DW takes us to the hottest area to tell us how local people are putting their hands together for a better future for everyone at a time when realising that energy cooperation is a necessary step; it is about Israelis, Palestinians, and Arabs jointly tackling climate change.
A new US-led initiative brings together Palestinians, Israelis and Arab states to address climate change in the region. Building trust and funding joint projects remain challenges.
The Middle East and Northern Africa (MENA) region is one of the most vulnerable to climate change. It’s already being hit disproportionately by rising temperatures, water scarcity and desertification. And the outlook for the future is grim.
These are all compelling reasons for experts in the region to collaborate more, say the organizers of a conference on agriculture, water and food security. The conference, which was attended by experts from Israel, the occupied Palestinian territories and several Arabic and Muslim countries, aimed to develop practical programs to address regional challenges.
“So much can be done in this region by cooperating across borders,” said William Wechsler, senior director of the N7 Initiative which organized the conference held last week in the capital of the United Arab Emirates, Abu Dhabi. The initiative promotes collaboration between Israel and Arab and Muslim nations that have signed the Abraham Accords, a deal brokered in 2020 to normalize relations between Israel and several Arab countries, including Morocco, the United Arab Emirates and Bahrain.
“For example, water can be made more available, food prices can be lowered, and people’s lives can be made more secure,” said Wechsler, listing the advantages of potential cooperations.
Wechsler believes agriculture is an ideal basis for climate change collaboration. Not only is it a field where progress can be made quickly, it could also have a big impact on people’s lives across the MENA region.
Egypt seeks to address wheat shortages and inflation by implementing crops that need less water.Image: AFP
“If we miss the opportunity to address climate change now, the window of opportunity will eventually close,” Wechsler warned.
Although there are challenges to establishing governments and private sector cooperations, Wechsler believes those actively involved in tackling climate change and its effects are keen to work together.
“At the end of the day, scientists and engineers are practical people who are interested in solving problems, no matter where they are from,” Wechsler told DW.
Difficult to find funding for joint projects
For conference participant Faouzi Bekkaoui, the director of Morocco’s National Agricultural Research Institute, Israel has much to offer his country.
“Israeli expertise relates in particular to water usage efficiency, such as irrigation systems and developing more resilient crops and varieties,” he told DW.
Morocco is among the world’s most water-stressed countries, according to a World Bank 2022 report, and its agricultural sector is badly affected by the water shortage and climate change.
“Israel also made significant progress in biotechnology or genomics, and all these areas could be beneficial for Morocco, as well,” he said.
But funds for joint Moroccan-Israeli projects or academic exchanges are limited. Bekkaoui has now applied to the US-based Merck Foundation, which funds projects between Israel and the Arab countries that signed the Abraham Accords, for a grant.
The region lacks a tradition of cross-border academic cooperations.
“Most national research administrations … have limited pathways to grant research funding to foreign organizations,” said Youssef Wehbe, a researcher at the National Center of Meteorology in Abu Dhabi, in a recent podcast by the Middle East Institute.
Finding funding for cross-border projects to combat climate change is even more complex. During the World Climate Summit COP26 in Glasgow in 2021, richer nations agreed to provide adaptation funds worth $40 billion (€37.3 billion) annually for low- and middle-income countries from 2025 onwards.
But most of this finance is awarded in the form of loans for mitigation projects to reduce fossil fuel usage, such as installing solar panels or wind farms, which return a profit to lending nations, explained Wehbe.
In contrast, financing for adaptation schemes is low as they are “harder to fund and are less attractive to funding nations compared to the loan model, which returns a profit for these lending nations,” Wehbe said.
He calls for more globally oriented research programs targeting climate change “to solicit ideas from the international scientific community.”
Israeli irrigation technology could help other countries in the region, for example MoroccoImage: Menahem Kahana/AFP
Tackling climate change to reduce conflict
Agriculture and climate change expert Jamal Saghir, a professor at Canada’s McGill University and former World Bank director, also regards collaboration across borders as the best solution.
“Regional cooperation is always a win-win situation and much better than national or bilateral projects,” he told DW. “Most of the Mideast countries are not doing enough yet and climate change is much faster.”
