Potential Outcome of COP17: The ‘Greedy Corporate Fund’

By Michelle Pressend

As the 17th United Nations Framework Convention on Climate Change starts winding up, people all over the world are being told to reign in their expectations. COP 17 will likely not result in a second commitment period of the Kyoto Protocol, but does look set to become the launch pad for the new Green Climate Fund (GCF), also known by climate justice activists as the “Greedy Corporate Fund”.

Since COP17 is floundering and Kyoto targets seem a distant dream, South Africa’s international affairs minister and the President of COP 17, Maite Nkoana-Mashabanehas, has already started informal discussions on the fund. There’s a good chance she’s pushing for an agreement on the GCF so that Durban at least shows some tangible results.

The major bone of contention at the COP17 negotiations is the financial resources required by developing countries for “adaptation” (money to help developing countries adapt or adjust to the effects of climate change) and “mitigation” (money needed by developing countries to eliminate or significantly reduce greenhouse gasses).

Three things are clear.

Firstly, some developed countries are not interested in ensuring a multilateral agreement to deal with climate change. They want a “pledge and review” system. This means countries will voluntarily determine the amount of emissions they wish to reduce. Those strongly advocating this position are, United States of America (the world’s biggest polluter), Japan and Canada.

Secondly, the European Union (EU) wants a legally-binding agreement, but with a compromise in which major emerging economies like China, India and others agree to a transition period to start negotiations for a new legally binding treaty that will take effect in 2020. Meanwhile, as NASA scientists pointed out this week, the polar ice caps are melting at a rapid rate resulting in rising sea levels.

And thirdly, that the mechanism for the GCF based on a Transitional Committee meeting co-chaired by Minister Trevor Manual, which recently took place in Cape Town, is adopted.

From a climate justice perspective, it is widely accepted that developed countries should be responsible for paying for the ecological debt they incurred given their historical contributions to the climate change crisis. In the words of climate justice groups, “Those who owe climate debt must pay reparations to all the countries and peoples of the South.”

Importantly, these funds should come in the form of grants and not loans. If funds were to come in the form of loans it is likely to increase the indebtedness of developing countries. Thus it is important that these funds come from additional grants committed to by the developed world above and beyond official development assistance (ODA).

But it seems that a combination of market-based solutions are being touted to mobilise the GCF, raising serious questions about the ability of poor communities (those most affected climate change) to access the fund and drive climate adaptation and mitigation from their own perspectives, based on their own specific needs.

Warning that it would be problematic if the framework from the Transitional Committee report on the GCF were adopted, Undersecretary of the Climate Change Commission in the Philippines, Naderev Sano, raised concerns about the proposed mechanisms saying, “If markets can’t be reliable, why use markets to save the planet.” He made these remarks at a COP17 side event organised by IBON (an international non-profit that monitors global issues and links them to local struggles): “Improving Development Effectiveness in Climate Finance: Challenges and Opportunities”.

In 2009, the United Nations World Economic and Social Survey estimated that between US$500-US$600 billion is needed annually, for adaptation and mitigation in developing countries.

This first problem with the fund is that there are no genuine commitments of actual money. Developed countries are committed to mobilise US$100 million by 2020 through various means, which include carbon trading (the real benefits of which to the environment are as yet unproven), private equities, and investments in cleaner development mechanisms. Thus, a major concern related to the sources of funding for the GCF is that it is predominately from private sources that are likely to view climate change more as a business opportunity than a social responsibility.

Leading to the second concern, which is that the fund makes provision for the private sector to access funds directly. So, for example, if coporations want to access the fund for controversial Reduced Emissions from Deforestation and Forest Degradation (REDD) projects, they will be able to do so, with few questions about the impact of their projects on poor communities. There is already a growing body of evidence demonstrating that REDD projects – apart from being ineffectual for poor communities who do not have the capacity to wait for their long term results – are actually threatening indigenous communities’ rights over their ancestral lands. In many instances, REDD is turning out to be just another land grab by the rich.

Thirdly, the World Bank is likely to govern this fund, and if this is the case, then these loans are likely to come with often-unreasonable conditions for developing countries. Cephas Lumina, a United Nations expert on foreign debt and human rights, emphasised at the IBON event that new finance should not extend the debt burden of countries of the South and that there should be no key role for the World Bank. “They have a record of failed projects and harmful policies,” he said. He further stressed that finance should be in the form of grants not loans in addition to respect for state sovereignty.

A global fund for adaptation and mitigation for developing countries should not only address the inevitable effects of climate change, but also ensure the transfer of cleaner technologies to these countries for their public sectors without financial conditions. Financing this fund should come from taxing the profits of the economic sectors most responsible for climate change (oil, coal, cars, electricity generation, and so on), from shifting fossil-fuel subsidies and from financial transaction taxes.

