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“Total Consensus” on Global Financial Reforms

“Total Consensus” on Global Financial Reforms

The two-day conference, which ends on Friday in Paris, is officially called the New Global Finance Compact Summit.

Behind the somewhat clumsy name is an initiative of French President Emmanuel Macron, who gathered thick delegates from more than a hundred countries to discuss indebtedness and climate finance.

The conclusions are far-reaching: To save the world, global financial institutions must be reformed. In Macron’s words, almost 80-year-old institutions, the World Bank and the International Monetary Fund, must become “more efficient, fairer and more adapted to today’s world.”

Climate tax on marine traffic

Concretely, the big words are about mobilizing more capital for climate measures in developing countries, and about the indebtedness of countries that are not a hook for welfare investment.

The final declaration is expected to contain a proposal for a global climate tax on international shipping traffic, which could bring in more than SEK 1,000 billion annually. However, supporting a tax on financial transactions, another idea that has been discussed, doesn’t seem like much.

Countries fall into a debt trap

Brazilian President Luiz Inácio Lula da Silva pointed to the crisis in Argentina as an example of how global financial institutions can create debt traps.

– The International Monetary Fund very irresponsibly made a huge loan to Argentina. We don’t know what the Argentine president did with the money and now Argentina is in a very difficult situation because the country doesn’t have enough dollars to pay it back, Lula was shocked.

Barbados’ Prime Minister Mia Motley, a leading voice for climate-vulnerable island nations, has called on the rich world to shoulder its share of responsibility.

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– We only have this planet, and unless you have a plan to live on Mars that I don’t know about, we need to work together to make it better.

In addition to about 40 heads of state and government, the meeting brought together high-ranking delegates from most of the world’s major powers. Including Chinese Premier Li Qiang and US Treasury Secretary Janet Yellen.

– As the two largest economies in the world, it is our responsibility to work together on global issues, Yellen said, referring to the strained relations between the two countries.

The World Bank inserted the pause button

The summit is held outside official structures such as the United Nations and the Group of Twenty, and does not make binding decisions. But French President Macron describes his findings as a to-do list and says there is “total consensus” on the need for global financial reform.

At the same time, some results were achieved during the days of the meeting in Paris. China and other creditors have agreed better terms for heavily indebted Zambia, and the spontaneous serenade was celebrated in parliament in Lusaka.

World Bank President Ajay Banga announced that the organization was introducing a “pause mechanism” so that heavily indebted countries suffering from crises or natural disasters could “focus on what matters.”

Outside the financial meeting, activists, including Greta Thunberg, demonstrated calling for climate justice. Photo: Michel Euler/AP/TT

The two-day meeting in Paris is organized at the initiative of French President Emmanuel Macron and brings together more than 100 delegates.

According to Macron, global financial institutions need to be reviewed in light of the climate crisis, the pandemic and the cost crisis that followed Russia’s illegal invasion of Ukraine.

The meeting takes place outside the United Nations, but the overarching goal, according to the host country, is to reach the climate goals of the Paris Agreement and the sustainability goals of the United Nations’ 2030 Agenda.

Among those involved in setting the tone are European Commission President Ursula von der Leyen, German Chancellor Olaf Scholz and International Monetary Fund chief Kristalina Georgieva.