The Middle East is warming at twice the global average. This is expected to fuel competition and conflict over dwindling resources – making it essential for the region to tackle climate change and its consequences such as more migration and unrest.
However, Saghir believes the region can leapfrog these issues through technology. Here he seesIsrael and the Gulf countries in a position to take a lead.
“Israeli technology is leading in desalination and irrigation and the region would benefit a lot from these methods,” he said. The United Arab Emirates, beyond their thriving oil business, have also made significant investments in renewable energies, he pointed out.
“Joint collaboration will lead to new ideas in research and development, which can then be implemented by several countries,” he said. “What are they waiting for? This could happen now.”
Cross-border regional cooperation could help address water shortages before it is too late, say the organizers of the summitImage: Albert Gonzalez Farran/UNAMID/AFP
Building a basis of trust
Tareq Abu Hamad, executive director of the Arava Institute for Environmental Studies in Israel, believes tackling climate change together with other scientists across the region could turn into “a great opportunity to build trust.”
“We live in a small region that is considered as a hotspot when it comes to climate change, and we do not have any other option than cooperating with each other to deal with these challenges,” he said.
Alex Plitsas, who is involved in the N7 Initiative, was struck by one scene at the conference that filled him with hope.
“The most extraordinary thing I witnessed … in Abu Dhabi was when a male Arab diplomat from a Gulf state wearing traditional thobe & donning a kaffiyeh sat with a female Israeli entrepreneur and I late at night,” he wrote on Twitter, “as they worked to figure out how to make people’s lives better.”
With all respect to the author, BRICS and Realignment in the Middle East & North Africa would be a more comprehensive title; please read on to understand this, however minor but essential point.
The contrast of the BRICS summit in June with the meeting of G-7 leaders held only a day prior, served as a foretaste of geopolitical competition to come. It won speculation over whether a new geopolitical bloc, even an international order, might finally be finding form.
The summit came ahead of news that several MENA states are expected to be soon welcomed into BRICS. Regardless of whether BRICS lives up to its potential, this news is further indication that the region’s relationship with the West is heading into a wintry chapter as regimes seek to profit from new opportunities in a multipolar world.
Indeed, the competition and conflict redefining geopolitics has also questioned whether realignments are afoot in the Middle East. Developments like regional interest in BRICS and OPEC+ oil cuts suggest that popular belief in MENA neutrality, in what plausibly seems to be a new cold war, merits consideration and even revision.
China’s President Xi Jinping (L), India’s Prime Minister Narendra Modi (2nd L), Russia’s President Vladimir Putin (C), South Africa’s President Cyril Ramaphosa (2nd R) and Brazil’s President Jair Bolsonaro (R) are pictured before posing for a family picture during the 11th BRICS Summit on November 14, 2019 in Brasilia, Brazil. (Photo by Sergio LIMA / AFP)
BRICS: A New Geopolitical Bloc?
Global economic power has been reclaimed in the 21st century. The establishment of BRICS in 2006 is a testament to this seismic shift on the world stage. The organisation is membered by industrialised developing countries with emerging economies: Brazil, Russia, India, China, and South Africa.
Representing 23% of the global economy, 18% of global trade, and a combined gross domestic product akin to that of the US, BRICS possesses immense economic power. When the first summit was held, the organisation’s initial goals were modest and focused on investment. But amid the shifting tides of geopolitics, and the concentrated and accruing economic power of BRICS, it bears the hallmarks of a new geopolitical bloc.
Representing 23% of the global economy, 18% of global trade, and a combined gross domestic product akin to that of the US, BRICS possesses immense economic power.
In reality, the potential of BRICS rests on the dazzling rise of China’s economy. China’s GDP is more than double that of the other four BRICS members: almost $18 trillion compared with Brazil ($1.6 trillion), Russia ($1.8 trillion), India ($3.2 trillion) and South Africa ($400 billion). Without China, the organisation would fade into irrelevance; with China, its economic clout, and so potential to exercise geopolitical power, is vast.
As observed in Forbes: “If intra-BRICS commodity trade were to be settled in a commodity-linked basket of currencies among members as well as willing non-members, it would constitute an effective end to the petrodollar, a key pillar of the G7-led global financial system.” The strong resistance of the Russian ruble to Western sanctions – reaping reward from global energy prices – has boosted confidence in this aspiration.
