St. Vincent’s (SVG) Prime Minister Ralph Gonsalves says, the Paris Summit on a ‘new Global Financing Pact’ was a work in progress, not a definitive conclusion.
The Summit was held to organize financial help for developing and low-income countries (DLICs) facing the challenges of excessive debt, climate change, and poverty, but despite the lofty title, it only generated a road map.
Gonsalves stated on state radio on Wednesday, June 28, that developed nations are interested in tinkering but do not desire significant changes.
“They will make some nice-sounding general statements but no fundamental change. It’s unlikely we’re going to see any fundamental change or the prospect of any fundamental change until after the next general elections in the United States of America in November 2024”.
“If the Congress that the American people put together and if they have a president who turns his back against all of these things, well, that’s the end of that, and if that happens, the rest of humanity will have to construct alternative systems while not doing away with the World Bank and the IMF.”
Gonsalves says the alternatives are already being put into place.
“It is beginning to happen with the BRICs. Brazil, Russia, India, China, and South Africa, but this matter is complicated because of the strength of the United States. Even though it is the reserve currency, the United States dollar is declining in importance”.
In the 1970s, the US dollar held more than 80% of the reserve currency market. It is now less than 60% of the total amount of reserves, and nations such as Saudi Arabia have begun to deal with China with Chinese yuan. Russia and China conduct business in rubles and yuan.
According to Gonsalves, the BRICs would like to trade in a BRICs currency or a basket of currencies.
“These are ideas that are being fashioned; the question is where the resources are going to come from. There are transformative proposals that there should be a special global tax on air travel, sea transport, fossil fuels, energy production and distribution, and Big Pharma and the oil companies. However, any serious consideration won’t come until after the US elections, and it all depends on the outcome”.
Gonsalves says the world is in a very interesting period of flux and potential change, but the forces that want to hold back change are still very strong and powerful.
The Paris Summit exhibited the potential and limitations of the plurilateral approach.
The results of the Summit were contained in the Chair’s summary of discussion, essentially reflecting participants’ appeals and statements of wishes rather than new commitments by countries. In fact, the United States—a key country in any international undertaking—has been lukewarm at best about several proposals to raise funding, including worldwide taxation of CO2 emissions in shipping and aviation, of financial transactions, and of fossil fuels in general.
Secretary Yellen reiterated that multilateral development banks (MDBs) should try to optimize the use of their balance sheets to provide more finance to climate-related projects before asking members for more capital.
