On August 21 the UN News Serviceunder the heading “WITH DROUGHT INTENSIFYING WORLDWIDE, UN CALLS FOR INTEGRATED CLIMATE POLICIES declared that more “consolidated efforts to combat the threat of climate change and counter its ripple effects on global food security are needed”. In http://www.wmo.int/pages/mediacentre/press_releases/documents/954joint.doc the World Meteorological pointed to the “intensifying global drought and increasing temperatures worldwide”. Together with the Convention to Combat Desertification and other UN agencies it presented various ways for nations to coordinate their climate policies.
Though this need for coordinated action on the national level is very important, time has come to change the mindset of national climate policies into one that emphasizes a whole world mindset. National coordinated climate policies are to be integrated into global monetary, financial, economic and commercial systems to make them more effective.Thus, integrating national climate policies into a carbon-based international monetary system, i.e. a monetary system with a specific tonnage of CO2e per person as a monetary standard, would these climate policies more effective.
Though droughts have plagued humankind all through its history, droughts and increasing temperatures due to the warming of the climate is something new and bodes ill for the future of people, species and planet. It is this novel combination of drought and heat requires new thinking. Having nations assisted by UN agencies to cope with this novel phenomenon ofheat droughts is insufficient and demands at least search for new global approaches such as presented in the proposed carbon-based international monetary system of the Tierra Solution.
A month has passed since the concluding of the Rio 2012 Earth Summit on June 22. It is an appropriate time to evaluate the impact of The Tierra Solution (TSN) by considering its impact before, during and beyond the conference.
There were about a dozen interventions during the preparatory process of the Summit, both physical at UN meetings and conferences and electronic by the participation in various dialogues and listservs. Most notable physical interventions were 1. At the Stakeholder Forum’s (SF)May 2010 thatpreceded the first PrepCom in New York and which, later on, resulted in having SF accept the TSN as one of its ten thinkpieces in its series of Sustainable Development Goals (its executive director Felix Dodds wrote the preface of the TSN Book ); 2. At the UNITAR/Yale conference on global governance of September 2011 where both my panel presentation and an accompanying flyer were made part of the proceedings; 3. At the DPI/NGO Conference of September 2011 in Bonn which resulted in line 265 of its Declaration where governments are asked to “rethink the international monetary system and a carbon standard”; 4. At two CoNGO committees in New York, i.e. the Sustainable Development Committee in May with its PowerPoint presentation on Monetary Justice in May resulting in recommendation 10 to considering monetary justice as the guiding principle for global governance and the Financing for Development Committee in June with its PowerPoint on Transformational Finance (TF) which resulted in an edited one hour video and several members interested in forming a TF Working Group. During the PrepComs, Intersessionals and Informals I generally produced a golden rod circular for each occasion specifically relating the topic at hand with the TSN. Thus, a circular was produced arguing for a 10th Sustainable Development Goal (SDG) when civil society argued for 9 SDGs during the discussion of the green economy during the spring of 2012.
My main electronic engagement before the Summit was 1. The inclusion of the TSN as a global governance proposal into the Compilation Document of October 2011 which contained some 700 submissions of government, business and mostly civil society—it was the basis for the formulation of the famous Zero Document; 2. My participation in the Sustainability Treaty process by submitting the People’s Treaty on Monetary Transformation; 3. My participation with the Rio Dialogues, a worldwide process of determining solutions, organized by the Brazilian government and the UNDP. I participated in 3 of the 10 issue areas, several times making the point that a most important area was not included, i.e. integration of the issue areas or guiding principles. My main recommendation was that civil society support the G3 nations, some 4 dozen of them, in their proposal for a 2013 global governance conference that would also include the consideration of integrated sustainability approaches such as the TSN. It was also the main recommendation I made to the People’s Earth Summit, the more radical civil society group. The main outcome during the Summit’s Dialogues voting was focused on removing the subsidies for fossil fuels, an important element in the TSN’s decarbonization component of the Fee & Dividend approach; 4. The inclusion of the Rio challenge in the two online courses on climate and sustainable communities presented by the National Peace Academy together with Earth and Peace Education International.