In reality, the potential of BRICS rests on the dazzling rise of China’s economy. China’s GDP is more than double that of the other four BRICS members
President Putin even proposed at the recent BRICS summit the creation of an “international reserve currency based on the basket of currencies of our countries” to counterweight US hegemony in the IMF. The desire to create an economic order removed from the US-led dominated one has gained impetus as Russia and its allies have been disturbed by the velocity of Western-sanctions, from which they seek permanent protection and relief.
At the outset of war this year, intra-BRICS trade suddenly won significant sway over oil geopolitics through Western-sanctioned Russian crude oil exports being snapped up by the likes of China, India and Brazil. These purchases have offered welcome relief to the Russian economy and its military expenditures, softening the bite of Western sanctions (including the recently announced policy of capping prices on Russia’s oil exports).
The attendance of President Putin at its virtual summit in June was a jarring reminder to the West of how its mood of anger and reproach not shared universally; for most governments, ethical concerns about Russia’s violence do not eclipse the strategic value of Moscow’s energy and economic deals (hence why Western aims to blackball Russia on the world stage yields only limited success).
intra-BRICS trade suddenly won significant sway over oil geopolitics through Western-sanctioned Russian crude oil exports being snapped up by the likes of China, India and Brazil
By opting to remove Russia from the international economic system, the process of deglobalisation – hastened by the Covid-19 pandemic – assumed new intensity; with its promise of straining geopolitical tensions even further, BRICS is another symptom of this global trend. The consolidation of the organisation could define two dominant blocks in geopolitics, although many countries will resist this simplified division in preference for the strategic rewards of neutrality.
In which case, the symbiosis between the main economies – the US, China, the EU, but so too emerging ones like Brazil and India – which has been a major determinant of stability in world politics for decades, could falter with competition. Moreover, the deepening rift between G-7 countries and BRICS questions how, for example, cooperative climate action might be possible going forward? It foreshadows a fraught future for multilateralism. But such views are based on the idea that BRICS will decisively shift from an economic club into a coherent political organisation. There is some scepticism over whether BRICS members have the ability to reach a level of cohesion which would permit united political action.
BRICS has little to show for itself apart from the New Development Bank, established to offer an alternative to the World Bank for emerging economies.
A decade ago, a panel at the Wilson Centre strongly agreed that the differences between the group – namely, trajectories of economic growth and ideological principles – far outweighed commonalities. Anti-Westernism alone is an insufficient ingredient to build and sustain cohesion amongst diverse actors. It is also true that since its birth, BRICS has little to show for itself apart from the New Development Bank, established to offer an alternative to the World Bank for emerging economies.
The institutionalisation of BRICS remains therefore weak. Nonetheless, news of its expansive ambitions makes such criticisms now seem tenuous. As BRICS members hunt for a credible alternative to the US-led global order with increasing zeal, the organisation could demonstrate in the coming years that it counts for much more than an empty acronym.
AFP File Photo
BRICS, the Middle East, and the West
With war in Ukraine squeezing and shaping world politics, competition between the West and its rivals gained definition. In this context, BRICS – Brazil, Russia, India, China, and South Africa – has naturally sought to build up the organisation’s membership.
MENA countries have been among those touted as potential members in the near future. The president of the BRICS International Forum announced that he expects Turkey, Egypt and Saudi Arabia to join the group “very soon”. BRICS has caught the interest of other MENA countries who might follow suit; in November came news that Algeria had officially applied to join the organisation. The organisation, which has called up speculation as to whether it might qualify as a new geopolitical bloc, seeks to recruit “node” countries of strategic location and economic power.
If BRICS members wish to present the organisation as a credible alternative to the US-led economic order, it needs to co-opt as much of the world economy as possible. The inclusion of the three countries would represent an important win for BRICS and further address the lop-sided distribution of economic power between the West and the Rest: Saudi Arabia with its vast energy reserves, Turkey through its location and economic growth, and the UAE as a global centre of commerce and finance (the inclusion of key commercial and logistical centres within the group would offer more control over world trade).
The organisation, which has called up speculation as to whether it might qualify as a new geopolitical bloc, seeks to recruit “node” countries of strategic location and economic power.
