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International Last Updated: Sep 24, 2022 - 1:16:21 PM


Europe and the New Non-Alignment
By Laurence Tubiana, Project Syndicate, Sep 23, 2022
Sep 23, 2022 - 1:34:04 PM

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Although these are not auspicious times for multilateralism, that is no excuse for Europe's climate-oriented investments, diplomacy, and international aid to fall by the wayside. If anything, a climate-focused strategy can serve all of the bloc's primary objectives simultaneously.

 

PARIS – Russia’s war on Ukraine reveals a new dynamic of non-alignment in the international system. Western leaders find themselves more isolated on the global stage than they expected. When the United Nations General Assembly (UNGA) has taken votes to condemn Russia’s aggression, China and many others have abstained or opposed them. Major democracies like Brazil, Indonesia, India, Senegal, and South Africa have hedged their positions on the war. And by hosting and sending high-level delegations, Russia has been competing with the European Union and the United States for influence in various regional blocs, intensively courting members of the African Union and the Association of Southeast Asian Nations.

 

Why are so many countries wary of taking sides, even after seeing the unspeakable suffering Russia has inflicted on civilians in Ukraine? Part of the reason is a widespread perception of European double standards (Ukraine is hardly the only conflict zone in the world today) and Europe’s uneven diplomacy on issues such as COVID-19 vaccines, debt relief, migration, and climate financing. Moreover, many fear alienating Russia, given the vast leverage that it has over energy and commodity prices. By upending Europe’s energy landscape and highlighting its dangerous energy dependencies, the war underscores the volatility of today’s fossil-fuel geopolitics. In the run up to November’s UN Climate Change Conference in Egypt (COP27), and beyond it, the new non-alignment will become apparent in the sphere of energy diplomacy. It will be important to remember that the world’s commitment to the 2015 Paris climate agreement is a direct threat to Russia’s petrostate economic model and broader geopolitical strategy of cultivating profitable energy dependencies. At the onset of the invasion, Russia was the largest exporter of oil and gas to the EU. Several months in, skyrocketing prices resulted in the EU accounting for 70% of Russia’s record fossil-fuel export revenues, reinforcing the Kremlin’s belief that Europe would ultimately find it too costly to resist the aggression. But the EU has shown resolve in supporting the Ukrainian people and doubling down on decarbonization within the framework of the European Green Deal. For example, its REPowerEU plan, agreed in response to Russia’s war, has further deepened the bloc’s institutional commitment to the Paris agreement. And yet, measures to close Europe’s immediate energy-supply gap have lent additional momentum to the new non-alignment. It has contributed to energy- and commodity-price inflation – just as the Kremlin intended when it engineered a natural-gas shortage in Europe. As Europeans have rushed to buy non-Russian oil and liquefied natural gas in already-tight global markets, countries like Bangladesh and Pakistan have struggled – just as they were suffering scorching heatwaves – to pay for the LNG needed to power their electricity grids. Similarly, oil scarcities produced record-breaking profits of $59 billion for the fossil-fuel industry in the second quarter of this year, while pushing up energy costs in many heavily indebted economies and emboldening non-aligned exporters like Saudi Arabia. And more broadly, Europe’s rush to diversify its short-term energy supply is triggering a scramble for new fossil-fuel infrastructure, undermining the global multilateral push toward decarbonization along with the EU’s own credibility. Between Germany’s pledge to invest in new gas fields in Senegal and the EU’s inclusion of gas in its sustainable-finance taxonomy, there have been unhelpful mixed signals, damaging the prospects for a cohesive European approach to climate diplomacy

 

The Right Priorities

Non-alignment offers developing countries and emerging markets new avenues to boost their autonomy in foreign and energy policy. Indirectly, that will reduce pressure on Russia and allow it to pursue a war of attrition, rather than seeking a rapid end to hostilities. And as we learned from this summer’s drawn-out negotiations over Ukrainian grain – which the Kremlin repeatedly scuttled, and has since threatened to abandon – Russia will continue to seek advantageous bilateral deals and other forms of leverage wherever it can.

That does not bode well for the macroeconomic picture, or the Paris agenda. Global recession fears and rising interest rates have immediate implications for climate action, especially as it relates to the crucial issues of finance and debt. Sovereign debts have been rising throughout the pandemic, leaving 60% of low-income countries at risk of debt distress. Yet under current conditions, it will be difficult for advanced economies to make the domestic case for expanding grant aid to other countries, or for those same recipient countries to take on more debt in the form of concessional climate finance.

Europe, for example, is under enormous fiscal pressure across the board. Shoring up the credibility of its climate-finance framework when it has so much else on its plate will not be easy. One top priority, of course, is to keep supporting Ukraine militarily, and to increase defense spending within the EU. Another is to prepare for winter. The expert consensus is crystal clear: The risks of supply shortages are real, and no amount of alternative gas imports will offset them. To avert shortage-driven crises, Europe will need to roll out comprehensive energy-savings schemes that could include shutting down some gas-consuming industrial facilities; leveraging alternative supplies; fuel switching; and a rapid deployment of renewables, heat pumps, and home renovations. A related priority is to prevent the energy crisis from creating a broader social crisis. Intense upward pressure on the cost of living will require strong – and hugely costly – social-policy measures to manage inflation, and targeted energy-efficiency programs to address fuel poverty. But Europeans should recognize that it is in their interest to rise to the global climate finance challenge. In 2009, advanced economies committed to providing $100 billion per year to support climate-related investments in developing countries. But this threshold still has never been crossed, and according to the OECD, the rich world is still $17 billion short to this day. While Europeans aren’t solely responsible for this failure, they must recognize how it looks to the rest of the world when they mobilize far greater sums for themselves in response to crises like COVID-19 and the war in Ukraine. Europe must make every effort to increase the volume and quality of its climate and development financing ahead of COP27. To create the necessary fiscal space, taxing oil and gas companies’ crisis-induced profits is a compelling, even if complex, place to start. The imperative now is threefold: not only is climate finance a solution to energy insecurity and climate change, but it also will ensure that the new non-alignment does not divert from multilateral commitments, which are ultimately designed to move our economies beyond fossil fuels as soon as possible.