So far as I know now, monetary transformation at the Summit itself was only once brought up in public by the comments by Leida Rijnhout the executive director of ANPED (the Northern Alliance of NGOs) who was also instrumental in having the Bonn Declaration include the need for monetary transformation.
It was on June 20 that the publisher of The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation officially launched the book at http://cosimoblog.blogspot.com/2012_06_01_archive.html and it was a week later that I hired a publicist to reach her 5000 media outlets. In two weeks, about half a dozen responses were received, but none of the larger media (yet).
There are about half a dozen projects to connect Rio with the TSN. 1. A panel on connecting Rio (development) with Doha (climate) is being organized for the end of September with the former president of CoNGO together with the book launchings of the TSN and his book on values; 2. An online course on Monetary Justice has been scheduled for October 2012; 3. A PP presentation on monetary peace will be presented at the PJSA (Peace and Justice Studies Association) conference in October; 4. Several activities in preparation and participation at the UNFCCC Conference atDoha in November/December, showing how the TSN is one of the few alternatives for an integrated global governance system that would bridge the development and climate realities; 5.Working with The Widening Circle Campaign , phase 2, a major civil society effort to build a global citizen movement that originated in Rio; 6. Using the social media via the www.timun.net , particularly YouTube and LinkedIn networking group at http://www.linkedin.com/groups/Tierra-Solution-International-Networking-Group-4496959?gid=4496959&report.success=7GcSc9MenMD5-zxa-kN_TToM-x5janvu_HMEw0LwSaLTiMXToFk2hhLiKanEipLCLCi2aHOMY2Q0YQnTDIu0oJnh-x5wKBYTHQ 7. Finishing an article on “The Rio 2012 Earth Summit: Its problem and Challenge” emphasizing the need for a conceptual, institutional and strategic vision of integrated global governance. 7. A publishingstrategy to highlight the TSN using topics such as a) integrated global governance; b) transformational financing for development and climate; c) transformational decarbonization; d) monetary justice; e) the 10th Sustainable Development Goal, which would integrate the 9 SDGs of the Green Economy Coalition.
No lasting and profound progress can be made in this triple C approach to FfD unless all stakeholders are aware of and are able to agree on the underlying assumptions in the global monetary, financial, economic and commercial systems that are part of FfD.
ANSWERS TO THE TWO TOPICS UNDER DISCUSSION
“Promotingsustained, inclusive and equitable economic growth, job creation, productive investment and trade”
The NGO Coalition for Green Economy is holding on line discussions about 9 Global Green Economy principles in preparation for the Rio 2012 Earth Summit. These principles are eminently applicable to the first of the two topics of this high-level ECOSOC consultation. Those principles are:
1. A green economy delivers sustainable development; 2. A green economy delivers equity - The Justice Principle; 3. A green economy creates genuine prosperity and wellbeing for all - The Dignity Principle; 4. A green economy improves the natural world - The Planetary Boundaries, Earth Integrity and Precautionary Principle. 5. A green economy is inclusive and participatory in decision making - The Inclusion Principle. 6. A green economy is accountable. - The Governance Principle. 7. A green economy builds economic, social and environmental resilience - The Resilience Principle. 8. A green economy delivers sustainable consumption and production - The Efficiency Principle.9. A green economy invests for the future - The Intergenerational Principle.
A 10th principle has been presented by the International Institute for Monetary Transformation that would integrate these principles under the concept of monetary justice in its regular and transformed sense of the terms. It can be formulated, following the format of the above 9 principles as:
“10. A global green economy without an equitable, sustainable, and, therefore, stable global monetary system will not be effective—The monetary justice principle.
