The Summit for New Global Financing Pact (PACT) in Paris, capital city of France, has become a highly recognized event as it seeks to review the key challenges and obstacles influencing the global development. As the summit title seemingly implies, the finance is the main determining factor. There also other factors such formulation of polices and approaches, climate change and the geographical environment.
A critical glimpse across the world shows wide disparities in the state of development today which many well-experienced researchers and analysts also say are primarily due to geopolitical factors. These experts consistently referred to as Global North and Global South divide. We heard of economic terms or categorization such as “highly-developed” or “industralized” world and “least-developed” or “developing” nations largely situation in the South.
With the current rapidly changing situation, some have attempted to explore political theories, for instance, “imperialism” and “colonial tendencies and practices” to show convincingly tell the world what nations in different part of the world as the worst development collaborators, and that the United States and Europe under-developed Africa and a number of nations in Asia and Latin America.
International Monetary Fund (IMF), the World Bank and other financial institutions have, at different times, blamed for exercising full-fledged control of and imposing stringent rules or conditions on their crediting nations. These creditors are trapped in debts. Currently, China is described as creator od “debt-trapped African nations” in its bilateral relations with the African continent.
At the start of the Summit for a New Global Financing Pact (PACT) in June 22 to 23 which gathered world leaders, hunan rights organization Amnesty International in its media release suggested that finance summit must deliver urgent assistance to countries struggling with debt and climate crises, and that wealthier nations must commit to comprehensive debt relief for lower-income nations, including the cancellation of loans and to the scaling up of foreign assistance to vulnerable countries.
Tellingly we can further underscore the fact the wealthier nations honour previous financial pledges which most of them have failed to meet and adopt new ones which guarantee the rights of people in lower-income countries. Supporting its argument, it pointed concretely to an adequate standard of living and to social security are enshrined in the 1948 Universal Declaration of Human Rights, as well as the International Covenant on Economic, Social and Cultural Rights.
According to report, this human rights have been ratified by more than 170 countries. Article 2 of the ICESCR obliges states to take steps, including through international cooperation and assistance, to support other states to meet their economic and social rights obligations.
“Many vulnerable, lower-income states have been overwhelmed by economic shocks, debts they cannot pay, and the effects of climate change – a crisis to which they contributed very little, but which is costing people in these countries dearly. These are unprecedented challenges that require a rethink of how the world’s financial architecture is set up,” said Agnès Callamard, Amnesty International’s Secretary General.
“The rights of many people in vulnerable countries to access healthcare and social protection are not met at even the most basic level. There is a vital need to provide financial and technical assistance to these countries so that they can scale up social protection schemes to guarantee people’s right to an adequate standard of living.
“Unsustainable levels of debt can have grave implications for economic and social rights. The cost of servicing existing debt can divert essential financing away from crucial social spending. Coordinated international action offering debt relief can transform the ability of governments to invest in economic and social protections, supporting their capacity to protect the rights of their people,” according to Callamard.
In her objective views, “All creditors – states, private creditors, and international financial institutions – should cooperate to ensure timely debt relief for all countries in and at risk of debt distress and consider all options, including debt restructuring and debt cancellation.”
All states should support and fund the establishment of a global social protection fund to help countries that are struggling to provide adequate protections, as advocated by the International Labour Organization and UN Special Rapporteur on Extreme Poverty and Human Rights.
Callamard described as regrettable many states, and civil society organizations and social movements representing communities worst affected by these crises, will not be represented at the summit. Those most exposed to the effects of climate change and national indebtedness should be allowed to contribute to discussions and engage in reforms that can achieve climate justice and economic security.
Whether the Paris meeting, called by France’s President Macron outside of the usual UN framework for discussions, is an appropriate forum for the substantial reforms required is questionable. “Nonetheless, we urge the summit’s participants to recognize the urgency of this unfolding crisis and encourage them to harness the growing momentum for change. It is crucial that they enable further progress at the G20 Leaders’ Summit and COP28 climate meeting later this year,” she further explained.
As widely-known and discussed, climate funding is another controversial question in the world. Conferences and summits have attempted to find financial mechanisms and strategies for the climate change. According to well-known fact, lower income countries cannot fairly phase out fossil fuels, protect people from the harms of the climate crisis and provide remedy to those most affected if wealthier states continue to evade their obligations of international cooperation and assistance under human rights law and the commitments taken under the 2015 Paris Agreement and the United Nations Framework Convention on Climate Change to provide climate finance to developing countries.