Seizing Opportunities

What should Europe do between now and COP27? While there are no silver bullets, there are clear opportunities for Europe to foster multilateral cooperation and serve its own interests in the process. First, the EU should ramp up its Just Energy Transition Partnerships. The prospect of an $8.5 billion deal (supported by the United Kingdom, the US, and European governments) to finance South Africa’s shift away from coal was one of the high points of COP26 in Glasgow last year. It was also a crucial signal of intent within the G20: While the group’s members account for 80% of global emissions, many have yet to propose adequate emissions-reduction plans (known as Nationally Determined Contributions, or NDCs). Since last year’s announcement, however, the road to finalizing this deal has grown bumpier, not least because South African President Cyril Ramaphosa has been an outspoken proponent of non-alignment. Going so far as to blame NATO for Russia’s unprovoked attack on Ukraine, Ramaphosa’s government has even proposed counter-resolutions at the UNGA seeking to exculpate Russia from the major humanitarian crisis it has unleashed. South African authorities have also raised doubts over the structure of the proposed financing amid current fiscal constraints. Still, at the time of this writing, the partnership appears to be progressing, with South African authorities proposing a draft investment plan in late July.

Moreover, under Germany’s G7 presidency, donor governments have entered new discussions with India, Indonesia, and Senegal – all of which are also non-aligned on the Ukraine issue. A concrete, well-financed rapprochement with these governments in the area of energy cooperation would be a boon for the global green transition.

Now, Indonesia and Senegal should use their respective G20 and African Union presidencies to prepare the ground for more cooperation at COP27. Many of these countries are due to submit strengthened NDCs before the summit, and better financing guarantees can only help with that (as Indian Prime Minister Narendra Modi made clear when presenting his country’s new NDC in early August). A second opportunity for Europe lies in debt relief and restructuring. Here, a recent agreement between China and Zambia is a positive sign. The negotiations were co-chaired by China and France under the aegis of the Paris Club of sovereign creditors, demonstrating that constructive discussions remain possible, even when global tensions are high. European governments should push for this approach to gain a stronger foothold within the formal multilateral system. High commodity prices, aggravated by Russia’s war, make it all but certain that more countries will be facing debt crises soon. Following the recent agreement on an IMF deal, the international community’s response to unrest in Sri Lanka – another country highly indebted to China, but also to India and Japan – will be the next big test. Third, Europe must continue to act as a catalyst for cooperation, looking beyond the geopolitical tensions of the day. China’s decision to suspend bilateral climate talks with the US following Speaker of the House Nancy Pelosi’s visit to Taiwan does not mean multilateral efforts are doomed to fail. The world’s two largest emitters are developing significant climate policies. The adoption of US legislation that includes hundreds of billions of dollars in climate-related investments has helped restore America’s credibility on the issue. EU leaders can therefore work to ensure that channels remain open. There is ample scope for enhanced cooperation between China’s Belt and Road, Europe’s Global Gateway, and America’s Build Back Better World initiatives, to make these global infrastructure spending programs clean and complementary. Fourth, a big opportunity lies in reforming the Bretton Woods institutions (namely, the World Bank and the International Monetary Fund) to render them fit for purpose in the age of climate change. Here, we are reminded of another highlight from COP26: Barbadian Prime Minister Mia Mottley’s widely-circulated speech calling for special drawing rights (SDRs, the IMF’s global reserve asset) to be channeled through multilateral development banks to support climate-related investments in developing countries. As key members and shareholders of the IMF and multilateral development banks, European governments can increase their lending and prod the Fund to act on this proposal, including by easing the terms governing how such resources are released to MDBs and spent thereafter. Fifth, and most importantly, Europe should propose new and sweeping security partnerships with African countries to enhance relations between the two blocs. Climate-driven disruptions, food insecurity, disease outbreaks, and forced migration will affect all current and future dynamics across these regions. African and European leaders must co-create a vision for resilience and human security that far exceeds the current military-led thinking. Adapting agriculture, food, and water systems must become a high priority for European cooperation with Africa. The goal should be to strengthen resilience, protect the water cycle, and safeguard biodiversity, thus reducing an array of security threats – from extreme weather events to vector-borne diseases. Moreover, the International Energy Agency highlights Africa’s position as home to 60% of the world’s best solar resources but just 1% of its installed solar capacity. Under the IEA’s 2030 scenario, 80% of new energy access in Africa could be supplied by renewable energy. This, too, is a security choice, and one that Europe can signal at COP27: European leaders can choose a compelling vision for common security, or they can continue pursuing dangerous investments in new oil and gas infrastructure, harming the world’s security prospects in every sense.

The Only Option

These are not auspicious times for multilateralism. What we achieved with the Paris agreement in 2015 could not have been done in 2022. With hindsight, 2015 – also the year of the UN Sustainable Development Goals and the Iran nuclear deal – may be remembered as a high point for international cooperation. But the deleterious effects of climate change are gathering pace, regardless of diplomatic alignments. The Paris agreement has become a guardrail for collective action – one that must stand even when other arrangements are shaking. By pursuing coordinated climate policies, we can also create new conditions to support peace and security, and new forms of cooperation. It won’t be easy, but we have no choice.


Source:Ocnus.net 2022

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