World Leaders Push ‘Overhaul’ of ‘Global Financial System’ for ‘Climate Solidarity’

Around 50 heads of state are meeting at a summit in Paris to discuss plans to “overhaul” the “global financial system” to “save the planet” from “climate change.”

On Thursday and Friday, world leaders have been gathering at the Summit for a New Global Financing Pact, an event hosted by French President Emmanuel Macron in Paris.

The agenda of the gathering is to urge world leaders to sign a globalist pact committing to a financial “overhaul” for “climate solidarity.”

The world’s wealthiest nations are demonstrating a “surge of solidarity” with those most vulnerable to “climate change,” said Cécile Duflot, president of the NGO Oxfam.

Some 50 heads of state and government, representatives from international financial institutions, members of the private sector, “climate experts,” and other powerful elites will be attending the summit.

The objective of this ambitious conference is to “build a new contract between [the global] North and South,” according to the Élysée Palace.

Macron announced his intention to host this summit at the end of COP27 back in November 2022.

Environmentalists were not satisfied with how the climate negotiations had concluded. But in the final hours, a historic agreement was reached providing for the establishment of a fund to compensate for the effects of climate change suffered by developing countries.

The initial aim of this week’s Summit for a New Global Financing Pact was to establish concrete measures to finance this fund.

“From now on, the battle against poverty, the decarbonization of our economy, and the fight for biodiversity will be very closely linked,” Macron said at the time.

Organizers cite the Ukraine War, the economy, and the alleged “climate crisis” as the key issues facing the world today.

In the Palais Brongniart at Place de la Bourse, once the seat of the Paris stock exchange in the 2nd arrondissement (district), the hundreds of attendees will attempt to lay the foundations for an “overhaul of the entire global financial system” by adapting the post-war Bretton Woods institutions – the International Monetary Fund (IMF) and the World Bank – to today’s challenges.

On Wednesday, 13 political leaders – including Macron, US President Joe Biden, German Chancellor Olaf Scholz, British Prime Minister Rishi Sunak, and Brazilian President Luiz Inacio Lula da Silva – wrote that they are “urgently working to fight poverty and inequalities” in a contribution to French daily newspaper Le Monde.

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“Climate change will generate larger and more frequent disasters, and disproportionately affect the poorest, most vulnerable populations around the world,” they wrote.

“These challenges cross borders and pose existential risks to societies and economies.”

“We want our system to deliver more for the planet.”

The financial needs of the Global South are colossal. A group of independent experts, specializing in climate finance and working under the auspices of the United Nations, estimated last year that the world needs to allocate $1 trillion a year between now and 2030 for developing countries besides China to respond to the climate and biodiversity crisis.

Oxfam estimates that $27 trillion will have to be mobilized to “fight poverty, inequality, and climate change in developing countries” between now and 2030, i.e., around $3.9 trillion a year.

The World Bank put this estimate even higher, outlining in its 2021 climate action plan that $4 trillion a year will be needed between now and 2030 to build infrastructure that meets the needs of developing countries.

Governments present at the summit for a new global financial pact this week will not be making financial pledges but are instead expected to discuss the most effective means of financing.

The first items on the agenda are those based on already established commitments.

“Developed countries have already pledged to allocate 0.7% of their wealth to developing countries and to contribute $100 billion to the climate,” said Désiré Assogbavi, the director for French-speaking Africa at ONE, a global anti-poverty NGO, at a press conference on Tuesday.

“But for the moment, these funds have only been partially distributed, if at all.”

G7 countries in 2021 considered reallocating $100 billion in Special Drawing Rights (SDRs), an IMF reserve currency that is proportional to a country’s capital, to developing countries.

“This measure has been blocked in the eurozone, but this could easily be resolved by a political decision,” said Assogbavi, calling for the blockage to be lifted “by the end of the year”.

“On the last day of the summit, we hope that very clear mechanisms will be announced so that each of these commitments can be implemented.”

At the same time, new sources of funding will need to be explored.

Meanwhile, several associations and NGOs are already putting forward a number of ideas.

First, they are calling for taxes to be introduced on the biggest polluters, in particular fossil fuel companies, due to “their historic responsibility for climate chaos.”

In early June, 12 associations signed a petition asking Macron to tax the fossil fuel industry.

They had gathered more than 31,000 signatures as of June 21.

“This tax would enable us to raise up to $300 trillion,” said Fanny Petitbon, head of advocacy for the NGO CARE France.

“Why not also introduce a tax on financial transactions, which would raise $440 billion?” asked Petitbon.

The principle of this tax is simple: given the scale of the transactions carried out on the financial markets, applying even a very low tax rate would help raise significant tax revenue without having any impact on how the markets work.

Ahead of the Paris summit, only a consensus on taxing maritime transport seems to be emerging, which could generate between $60 and $80 billion a year, according to the World Bank.

“The subject could come to fruition in July when the International Maritime Organisation meets,” said Petitbon.

“But the question of how the money will be used has yet to be decided.

“While some advocate that it should go to developing countries, others are calling for it to be used to decarbonize the maritime sector.”

In addition to the major issue of financing, the other dossier on the table is the debt owed by developing countries.

“Debt servicing for developing countries is at its highest level since the end of the 1990s, and 93% of the countries most vulnerable to climate-related disasters are over-indebted, or not far from it,” said Lison Rehbinder, development finance advocacy officer at the CCFD-Terre Solidaire NGO.

“Today, countries in crisis are forced to repay their debts to creditor states, financial institutions, and private banks, and this prevents them from investing in public services or fighting against climate change,” she said.

For the moment, the plan under discussion is to introduce clauses in loan contracts that would allow repayments to be suspended in the event of a climate disaster, according to Rehbinder.

Adopted by G20 countries during the Covid pandemic, this measure would become automatic.

“But we need to go further and think about large-scale debt cancellation,” she said.

“That’s the only way for countries to get their heads above water.”

Harjeet Singh, head of global policy strategy at Climate Action Network International, agreed.

“The richest countries continue to mostly provide the countries of the South with loans – in 2020, grants accounted for just 26% of committed climate funding,” he said.

“The fight against climate change must quickly move away from this profit-driven logic.”

The associations argue that it will only be possible to implement all these measures if the major multilateral development banks, primarily the World Bank, adopt bolder lending policies.

France acknowledges, however, that Paris will not be able to make any concrete decisions at this summit.

According to the Élysée Palace, the meeting’s main purpose is to draw up a guide that will be used at the next G20 summit in India in September, the annual meetings of the IMF and World Bank in October, and COP28 in Dubai in early December.

“This event will put many important issues at the center of international discussions,” said Duflot.

“Unfortunately, it is still too unambitious, though we can no longer wait to implement far-reaching solutions.”

“It’s not the money that’s lacking, but the political will,” said Petitbon.

“The heads of government must now shoulder their responsibilities.

“Because beyond funding, it’s all about rebuilding trust between the countries of the North and South.”

READ MORE: America Signs Global Climate Agreement to Crack Down on Farming

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By Frank Bergman

Frank Bergman is a political/economic journalist living on the east coast. Aside from news reporting, Bergman also conducts interviews with researchers and material experts and investigates influential individuals and organizations in the sociopolitical world.

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