The Financial Transaction Tax, also known as the Robin Hood Tax, is a small levy of 0.01-0.05% imposed on the trade of stocks, derivates, currency, and other financial instruments, which could generate billions of dollars. Civil society organisations argue, “We pay a transaction tax every time we buy food and clothes; it’s only fair that the banking sector also pay a transaction tax.”

So while the creation of the GCF was meant to reflect calls from the international community over many years for a global fund that is representative, democratically governed, effective, accountable, and designed to meet the needs of those most marginalized and vulnerable to climate change, it is in danger of being used as another vehicle for private sector interests, a mechanism to avoid responsibility by developed countries, and for the continued damaging influence of multilateral institutions like the World Bank.

But the United Nations appears committed to this problematic path. Martin Krause from the United Nations Development Programme indicated that ODA-related flows would never be enough or sufficient. Thus, countries need to catalyse domestic public and private funds as well as international private funds. He emphasised that countries need to help leverage private investment by getting policies right and create incentives and an enabling environment for investors. He also mentioned the importance of bringing climate finance into national budgets.

Moreover, it appears that the EU will not commit to further public funding.

As pointed out by Martin Khor from the South Centre “Many are worried it (the GCF) will be a rather empty structure at first, as funding from developed countries is getting scarcer with the impending economic recession.” So even if developing countries’ plans were founded on the basis of sustainable development, it is doubtful that these plans would get funded.

Climate change is a global problem, which requires global solutions. Governments need to face up to the apocalyptic impact of climate change, move away from a predominant dependence on market mechanisms and promote shifts in global economic policy making that dismantle unsustainable consumption and production patterns as well as growing inequalities.

The main concern of climate justice activists at COP17 is that climate solutions are increasingly being based on market mechanisms while legal frameworks, especially multi-lateral legal frameworks, are being diminished in this round of negotiations, creating huge new challenges and obstacles for protecting people’s rights.

We need to be clear about this. If legal frameworks are watered down, then people’s rights will be far more difficult to protect. Human rights are being systematically erased from the climate change agenda.

Pressend coordinates the Trade Strategy Group (TSG) at the Economic Justice Network and Global Network Africa at the Labour Research Services in Cape Town. She is also an independent socio-political analyst.

Read more articles by Michelle Pressend.

From the South African Civil Society Information Service (www.sacsis.org.za)

Who’s Really South Africa’s Foreign Policy ‘Master’?

By Dale T. McKinley

If one has been relying solely on more recent mainstream press coverage and associated NGO-academic interpretations to understand and analyse South Africa’s foreign policy/diplomacy then it would only be a slight exaggeration to say that the overwhelming conclusion would have to be that China has become our new foreign ‘master’. Whether it’s the Dalai Lama saga, the Libyan conflict, the situation in Zimbabwe, trade issues, general North-South politics or diplomatic positions taken at the United Nations, the dominant ‘line’ appears to be that most everything that South Africa does these days on the foreign front is linked, in one way or another, to Chinese interest and influence. Predictably though, there is a great deal of difference between appearance and reality. To put it bluntly, the ‘China syndrome’ argument is more hot air than anything else.

First things first though. In our era of neo-liberal globalisation and capitalist power politics no country’s foreign policy is really ‘independent’ although this does apply in varying degrees depending on the country’s global pecking order. And yes, it also very directly applies to South Africa despite President Jacob Zuma doing his best a few weeks back to convince us all otherwise when responding to widespread criticism over the Dalai Lama debacle. If anyone is naïve enough to swallow Zuma’s foreign policy explanation that, “we look at what is of benefit to the South African people and what will advance our domestic priorities at that given time” then read no further.

Most certainly, China has a great deal more political influence and economic weight both globally and in respect of South Africa than it did back in the late 20th century. Further, there can be little argument that the ruling ANC and the government it runs takes that increased influence and weight – largely due to China’s ravenous appetite for Africa’s and South Africa’s bountiful natural resources – on board when it comes to consideration of some of its foreign policy and diplomatic decisions. But if we take the time and effort to actually look at the principal source of (foreign) influence and weight on the core of South Africa’s foreign policy then China definitively takes a distant back seat to the world’s still main imperialist power, the USA.

While China’s contemporary toxic cocktail of Stalinist-infused political authoritarianism, ‘free market’ capitalism and social engineering might well appeal to many within the ANC and government, the USA – and its associated Western junior allies – not only has a much deeper historical socio-cultural, economic and political boot print in South Africa (also across the sub-continent), its present-day imperial ‘candy store’ is better set up, stocked and deployed.

On the economic front besides the fact that the USA has had – from almost the very beginnings of South Africa’s capitalist development – serious and sustained mining-industrial corporate presence, the dominant trope of South Africa’s post-apartheid capitalist economy has been symbiotically tied to the global circuits of US capital. Seventeen years on and the USA remains by far the largest source of foreign direct investment (FDI) in South Africa, with some of the world’s largest (public and private) pension and portfolio funds leading the way. Even though much has been made of the fact that China is now South Africa’s largest trading partner (remembering that the USA is a close second) the variegated and more easily shifting nature of FDI is a great deal more strategically placed as a political shaper and influencer than mostly predictable bulk trade which is largely driven in the longer-term by objective-material need.

