Speaker 1: Welcome to Zero. I'm Moscoboyd. A couple of weeks ago,
Speaker 1: we featured an interview with the Barbadian economist Avanash Pasord.
Speaker 1: He was on his way to a meeting in Paris
Speaker 1: hosted by France's President Emmanuel Macron and Barbados's Prime Minister
Speaker 1: me And Motley, with the goal of making the global
Speaker 1: financial system more relevant to climate change, biodiversity loss and inequality.
Speaker 1: That meeting took place last week and more than forty
Speaker 1: world leaders gathered in Paris for the talks. Our regular
Speaker 1: host actuat Ratty was also there, and so for this
Speaker 1: bonus episode of the podcast, I'm catching up with him
Speaker 1: to get his takeaways. Actually, fast up, how's Paris?
Speaker 2: It was actually fun because on June twenty first, there is,
Speaker 2: as I learned, feed the La music. It's the one day,
Speaker 2: the longest day of course in the Northern Hemisphere where
Speaker 2: all kinds of music is free. So there were huge
Speaker 2: cues outside venues where bands were playing, and pretty much
Speaker 2: every restaurant had hired a DJ, and it was a party.
Speaker 2: I just could not really party at the time.
Speaker 1: Yes, because you were there for serious business, not the
Speaker 1: feed telemusic. You were there to attend what is the
Speaker 1: snappily titled summit for a new Global Financing Pact? What
Speaker 1: was that meeting trying to achieve?
Speaker 2: In the grandest imagination of Macron and Motley, it was
Speaker 2: supposed to be a new pact between global North countries
Speaker 2: and global South countries.
Speaker 3: Privately, I call this the how dare you Summit? How
Speaker 3: dare you? How dare you upset the order? How dare
Speaker 3: you step out of your crease?
Speaker 2: The pact would aim to reform the institutions that are
Speaker 2: at the heart of making the connection work, which is
Speaker 2: the World Bank and the International Monetary Fund. Of course,
Speaker 2: it was a meeting of only about fifty world leaders,
Speaker 2: which is a lot, but not everybody, and these institutions
Speaker 2: will only be reformed when all countries vote to make
Speaker 2: that reform happen. These kinds of changes take a long time,
Speaker 2: and this was a show of force from Macron and
Speaker 2: Motley that finally these reforms may actually happen.
Speaker 1: And before the meeting even started you said it was
Speaker 1: a kind of select bunch. It wasn't everyone but world
Speaker 1: leaders including French President Macron, Publicist Prime Minist of Mayor Motley.
Speaker 1: The US is President Biden, UK Preme Minister, that the RICISUNAC,
Speaker 1: Brazilian President Lula, they altogether released this joint letter which
Speaker 1: was expressing support for the meeting. So was there a
Speaker 1: good mood going into it as you were there on
Speaker 1: the ground when you weren't celebrating the fed teal music,
Speaker 1: what was the feeling?
Speaker 2: Yeah, there was. When the meeting started, there were speeches
Speaker 2: by many of the world leaders who were there, and
Speaker 2: they all seemed willing to want to make changes happen.
Speaker 2: And these changes are crucial because currently the energy transition
Speaker 2: is going to need about four trillion dollars of spending
Speaker 2: every year. Much of that spending is going to happen
Speaker 2: in developing countries, and today we are spending about a
Speaker 2: trillion a trillion and a half depending on how you count.
Speaker 2: Most of that money is being spent in developed countries.
Speaker 2: So to be able to make that spending also happen
Speaker 2: in developing countries, you're going to need these institutions to
Speaker 2: really work. And these countries are meeting at a time
Speaker 2: when there is a real serious problem with debt. Some
Speaker 2: fifty countries in the world are in debt distress, which
Speaker 2: is to say that the money that they've borrowed has
Speaker 2: to be repaid, and because interest rates have gone up,
Speaker 2: those repayments have gone up, and many of these countries
Speaker 2: don't actually have the money to be able to repay, and.
Speaker 1: Many of them are in more debt because of things
Speaker 1: like the COVID nineteen pandemic.
Speaker 2: The pandemic, but also because of climate impacts, where a
Speaker 2: lot of the damages that happen have to be paid
Speaker 2: for and that comes from government purses, at least initially.
Speaker 2: So you get this vicious cycle of debt and distress
Speaker 2: and debt and disaster, and you want to try and
Speaker 2: break that because it is in the interest of developed
Speaker 2: countries to make sure that these countries don't go bust.
