additional financing.
3) Who would receive support from the fund?
As climate disasters increase all over the world, we could tragically get into disasters competing with disasters – is my drought more urgent than your flood? – unless explicit principles of climate justice and the polluter pays principle are clearly established.
What COP27 at Sharm el-Sheikh, Egypt, has done is to ensure that the idea of loss and damage will be a central feature of all future climate negotiations. That is big.
Seasoned observers left Sharm el-Sheikh wondering how developing countries were able to push the loss and damage agenda so successfully at COP27 when it has been so firmly resisted by large emitter countries like the United States for so long.
The logic of climate justice has always been impeccable: The countries that have contributed most to creating the problem are a near mirror opposite of those who face the most imminent risk of climatic loss and damage. So, what changed?
At least three things made COP27 the perfect time for this issue to ripen.
Second, the devastating floods this summer that inundated a third of my home country of Pakistan provided the world with an immediate and extremely visual sense of what climate impacts can look like, particularly for the most vulnerable people. They affected 33 million people are expected to cost over $16 billion.
The floods, in addition to a spate of other recent climate calamities, provided developing countries – which happened to be represented at COP27 by an energized Pakistan as the chair of the “G-77 plus China,” a coalition of more than 170 developing countries – with the motivation and the authority to push a loss and damage agenda more vigorously than ever before.
Importantly, for now, developing countries got what they wanted: a fund for loss and damage. And developed countries were able to avoid what they have always been unwilling to give: any concrete funding commitments or any acknowledgment of responsibility for reparations.
Both can go home and declare victory. But not for long.
Is it just a ‘placebo fund’?
Real as the jubilation is for developing countries, it is also tempered. And rightly so.
For developing countries, there is a real danger that this turns out to be another “placebo fund,” to use Oxford University researcher Benito Müller’s term – an agreed-to funding arrangement without any agreed-to funding commitments.
The COP27 delivered partial success in an agreement on a fund for those vulnerable countries; however, it still needs to provide an understanding of the most basic requirements for stopping the current climate breakdown. That is mainly to slash the burning of fossil fuels as promptly as possible. In the meantime, life carries on. Like in the story that follows, it is not building better with less at this conjecture and not about decarbonising all active ingredients but, like Azerbaijan sharing investment plans within the concept of ‘smart’ cities and villages.
Azerbaijan shares investment plans within concept of ‘smart’ cities, villages
BAKU, Azerbaijan, November 21. Azerbaijan cooperates with the world’s leading companies in the building of ‘smart’ cities and villages, Azerbaijani Minister of Digital Development and Transport Rashad Nabiyev said on November 21 during an international conference on ‘smart’ cities and villages, being held in Baku, Trend reports.
According to Nabiyev, the concepts of ‘smart’ cities and villages contribute to the efficient use of water and other natural resources.
“In the next five years, $2.5 trillion will be invested in these concepts. Azerbaijan has been working in this direction since 2020. Our ministry has studied the experience of leading countries when elaborating on the concepts. Within the framework of the ‘Online Azerbaijan’ concept, large-scale work is being carried out to integrate state systems, switch to ‘cloud’ technologies and other work,” the minister noted.
Besides, Nabiyev noted that the effectiveness of the concept of ‘smart’ cities and villages may differ depending on the region.
“When implementing these projects, we take into account the factor of development of local companies and their localization,” he said.
The minister pointed out that over the past two years, 472,000 households in Azerbaijan have been provided with fiber-optic communication, and by 2024 even the most remote villages will be provided with it.
Speaking about the development of these projects, Nabiyev said that more attention should be paid to ensuring the security of information systems.
“In the next three years, 932 highly qualified specialists in the field of cybersecurity will be trained in Azerbaijan,” he added.
ANSAmed in its Culture invites all to the Day of the Mediterranean, to the voyage through senses that unite people, hopefully for each and every one.