More specifically though, the economic relationship between South Africa and the USA is far more institutionally embedded than that with China. Confirmation of this can be found in the establishment of the SA-US Bilateral Cooperation Forum in 2002. In the ensuing years, the Forum has been a hive of activity with ten separate committees focusing on; trade and investment, agriculture, justice and anti-crime initiatives, defence, energy development, health, human resource development, housing, science and technology as well as conservation and environmental matters. Add to this the long-standing ‘Bi-lateral Trade and Investment Framework Agreement between South African and the USA, the almost 1000+ US companies with a physical presence in South Africa, the USA-driven support for NEPAD and the African Union, the domestic and continental economic importance of the American Growth & Opportunity Act (AGOA) as well as the widespread involvement of outfits such the US Agency for International Development (USAID).

Combined with the economic and political dominance of the USA and its Western allies within the United Nations as well as within key international financial institutions such as the World Bank, the International Monetary Fund and the World Trade Organisation and it does not take an ‘expert’ to figure out the degrees to which an economy like South Africa’s is intricately inter-twined into the character and content of US global (state and corporate) capitalism. The reality is that despite all of the ANC-government rhetoric about the centrality of South-South economic (and political) solidarity, the USA and its associated junior allies remain the biggest and most influential capitalists in South Africa’s (and Southern Africa’s) economic and by association, foreign policy, sand pit.

As crucial as the economic front is, the military-security side of things also looms large; after all, the viability of a system requires protection and projection. Again, while noting the historic military-security relationship between the USA and South Africa, the last few years in particular have seen this relationship grow from strength to strength. South African military forces have participated actively in the USA’s ‘Africa Command’ (not surprisingly, the only one of its kind in the world) annual ‘Africa Endeavor’ exercises, described by the US military as, “multinational communications interoperability exercises” and involving the armed forces of many other African countries as well as NATO and European Union nations. In 2008, through the African Union and the Southern Africa Development Community (SADC), South Africa also participated in US-initiated and financed military exercises of the Economic Community of West African States (ECOWAS). In 2009, the South African Navy held week long joint exercises with the USA’s guided-missile destroyer ‘Arleigh Burke’.

The last three years have seen the relationship being extended much more directly and bi-laterally. In 2009 enlisted non-commissioned officers (NCOs) from the Special Forces division of the USA’s ‘Army Africa’ visited SANDF Special Forces headquarters. This was soon followed by an early 2010 visit to South Africa from the ‘Army Africa’ commander who, according to the US military, “observed preparation for training under the U.S. State Department-led African Contingency Operations Training and Assistance program.” The commander was quoted as saying that, “our task now is to expand this relationship into an enduring partnership between the U.S. Army and the South African Army.” No surprise then, that during 2010 the ‘expansion’ included, “officer and NCO professional development activities, a leader exchange program, and various engagement activities including military medicine, military police, facilities management and helicopter operations.”

The cosiness has not stopped with the military though. In late 2010 some of South Africa’s top police officers went to the USA to receive training in “crisis response skills” as part of the US State Department’s ‘Antiterrorism Assistance Programme’. Then SAPS Special Task Force Commander Nhlanhla Mkhwanazi (recently promoted by President Zuma to acting National Police Commissioner), told the media; “this training recognises … the solid relationship law enforcement in South Africa has with the United States.”

What all of this translates into is a contemporary foreign policy – and largely also, a national policy – which continues to dominantly reflect the realities of South Africa’s (and the sub-continent’s) historic and systemic relationship with global capitalism, and thus also its main political, economic, socio-cultural and military driver, the USA.  Yes, there are spaces here for degrees of ‘independent’ economic action and competition (e.g. China) as well as political-ideological point-scoring (e.g. ‘anti-imperialism’) but the dominant core still remains intact.

Dr. McKinley is an independent writer, researcher, lecturer and political activist based in Johannesburg.

Read more articles by Dale T. McKinley.

First published in  The South African Civil Society Information Service (www.sacsis.org.za).

The Euro and Europe

Fighting elections and trying to save the Euro are two issues that are difficult for Sarkozy and Merkel to address simultaneously. That is why there doesn’t seem to be a solution. Europeans need to understand that the party is over. You cannot go on financing benefits by amassing new public debt indefinitely.

Parties in coalition or in absolute majority must pave the way, to make unpopular decisions, in order to reduce the massive overhang of public debt, which will hamper the reduction of debt for generations to come. Nobody has the guts to start the process, and talking is becoming more important than acting. However, people talking about a separate currency for the weaker southern area in the community are really missing the point. It is the common currency that united Europe and ensured a common approach to issues by all participants of the currency union.

Winfried Loeffler