Hello from Paris, where a shortage of sniffer dogs, press passes and discussion time has lent a manic quality to a two-day climate and development summit hosted by French president Emmanuel Macron.
One of the summit’s aims is to reform the international financial architecture to make sure it serves 21st-century climate and development goals.
And the gathering of about 40 world leaders — plus hundreds of others from government, business and civil society — has piled pressure on the World Bank and the IMF to factor climate change more seriously into their lending decisions.
On the eve of the summit, the World Bank said it would offer “pause clauses” to freeze repayments for countries in debt distress when they are hit by climate disasters. The UK, France and the US have since promised to bring in similar clauses to their bilateral lending or export credit finance.
And we learned yesterday that developed countries may have finally reached a target to make $100bn in IMF resources available for the fight against climate change and poverty.
At least that’s according to Kristalina Georgieva, the IMF’s managing director. The US has not officially confirmed it will unlock its hefty chunk of reserve assets known as special drawing rights, which have been stuck in partisan limbo.
On the back of this apparent good news, Georgieva warned leaders yesterday not to “throw the baby out with the bathwater” in their rush to reform the international financial architecture, or to “pooh-pooh” the significance of the $34bn that African countries have been told to expect in funds from this pot.
Read on for more from the summit, and for Patrick’s story on the debate over finance for Ukraine. And check out the FT’s report on the Church of England’s eye-catching decision to dump energy majors from its £10.3bn endowment fund and £3.2bn pension scheme after concluding they were not on track to meet Paris agreement goals. (Kenza Bryan)
‘Sceptical environment’ of Paris summit yields climate deals and promises
The first day of Emmanuel Macron’s Paris summit yielded a couple of big wins for two African nations. Zambia reached a deal with China and other big creditors on the sidelines of the summit to restructure billions of dollars in debt yesterday, raising hopes for other countries in debt distress such as Ghana and Ethiopia.
And Senegal will get €2.5bn ($2.7bn) to spend on increasing the proportion of clean fuels in its energy mix, in a deal underwritten by France, Germany, Canada and the EU.
Despite these developments one powerful figure “on the sceptical end” of attendees was Mark Malloch-Brown, president of the Open Society Foundations, a major private funder of human rights activism that is increasingly focusing on the climate.
“This is not a place where decisions get made: it’s not a G20 or a G7 let alone a UN general assembly,” he told me yesterday over a late-afternoon coffee. Those who attended either “already cared deeply”, or were friends of the French president, who “called in his chips” to summon the good and the great.
Speaking to Malloch-Brown was a reminder of the role philanthropists play behind the scenes in unlocking capital that governments either don’t have or can’t be seen to give. The foundation has helped pay for the summit as well as the Bridgetown Initiative, a campaign for the IMF and World Bank to give developing countries better lending terms.
But this role — as well as an ugly strand of antisemitism against founder George Soros — has made it the public target of conspiracy theories and climate denial.
“A more paternalistic age has been replaced by a more sceptical and politically spiky environment,” Malloch-Brown told me, drawing comparisons with the Covid-19 conspiracy theories that emerged when philanthropist Bill Gates helped to fund vaccine development.
On the plus side, the summit had managed to “turbocharge the political momentum”, he said. In a climate discourse that had a “level of anger and almost panic, a sense that the solutions are not sufficient for the task”, it managed to combine the “quantitative language” of the World Bank with the “qualitative”, more “anecdotal” language of activists.
He is right about the mixing of worlds and of tone. Immediately after Macron’s opening speech yesterday, exhorting “the private sector, sovereign wealth funds, philanthropic organisations and the big asset managers” to come on board, Ugandan climate activist Vanessa Nakate led a minute’s silence to honour lives already lost to extreme weather and rising temperatures.
Life expectancy has been falling in the wake of the global pandemic, the emerging market debt crisis and rising temperatures, according to UN Development Programme figures that were cited a number of times yesterday as evidence that inequality is just as urgent a problem to solve as the climate crisis.
Flanked on stage by the leaders of Chad, Sri Lanka and Rwanda, Tunisian president Kaïs Saïed was visibly angry during a discussion on special drawing rights with the IMF, moderated by Spain’s deputy prime minister Nadia Calviño.
Saïed referenced the disproportionate impact on the developing world of Covid-19 and other diseases. “We have always paid the cost”, he said, blaming “looting” by banks in the global north for high borrowing costs faced by heavily indebted countries such as Tunisia.
Kenya’s president William Ruto struck a frustrated note in one of the final sessions of the day, in which he asked why countries had failed to agree on a global tax on fossil fuels. “We are going backwards,” he warned.
Later today, we expect leaders to come up with a formal climate and development to-do list and a progress tracking tool at the very least. They might also agree on a statement of support for an international levy on carbon emissions linked to shipping, due to be discussed at the International Maritime Organization next month. (Kenza Bryan)
Investments in Ukraine can’t wait until war ends, DFC chief says
While much of this week’s Ukraine Recovery Conference in London focused on long-term reconstruction (specifically of the green variety, as we detailed on Monday), a crucial piece of US financial support for Ukraine zeroes in on helping the country’s economy now — while the war is still raging.
Among the attendees was Scott Nathan, chief executive of the US International Development Finance Corporation. Nathan told me his crucial message was that Ukraine needed development support now. “It cannot wait until the end of hostilities,” he said.
“Our goal is to keep the private sector buoyant and growing,” he said, to “keep people employed and paying taxes” to the Ukrainian government.
On Wednesday, the DFC announced new political risk insurance offerings for Ukraine. This type of insurance can be necessary for businesses operating in hot zones from Ukraine to the Taiwan Strait.
Nathan signed a $25mn DFC equity investment for Horizon Capital, a private equity firm focused on Ukrainian businesses. Nathan has made three trips to the country since the start of the war.
It is easy to forget that the London Ukraine gathering has been held for years and was initially a “reform” conference aimed at combating the country’s corruption. Nathan pointed out that paying taxes remained a crucial part of supporting the foundation of the Ukrainian government and economy. Maintaining a solid foundation — however challenged by Russia’s attacks — could ease the country’s eventual recovery. (Patrick Temple-West)
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