In particular, bringing in oil-producing states, like Saudi Arabia, into the fold would consolidate BRICS’s control over global oil production itself – whose value in geopolitics has been laid bare this year since Russia invaded Ukraine. From a regional perspective, the incentives for joining BRICS are building and the interest expressed by Saudi Arabia, amongst others, has come as little surprise.
Many in the region likely deem it short-sighted to avoid the potential benefits which BRICS, taut with economic/political power and potential, might afford them; in a world retreating to multipolarity, MENA regimes are united in their desire to exploit and exhaust new opportunities. BRICS membership from a regional perspective, therefore, presents a tantalising prospect.
Despite its vast wealth and intimate security relations with the US, Saudi Arabia seeks to grow interactions with China and other emerging economies, given the demands of its restless economy in transformation. But economic interests are only part of the appeal; strategic considerations of geopolitics play a decisive role too. States like Saudi Arabia are presently reassessing who exactly are and are not their allies.
The cooperation of China and other BRICS members, like Russia and India, represent a welcome antidote for MENA countries to their fussy relations with the West. Indeed, it was symbolic that news of Saudi Arabia’s interest in membership of the BRICS group arrived just ahead of President Biden’s visit to the Middle East in July.
economic interests are only part of the appeal; strategic considerations of geopolitics play a decisive role too. States like Saudi Arabia are presently reassessing who exactly are and are not their allies.
This economic and geopolitical logic is also shared by Turkey and Egypt; however, although the West may regard the accession of countries like Egypt to BRICS as evidence of strategic realignment, some argue that it is more plausible to see it as a natural continuation of foreign policies defined by the principle of balanced international relations. At the same time, suggestions that BRICS represents an attempt to refashion the 1956 Non-Aligned Movement, whose members sought to minimise the Cold War’s interruptions behind a shield of neutrality, ignores its membership’s antipathy to the West.
BRICS seeks to develop and define a credible alternative to the US-led global economy – and particularly the US dollar. With the economic isolation of Russia, MENA regimes have been reminded of the heavy consequences when states fall foul of Washington, and the appeal of an alternative. Western sanctions have stifled many regimes in contemporary history, like those of Iraq, Syria, Libya, and Sudan. A new economic system out of the thumb of the West would enable MENA regimes in order to indulge their strategic whims with less consequence.
Saudi Crown Prince Mohammed bin Salman (R) shaking hands with Chinese President Xi Jinping during a GCC-China Summit in the Saudi capital Riyadh, on December 9, 2022. (Photo by SPA/AFP)
Middle Eastern Realignment in a Multipolar Order?
Moscow’s efforts to marshal diplomatic support for its invasion of Ukraine might seem to undercut claims of geopolitical reshuffle in the region; despite some hesitation, a U.N. resolution condemning Russia in March was supported by Saudi Arabia, the UAE, and Egypt.
But this incidence of the region rhetorically aligning with the West has proved anomalous in 2022, a year which has been defined more by tension than cooperation. This condemnation has not translated into support for Western sanctions. Like much of the non-Western world, MENA states are not moved by and even deeply suspicious of Western efforts to preserve a rule-based order.
High-minded Western words about ideas of democracy and freedom are far less appealing to MENA autocracies than the respectful and predictable indifference of Russia and China; the anti-Westernism which courses through the region is shared by its regimes too, ever indignant at the meddling in and criticism of their internal affairs by Western countries.
In Washington today, there is considerable animus towards Riyadh since it took a collective decision with its OPEC counterparts to raise global oil prices by announcing its largest supply cut in years – coolly rebuffing the pleas by the Biden administration.
The Biden’s administration’s resolve to renew democracy worldwide is a continually raw reminder to MENA leaders of their ideological friction with the West. This reality was encapsulated in recent months in Western fury about Qatar’s hosting of the World Cup (which, ironically, may be regarded as the best World Cup tournament ever after such a dazzling final).
The controversy surrounding OPEC has led to the further perishing of US-Saudi Arabia relations. In Washington today, there is considerable animus towards Riyadh since it took a collective decision with its OPEC counterparts to raise global oil prices by announcing its largest supply cut in years – coolly rebuffing the pleas by the Biden administration. Consequently, there is now a growing and plausible view in the US that Saudi Arabia is no longer an ally given its decision to blunt the punitive action of the West against Russia.
