Wednesday, September 16, 2009

Global Cooperation Ahead of COP 15

The financial and climate change crises are spurring unprecedented levels of global cooperation. In less than one week leaders of the G20 will be meeting in Pittsburgh, and in less than three months leaders will convene in Copenhagen for COP 15, the last hope to manage climate change.

An international group of environmental scientists and economists warn that under current governing models the number and scale of human-caused crises are "outrunning our ability to deal with them." The researchers indicate that, "The core of the problem is inducing cooperation in situations where individuals and nations will collectively gain if all cooperate, but each faces the temptation to free-ride on the cooperation of others."

At next week's meeting in Pittsburgh, G20 finance ministers are expected to report on climate financing issues. The G8 has already set ambitious targets for climate protection and pledged billions of dollars in aid for developing countries.

World leaders seem to be getting the message. At the conference in L'Aquila earlier this year, instead of fat black limousines, participants were ferried about in small white electric cars. "Never before have the choices we made as nations working together produced such co-ordinated action to sustain and create jobs. So no one should underestimate the progress made by the G20 working together," the British PM Gordon Brown said.

The Major Economies Forum (MEF), which included the G8 nations, the G-5 nations, plus Australia, Indonesia and South Korea all agreed that global temperatures should not rise by more than an average of 2 degrees above pre-industrial levels. By agreeing to cut their emissions by 80% or more by 2050, wealthier nations are showing signs of much needed leadership.

The IMF is also playing a stabilizing role in the global economy. The IMF understands that although the crisis orginated in developed nations, it is having the most visible impact on the emerging market countries. To help address this disproportional impact, the IMF’s Executive Board approved a package of measures that will sharply increase the loan resources available to low-income countries. Up to $17 billion in zero or low interest loans will be made available through 2014.

“This is an unprecedented scaling up of IMF support for the poorest countries, in sub-Saharan Africa and all over the world,” said IMF Managing Director Dominique Strauss-Kahn in a statement accompanying the July 29 announcement. “We are responding with a historic set of actions in terms of support for the world’s poor. The new resources and new means of delivering them should help prevent millions of people from falling into poverty. All this represents a historic effort by the Fund to help the world’s poor.” Strauss-Kahn said. He added that there would be greater emphasis in Fund-supported programs on poverty reduction and growth objectives across all its new lending instruments, including targets to safeguard social and other priority spending.

The leaders of the G20 are laying the framework for international cooperation. Angela Merkel told the German parliament, "[like an] overarching roof," the G20 will be the future format for determining the world economic order.

On September 15 in a speech at the Brookings Institution, Fed Chairman Ben Bernanke offered his thanks to world leaders for their cooperation. According to Bernanke, the high level of global cooperation was one of the landmarks of the financial crisis.

In much of the world, these efforts appear to be paying off as we continue to see positive economic data and ample liquidity in the financial system. Last week the global equity markets were buoyed by news that G20 ministers have pledged to retain policies targeted at easing the recession.

As we count down to COP 15, we are seeing a flury of activity. However ongoing disagreement between developed nations and emerging countries is slowing progress. Due to concerns about the pace of negotiations, European foreign ministers recently announced they were increasing their diplomatic efforts within the EU and abroad.

“Time is now short and the need is urgent,” British Foreign Minister David Miliband said earlier this month at Copenhagen University. His Danish counterpart, Per Stig Moeller, said the EU “must also do all it can to engage key players.”

As Gordon Brown said, at next week's G20 Summit in Pittsburgh concerted international co-operation is again required." To this end the British PM has proposed a new global compact "based on a strong political commitment of mutual co-operation and set in place a new era of global economic management."

Timely international efforts have helped to manage the financial crises. The same urgent focus needs to be brought to bear to reach an agreement on a global climate deal.

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Related Articles:
Climate Change Optimism
Curbing Bankers Bonuses and Climate Change
G20 and Developing World Disagree on Climate Change
G20 Lays the Foundation for a Better World
G20 Protestors Dilute Green Message
G8's More Aggressive GHG Targets
COP 15 Implications for Business
COP 15 Timetable
United Nations Climate Change Conference
IMF Reforms

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