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The historic decision on loss and damage (L&D) at the 2022 UN Climate Change Conference (COP27) calls for a new fund and funding arrangements focused on addressing L&D. It also tasks a Transitional Committee with preparing recommendations on the new fund and funding arrangements for adoption at the 2023 UN Climate Change Conference (COP28) in Dubai. IPI President Zeid Ra’ad Al Hussein describes this decision made at COP27 in Sharm el-Sheikh as one of the most significant developments since the 2015 Paris Agreement.
IPI together with Oxford Climate Policy cohosted a policy forum on June 30th entitled “Innovative Finance for Loss and Damage: Capitalizing the New Fund.” During the event, participants discussed deficiencies and shortfalls in L&D funding and underscored innovative ways to capitalize on the new fund. Panelists also emphasized the need to take into account the global economic and political context, including the effects of COVID-19 and other crises.
With roughly six months left until COP28, the Transitional Committee will need to work efficiently to achieve its mandate, which includes determining the fund’s financial inputs or sources of capitalization. A new fund for addressing loss and damage will almost certainly require capitalization through a combination of old and new paths. Based on trends in official development assistance, contributions from developed country governments, though important, are unlikely to be sufficient to capitalize a new fund at the scale needed. Thus, it will likely be necessary to include new or “innovative” sources of finance. One idea is to combine conventional (public) contributions from donor countries and contributions from private donors using a specially designed tax, as countries have done with air travel to fund Unitaid. Such a tax could involve levies on air travel, bunker fuel, fossil-fuel extraction, greenhouse-gas emissions, or financial transactions. Another idea is to “frontload” contributions through the issuance of bonds, as the International Finance Facility for Immunisation (IFFIm) has done with its “vaccine bonds.”
Discussants asserted that multiple solutions are needed and presented several innovative options. IPI Research Fellow Michael Franczak noted the failure of developed countries to meet Official Development Assistance (ODA) commitments and introduced the option of a shipping levy. According to World Bank findings, putting a price on carbon could raise 40 to 60 billion dollars from the shipping industry between 2025 and 2050. While 22 countries have declared support for the principle of a levy on carbon emissions, many developing countries have been wary of tax burden transfers. Franczak noted the need for common but differentiated responsibility (CBDR) to effectively operationalize a carbon tax levy.
“The adverse impacts that we are already experiencing are both attributed and associated with changes in global systems,” stated Koko Warner Director of the Global Data Institute, International Organization for Migration. In many cases these impacts are irreversible and deeply challenging for our financial systems, we need to think about flexibility in the real economy. Long recognized as an authority on loss and damage, Managing Director of Oxford Climate Policy and Director of the European Capacity Building Initiative Benito Müller discussed his proposal for international climate solidarity levies and levy on air travel to finance the Loss and Damage Fund. Chris Canavan put forward the idea of using bonds or frontloading to make the Loss and Damage Fund’s financing immediately available. Assistant Professor of Environmental Studies at Colby College Stacy-Ann Robinson affirmed that the conversation about innovative finance for loss and damage is about livelihood: “People matter and we need to center equity and justice.”
The panel contextualized for the New York audience current discussions on innovative finance for L&D, including within the UN Framework Convention on Climate Change (UNFCCC), in Paris at the Summit for a New Global Financial Pact, and at the International Maritime Organization, as well as best practices and examples from existing entities like Unitaid and IFFIm.