Speaker 1: And it was quite a kind of esteemed casting crew
Speaker 1: of people who attended the event. It wasn't just the
Speaker 1: forty World leaders or fifty world leaders. You also had
Speaker 1: a United Nations Secretary General Guterrez. You had the COP
Speaker 1: twenty eight president who you've previously interviewed and wrote a
Speaker 1: big profile about Sultan Algebrat, people like Ajibanga, the new
Speaker 1: President of the World Bank, Crystallina Georgieva, the head of
Speaker 1: the IMF so yeah, pretty all star cast and crew
Speaker 1: of financiers and leaders in the space.
Speaker 2: Yes, and also from the private sector. Larry Fink of
Speaker 2: Black Rock was there, but so were executives from City
Speaker 2: Bank and from AKSA, the insurance company, and from other
Speaker 2: development banks, not just the IMF and the World Bank,
Speaker 2: but the African Development Bank, the Asian Development Bank, the
Speaker 2: Asian Infrastructure Investment Bank alsold people with trillions of dollars
Speaker 2: under management, are trillions of dollars available to spend.
Speaker 1: One of the moments I actually saw kind of doing
Speaker 1: the rounds on Twitter getting a bit viral, was Vanessa
Speaker 1: Act's moment of silence.
Speaker 4: I would like to begin by asking all of us
Speaker 4: to hold a moment of silence for people around the
Speaker 4: world who are already suffering, starving, being displaced, dropping out
Speaker 4: of school due to the devastating impacts of the climate crisis.
Speaker 1: That's what I was.
Speaker 2: Vanessa NaKaT is a climate activist who we've had on
Speaker 2: the podcast before, and her speech, which was at the
Speaker 2: plenary at the open was a very interesting one. She
Speaker 2: wore a T shirt which said Divest Now, and she
Speaker 2: was sitting in front of Mohmed bin Salman, the man
Speaker 2: who controls the oil that comes out of Saudi Arabia,
Speaker 2: and so she had a moment of silence for the
Speaker 2: victims of climate disasters. But also she went on to
Speaker 2: say that investing in oil and gas is a problem
Speaker 2: for the planet. So to have that kind of dialogue
Speaker 2: where climate activists could speak to financiers could speak to
Speaker 2: world leaders in a small area made for a very
Speaker 2: intimate setting.
Speaker 1: So at the end of the two days, what actually
Speaker 1: came out of this meeting? Was it just talk and
Speaker 1: roundtables or was there a document that you might expect
Speaker 1: from a climate meeting.
Speaker 2: It's not the first time that word leaders have met
Speaker 2: to try and talk about how to reform these institutions,
Speaker 2: and engeos coming into the meeting were quite cynical that
Speaker 2: this would be another talking shop, that people who want
Speaker 2: to portray that they want to change things will be
Speaker 2: saying those things. But people who really matter and have
Speaker 2: to change things, like the President of the US is
Speaker 2: not showing up, So what could we really achieve? So
Speaker 2: right from the get go, Macro is very keen to
Speaker 2: have concrete announcements made at the summit and to have
Speaker 2: a clear roadmap for what to do. To follow up
Speaker 2: on the many things that are going to be talked about,
Speaker 2: and in those things they did deliver. There were a
Speaker 2: few announcements, some in the billions of dollars, some in
Speaker 2: the hundreds of millions of dollars that will make a difference.
Speaker 2: And they laid out a clear roadmap of the next
Speaker 2: eighteen months of meetings which are both international or technical,
Speaker 2: where these discussions will be had and progressed.
Speaker 1: Okay, so you said there's a few billion dollar, multiple
Speaker 1: billion dollar announcements, and you wrote a piece with our
Speaker 1: colleague Natasha White outlining some of the key takeaways from
Speaker 1: the conference. So what were your takeaways from it?
Speaker 2: So the biggest number was one hundred billion in special
Speaker 2: Drawing rights. This is a type of fund that's available
Speaker 2: to members of the International Monetary Fund that they can
Speaker 2: draw on without actually adding to the debt burden. It's
Speaker 2: a technical thing, but really important when it comes to
Speaker 2: emergency use of money. And initially that money is only
Speaker 2: available based on the size of your economy. But what
Speaker 2: develop countries have done in this new hundred billion in SDR,
Speaker 2: which is roughly worth about one hundred billion dollars, is
Speaker 2: allocated for the use of developing countries in case of
Speaker 2: emergencies and that is real money that can be available.
Speaker 2: That was the big headline grabbing number and that announcement
Speaker 2: came from Crystalline Georgia. But who's the IMF. This is
Speaker 2: what we did. This SDRs were a sleeping beauty and
Speaker 2: actually Emmanuel McCrone was the first prince with the kiss.
Speaker 3: And now this is my announcement.
Speaker 2: We have reached one hundred billion on lending of SDRs.
Speaker 2: That was our target from twenty one. We have achieved
Speaker 2: that target.
