The RIO+20 Agenda - The Future We Want...

Documents are now circulating which reflect the basic “asks” for the RIO +20 Summit which starts next week. Here is a list of the “asks” I have discovered so far (you can see more here):

• ·         A reduction by all developed nations of CO2 emissions by 95% by 2050;
• ·         A total end to fossil fuel subsidies worldwide;
• ·         An end to market pricing for energy commodities and energy – regulated pricing so as to end energy poverty and wealth through energy exploitation and promote resource justice;
• ·         A tax on all developed nations of 0.7% of GDP (every Canadian family would pay $1,211) to support both global environmental governance and the United Nations Environmental Program (UNEP) – a kind of EPA for the world;
• ·         Global pursuit of the green economy (the EU ambition for RIO +20 is for this idea to be defined);
• ·         A global reduction in all forms of consumption;
• ·         Significant efforts to curb population growth;
• ·         The imposition of constraints on the development and use of specific “environmentally threatening technologies” – especially genomics, synthetic biology, nanotechnology.

This is not the complete agenda, but is the agenda of the many liberal eco-campaigners who will attend. The agenda is called “The Future We Want”. This is definitely not a future that appeals to me.

RIO +20 - Watch Out, Fear is About!

Rio +20 will take place in Rio de Janeiro, Brazil between June 20-22^nd 2012. It is a political meeting sponsored by the United Nations. According to the UN, “world leaders, along with thousands of participants from governments, the private sector, NGOs and other groups, will come together to shape how we can reduce poverty, advance social equity and ensure environmental protection on an ever more crowded planet to get to the future we want”.

Nothing is likely to happen, other than thousands of people increasing their carbon footprint and talking endlessly about things they are unlikely to agree on. All of the per-conference preparations suggest that there is no basis for an agreement and no basis for optimism about an agreement on a  process by which an deal can be reached. This process is dead and needs to be buried.

This is not the view of all. Those with a major vested interest in such events, like the World Wild Life Funds (WWF), see such meetings as important. It’s a chance for them to show its influence and showcase its thinking – after all, the WWF has hijacked many other UN processes, such as the International Panel Climate Change. Its also a chance for them to strike at the conscience of liberals and secure more donations – after all, their CEO is paid more than the President of the United States.

Despite the unlikely prospect for success, Rio +20 will focus on seven key areas for action. These are: jobs, energy, cities, food, water, oceans and disasters. Climate change – once seen as the most pressing issue facing the planet – is cast off into an underlying factor shaping the response to these seven issues. Not forgotten, not the center-piece.

A core argument will be that, unless urgent action is taken, then the planet and its people are in peril but national governments cannot deal with this international issues, so transnational governance is needed and the UN can create appropriate governance mechanisms to respond to these challenges. This has been the argument since the Club of Rome produced its first report and predictions of environmental doom were made in the 1970’s (none of which turned out to be accurate). The idea being that new governance models will only emerge if enough fear is created to generate demand for them. This was H L Mencken’s point:

“The whole aim of practical politics is to keep people alarmed (and hence clamorous to be led to safety) by menacing it with an endless series of hobgoblins, all of them imaginary”

So we can expect rhetoric like this:

“Civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.”

“We are in an environmental crisis which threatens the survival of this nation, and of the world as a suitable place of human habitation.”

“Tt is already too late to avoid mass starvation.”

“Population will inevitably and completely outstrip whatever small increases in food supplies we make. The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.”

- all predictions made at a similar event in 1970 and repeated annually (only the dates and attribution change and we have gone from the threat of a new ice age to the threat of global warming) ever since.

Virtual science will be invoked to claim that there is a scientific consensus that disaster is just around the corner – all based on incomplete computer models of the future rather than data collected and analyzed from direct observation. In fact, there is no scientific consensus on all seven of the issues to be discussed.

So keep an eye on Rio +20 – after all, you are paying for it.

Two Europes - Lord Owens Solution to the Crisis in Europe

Europe’s challenges are not just economic – they are political. They focus on the real absence of leadership across Europe, its inability to make decisions in real time and its failure to grapple with the real substantial issue which confronts them: sovereignty.

Europe began as a trade agreement covering coal and steel. It later morphed into a trading partnership which permitted the freer movement of goods and some services as well as people. As the maturing of European Union occurred, more and more integration of laws and systems were needed to permit the engine of growth to continue. Underlying this adolescent phase has been the growth of pan-national institutions which undermine national sovereignty.