A monetary standard other than the pure or flexible gold standard is to be developed so that volatile exchange rates, currency manipulation and speculation and financial imbalances can be reduced. Adopting the SDR as the major reserve currency is an intermediate step on the road to the removal of the expensive global reserve system when currencies have become convertible or a world currency has been adopted as part of a standard-based international monetary system such as proposed in Verhagen 2012 The Tierra Solution: Resolving the Climate Crisis Through Monetary Transformation. (The book, published by Cosimo Books, will be on the market in the middle of next month.)
It proposes a carbon-based system, called the Tierra Fee & Dividend (TFD) system with the Tierra as its unit of account, and Fee & Dividend, not cap-and-trade, as its carbon reduction method. Beside the carbon standard of a specific tonnage of CO2e per person, this carbon-based international monetary system would also have a balance of payments mechanism that balances both the financial and ecological (climate) credits and debts in one integrated payment system. The system would be governed by a Global Central Bank with administrative, regulatory and exclusively held money creation functions, so that its member states are bound together in a properly structured monetary union that would maintain balanced fiscal policies.
The Declaration of the Bonn DPI/NGO Conference of September 2011 attended by over 2000 NGO representatives has asked governments to “rethink the international monetary system to be based upon a carbon standard” (line 265) and Maurice Strong believes such system is “innovative” and could possibly function as an alternative to the Kyoto Protocol.
The main reason for including the monetary principle together with its credit-based financial system and 100% reserve banking as a 10th principle is that such inclusion provides an integration of the three pillars of sustainable development, the three C’s of FfD andthe 9 principles above.
“Financing of sustainable development”
No lasting and profound sustainable development is possible unless it explicitly connects with the challenge of climate change because climate changes disrupt now and will disrupteven more in the future any attempt for sustainable development. Thus, a financing system for sustainable development without a green economy framework that does not give essential attention to the challenge of disruptive climate changes will be ineffective. Consequently, adopting a carbon-based international monetary system would provide not only ample financing for development, but also for climate adaptation and mitigation measures. Such system would push nations to decarbonize their societies in order to combat climate change because the strength of their economies and their currencies would depend on it.
The first step in the support of the development and implementation of this Tierra global governance system is for nations to decide at the June Rio Earth Summit to have the UN General Assembly pass a Resolution to establish the UN Commission of Experts on Monetary Transformation, Climate Change and Sustainable Development which would explore the pros and cons of carbon-based systems, such as the TFD.Their recommendations would be part of a Monetary Agenda for Climate and Development Action which would include a blueprint for financing of development and climate.
THE UN’S ZERO DRAFT, THE RPRP REPORT AND THE MONETARY CHALLENGE
Monday, January 30, 2012
During this month of January 2012 the UN Headquarters have been abuzz with both the Zero Draft produced by the two co-chairman of the Bureau for the Commission on Sustainable Development and the Resilience of People, Resilience of the Planet (RPRP) by the High-level Sustainable Development Group (GSP) established on August 9, 2010 by SG Ban Ki-moon. Both of these two products, a draft and a report, are inputs into the Rio 2012 Earth Summit process.
How do they stack up in respect to a carbon-based monetary transformation as proposed by the International Institute for Monetary Transformation?
The Zero Draft is a minimalist document based upon a compilation document that had a very wide range of views, practices and proposals. It was a great disappointment to many that this draft had not more substance.
The RPRP report which was launched today in Addis Ababa, is a serious attempt to analyze the present world situation,it points to 8 drivers of change and proposes recommendations, one of which is the important one dealing with a Global Sustainable Development Council. It would replace the nearly two decades old Commission for Sustainable Development which received failing marks.Recommendations 52 and 53 read: “263. Governments should consider creating a global sustainable development council to improve the integration of the three dimensions of sustainable development, address emerging issues and review sustainability progress, with meetings held on a regular basis throughout the year. This body could be a
subsidiary organ of the General Assembly and would replace the Commission on Sustainable Development. It would need to have a broad geographical and political membership and to fully engage relevant international institutions —including United Nations agencies and the international financial institutions —and non-State actors from civil society, the private sector and science. 264. Such a council would develop a peer review mechanism that would
encourage States, in a constructive spirit, to explain their policies, to share
experiences and lessons learned, and to fulfill their commitments.”