Day of the Mediterranean, voyage through senses unites people
UfM’s music and social media for 28 November celebration
18 November 2022
NAPLES – The Day of the Mediterranean, launched in 2020, will be held again on 28 November 2022. The day is a way to recognize the importance of Mediterranean culture and cooperation and to embrace the rich diversity present in the region. The Union for the Mediterranean (UfM) highlights these aspects while launching various events and initiatives focused on music which will take place across the region. Starting from Spain, with a concert of the Arabic Orchestra of Barcelona and of the singer Judit Neddermann, on 26 November. The concert is organized by the European Institute for the Mediterranean and by the UfM secretariat in collaboration with local authorities. While the Anna Lindh Foundation (ALF) is coordinating civil society organizations across 25 Euro-Mediterranean countries, with 36 different free musical shows at community level, which will take place simultaneously on 28 November.
The Day of the Mediterranean will also provide new drive to build a common identity in the region, from European countries to those of the MENA region. The UfM launched an on-line campaign called “The Mediterranean, a voyage through the senses”, inviting all citizens to think about their common origins and what unites us as a Mediterranean population by filming a short video, sharing a picture or publishing a post in which one of our sense is most stimulated by the idea of the Mediterranean. The Day will also provide the opportunity to present themes of public interest, mobilize political will and resources to face the region’s problems, by remembering the creation of the Barcelona Process on 28 November, 1995.
Therefore the Day of the Mediterranean is a precious reminder of this commitment, to continue to work on this process despite the challenges. Among the initiatives, the ALF secretariat is organizing a special celebration at its headquarters. Among these celebrations there will be a multicultural musical exhibition and the projection of the logo on the building of the von Gerber home, which is located on the seafront in Alexandria, Egypt. The Mediterranean Day was launched in 2020 by 42 Member States of the UfM who declared 28 November the yearly celebratory date.
Unfortunately, those Western governments with decision making power and resources to help vulnerable countries respond to the polycrisis are not inclined to use it, given domestic cost-of-living crises in G7 countries, the ongoing conflict in Ukraine, and limited domestic political appetite for international initiatives.
In October, the International Monetary Fund (IMF) published what is perhaps its most bleak economic outlook in a decade, forecasting that the world economy will grow by only 2.7 percent in 2023 and warning that “the worst is yet to come.” Not since the global financial crisis of 2007–2008 have we seen such pressure on vulnerable countries grappling with what Carnegie scholar Adam Tooze describes as “polycrisis.” Climate change, food and energy price inflation, debt distress, and an ongoing pandemic have created a dynamic where, in Tooze’s view, “the whole is even more dangerous than the sum of the parts.”
This constellation of crises demands that G20 leaders design a new global financial architecture that delivers urgent liquidity for vulnerable countries, a solution for countries facing debt distress, and long-term financing at an order of magnitude greater than currently available—all while giving those vulnerable countries a more meaningful voice in the design of that architecture.
This polycrisis comes to its most acute head within the twenty-five countries that, according to Bloomberg, are most vulnerable to debt distress. Home to 1.5 billion people, they range from middle-income countries like Pakistan and Egypt to low-income countries like Ethiopia. And while the UN’s Food Price Index has retreated from the all-time highs that appeared immediately in the wake of Russia’s invasion of Ukraine, food prices remain higher than they were during the crises in 2008 and 2010—the latter of which precipitated unrest in more than forty countries as well as contributing to the Arab Spring protests. This is happening against a backdrop of increasing extreme weather events—from historic drought in the Horn of Africa to devastating floods in Pakistan that displaced 33 million people. In the first half of this year, extreme weather events cost an estimated $65 billion in damages globally.
Such an unprecedented cocktail of volatility is systemic in nature and is, in part, created by the collective inability of the world’s most powerful governments to build a multilateral system more resilient to these shocks. At a minimum, it warrants an unprecedented response from the international community. Unfortunately, those Western governments with decisionmaking power and resources to help vulnerable countries respond to the polycrisis are not inclined to use it, given domestic cost-of-living crises in G7 countries, the ongoing conflict in Ukraine, and limited domestic political appetite for international initiatives.
A DANGEROUS MYOPIA ON THE PART OF WESTERN LEADERS
Taking a step back, if leaders from Europe and North America have thus far been reluctant to meet the current crisis moment, this is myopic for two reasons.
