How to encourage the most indebted countries to invest in favor of the climate? By creating, no more and no less, a “new global financial pact”. This is in any case the objective of the summit to be held in Paris from June 22 to 23. For the occasion, Emmanuel Macron invited more than a hundred Heads of State and Government, including Lula, President of Brazil, Olaf Scholz, German Chancellor, or Azali Assoumani, President of the Comoros and of the African Union. Several dozen private partners and international organizations have also announced their future presence at the summit.
The French president had announced this project last November, at the end of the last COP27 in Sharm el-Sheikh, which left a taste of unfinished business with environmentalists. Originally, it was supposed to concretize the agreement on the climate fund reached in the last moments of the summit in Egypt, a financing mechanism intended to allow the compensation by the rich countries of the damage caused by global warming in the poor States. The current ambition is more broadly focused on an overhaul of the global financial institutions (IMF and World Bank), in order to support over-indebted countries which cannot invest in the “green” transition of their activities.
But, by the very admission of the presidency, France alone “does not have the capacity to decide” and wants to serve more as a “platform”. The purpose of the summit is to provide “dynamism, political momentum” on sometimes very technical subjects.
“Bridgetown Initiative”
If the summit is co-organized with India, which chairs the G20 until the end of November 2023, it is the small island state of Barbados which will play the role of spokesperson for the countries of the South. These regions are on the front line facing the consequences of climate change and rising sea levels, which could reach more than one meter higher by 2100.
The Prime Minister of the Caribbean island, Mia Mottley, had already mentioned the “Bridgetown initiative” during COP27. This plan denounces the high borrowing rates to which developing States must subscribe, which can reach 20%, and which prevent, according to the leader of Barbados, from investing the sums necessary to limit global warming. To borrow at lower rates, it thus proposes greater mobilization of SDRs (Special Drawing Rights), the equivalent of an international reserve of money managed by the IMF. It was by using these SDRs that in 2021, the organization took out the checkbook in the face of the consequences of the Covid and injected 650 billion dollars into the world economy.
To find means of financing, several avenues are studied. Attention is mainly focused on the measure of taxation of carbon emissions from maritime transport. “The needs are so enormous”, that we “need new resources”, underlined an adviser to Emmanuel Macron. Worn for ten years by the Marshall Islands and the Solomon Islands, this new tax will therefore be discussed two weeks before the crucial meeting of the International Maritime Organization.
The organizers of the conference also want to extend the debates to health and poverty, by “building a new contract between North and South”, in the words of Catherine Colonna, French Minister of Foreign Affairs, on January 6, 2023 before the French Development Agency. Among the subjects discussed during the round tables, it will be necessary to find new financing mechanisms to help poor countries, but also to promote the development of the private sector in low-income countries. The IMF estimated, for example, in a September 2021 note, that private investors can provide additional financing in Africa equivalent to 3% of GDP for development projects by the end of the decade.