Opening Remarks:
Zeid Ra’ad Al Hussein, President and CEO, International Peace Institute
Speakers:
Michael Franczak, Research Fellow, International Peace Institute
Koko Warner, Director, Global Data Institute, International Organization for Migration
Benito Müller, Managing Director of Oxford Climate Policy and Director of the European Capacity Building Initiative
Chris Canavan, Senior Advisor, Cygnum Capital
Stacy-Ann Robinson, Assistant Professor of Environmental Studies, Colby College
Moderator:
Zeid Ra’ad Al-Hussein, President and Chief Executive Officer, International Peace Institute
Le 25 juin dernier se sont déroulées au Guatemala les élections présidentielles, législatives, municipales et celles du Parlement centraméricain. A la surprise générale, la victoire écrasante de partis de droite n’a pas eu lieu, et l’arrivée au second tour d’un candidat de centre gauche, Bernardo Arévalo, présente une lueur d’espoir pour un peuple qui est las de ses institutions politiques et d’une corruption endémique. Le grand gagnant de ce premier tour n’est autre que le vote nul, représentant plus de 17 % des suffrages exprimés, après l’éviction de trois des candidats qui ont appelé leurs partisans à ne voter pour aucun des candidats en lice ; ainsi que les votes blancs qui s’élèvent à 7%. L’abstention s’est établie elle à 40% (une proportion qui s’inscrit dans l’histoire d’un pays qui connaît des taux d’abstention massifs). Sandra Torres, placée en tête des sondages durant la campagne, a obtenu 15,7% des voix, devant Bernardo Arévalo, la surprise de premier tour, qui a recueilli 12% des suffrages exprimés (les sondages le pointaient en 8e position avec 3% d’intentions de vote). Manuel Conde, le candidat du parti gouvernemental sortant (Vamos, conservateur), s’est finalement hissé à la 3e place avec 7,8% de voix.
Pour la troisième fois, Sandra Torres, ancienne épouse de l’ancien président Alvaro Colom (2008-2012), sera donc au deuxième tour. S’auto-proclamant de « centre gauche », elle tente de plus en plus de capter les votes conservateurs en accentuant notamment ses propositions sécuritaires et en prenant pour modèle Nayib Bukele, le président d’El Salvador, dont la politique de répression des gangs fait écho dans les pays d’Amérique latine. Opposée au retour de la Cicig (Commission internationale contre l’impunité au Guatemala, institution onusienne qui a démantelé plusieurs réseaux de corruption et qui a dû cesser ses activités en 2019 sur ordre du président de l’époque), Sandra Torres a été détenue en 2019 à la suite d’un « financement électoral illégal de son parti et association illicite ». Elle a passé 3 mois en prison, puis a été assignée à résidence, pour ensuite être acquittée en 2022. Sandra Torres, malgré sa popularité dans les milieux ruraux et chez les femmes, concentre une grande proportion de « votes de rejet » (« antivoto »), correspondant au fait qu’un grand nombre de citoyens préféreraient allouer leur vote pour n’importe quel autre candidat plutôt qu’elle. Son programme se veut de centre-gauche, incluant le « retour de programmes sociaux » mis en œuvre sous la présidence de son ancien époux Alvaro Colom, l’octroi d’un « demi-salaire minimum » aux mères célibataires, la suppression de la TVA sur les paniers des ménages, ainsi que des projets d’accords bilatéraux avec le gouvernement de Nayib Bukele à visée sécuritaire. Selon la politologue Gabriela Carrera, si Torres venait à gagner, il s’agirait de la continuité du gouvernement d’Alejandro Giammattei, avec la nuance de politiques clientélistes plus liées aux aides sociales.
Arévalo est le fils de l’ancien président Juan José Arévalo, premier président élu démocratiquement après la « révolution d’octobre » de 1944. Son parti, Semillas, (« Graines », centre-gauche) se présente comme social-démocrate et progressiste (malgré le fait qu’Arévalo se positionne contre le mariage pour tous et l’avortement). Il est né à la suite des révoltes de 2015 (contre l’ancien président Pérez Molina jugé pour corruption), pour s’ériger en tant que groupe d’analystes sur ces événements. Le Guatemala étant un pays où dominent les forces conservatrices, il s’agit là d’une vraie surprise qu’un parti de gauche parvienne au deuxième tour. Pourtant, pour certains experts, il ne s’agit pas tant d’un vote en faveur du parti Semillas, mais plus d’un vote de contestation contre un système politique épuisé et qui ne répond plus aux attentes des Guatémaltèques, comme le prouvent les chiffres de l’abstention, des votes nuls, et blancs. Arévalo, pour sa part, est largement soutenu par les jeunes et les mouvements étudiants, notamment au sein des zones urbaines. Son programme se définit avec 10 axes de travail, parmi lesquels se trouvent des politiques de développement social, l’amélioration de l’infrastructure économique, des politiques sécuritaires, l’amélioration de l’assistance et de la sécurité sociales, et des politiques environnementales, entre autres. Il s’est publiquement prononcé contre la criminalisation de journalistes, juges et procureurs qui ont été contraints de s’exiler sous le gouvernement de Giammattei. Il accuse également les derniers gouvernements d’avoir « réduit l’espace démocratique et d’avoir instauré des mesures autoritaires au sein du pays », et déplore le départ de la Cicig. Il déclare vouloir engager des politiques visant la restauration de garanties démocratiques, notamment au travers de la création d’un Système national anticorruption.
