2023-06-22 06:33:04
Are the great peaks still useful? They have their rituals, made of photographs and hugs. They end with declarations full of good intentions. Then everyone moves on… This time, however, it will be different assures the Élysée.
In these times dominated by the return of war in Europe, the summit for a new global financial pact, which is being held in Paris on Thursday 22 and Friday 23 June, wants to show that it is still possible for the international community to meet on subjects of common interest: “It’s about finding solutions to preserve our world, to ensure that no country has to choose between the fight against poverty and the fight against global warming”, explains the Elysée.
► A financial challenge
The subject on the table can be summed up in one question: how to direct more money towards countries in great difficulty? In 2009, rich countries pledged to invest, each year, from 2020, 100 billion dollars per year for the climate for the benefit of developing countries. According to Bercy, the figure should be reached for the first time… in 2023. A small victory. Except that the bulk is made up of loans: “Only 24 billion is in the form of donations, which is twice less than what is spent in the United States to treat dogs and cats”, plague Cécile Duflot, director general of Oxfam France.
Moreover, the sum is far from sufficient. In 2022, a report by independent experts commissioned by the United Nations estimates that 1,000 billion dollars per year would be needed instead to achieve the objectives of the Paris Agreement. While developed countries were able to mobilize 14 trillion dollars in 2020, in the midst of Covid, to support their economy, it is increasingly difficult for poor countries to accept broken promises. The Élysée acknowledges the need to “restore trust” between North and South.
► Closing the North-South divide
Many emerging countries are indeed tempted to seek support from the Brics side (Brazil, Russia, India, China, South Africa). Today, this club sees an influx of candidates. Saudi Arabia is the latest. The Brics have created their own development bank, headed by Dilma Rousseff, former president of Brazil, and headquartered in Shanghai.
The latter will be present at the Paris summit and her intervention is eagerly awaited. “The challenge is to know if we will be able to create an overall movement to play collectively”, indicates Rémy Rioux, the director of the French Development Agency (AFD). In other words, whether the countries of the North and the South still manage to cooperate, or whether mistrust prevails.
► The reform of the Bretton Woods institutions
Ajay Banga’s intervention is also eagerly awaited. Especially since it is the first major appearance of this Indo-American who has made a career in finance since taking office on June 2 as head of the World Bank.
Ajay Banga is supposed to be the man of the revival of this institution. Born of the Bretton Woods agreements after the Second World War, the World Bank carries the hopes of more equitable development. It grants loans to poor countries, but its prudent management does not allow it to respond to current challenges. A reform is therefore necessary so that it can raise more money, finance more adaptation to climate change, and enter into co-financing with private funds.
“The World Bank has a major role to play in defining the collective framework in which all other development banks can fit,” explains Remy Rioux. “Today, we sometimes find ourselves with institutions that are in competition to finance the same projects”, he regrets.
► Where to look for additional resources?
The Paris summit will also be an opportunity to measure support for various projects, which are very technical, but which are at the heart of the dialogue between developed and emerging countries. The first relates to the reallocation of special drawing rights (SDRs), the reserve currency of the International Monetary Fund (IMF).
After the Covid, the IMF shareholder countries decided to create 650 billion dollars of SDRs. This sum goes mainly to the majority shareholders of the fund, the rich countries, which have therefore undertaken to lend 20% of their envelope to the most fragile countries, which should make it possible to free up 100 billion dollars. This amount is about to be reached. But France and Japan want to go further and raise this share to 30%.
The participants of the summit will also be able to decide on projects intended to free up new financial resources. The most advanced idea is that of a tax on maritime transport, today very little used. A project is under discussion within the International Maritime Organization (IMO). “The Paris meeting can give it a political impetus”, said a source in Bercy.
► Avoid a new debt crisis
Finally, the summit will look at the debt of poor countries. A report by the United Nations Development Program (UNDP) in February warned that 52 countries are in a situation of over-indebtedness, with a risk of default. Zambia, Ghana and Ethiopia are currently in discussions with their creditors. But while Africa’s biggest lender is now China, much of the decision is in the hands of Beijing, which prefers to act bilaterally.
The announcement of a debt rescheduling agreement for Zambia, the country with which discussions are the most advanced, could take place in the coming days. This would be a first positive sign to show that developed countries and China can still get along when it comes to working for the common good. The Paris summit is not the place where decisions will be made. But it could be that of a renewal of the dialogue between the developed countries and those who consider themselves deprived of the right to follow the same path.
————–
Political leaders and representatives of civil society
The summit will welcome around fifty Heads of State or Government, including Chinese Premier Li Qiang, German Chancellor Olaf Scholz, US Treasury Secretary Janet Yellen, as well as representatives from 23 African countries.
On the side of international institutions, we expect the Secretary General of the United Nations Antonio Guterres, the President of the European Commission Ursula von der Leyen or the Managing Director of the IMF Kristalina Georgieva.
Representatives of charitable foundations will also take part. such as the Open Society, private investment funds through the International Capital Market Association, non-governmental organizations or delegates from the academic world.
#Paris #summit #return #NorthSouth #dialogue