Dozens of heads of state, along with leaders from business, multilateral institutions and civil society are set to gather in Paris Thursday to discuss ways to rehaul the global financial system, as climate change inflicts ever harsher consequences especially on debt-strapped developing countries.
The two-day Summit for a New Global Financial Pact is the latest in a raft of ambitious meetings French President Emmanuel Macron has hosted over the years with mixed results.
The goal of these latest talks, France’s presidency says, is to lay the groundwork for a financial system responsive to some of today’s most daunting challenges: from fighting the fallout of rising greenhouse emissions and inequality to protecting biodiversity. Key to realizing them is giving poorer, frontline nations the funds to do so.
In a statement published Wednesday in France's Le Monde newspaper, President Biden joined 11 other heads of state, including Macron, in calling for a "just and inclusive" transition to help the most vulnerable countries address development needs and fight poverty and climate change.
"We are convinced that poverty reduction and the protection of the planet are converging objectives," the leaders wrote, calling among other things for $100 million in voluntary funds, faster debt relief and more multilateral and sustainable financing for the most vulnerable countries.
“Fighting poverty and acting for the climate and biodiversity: we do not have to choose,” Macron said in a recent tweet that called for building a “fair transition.”
“African countries and the Global South more broadly are having to service debt obligations, increase their adaptive capacity and suffer climate loss and damage simultaneously,” said Maria Nkhonjera, senior program officer for the African Climate Foundation, an African-based strategic grant-maker. “It’s about creating a financial system that’s fair and responsive to their needs.”
Those meeting in Paris include African leaders, Brazil’s president, Lula da Silva and China’s premier Li Qiang. European Commission chief Ursula von der Leyen is expected at the talks, along with U.S. Treasury Secretary Janet Yellen.
“The idea is not to have a clear initiative out of this or a clear outcome, but really to steer a process that in the coming months through other conferences,” said Simone Tagliapietra, senior fellow at Brussels-based economic think tank Bruegel. “The only way to tackle this problem is through collaboration.”
Still, of the 50 heads of state due to attend, very few hail from the richest, most powerful nations. Only two, host Macron and German Chancellor Olaf Scholz, represent G7 countries.
The Paris meeting “seems to be big on lofty promises and light on actual commitments,” wrote development media outlet Devex.
Strong steering needed
Tagliapietra agrees the low turnout of western leaders could be a handicap.
"You need strong political steering” to tackle the summit’s ambitious goals, he said, “and not having all the leaders in the room might weaken this effort.”
Still, he added, “it might still be a useful summit to steer a process that could lead to important decisions later on.”
A group of developing countries led by Barbados’ prime minister, Mia Mottley, has set out a set of objectives in changing the way rich countries finance poorer ones on the frontlines of climate change — including meeting promises they made but never kept.
Among those set out by the group, known as the Bridgetown Initiative: a 2009 agreement for developed countries to mobilize $100 billion yearly in climate financing, and finding new ways for the World Bank and International Monetary Fund to increase loans to developing countries and support private investments in green energy.
“What we are seeing is that loans and development aid are simply being repackaged as climate finance,” says Nkhonjera of the African Climate Foundation. “So it’s not about a relocation of funds from one area to another, but about pumping more funds into the system.”
Host France is additionally pushing for debt restructuring for especially strapped nations, starting with Zambia, and for slapping a carbon emissions tax on the shipping industry.
The International Monetary Fund has said a debt agreement between Zambia and its creditors could be achieved within days, Reuters reports.
The summit’s success will be measured “by the financial flows the Global North is able to mobilize for the Global South when it comes to climate change, adaptation and mitigation,” Bruegel’s Tagliapietra said.
Several non-governmental groups, including international charity Oxfam, have called on rich nations for even bigger commitments.
“Countries from the South deserve better than breadcrumbs and debt,” the NGOs said in a statement, which calls for writing off debts of the most vulnerable countries, taxing the biggest and richest polluters and fighting tax evasion and illicit financial flows.
Oxfam, for one, estimates that developing countries need trillions of dollars before 2030 to cope with climate change and meet their sustainable development goals.
China
Backdropping their demands are massive debts that many developing countries are struggling to repay. China has been especially singled out for its reluctance to forgive loans — with some exceptions — and its lack of transparency on its lending terms and sums.
But critics say Western countries have also fallen short.
“Broken promises, missed opportunities and a failure to see the bigger picture; that’s the story of the west’s approach to developing nations in recent years,” Larry Elliott, The Guardian’s economics editor, wrote in an opinion for the newspaper.
If the West wants to offer an alternative to Chinese influence, especially in Africa “it needs to sharpen up its act fast,” he added.
Still, Bruegel analyst Tagliapietra counts among others in saying China’s presence at the Paris summit is a plus.
“Not having China in the room would be missing an important part of the debate,” he said, noting the recent efforts by Washington and Beijing to stabilize ties as another positive backdrop.
“Having a constructive approach with the Chinese is what’s needed at the end of the day,” he added, “if we are to achieve the sustainable development agenda.”