Pour le politologue Renzo Rosales, ces résultats sont la preuve qu’il existe une crise de la représentation démocratique au Guatemala. La désaffection des candidats est élevée (notamment envers Sandra Torres), ainsi que celle concernant le système politique actuel. Selon le chercheur, il sera difficile de gouverner pour les deux candidats. Arévalo propose un programme qui semble aller à contre-courant de ce qu’a pu vivre le Guatemala jusqu’à présent, du fait de ses propositions à caractère social et de son orientation à gauche. Torres, quant à elle, aurait plus d’appuis au Congrès et son programme est plus « ductile et se conforme aux attentes [du marché] ». Le caractère inattendu des résultats provient du fait que plusieurs candidats qui partaient favoris ont été exclus par le Tribunal suprême électoral parce que « perçus comme antisystème » (Thelma Cabrera et Carlos Pineda notamment). Le « Pacte de corrompus », un regroupement d’oligarques, d’hommes d’affaires, parfois même de trafiquants de drogues est considéré comme une sorte de « dictature de la mafia corporatiste » qui tient les rênes des réseaux économiques et politiques du pays. Ces élections étaient, selon Renzo Rosales, l’occasion pour ce microcosme élitiste de venir étendre son pouvoir au sein des municipalités, du Congrès et du palais présidentiel, en faisant fi du système de partis politiques, puisque 24 des 30 partis inscrits au début de la campagne électorale répondaient aux attentes du « Pacte des corrompus ».
Enfin, s’agissant des élections législatives, les résultats des votes sont éclatés entre plusieurs partis : le camp présidentiel « Vamos » a obtenu le plus grand nombre de sièges (39 sur 160 au total), le parti « UNE » de Sandra Torres, 28, « Semillas », 23. Aucune formation ne disposera donc d’une majorité. Deux autres partis ont obtenu un résultat supérieur à 10 sièges : « Cabal » (parti de l’ex-candidat de centre-droit Edmond Mulet avec 18) et « Viva » (Armando Castillo et Édgar Grisolia avec 11). Ces résultats font état d’une grande fracture et d’une fragmentation politiques, et ne faciliteront pas la tâche du ou de la prochain.e locataire du palais présidentiel, pour qui le premier chantier doit impérativement être la reconstruction du dialogue démocratique national.
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Sources :
https://www.bbc.com/mundo/noticias-america-latina-66016616
After Russia’s attack on Ukraine, an unprecedented series of sanctions was imposed on the aggressor. For example, around half of the Russian Central Bank’s foreign exchange reserves were frozen and Russian banks were excluded from the global banking communication system SWIFT. Many experts warned that the use of financial sanctions as a weapon would have a negative impact on the position of Western currencies in the international monetary system and lead to its rapid regionalisation and fragmentation. However, the latest figures published by the European Central Bank (ECB) in this year’s report on the international role of the euro show that nothing of the sort is happening. This is good news for Europe, because the impact of sanctions – including on the countries that impose them – is closely being watched by other potential aggressors, including China. However, the role of the single currency in the international financial system needs more attention.