Though the global economy was mentioned many times, both in terms of past and future developments, and its connection with the financial system highlighted several times, the terms monetary and monetary system, let alone monetary transformation, was not mentioned. The monetary connection with the financial system could have been identified, both analytically and programmatically.
An important event in terms of a carbon-based international monetary system was a meeting on January 26 at the New Economics Institute in Manhattan where some forty representatives of NGOs held their first international consultation on the production of NGO sustainability treaties for Rio 2012 Earth Summit. These treaties would be similar to those over three dozen sustainability treaties produced during Rio 1992. About a half a dozen participants expressed interest in being part of the treaty cycle on monetary transformation. I volunteered to send the first draft of this treaty to them for their feedback and expand the treaty cycle after their comments. This draft will be uploaded to the www.timun.net in the next couple of days.
The following presents the rationale of why the G20 and the Rio negotiators should consider taking monetary justice as the basis for their negotiations. Hopefully, the reader agrees with this rationale and signs the Petition which can be found at www.change.org and search for monetary justice.
MONETARY JUSTICE to be the basis for the G20 and Rio 2012 Earth Summit deliberations.
Addressed to: Mr. Sha Zukang, Secretary-General of Rio+20 Earth Summit
President Sarkozy, President of G20 for 2010-11
Monday, October 17, 2011
Why it is important?
The international monetary system, functioning as glue, binds together the global monetary, financial, economic and commercial systems. The present international monetary system, characterized by a fundamentalist free market system, by financial imbalances and their volatility of exchange rates with their associated disputes about managed and market-based exchange rates, by currency speculation and manipulation, its lack of effective regulation of capital flows and derivatives and, last but least, by a costly global reserve system with its unfair seignorage system, is unjust, unstable, and unsustainable. It is unjust because mostly operates for the benefit of hard currency countries while the rest of the world and the global economy itself suffer. Because the international monetary system is unjust, it is unstable and unsustainable.
Making monetary justice the basis for G20 and Earth Summit negotiations would consist of three major challenges dealing with needed transformational changes in the privately-owned banking systems, in the debt-based financial system and in the dysfunctional international monetary system which is called criminal by Nobel Prize economist Robert Mundell. First, banks are to become utilities without the privilege of creation money. Second, the financial system is to be based on money or credit which only the government can create and circulate into the economy. The Chicago Plan of the 1930s, proposed by many outstanding economists to deal with the Great Depression, is an example of such system Cf. www.ami.org Thirdly—the most challenging transformational change of all—the international monetary system is to be based upon a standard, not a gold, but carbon standard and governed by the Global Central Bank with its administering, monitoring, regulating and money creating functions. This novel concept is presented by www.timun.netwith its forthcoming book entitled THE TIERRA SOLUTION: Monetary Transformation, Climate Change and Sustainable Development.(Cosimo Books January 2012) Adopting such carbon-based international monetary system would constitute a global monetary governance system that could be the basis of a comprehensive global governance framework beyond Rio 2012.
In conclusion, signing this petition means that you believe that monetary justice is needed in global deliberations and negotiations to transform the global monetary, financial, economic and commercial systems so that humanity can live in social and ecological peace in the 21st century. (For context, seehttp://www.earthsummit2012.org and the September 2011 DPI/NGO Declaration where governments, among many other things, are called upon in Line 265 “to rethink the monetary system to be based on a carbon standard.”)
The decision of the Japanesedelegation at the very first day of the UN Framework Convention on Climate Change not to inscribe their climate pollution measures during the second commitment period of the Kyoto Protocol and even not to support the commitment period at all can be considered to be the first nail in the coffin that is the Kyoto Protocol. This historic decision is the beginning of the demise of the Kyoto Protocol and its market-based approach of cap-and-trade and its offsets.