One example of this is the European Court, whose fiat can now overturn the legitimate decisions of national elected parliaments and national legal system court decisions. Another is the continued erosion of national authority to that of European wide legislation – the Human Rights legislation, now enshrined across Europe, being a good example. 

When the Eurozone was created as a common currency and economic engine across seventeen member states, what was not done was political integration. Governments remained relatively free to determine economic policy and budgets. This is at the heart of the current challenge to the bloc of all EU nations. How much integration and loss of sovereignty is needed to both save the Eurozone and the EU?

German Chancellor, Angela Merkel, has made clear that Europe needs more Europe not less, which we can translate as less sovereignty and more supra-national control, mainly exercised on behalf of Germany. Political integration is now the agenda, with the economic crisis (self-inflicted by decisions made by the EU as well as national governments – for example, the decision to admit Greece to the Eurozone against the advice of the European Commission who warned the then German Chancellor Schroeder that Greece were using deceptive instruments to “falsify” their economic condition) as the “excuse” for this new entity – The United States of Europe.

Lord Owen, former Labour Foreign Secretary (1977-1979)  and one of the founders of the UK’s Social Democratic Party, recognizes this in his speech to the Lords on May 13^th 2012 (here). Noting that the crisis provides a rationale for a new degree of integration within the EU – “far more than has ever been contemplated before” – and that this will be a defining moment in determination of all political and economic decisions for the future of all European countries, whether they are in or out of the Eurozone (or indeed the EU), he suggests that there is a need for an approach which protects sovereignty. 

Lord Owen elaborated on his thinking in a June 7^th article in The Times (here) in which he suggests a duality in Europe. One group of nations determine that they want to be in the Eurozone and forfeit a degree of sovereignty, especially on all matters financial and economic, to the EU in exchange for which there is more democratic involvement in the election of the pan-Eurozone President who will oversee the decisions made in the zone on all matters economic. In this fiscal union model within the eurozone, Lord Owen suggests that it would have these characteristics: “a legislature in which the European Parliament would embody the lower chamber and the EU Council of Ministers the upper. The President of the European Commission and the President of the Council would be elected. The Commission would be an executive and virtually a European government, with federal authority for trade, economic, industrial, social, justice, environmental, agricultural, fishing, foreign and defense policies. The European Central Bank would replace the need for national banks, though they might remain as symbols. Under a fiscal union the explicit expectation would be that all EU member states would eventually join the Eurozone” once they agreed to these degree of forfeiture of sovereignty and met strong economic and political conditions. Germany is pushing this very strongly.

The second group of nations, which could also include Eurozone members, simply want to continue with the free trade and mobility aspects of the European Union and this could involve not just the current EU members but also Turkey and those who aspire to EU membership and other members of the European Economic Area (read here for a description). Its focus would be on the free flow of goods, services, people and capital amongst what would then be thirty two European nations.

This two tier Europe suggested by Lord Owen (and several others) has growing appeal. What is likely to happen is that integration will take place for some in the Eurozone as a condition of fiskalunion and further support for the beleaguered Euro and this will force all to address the issue of sovereignty. 

In Britain, as both Lord Owen and Lord Mandelson have suggested, a referendum on Britain’s role in the EU is now inevitable at some point between 2013-2016, with momentum favouring this earlier than later. Lord Own suggests that these two questions should be asked: “Do you want the UK to be part of the single market in a wider European Community?”  - Yes/ No and  “Do you want the UK to remain in the European Union, keeping open the option of joining a more integrated Eurozone?” – Yes / No? It is likely that the answer to the first question if asked today would be yes and to the second no.

When you read of the economic response to the banking crisis in Spain and to poor government in Greece see these responses as starting points for a conversation about sovereignty. This is the true heart of the challenge in Europe.

Tipping Point in Europe - June 17th

On 17^th June the electors of Greece will decide the fate of the Eurozone. They will be asked to elect a government. One choice they could make is to elect a government which is committed to rejecting the fiscal bail-out arrangements made by two previous Greek governments aimed at securing the place of Greece in the Eurozone. A different choice they could make is to elect a Government which supports the arrangements in place and will secure Greek’s place in the Eurozone through pursuing the shock doctrine imposed on Greece by the Germans. More likely, they will make a third choice and confusion will result.