Speaker 1: When we had avannashpasod Onzia the other day, he was
Speaker 1: talking about his country, Barbados's use of natural disaster clauses
Speaker 1: and how that allowed the country to respond and actually
Speaker 1: manage when natural disasters happened. How much discussion did these
Speaker 1: kind of ideas get. At the Paris meeting, there was
Speaker 1: a systematic approach from the new President of the World Bank,
Speaker 1: a Jay Bangor, who said that they've developed what he
Speaker 1: calls a catastrophe toolkit, and it makes sense to think
Speaker 1: of it as a toolkit because it is a series
Speaker 1: of solutions that under this new President of the World Bank,
Speaker 1: they're going to try and implement, starting with funding advanced
Speaker 1: warnings systems which would allow countries to minimize the impact
Speaker 1: as it's going to come to their shores, but also
Speaker 1: providing insurance so that as soon as the impact happens
Speaker 1: that they are able to draw on some cash. Then
Speaker 1: there is the innovation that PERSO talked about, which is
Speaker 1: allowing for delay in debt repayments, so immediately money that
Speaker 1: you were supposed to pay to a bondholder would be
Speaker 1: put on hold and you would be able to get
Speaker 1: up to two years in relief so that that cash
Speaker 1: can be injected back into the economy to recover. And
Speaker 1: a series of these steps will make a difference. Some
Speaker 1: of it is going to happen through this initiative that
Speaker 1: was launched at COP twenty seven called the Global Shield,
Speaker 1: which includes insurance and advanced warning systems but also emergency
Speaker 1: help of personnel. And so the Global Shield got a
Speaker 1: one hundred million euros worth of further boost and now
Speaker 1: the total sum that can be spent through it is
Speaker 1: about two hundred and seventy million euros. So that sounds
Speaker 1: like another series of quite concrete outcomes from this meet.
Speaker 1: One of the main climate finance sticking points now and
Speaker 1: in the past. Is this hundred billion dollar figure that
Speaker 1: rich countries for a very long time have promised that
Speaker 1: they would give poor countries each year, and they were
Speaker 1: supposed to meet that commitment in twenty twenty, but that
Speaker 1: promise has gone on met. This whole conference was about
Speaker 1: climate finance. Was the problem with one hundred billion dollars addressed? Yeah,
Speaker 1: it's a good question.
Speaker 2: It's sort of the number that developing countries use as
Speaker 2: a way of pointing out the hypocrisy of developed countries
Speaker 2: wanting to do anything. The reality is, the total amount
Speaker 2: of money needed to tackle climate change is many multiples
Speaker 2: of that hundred billion dollars, but at least you need
Speaker 2: to meet that token amount, and mccron at the meeting
Speaker 2: said that he is confident, according to his experts, that
Speaker 2: this year that number will be met. Now, the complaint
Speaker 2: from developing countries has been that, well, first you've not
Speaker 2: met it, even with the math you do, and actually
Speaker 2: the math you do is not correct, and so bloo.
Speaker 2: Mcgnews was able to get Macron to answer whether developing
Speaker 2: countries will be convinced by the math this time around,
Speaker 2: and he said, I understand these concerns and we're going
Speaker 2: to order a concrete analysis, although we don't know when
Speaker 2: it's happening or whether that concrete analysis will be made public,
Speaker 2: but there seems to be call for accountability and maybe
Speaker 2: that will be met.
Speaker 1: Okay, what happened to Persoad's big idea about currency d risking?
Speaker 1: He came to us and said, this is how I
Speaker 1: want to make sure that billions of dollars becomes trillions
Speaker 1: of dollars and we get private investors to invest in
Speaker 1: developing economies to make green projects happen. Did that make
Speaker 1: any progress at the meeting?
Speaker 2: So you should definitely go back and listen to the
Speaker 2: Persa episode from two weeks ago for the detailed answer
Speaker 2: he gives around how to make it work. But in brief,
Speaker 2: if you think about that four trillion dollar figure, most
Speaker 2: of that money has to come from private capital. Now,
Speaker 2: private capital, much of it sits in developed countries, and
Speaker 2: would like to invest in these developing countries. But if
Speaker 2: they do so, they're going to make revenues in a
Speaker 2: local currency. So you build a solar plant. The solar
Speaker 2: plant is generating money in South Africa and ran now
Speaker 2: you want that money coming back to you, But that
Speaker 2: would be probably in dollars, and so this currency exchange,
Speaker 2: which can be risky given the financial risk around emerging
Speaker 2: market currencies, is a bottleneck for investors to invest in
Speaker 2: emerging economies. And person's idea was that a body that
Speaker 2: is funded by the IMF and the World Bank should
Speaker 2: come together and guarantee a currency exchange, at least partially
Speaker 2: so that investors feel more confident going into these countries. Now,
Speaker 2: at the end of the meeting, there were a series
Speaker 2: of documents that were produced. Currency exchange made it into
Speaker 2: one of those documents, and that was the discussion will
Speaker 2: be moved on to September and IMF with World Bank
Speaker 2: and TCX, which is an already existing currency exchange mechanism,
Speaker 2: are going to start to pilot how this might work.