The creation of the common currency was not geopolitically motivated, but mainly by the desire to eliminate exchange rate fluctuations in an increasingly integrated single market. Currently, more than 500 million people live in countries where the euro or currencies pegged to it are officially in circulation. The single currency is the second most important currency in the international monetary system after the US dollar. But what are the benefits of further strengthening its international role? What challenges stand in its way? Answers to these questions are particularly important right now. For the growing geopolitical rivalry between China and the United States and the gradual decline of the West’s share in the global economy raise the question of the euro’s role in a changing but still dollar-dominated international financial system.
Stable currency with structural problemsIn principle, there is a consensus that a stronger international role for the euro would benefit European economies. It would lower the cost of raising capital, have a stabilising effect on the European debt market, reduce exchange rate risks, strengthen the autonomy of monetary policy and have a positive impact on the political standing of the European Union (EU). In the first decade of its existence, the euro also came close to dethroning the dollar, but the crises in the eurozone abruptly interrupted this trend. Since then, the euro has occupied a stable second place in the international monetary system after the dollar.
The problems in strengthening the international role of the euro reflect the challenges of integrating the EU politically and economically as such. Central to this is the diversity of the member states’ economies, many of which face enormous structural problems. Moreover, there is no single state behind the single currency, and it is hard to imagine that one could emerge. The financial markets, which are seen as key to the widespread use of a currency, are fragmented in Europe and lack transparency for international investors. The Capital Markets Union project is making relatively slow progress.
Despite a considerable increase in the issuance of common debt instruments, the EU does not have a safe asset that is comparable to what the United States has. Only Germany, the Netherlands and Luxembourg have the highest credit ratings. The second- and third-largest countries in the Eurozone – France and Italy – have serious structural problems and difficulties in stabilising their public debt. In addition, Europe is dependent on the US financial infrastructure, for example in payment card systems. Although the political–military alliance with the United States appears stronger than ever today, it is unclear how the political situation there will develop in the future. Donald Trump’s presidency has shown that Europe should develop its own independent financial infrastructure. However, this is a very complex and time-consuming process that requires close cooperation between governments, financial institutions, regulators and technology providers.
A global euro: Overcoming national hurdlesFor many years, efforts to use the euro internationally were also hampered by conflicting interests among member states. Some member states, including Germany, took the view that the internationalisation of the currency should be the result of market forces and not a deliberate action taken by European institutions. However, strengthening the international position of the euro does not require a meta-agreement between member states. What is needed is more of a commitment from them to solve the structural problems of their own economies and more ownership of important EU projects – Banking Union, Capital Markets Union, digitalisation and green transformation – all of which are progressing too slowly. The digitalisation of the economy requires comprehensive measures, from support for the development of European payment systems to better informing citizens about the opportunities and risks associated with digital investments, for example. A key challenge will be to bring the ECB-led Digital Euro project to the implementation phase. This project has the potential to develop a much-needed payment infrastructure in Europe.
Even if security policy issues, the EU enlargement process and institutional issues currently dominate the European agenda, it should not be overlooked that the basis of European integration is the economy. The EU internal market exists in symbiosis with the common euro currency. Both projects are far from complete and require much more political attention and thinking beyond partisan or national interests. However, this will be difficult in the near future, as the EU and member states are facing a series of elections at the European, national and regional levels.
Europe is committed to revitalising its relations with Latin America and the Caribbean. This is evidenced by the numerous high-level visits from Germany and the EU to Latin American countries since the beginning of the year. In early June, the European Commission presented a “new agenda” for exchange with the region, and last month the German Bundestag’s SPD parliamentary group released a position paper on the ways and reasons to strengthen the partnership. Slated to take place in July, the upcoming summit between the EU and the Community of Latin American and Caribbean States (CELAC) is expected to give new impetus to bi-regional relations. However, in order for such expressions of interest to be translated into a substantive reboot of the relationship, jointly developed initiatives will be needed. Such endeavours will need to account for and address changes in the triangular relationship between democracy, sustainable development and global governance.