First, helping vulnerable countries avoid widespread hunger, mitigate debt distress, and build resilience to climate shocks is not charity but enlightened self-interest. It will contribute to stability in those nations and help avert the challenges created when large populations migrate to flee conflict and famine in search of economic opportunity. Europe’s so-called migration crisis in 2016, which helped fuel a wave of populism on the continent, was catalyzed in part by instability in Libya and Syria.
Second, Western countries are increasingly aware that their relationships with countries in the Global South are not what they assumed. A succession of UN General Assembly resolutions condemning Russia’s actions in Ukraine, most recently on October 12, 2022, saw many African countries abstain (see figure 1). While there are a number of reasons for such nonalignment, it is clear that some African countries want to be free to chart their own path and choose their own partnerships—and that the choice of partners depends in part on what the partner country can bring to the table.
In this regard, the West risks falling behind. Russia, the largest supplier of weapons to Africa, now provides 44 percent of major arms to the region. China committed about $160 billion in infrastructure financing in Africa between 2000 and 2020 in comparison with $153.4 billion in official development assistance from the United States1. In June, China announced a restructuring of some African countries’ debts amid concerns of debt sustainability and agreed to co-chair Zambia’s creditor committee to address the restructuring of the country’s debt.
In contrast, leaders from the Global South at UN General Assembly meetings both in public and private have disparaged European countries for stepping back from their role as custodians of the multilateral system, for their lack of support during the coronavirus pandemic, and for a litany of promises that remain unfulfilled. While they are more positive that the United States is in listening mode, as reflected in the recently published U.S. Strategy Toward Sub-Saharan Africa, they remain wary that U.S. domestic politics could see a shift of administration in two years’ time.
A study of developing countries’ attitudes compiled by Rosa Balfour, Lizza Bomassi, and Marta Martinelli at Carnegie Europe demonstrated the disconnect between how Europe thinks it is perceived and how it is actually perceived in key countries of the Global South. In many cases, the role of Europe’s development programming remains invisible to citizens of these countries, while steps to use the EU’s market access to enforce human rights and environmental standards, viewed at home as a positive impact of Europe in the world, are perceived elsewhere as simple market protectionism.
Likewise, a large-scale survey of African youth conducted by the Ichikowitz Family Foundation shows that in 2022, China overtook the United States as the geopolitical superpower viewed most favorably—in part because its actions on the continent are so visible. Analysis from Afrobarometer (see figure 2) presents a similar trend.
THE WEST’S CRISIS RESPONSE IS FUELING MISTRUST IN THE GLOBAL SOUTH
There is a growing perception among Africans that African countries are victims of crises created in and by other regions. This view is rooted in fact: the global financial crisis began in the U.S. housing market, the coronavirus pandemic began in China, and industrialized countries in the Global North caused the climate crisis (Africa has contributed just 4 percent to historical carbon emissions). In each case, Western countries’ policy responses to these crises further disadvantage African countries.
During the pandemic, Western countries have monopolized vaccine supply, and the current response to the climate crisis sees some Western governments seek to limit the ability of African countries to exploit natural gas to support economic and social development—while those Western countries continue to use natural gas themselves.
Not only is inflation greater in African countries, but it also has a more devastating impact on ordinary people. Analysis in a new data portal from the ONE Campaign, where the author is executive director for global policy, shows that, in comparison to higher-income countries, a larger proportion of Africans’ income is spent on food and other essential goods, leaving them more vulnerable to inflation (see figure 3).
Yet the current inflationary challenges illustrate the failure of global economic governance institutions to prevent macroeconomic policy decisions by major powers from spilling over to the wider world and harming vulnerable nations
The U.S. Federal Reserve’s steep interest rate hikes in recent months to quell inflation in the United States will greatly impact other countries, particularly those with heavy debt burdens. The U.S. dollar is the world’s reserve currency. About half of international trade is invoiced in dollars, about half of all international loans and global debt securities are denominated in dollars, and dollars are involved in 90 percent of foreign exchange transactions. As a result, increases in interest rates are hitting vulnerable countries in a number of ways.
