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Climate: The Sorcerer's Apprentices of the World Bank and IMF

Climate: The Sorcerer's Apprentices of the World Bank and IMF


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By Éric Toussaint

In late October 2006, Nicholas Stern, the British government's economic adviser sent Prime Minister Tony Blair a 500-page report on the effects of ongoing climate change and the means to combat it. Implicitly, the diagnosis contained in the report constitutes a condemnation of the policies applied by the IMF and the World Bank

In late October 2006, Nicholas Stern, the British government's economic adviser sent Prime Minister Tony Blair a 500-page report on the effects of ongoing climate change and the means to combat it. In his report, Nicholas Stern states: "Climate change is going to deteriorate the basic living conditions of the population of the entire planet - access to water, food production, health and the environment" [1]. Implicitly, the diagnosis contained in the report constitutes a condemnation of the policies applied by the IMF and the World Bank, of which Nicholas Stern was chief economist [2]. This article compares the Stern report with the positions taken by the main leaders of the World Bank, the IMF and the government of Washington, over the last fifteen years. It also takes up the report that the World Bank devoted in 2006 to natural catastrophes. The World Bank published an analysis that contradicts what it had claimed until then. It tries, as a discourse, to limit the credibility crisis that affects it, but without abandoning its orientation in favor of everything to the market and its adherence to the destructive productivist model of human beings and the environment. As for the Stern report, although it contains very interesting judgments, it does not even manage to outline an alternative to the productivist model and the frantic search for growth.

Changing positions of the World Bank leadership


While many voices have drawn attention since the early 1970s to the dangers of unlimited growth and the consequent depletion of natural resources, the leaders of the World Bank and the IMF claimed until recently that there was no danger to the Earth. Lawrence Summers, chief economist and vice president of the Bank from 1991 to 1996 and then Secretary of State for the Treasury during the presidency of William Clinton, declared in 1991: " There are no (…) limits to the absorptive capacity of the planet capable of blocking us for the foreseeable future. The risk of an apocalypse due to global warming or any other cause is non-existent. The idea that the world is running towards its doom is deeply false. It is also a profound mistake to think that we should impose limits on growth due to natural limits; it is also an idea whose social cost would be staggering if it were ever Apply" [3].

In a letter to the British weekly The Economist, published on May 30, 1992, he wrote that in his opinion, and even taking the most pessimistic scenario: "Wielding the specter of our impoverished grandchildren if we do not confront global environmental problems is pure demagoguery." Added : "The argument that our moral obligations towards future generations require special treatment of environmental investments is stupid" [4].

The positions taken by Lawrence Summers caused a veritable outcry of outrage at the time, and five years later, in 1997, Nicholas Stern (future Bank Chief Economist) wrote it in the Bank-sponsored book to describe his first half century of existence: "The Bank's commitment to the domain of the environment has been questioned by some after the publication, in late 1991, by The Economist magazine of excerpts from an internal service note written by Lawrence Summers, to at the time chief economist. The internal service note suggested the possibility that environmental issues were overestimated when it comes to developing countries; these countries could reduce their marginal costs by trading or tolerating polluting substances "[5].

In complete opposition to the reassuring statements of Lawrence Summers, cited above, predicting that global warming would not reduce growth by more than 0.1% per year over the next two centuries, Nicholas Stern states in 2006: "The The report estimates that if we do not act, the costs and risks of climate change together will represent the equivalent of a loss of at least 5% of global GNP every year, now and forever. If a broader range is taken into account of risks and impacts, estimates of losses could reach up to 20% of GNP or more. " It's a harsh but belated denial of Lawrence Summers' claims.

Statements of the type of Lawrence Summers are not an isolated phenomenon: they reflect the dominant position of the Washington government in relation to the decisions of the World Bank and the IMF. These positions, which deny that the productivist model causes serious damage to the environment, and which also deny that climate change is underway, have been expressed by Washington at least until recently.

The many speeches by Anne Krueger, chief economist at the World Bank during Ronald Reagan's tenure and later number two at the IMF from 2000 to 2006, provide the proof. In one of them, delivered on June 18, 2003 on the occasion of the 7th St. Petersburg International Economic Forum, Anne Krueger declared: "Let us take this age-old concern that rapid growth will deplete fuel resources and that if it does occur , growth will come to a net stop. Oil reserves are more important today than they were in 1950. At that time, it was estimated that world oil reserves would be depleted in 1970. The forecast did not come true. Today, known reserves may last 40 years at the current rate of consumption. There is no doubt that by the time we get to 2040, research and development will have made new advances in the production and use of energy. "

This statement is in contradiction with all research results on oil reserves. Since the beginning of the 1990s, the volume of new deposits has been less than the progression of consumption [6].

Anne Krueger went on to say: "Nor do we cause irreparable damage to the environment. It is clear that after an initial phase of degradation economic growth then leads to a phase of improvement. The critical point, from which people choose to invest in prevention of pollution and cleaning of contaminated areas, is around 5,000 dollars of Gross Domestic Product (GDP) per inhabitant ".