This is the destruction that took place in Cancun where the conference had to be extended to come to a conclusion that the parties agreed to disagree about the targets of 1.5 or 2 and a couple of other issues. Where is the creative part in this memorable conference of COP16? The creative part, in my opinion, consists of three quite different elements.
The first creative part consists of the reinstatement of the threatened multilateral process by the adoption of the Cancun Agreements on many important and disputatious issues that seemed to be out of sight in the first week of the negotiations.
The second creative component is the increasing strength of civil society by the ever increasing network, both quantitatively and qualitatively, who is willing to continue to do battle till governments become serious about the climate change peril. The second element is the vision that is being born, particularly the need of the carbon budget approach that is proposed by India and the intergovernmental South Center in Geneva. In June India had organized an international conference on the carbon budget during which both Germany and France, not the US, were prominent participants.
During the side event on Wednesday December 7 on carbon budget I raised the question whether we should not place this approach in the larger framework of a carbon based international monetary system which was considered a valid and interesting question. Both the Indian minister of the environment and his academic counterpart of the Tata Institute responded that more information is needed, an approach that can not be said about panelists in other side events. As a matter of fact in another side event panelists held forcefully forth on the challenge of effective monitoring to my monetary question.
Why should carbon budgeting and other climate change issues be placed in the larger context of a global monetary governance system? The main reason is that global challenges such as climate change and the MDGs have to be dealt with a global monetary approach. If that were done, nations could create the liquidity needed for these challenges without creating inflation. Presently, high-income nations in the North are expected to fulfill their financial promises to fund the programs of these two challenges while their own economies perform very poorly operating under heavy sovereign debt loads, high unemployment and austerity budgets. These national funding approaches to the two global challenges are unpredictable, ancient and ineffective.
During the conference the International Institute for Monetary Transformation presented two press conferences, one dealing with the alternatives to the KP and the other dealing with the need for inclusion of monetary governance in the Rio 2012 Earth Summit. Both were very sparsely attended, though IIMT’s media advisory in its 18 point heading “THERE ARE ALTERNATIVES TO THE KP” went like hot cakes. With different foci, both press conferences contained the same message: a carbon-based international monetary system is needed to deal with the financing of the millions of good local mitigation and adaptation programs. That message was also communicated to senior Japanese negotiator Nakano in a forty minute exchange of views and even to Ms Figueres, UNFCCC Executive Secretary, in a request for a short meeting.
How can the present dysfunctional international monetary system that is called criminal by Nobel Prize winner economist Robert Mundell be transformed to fulfill its linchpin role in making the other global systems work and respond to the climate crisis? For two years the IIMT has been engaged in finding the answer to that most important question. Its importance became ever clearer during the two week conference in Cancun by focusing on the many financing proposals that created more funding institutions, but with less committed funding. The new Global Green Fund under the UNFCCC is still empty.
By introducing a carbon-based monetary standard of a specific amount of tonnes of CO2e per person nations’ currencies become convertible. Though nations can maintain their own currencies, their value is determined by the carbon standard of which the Tierra is the unit of account. Thus, the strength of a nation’s economy and consequently its currency is dependent on the level of decarbonization of its industry and the life styles of its citizens. The introduction of this Tierra carbon-based international monetary system also leads to carbon accounts in a nation’s balance of payments. These carbon accounts have to be balanced and thus nations have to deal with ecological imbalances besides financial imbalances. Given that nations in the South are carbon creditors and financial debtors and nations in the North are carbon debtors and financial creditors, there is room for substantial substitution. Finally, the architecture of the Tierra carbon-based international monetary system contains the Global Central Bank which administers the system, monitors and regulates financial flows and, most importantly, creates liquidity by circulating credit into the economies of nations in the global North and South. In the process it reclaims the sole money creation function with the consequence that privately-owned banking systems become utilities without the privilege of fractional reserve banking. Maurice Strong of UN Earth Summits fame considers the Tierra Fee & Dividend proposal “innovative….it seems to be very promising in light of the stalemate of Kyoto prospects”.