But while African countries’ fortunes are shaped by these global events, they have limited agency over the response, thanks in part to an outmoded global economic architecture created after the Second World War—before most African countries gained independence.
The Bretton Woods institutions—the International Monetary Fund and the International Bank for Reconstruction and Development (now part of the World Bank Group)—were established in 1944 to safeguard the stability of the international financial system and finance postwar reconstruction. But their governance remains archaic.
Under a long-standing “gentleman’s agreement,” Europe gets to choose the managing director of the IMF and the United States chooses the World Bank president. The voting shares of these institutions are highly unequal, since they are pegged to the size of shareholders’ economies. As a result, the United States, with a population of 330 million people, controls roughly 16 percent of the voting power at the IMF and World Bank, while Africa’s fifty-four countries—accounting for 1.4 billion people—collectively have a voting share of roughly 7 percent. Per capita, an American’s vote is worth twenty times as much as a Nigerian’s at the IMF, and sixty-four times that of an Ethiopian. And even on its own terms, current quota shares disproportionately benefit wealthy countries—particularly Europe—at the expense of emerging economies.
Increasingly, countries in the Global South are demanding a meaningful seat at the table of international institutions. These calls were particularly prominent at this year’s UN General Assembly. Indian Minister for External Affairs Subrahmanyam Jaishankar described the current architecture as “anachronistic and ineffective.”
We need to reform a morally bankrupt global financial system. This system was created by rich countries to benefit rich countries. Practically no African country was sitting at the table of the Bretton Woods Agreement; and in many other parts of the world, decolonization had not yet taken place. It perpetuates poverty and inequalities. We need to balance the scales between developed and developing countries and create a new global financial system that benefits all.
These increasingly emphatic statements are no longer general calls for reform. Instead, leaders from the Global South have an agenda and are putting specific proposals on the table.
In April, following Russia’s invasion of Ukraine, members of the Africa High-Level Working Group on the Global Financial Architecture, coordinated by the UN Economic Commission for Africa, proposed a specific set of measures to create fiscal space to help them respond to the invasion, including the recycling of $100 billion in special drawing rights, a renewed debt service suspension initiative, and a liquidity and sustainability facility to reduce the cost of African borrowing on capital markets.
Since then, Barbados’s Prime Minister Mia Mottley has proposed the Bridgetown Initiative, which seeks to address immediate fiscal concerns and proposes a more structural set of reforms to help vulnerable countries become resilient to economic, climate, and pandemic shocks.
Yet debates about Bretton Woods reform risk becoming fragmented in a political environment in which achieving the necessary consensus for reform is challenging. Furthermore, in an era of great power competition, G20 countries are unlikely to voluntarily give up some of their power in these institutions.
AS A RESULT, A FOCUSED AGENDA IS MORE LIKELY TO GAIN TRACTION.
Firstly, G20 countries should urgently take steps to provide the necessary liquidity to help vulnerable countries weather the economic storm and build resilience for the future. They should reinstate the debt service suspension initiative, which helped free up fiscal space during the coronavirus pandemic, and make good on their promise, made in October 2021, to provide emergency liquidity in the form of $100 billion in special drawing rights. To date, $81 billion has been pledged (including $21bn from the US that is yet to be appropriated by Congress) to this target but very little has been disbursed. These funds should be urgently committed to the IMF’s Poverty Reduction and Growth Trust, the IMF’s newly established Resilience and Sustainability Trust, and multilateral development banks (MDBs), enabling vulnerable countries to draw down these resources.
Second, the polycrisis requires long-term resourcing that is an order of magnitude greater that what is currently on the table. There is hope on this front. In October, ahead of the IMF and World Bank annual meetings, U.S. Treasury Secretary Janet Yellen signaled U.S. government support for the reform of MDBs relating both to how they lend and to how much they lend. Australia, Canada, France, Germany, Italy, Japan, the Netherlands, Switzerland, the United Kingdom, and the United States then announced an “evolution roadmap” for the World Bank to address its investment in cross-border challenges such as pandemic preparedness and climate change (in addition to its current model of bilateral lending to countries), and support for more risk-taking to more effectively leverage the World Bank’s balance sheet.