As the shadows of competition are thrown further across the Middle East, policy makers on both sides of the geopolitical division are carefully observing the initial reactions of regional regimes when taking stock of their friends and adversaries “It’s clear that OPEC+ is aligning with Russia” retorted a wounded White House when the decision was taken in October, directing the criticism at its long-standing ally in the Gulf.
Suggestions that Saudi Arabia may be sidling up to Russia on a political footing has been treated with scorn by commentators, whose main criticism is that this position is too binary. “The Saudis weren’t thinking about Ukraine – like many people in Asia and Africa, they don’t think in absolute terms of being pro- or anti-Russian,” wrote Hussein Ibish, senior resident scholar at the Arab Gulf States Institute in Washington.
The desire to engage more with organisations like BRICS, so the argument proceeds, does not amount to a rejection of the West but represents the desire of Riyadh (and Cairo, Ankara, and Algiers) to strategically plant its feet on both sides of the geopolitical divide. By doing so, MENA states seek to maximise the benefits of geopolitical competition, minimise its consequences, and evade its constraints.
There is a popular perception that every time the US does not get its way in the Middle East, Washington vainly misreads this as a snub; that the US fails to understand that decisions and policies can occur with little consideration of it. And there is some truth to this view. However, the divergences between the US and MENA states on vital issues in US foreign policy are stacking up.
Whatever the intentions, the action of MENA countries in OPEC+ is not neutral; on the contrary, they have adopted a policy supportive of Russia on the defining geopolitical issue of 2022
Whatever the intentions, the action of MENA countries in OPEC+ is not neutral; on the contrary, they have adopted a policy supportive of Russia on the defining geopolitical issue of 2022. And on other key divisions of contemporary geopolitics – like sovereignty in Taiwan – Arab governments have embraced Beijing’s position. Now with tacit support for Russia through OPEC in the Gulf, in addition to support for China’s repression in Xinjiang and Hong Kong, the Middle East is sharply opposed to the US and wider West on the essential geopolitical issues of today and tomorrow.
Only this month, President Xi was honoured by Arab leaders in Saudi Arabia, serving as further evidence to some that MENA states are eyeing alternatives to the “liberal world order,” regarding China’s authoritarianism as a more natural ally given their own politics. Saudi officials insisted that the generous reception of Xi is perfectly suitable for a state as powerful as China; yet its timing brimmed with geopolitical symbolism and was credibly seen as a rebuke to the US given its contrast with the wintry welcome which met Biden in July.
Sergio LIMA / AFP(L to R) South Africa’s President Cyril Ramaphosa, India’s Prime Minister Narendra Modi, China’s President Xi Jinping, Russia’s President Vladimir Putin, Brazil’s President Jair Bolsonaro at the 11th BRICS Summit, Brasilia, Brazil, November 14, 2019.
New Friends and Foes
A feeling of change hangs over MENA geopolitics as wider international dynamics evolve. Many commentators and scholars have been rightly dismissing simplistic readings of this change which talk of the emergence of well-defined boundaries and blocs; they remind audiences of the banal but important fact that geopolitics resists crude simplifications (whose consequences in policy making were painfully present and predictable in the Cold War of the last century).
there is a growing and tangible dislocation between the region and the West.
Despite this wisdom, there is also a risk that such commentary becomes too focused on teasing out nuance while failing to see the woods from the trees. Whether shown by news of BRICS pulling new membership from the Middle East, or by Gulf leaders humiliating President Biden over oil production, there is a growing and tangible dislocation between the region and the West.
Talk of neutrality and the need to avoid simplifications may prevail for the time being in policy chatter, but the sense of striking geopolitical shift – even realignment – in the Middle East is gathering credibility. For as the geopolitical crises of the 21st century continue to fall thick and fast, the West and their supposed allies from the region are likely to repeatedly find themselves on opposing sides of the geopolitical divide.
According to the following, people who migrated to European countries are . . . like all those Turkish people who are worse off than those who stayed at home. Let us see why and how.
Many Turkish people who migrated to European countries are worse off than those who stayed at home
Many people migrate to another country to earn a decent income and to attain a better standard of living. But my recent research shows that across all destinations and generations studied, many migrants from Turkey to European countries are financially worse off than those who stayed at home.