Confusion would fit well with Europe right now. Because of poor leadership, short-term decisions and a lack of cohesion, Europe has spent three years stumbling through its economic crisis. Since 2010, when the crisis began, 17 of the EU’s 27 leaders have been ejected by democratic elections and confidence in the EU is falling, not rising. The failure of decisive and visionary leadership and the failure to tackle the real challenge – unemployment, not deficits – means that Europe’s electorate do not support the technocrats in their pursuit of the “confidence fairy” and austerity. Europe is calling for change.

But the current crop of nit-wits running Europe fail to heed a simple message. They have misread the signs, do not understand the problem and are pursuing the exact opposite strategy to that required. In short, the vote is for either making things better (rejecting the current EU strategy) or making it worse (accepting the EU strategy).

Don’t take my word for it. Mario Draghi, President of the European Central Bank, says that either the EU pursues complete fiscal integration or it accepts the end of the European project, starting with the collapse of the Euro.

The Economist also thinks that we are at a tipping point for the EU. They suggest: (a) Eurobonds for the debts of nations and banks above 60% of GDP; (b) closer fiscal union for budget matters; and (c) addressing the disparities in the balance of trade through stimulus.

Paul Krugman, the Nobel Prize winning columnist for the New York Times, thinks that the Eurozone (indeed the EU) should invest more funds in public projects that massively reduce unemployment so that this would stimulate demand – he says the problem (except for Greece) is not profligate Government spending, but lack of demand. Rather than worrying about Government debt, we should address the real challenge: massive unemployment and the economic depression.

Only ideologues and Austerists support the austerity agenda for Europe as a whole. While Greece is a special case (complicated, definitely profligate), it is a serious mistake to turn every challenge in the EU into a Greek tragedy. Spain and Italy have different challenges from Greece – no one size solution fits all. What is needed is imagination and leadership.

And this is what the electors in Greece will be looking for. They will be disappointed. So we can expect confusion to reign for the rest of June.

Someone Should Listen to Paul Krugman

Mario Draghi, who runs the European Central Bank, made clear yesterday that he now feels the current arrangements for the Eurozone are unsustainable. He called on the leadership of the zone to make clear and unequivocal commitments to either its sustainability or to significant change, while clearly signaling his preference for the latter. He noted that the real battle for the Euro was being fought in Italy and Spain – suggesting he already sees Greece out iof the zone following a default.

At almost the same time, the EU commissioner for economic matters, Olli Rhen, was making similar statements. Suggesting it was time for some serious and focused leadership from his political masters, Rhen said that the single currency’s members needed “a genuine stability culture and a much upgraded common capacity to contain common contagion. This is the case, at least if we want to avoid a disintegration of the Eurozone and if we want it to survive.”

As these words were being uttered, the electrorate in Ireland were being asked to vote in favour or against the fiskalunion compact and its austerity implications for Ireland, with a “yes” vote looking likely.

So an eventful day in Europe. The clock is indeed ticking and the time for a Greek exit and a Spanish and Italian bailout appear imminent. Greece will default and leave the Euro, though some are floating the idea of “defaulting” within the Euro – impossible under all of the agreements Greece has signed and all members of the fiskalunion compact have agreed to. Spain is wandering around in the wilderness of debt financing looking for someone or something to save its ailing banking system and support its government. Italy is reeling from two major earthquakes and the earth shattering silence of its core economy. It’s a mess.

Paul Krugman is in Europe promoting the view that almost everyone who is supporting the Eurozone strategy of austerity has it dead wrong. Austerity is not inspiring business confidence, is not working and is morally wrong. Austerity is leading to a lost generation of young people and the idea that they will all go off and start their own businesses is just pure nonsense (as indeed it is). What is needed, he suggests, is more infrastructure and public spending, modest rise in inflation and the encouragement of risk.

He is getting some serious negative reaction, with most who discuss the issue with him being simply incredulous that a Nobel prize winning economist could be so out of tune with the dominant view. Precisely. This is what thinkers do – challenge orthodoxy. This is why he won the Nobel prize.

He does make the point that, once unemployment starts to go down and we see economic growth occurring, then is the time to reduce public spending and lower debt – but most don’t hear this part.

His suggestion that the current fixation on austerity is actually an ideology not an evidence based strategy also gets people upset. “If a family is in serious debt they must reduce it” say his critics and he responds, politely but firmly, that an economy is very different from a household and we cant see the analogy taking us very far.

But at least he is a willing crusader against wrong-minded and failing economic policies. Someone should listen.