According to a G20-commissioned expert group, MDBs (including the World Bank) could mobilize up to an additional $1 trillion without risking their AAA credit ratings. The boards of the MDBs (largely composed of G7 finance ministers) should lay out a roadmap for implementing these recommendations and increasing the speed and flexibility of lending to vulnerable countries.
Finally, there are increasing calls for Global South countries to have a meaningful seat at the decisionmaking table. Establishing a permanent African Union seat at the G20 would send an important signal, and the IMF’s 2023 quota review could provide an opportunity for the creation of a new African chair on the IMF’s board as well as an increase in quota or a change in quota distribution in favor of African countries.
These specific steps would signal that Western countries are listening to countries in the Global South, provide urgent finance at a scale needed to address the current challenges, and catalyze a broader debate about the kinds of international institutions needed in the twenty-first century.
All of this could be accomplished without significant investments of domestic budgets or political capital. In this respect the usual explanations for inaction do not stand.
1 Author’s calculations of statistics from the Development Assistance Committee of the Organisation for Economic Cooperation and Development. See Organisation for Economic Cooperation and Development, Query Wizard for International Development Statistics (accessed October 18, 2022), https://stats.oecd.org/qwids/.
In their understanding of good governance and its role in sustainable development, Gulf Business addresses this theme only within the business world of the MENA region, specifically within the Gulf area countries. Let us see what it is all about.
Insights: Understanding good governance and its role in sustainable development
By Dr Ashraf Gamal Eldin
Good corporate governance fosters fair competition, enables efficient utilisation of resources, increases employment opportunities, and develops domestic and regional capital markets.
11 November 2022
Dr Ashraf Gamal Eldin
The term ‘governance’ refers to all forms of regulations, including that of institutions, procedures, and practices used to decide on and regulate matters of public concern. In its most basic sense, governance is about providing direction and ensuring that an institution operates efficiently.
Good governance, however, adds a normative or evaluative attribute to this process. In simple terms, good governance refers to the institutional and political outcomes necessary to achieve developmental objectives. The concept has become increasingly important in recent years, emerging as one of the essential components for growth and sustainable development. The key measure of good governance is the extent to which it upholds human rights, including civil, cultural, economic, political, and social indicators. As a result, it is important to understand good governance and its significance in sustainable development.
Good governance reassures stakeholders that an organisation fulfills its obligations to all of its stakeholders, it treats everyone with respect and dignity, by being transparent about its operations, finances, and conduct. In fact, a major indicator of an institution’s quality and excellence is how committed it is to adopt the principles of good governance in all facets of its operations and decision-making. This is even more important, as it significantly supports sustainable development in institutions. It is widely observed that the inability to uphold these principles can have negative effects on welfare, efficiency, and operational excellence, thereby affecting the long-term success of organisations.
The private sector is growing rapidly in the Middle East and North Africa (MENA) region. Despite the fact that every country is unique, forward-thinking companies throughout the region see better corporate governance as a competitive advantage in their quest for growth and profitability. Consequently, countries in the MENA region are at various stages of developing unique corporate governance frameworks. This could be further driven by making strenuous efforts to create a national environment that supports and encourages corporate governance in the region. The UAE ranked first in the Middle East and 24th globally on the Good Governance Index 2022, which was released by the Chandler Institute for Governance, a non-profit organisation that works with governments to strengthen their capabilities.
Sustainable development argues that the current use of resources should minimize the level of harm to the future generations’ share of resources. ‘Good Governance’ is capable of common sense and the versatile planning that is required for sustainable development.
A good corporate governance system fosters fair competition, enables more efficient utilisation of resources, increases employment opportunities, and the development of domestic and regional capital markets. With governance playing a crucial role in driving efforts to meet institutional goals, it has been referred to as the fourth pillar of sustainable development alongside social, environmental, and economic factors. As there is a strong emphasis on minimising future harm from the current use of resources, governance will certainly aid in shaping versatile strategies that ensure sustainable development across organisations.
Good governance is not a luxury, it creates a competitive edge for companies and economies.
Dr Ashraf Gamal Eldin is the CEO of Hawkamah Institute for Corporate Governance
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