Speaker 2: So that's concrete progress if they're going to actually try
Speaker 2: it out. Pristat's estimation is that if you make it work,
Speaker 2: you could unlock as much as one point five trillion
Speaker 2: dollars in private investments for climate solutions.
Speaker 1: And he also discussed this idea of putting taxes on
Speaker 1: things like international shipping, and that was to help fund
Speaker 1: things like lost and damage and disaster recovery in places
Speaker 1: that being impacted by climate events. Did that feed into
Speaker 1: the discussions as well.
Speaker 2: Macro actually brought it up many many times. He's very
Speaker 2: keen on putting taxes on shipping, aviation, or even international
Speaker 2: financial movement, and that would all even if small amounts,
Speaker 2: so say half a percent, point one percent or even
Speaker 2: one percent, would go a long way to bringing in
Speaker 2: billions and billions of dollars every year to fund loss
Speaker 2: and damage which would deal with climate impacts. So there
Speaker 2: was a lot of talk around that. But Macro was
Speaker 2: also very clear that any form of international tax all
Speaker 2: countries to agree, and that's a very hard thing. So
Speaker 2: he wants to start early, and he's making headway at
Speaker 2: least with the shipping tax, where France has been trying
Speaker 2: to get as many countries to agree to back this tax,
Speaker 2: and he's got about twenty three countries on his side
Speaker 2: right now. And there will be an International Maritime Organization
Speaker 2: meeting happening next week where they will discuss the shipping tax.
Speaker 5: And on this one, we do not want the North
Speaker 5: to pay for the South. We want all of us
Speaker 5: to pay, whether it is aviation tax, whether it is
Speaker 5: fuel tax, whether it is shipping tax, we want to.
Speaker 1: Pay taking all together. How does this conference, this big
Speaker 1: financial meeting, build momentum towards COP twenty eight in November.
Speaker 2: So a lot of the world leaders who were there,
Speaker 2: who talked about these ideas, know that it's going to
Speaker 2: take some time to make them come to fruition.
Speaker 1: There's this really nice clip from me and Motley who
Speaker 1: said something along the line.
Speaker 3: Nine months ago, no one was speaking about natural disaster clauses.
Speaker 3: Now we have people wanting to recognize the wisdom of
Speaker 3: it because countries do need to pause debt payments.
Speaker 2: Yeah, and so you get to see these changes as
Speaker 2: they happen, but you're also realistic about how much time
Speaker 2: is going to take, and so creating deadlines to make
Speaker 2: these things happen is quite important, and copy events which
Speaker 2: come once a year are a good moment to make
Speaker 2: that happen. But the big thing for me, as somebody
Speaker 2: attending the event was the show of force. There were
Speaker 2: fifty world leaders, Okay, not everybody, but twenty five African countries,
Speaker 2: nearly half the continent, Germany, France, China, Brazil, large economies
Speaker 2: that really want change to happen. On the very final day,
Speaker 2: they all sat in a semicircle with Macron at the
Speaker 2: heart of it, holding court, getting everybody's opinions, views, noting
Speaker 2: them down, and concluding with what is it that needs
Speaker 2: to be done? That kind of discussion around one topic
Speaker 2: of climate finance or financial reform to deal with debt
Speaker 2: isn't something I've attended and it felt energizing. Now, how
Speaker 2: much comes off it is really dependent on the people
Speaker 2: attending and whether they can take it all the way.
Speaker 1: ATCHA, thank you very much, Thank you, thank you for
Speaker 1: listening to Zero. If you found this explaining useful, please
Speaker 1: take a moment to rate and review the show on
Speaker 1: Apple Podcasts or Spotify. If you've not yet listened to it,
Speaker 1: you should definitely go back and listen to our episode
Speaker 1: with Avanashpressod to get more background on what we've talked
Speaker 1: about today. We've linked more reporting, including actat and Natasha's
Speaker 1: article on the Paris meeting. In the show notes. Zero's
Speaker 1: producers me Oscar Boyd and our senior producer is Christine driscoll.
Speaker 1: Our theme music is composed by Wandery. You can get
Speaker 1: in touch with us at Zero Pod at Bloomberg dot Net.
Speaker 1: Special thanks to Natasha White and Carabindrim. We'll be back
Speaker 1: on Thursday.