Change change related developments, without doubts, need huge finance. But wealthy countries have failed to fulfil a pledge to provide $100 billion annually to help states mitigate and adapt to climate change. A separate loss and damage fund has yet to be funded and become operational. A climate meeting in Bonn this month was hampered by disputes between wealthy and developing countries over climate finance.
Agnès Callamard, without reservation, reiterated that there have to be “commitments to ensure urgent and sufficient relief for nations in debt distress, and more grants, are required to support those states struggling to protect the rights of people against the devastating impacts of the climate crisis and other disasters.”
“With average global temperatures rising and set to far exceed the 1.5˚C increase over pre-industrial levels previously agreed to, the world is standing on the precipice of a climate disaster. This summit should offer a chance for global leaders to protect the rights of the world’s most marginalized people, not move the burden further onto those who are suffering the most but contributed the least to causing this crisis,” she added.
There is one more question, this connects tax and financial reforms. Many still believe that the global financial system has failed the people most at risk from an unprecedented combination of crises, and fundamental reform to make it more inclusive, sustainable, and equitable is long overdue.
Given geopolitical contradictions and complexities, one more critical point of focus is formulating new pacts and financial modalities to address the current global economic crisis and climate change. In this context, Amnesty International shares many of the concerns about this summit made by civil society organizations and some Global South countries, including the absence of a scheduled discussion on a UN Tax Convention and Tax Body to create fairer global tax governance, and on the imperative to shift finance away from fossil fuels and towards economic and social rights.
At this point, the summit primarily seeks to rally political leaders and representatives of global financial institutions. The new financing system will address inequality, debt crisis, climate change, international taxes, and special drawing rights. It will be more inclusive and fairer. Therefore, at least, there are solid grounds to rethink the contract between the countries in the Global North and the Global South.
Most of their conditions are usually unfavourable to many creditors; however, much again depends on the crediting countries’ implementable policies, approaches and economic goals. At this point, we must ponder a few questions: How does the summit fit into a global context defined by the sweeping consequences of persistent economic, climate, health and energy crises, mainly in the most vulnerable countries? What do we expect from the summit, and what next after all these?
In summary, we seriously expect the summit to formulate comprehensive proposals for innovative financing sources, particularly those from the multilateral development banks. This will ultimately benefit developing countries, including those in Global South including Africa. Further, the international institution’s interventions will effectively address and reduce or minimize the vulnerability of economic shocks due to global instability from the pandemic and Russia-Ukraine crisis. We equally expect some reforms in the global financial infrastructure to create a just, sustainable and equitable world.
In November 2022, on the sidelines G20 Summit and the conclusion of a COP27 Summit with mixed results, French President Emmanuel Macron called for a global conference in Paris in June 2023. Macron announced that the Paris Summit would take stock “of all means and ways of increasing financial solidarity with the Global South.”
Macron’s announcement happened in a particular global context. The climate change crisis particularly threatens the Global South countries, including island states. Thus, the Barbados Prime Minister, Mia Mottley, has led an initiative to finance climate action since COP26. The “Bridge Initiative” focuses on facilitating access to global financing for the countries most vulnerable to climate change. The funding allows them to respond better to climate challenges.
Macron’s announcement aligns with the Bridgetown Initiative. However, the Paris Summit will deliberate on financing issues beyond the climate question, including the fight against poverty. The Covid-19 pandemic, the Ukrainian conflict, and the accompanying consequences have massively shrunk the budgetary and fiscal space for many countries, including Africa. This has affected their ability to finance citizens’ access to basic social needs and services. Consequently, the UNDP observed a human development decline in nine out of ten countries globally in 2022. The fall has mainly come from increased poverty levels and a drop in life expectancy.
Objectives for the Paris Summit: Catherine Colonna, the French Minister of Europe and Foreign Affairs, in a statement on January 6, 2023, noted that the Paris Summit would focus on building a new pact with a Global North and a Global South. According to her, the new arrangement would facilitate vulnerable countries’ access to the necessary finance to address the effects of the current and future crises.
The two-day gathering was organized by French President Macron. The meeting was inspired by the Bridgetown Initiative, a framework agreed in 2022 in Barbados to reform the global financial system and address the debt, climate, and cost-of-living crises. The New Global Financing Pact held in Paris from 22-23 June.
The high-level international steering committee composed of states and international organizations oversees the Paris Summit preparations. It includes France, South Africa, Senegal, the United Arab Emirates, the United Kingdom, the United States, Germany, Barbados, Brazil, Japan, China, India, the United Nations Secretariat, the European Commission, the OECD, the World Bank and the International Monetary Fund.