Even if there are some non-monetary benefits of staying in the destination country, such as living in a more orderly environment, this raises fundamental questions. Primarily, why are 79% of the first-generation men who contributed to the growth of Europe by taking on some of the dirtiest, riskiest manual jobs – like working in asbestos processing and sewage canals – still living in income poverty? There is a strong indication that the European labour markets and welfare states are failing migrants and their descendants.
In my recent book, Poverty and International Migration, I examined the poverty status of three generations of migrants from Turkey to multiple European countries, including Austria, Belgium, Denmark, France, Germany, Sweden and the Netherlands. I compared them with the “returnees” who moved back to Turkey and the “stayers” who have never left the country.
The study covers the period from early 1960s to the time of their interview (2010-2012), and draws on a sample of 5,980 adults within 1,992 families. The sample was composed of living male ancestors (those who went first were typically men), their children and grandchildren.
For my research, the poverty line was set at 60% of the median disposable household income (adjusted for household size) for every country studied. Those who fall below the country threshold are defined as the income poor.
Data for this research is drawn from the 2000 Families Survey which I conducted with academics based in the UK, Germany and the Netherlands. The survey generated what is believed to be the world’s largest database on labour migration to Europe through locating the male ancestors who moved to Europe from five high migration regions in Turkey during the guest-worker years of 1960-1974 and their counterparts who did not migrate at the time.
It charts the family members who were living in various European countries up to the fourth generation, and those that stayed behind in Turkey. The period corresponds to a time when labourers from Turkey were invited through bi-lateral agreements between states to contribute to the building of western and northern Europe.
The results presented in my book show that four-fifths (79%) of the first-generation men who came to Europe as guest-workers and ended up settling there lived below an income poverty line, compared with a third (33%) of those that had stayed in the home country. By the third generation, around half (49%) of those living in Europe were still poor, compared with just over a quarter (27%) of those who remained behind.
Migrants from three family generations residing in countries renowned for the generosity of their welfare states were among the most impoverished. Some of the highest poverty rates were observed in Belgium, Sweden and Denmark.
For example, across all three generations of migrants settled in Sweden, 60% were in income poverty despite an employment rate of 61%. This was the highest level of employment observed for migrants in all the countries studied. Migrants in Sweden were also, on average, more educated than those living in other European destinations.
My findings also reveal that while more than a third (37%) of “stayers” from the third generation went on to complete higher education. This applied to less than a quarter (23%) of the third generation migrants spread across European countries.
Turkish guest workers in a Berlin park in the 1980s. DPA/Alamy
Returnees did well
Having a university education turned out not to improve the latter’s chances of escaping poverty as much as it did for the family members who had not left home. The “returnees” to Turkey were, on the other hand, found to fare much better than those living in Europe and on a par with, if not better than, the “stayers”.
Less than a quarter of first- and third-generation returnees (23% and 24% respectively) experienced income poverty and 43% from the third generation attained a higher education qualification. The money they earned abroad along with their educational qualifications seemed to buy them more economic advantage in Turkey than in the destination country.
The results of the research should not be taken to mean that international migration is economically a bad decision as we still do not know how impoverished these people were prior to migration. First-generation migrants are anecdotally known to be poorer at the time of migration than those who decided not to migrate during guest-worker years, and are likely to have made some economic gains from their move. The returnees’ improved situation does lend support to this.
Nor should the findings lead to the suggestion that if migrants do not earn enough in their new home country, they should go back. Early findings from another piece of research I am currently undertaking suggests that while income poverty considerably reduces migrants’ life satisfaction, there are added non-monetary benefits of migration to a new destination. The exact nature of these benefits remains unknown but it is likely to do, for example, with living in a better organised environment that makes everyday life easier.
However, we still left with the question of why migrants are being left in such poverty. Coupled with the findings from another recent study demonstrating that more than half of Europeans do not welcome non-EU migrants from economically poorer countries, evidence starts to suggest an undercurrent of systemic racism may be acting as a cause.
If migrants were welcome, one would expect destination countries with far more developed welfare states than Turkey to put in place measures to protect guest workers against the risk of poverty in old age, or prevent their children and grandchildren from falling so far behind their counterparts in Turkey in accessing higher education.