This last paragraph contains two manifest errors (lies). First, the facts show that irreparable damage has been done to the environment. Second, it is not true that after "an initial phase of degradation" of the environment, "economic growth then leads to a phase of improvement." The most industrialized countries have long exceeded $ 5,000 GDP per capita [7] and yet most of them continue with a policy that implies increased pollution.

It was only in the aftermath of Hurricane Katrina in August 2005 that the White House began, reluctantly, to acknowledge the evidence.

CADTM, as well as other movements, has not expected a catastrophe like the one that hit New Orleans to reproach the World Bank and the IMF for policies that have favored climate change and that have weakened the ability of developing countries to cope. to natural calamities. The CADTM denounced the promotion made by the World Bank and the IMF of policies that favor deforestation and the development of energy mega-projects that destroy the environment [8].

Similarly, he asked the World Bank to abandon support for projects that destroy natural coastal protections such as mangroves that cushion the effects of the tsunami type [9]. The CADTM has also demanded that the World Bank suspend its loans in the extractive industries sector. Finally, CADTM has criticized the decision made by the Rio Conference in 1992 to entrust the World Bank with the management of a world fund for environmental protection. That undoubtedly leads to entrusting the fox with the care of the chickens.

The change of address initiated by the Bank

Without the slightest self-criticism, the World Bank published in April 2006 a report devoted to natural disasters. Its author, Ronald Parker, writes: "There is an increase in catastrophes related to the degradation of the environment throughout the entire planet" [10].
While the number of earthquakes remains almost constant, the number and extent of climate-related natural disasters are on the rise: from an annual average of 100 in 1975 to more than 400 in 2005. The Bank recognizes that global warming, deforestation and soil erosion have increased the vulnerability of entire regions. The Bank estimates that developing countries suffered damages of at least $ 30 billion per year. As stated by Lester Brown, director of the Earth Policy Institute: "This Report highlights that, although we continue to label disasters as 'natural', they are sometimes clearly of human origin" [11].

Nicholas Stern's report on global warming

Nicholas Stern is very clear: the least industrialized countries, although less responsible for global warming, will be the most affected: "All countries will be affected. The most vulnerable - the poorest countries and populations - will suffer earlier and earlier, even if they have contributed. much less climate change. " He adds, in complete contradiction to the philosophy of the proponents of neoliberal globalization, that: "Climate change is the biggest market failure the world has ever known and it interacts with the other market imperfections."

That said, Nicholas Stern does not propose any alternatives to the productivist model and the capitalist market at all. On the contrary, his report aims to sound the alarm bells so that sufficient funds are devoted to the costs of industrial reconversion and protection of the environment, in such a way as to allow the continuation of this blind growth. It affirms that humanity can be both "green" and "pro-growth" ("green and growth")

He explains that the environmental protection market is going to offer a new market niche to the private sector to make a profit. And to crown all this, he explains that since developing countries pollute less than industrialized countries, while suffering more from the effects of global warming, they will be able to sell rich countries rights to continue polluting. With the proceeds from the sale of the rights, they will be able to finance the repair of the damages suffered by their population.

conclusion

Once again, supporters of the dominant productivist model have begun by denying the existence of a crucial problem, in this case environmental damage and global warming, and have continued to vigorously promote policies that would aggravate the situation. Later, when the situation became unsustainable, they launched the scoop in the international media by publishing a report on the subject, trying to give credence to the idea that international institutions and the governments of the most industrialized countries have become aware of this serious problem. , in fact voluntarily hidden for decades. In short, the defenders of the current system make people believe that the system is in a position to provide a solution to the problem of which is the fundamental cause, thus allowing its own perpetuation. It is urgent to understand that the only just and lasting solution passes precisely through the questioning of this productivist capitalist system, structurally generator of environmental damage and galloping inequalities.

* Eric Toussaint
More information: http://www.cadtm.org
Translated by Guillermo Parodi. Reviewed by Griselda Pinero

Notes:
[1] Nicholas STERN, STERN REVIEW: The Economics of Climate Change, October 2006. All references to the Stern Report in this article come from its conclusions. The full Report can be accessed on the UK government website. [2] Nicholas Stern was Chief Economist and Vice President of the World Bank from 2000 to 2003. [3] Lawrence Summers, on the occasion of the annual meeting of the World Bank and the IMF in Bangkok in 1991, interview with Kirsten Garrett, "Background Briefing", Australian Broadcasting Company, second program. [4] "Summers on Sustainable Growth", Lawrence Summers letter to The Economist, May 30, 1992. [5] Nicholas Stern and Francisco Ferreira in Kapur, Devesh, Lewis, John P., Webb, Richard. 1997. The World Bank, Its First Half Century, Volume 2: Perspectives, p. 566. [6] In Alternatives économiques, n ° 239, September 2005 [7] GDP per capita exceeds $ 20,000 in the countries of North America, Western Europe, Japan, Australia and New Zealand. [8] See especially, Eric Toussaint, External Debt in the Third World: Finance against the People, New Society-CADTM-CSAPN, 1998, chapter 9. [9] Damien Millet and Eric Toussaint, The Tsunamis of the
debt, Icaria - Intermon, Barcelona, ​​2006 [10] Cited in the Financial Times, April 22-23, 2006. [11] Quoted in the Financial Times, April 22-23, 2006.


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