They would not let them settle for lower returns on their educational qualifications in more regulated labour markets. It’s also unlikely we would have observed some of the highest poverty rates in countries with generous welfare states such as Sweden – top ranked for its anti-discrimination legislation, based on equality of opportunity.
Overall, the picture for “unwanted” migrants appears to be rather bleak. Unless major systemic changes are made, substantial improvement to their prospects are unlikely.
In today’s world, the riskiest investments are in the Middle East and Africa, whilst Big Oil’s greenwashing campaign is in full swing, as described in RGnB.org. Aren’t Big Oils and Hydrocarbon economies of the MENA in cahoots?
The above Image is of Canva
Big Oil’s greenwashing campaign
A released new memo and documents last week showed how the fossil fuel industry engages in “greenwashing” to obscure its massive long-term investments in fossil fuels and failure to reduce emissions meaningfully, writes Dan Bacher.
The new documents are part of a Committee’s ongoing investigation into the “fossil fuel industry’s role in spreading climate disinformation and preventing action on climate change,” according to a press statement.
“Even though Big Oil CEOs admitted to my Committee that their products are causing a climate emergency, today’s documents reveal that the industry has no real plans to clean up its act and is barreling ahead with plans to pump more dirty fuels for decades to come,” said Chairwoman Maloney.
Syria, Yemen, and Libya were on the list of the highest-risk countries in the third quarter of 2022
The Middle East and Africa (MEA) have been identified as the region with the highest risk offerings, with a score of 54 out of 100, for investors driven by “social unrest, food insecurity, rising debt, and inflation,” according to a leading data and analytics company, GlobalData.
Syria, Yemen, and Libya were on the list of the highest-risk countries in the third quarter of 2022.
The research showed that the Americas region’s risk score was 47.7 out of 100 during the third quarter, making it the second-highest area with investment risk, followed by the Asia-Pacific region at 41 and Europe at 33.4.
“While rising oil prices have increased the revenue of major oil producers and exporters in the MEA, high fuel costs have adversely impacted low-income nations – especially given their heavy dependence on staple food imports from Russia and Ukraine,” GlobalData economic research analyst Puja Tiwari said.
Tiwari added: “Humanitarian crisis across Lebanon, Syria, Iraq, Libya, and Yemen, along with skyrocketing poverty, is impacting the MEA region. Due to curtailment of wheat exports from two main producers in the world (especially wheat from Russia and Ukraine), many countries across the MEA are already facing a major food crisis.”
The research also showed that global risk rose from 44 and 44.9 out of 100 in the second and third quarters of 2022, respectively.
Tiwari said the major causes of global risk include rising costs due to the onset of the Russia-Ukraine conflict and sanctions on Russia, followed by Europe’s energy crisis, China’s slowdown of growth, aggressive interest rate hikes by central banks, currency depreciation and stock market crashes.
“While governments of major economies are undertaking various fiscal measures to deal with the rising prices, this will weigh on already strained government finances. Moreover, with several economies tightening monetary policy, the increased borrowing costs will remain another challenge moving into Q4 and beyond,” Tiwari said.
A global economic turmoil calls for a modernised financial Architecture to address the needs of the most vulnerable countries if we all intend to leave something to our respective kids.
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.
First, a stronger U.S. dollar increases the cost of servicing U.S. dollar–denominated debt as well as of importing food and energy—and these imports are estimated to have increased by $9 billion in low-income countries this year. International investors have also pulled $70 billion from emerging market bond funds in 2022, making finance more costly and harder to come by. At the same time, China is tightening its lending to Africa as it weathers its own domestic economic challenges. As a result, analysts are warning of a “historic cascade of defaults” by developing countries.
The UN Conference on Trade and Development has warned that efforts to calm inflation in the form of fiscal tightening, particularly in the United States, could precipitate a recession in developing countries on a scale greater than the global financial crisis and the coronavirus pandemic, the latter of which saw global GDP growth fall by 6.3 percentage points. Many of the impacts will fall heaviest on Africa’s low-income countries, 60 percent of which are in or at high risk of debt distress.
AN ARCHITECTURE FIT FOR A BYGONE ERA
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.
NOTES
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/.
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