The carbon reduction method that the IIMT has selected among the half dozen carbon reduction methods is the Fee & Dividend method that is considered fairer, faster and more formidable than the present cap-and-trade method. This fee that is levied upstream at the source where fossil fuels enter a nation’s economy is not a carbon tax, because its administration takes place outside the national government’s fiscal system. This non-governmental organization collects the fees and divides its revenues among the legal residents. The components of the Fee & Dividend method are well described in James Hansen’s 2010book entitled Storms of My Grandchildren.
It is to be noted here that part of the destruction of the KP is the abandonment of cap-and-trade method which is not fast, formidable and fair enough. This market-based approach with its offsetting programs such as the Clean Development Mechanism (CDM) has to abandoned, so that other carbon reduction methods such as the Fee & Dividend can be adopted that push all nations to reduce their emissions without offsetting.
The strategy for implementing the Tierra Fee & Dividend monetary governance proposal is two fold. Nations are to endorse the UN General Assembly Resolution to establish a UN Commission on Monetary Transformation that would consist of experts in the climate, development and monetary issues. It would recommend a UN Framework of Monetary Transformation to be submitted to the UNFCCC and the Rio 2012 Earth Summit. At the same time national TFD Working Groups would engage in further research on monetary transformation, stimulate a national debate on the issue and press their national governments to sponsor the above UN General Assembly Resolution. With such strategy humanity may finally produce a global monetary governance system that would combat the climate crisis by advancing low carbon and climate-resilient development.
Frans C. Verhagen, M.Div., M.I.A., Ph.D., a sustainability sociologist, is the founding president of the International Institute for Monetary Transformation. His forthcoming book to be published by COSIMO is entitled THE TIERRA FEE AND DIVIDEND GLOBAL GOVERNANCE SYSTEM: Using a transformed international monetary system to combat climate change by advancing low carbon and climate resilient development.
Here is the draft statement which will not substantially change.
This is the first public statement without a carbon-based international reserve currency, because during last weekend it become clear that no reserve system is needed in the Tierra Fee and Dividend system, a major decision in the development of the system.
TRANSFORMING THE INTERNATIONAL MONETARY SYSTEM
TO SERVE LOW CARBON AND CLIMATE-RESILIENT DEVELOPMENT:
The Case for the Tierra Fee & Dividend System
A Statement at the 18th UN Commission for Sustainable Development
The International Institute of Monetary Transformation
Frans C. Verhagen, M.Div., M.I.A., Ph.D., sustainability sociologist, president
Development or living well in global North and South has to be low carbon and climate resilient within the ethical context of Article 3 of the UNFCCC and the demands of climate justice as proposed at the December 2009 Copenhagen conference and the April 2010 Cochabamba peoples’ conference.
Domestic, regional and especially international monetary policies can be used to work towards low carbon and climate-resilient development in the global North and South. Fundamental change in the often underemphasized international monetary system leads to fundamental change in the financial, fiscal, economic and commercial systems given that it is like glue which binds them together.
THE PRESENT MONETARY NON-SYSTEM AND THE DIRECTIONS OF THE MONETARY FORK IN THE ROAD
Many observers have pointed to the need of having a second Bretton Woods monetary system since the early one of 1944 expired on 15 August when the USA unilaterally disconnected the convertibility the dollar with gold. This action lead to emergence of floating exchange rates and of reserve currencies, the major one is the US dollar. It also led to the creation of SDRs which have been hardly used during the last 40 years. Basically, the international monetary system is a non-system which has been judged to be immoral by the notable monetary economist Mundell.
IMF, the fund to balance the global financial imbalances, has failed its surveillance function because of the continuing global financial imbalances and because of its double standard for developing and developed countries.
The present non-system is a muddling at considerable transaction and reserve currency maintenance costs amidst humanity’s greatest challenge of restoring the degraded Earth’s processes of the cycling of matter (particularly the carbon cycle), the flowing of energy and the webbing of life. There is a choice between the present muddling through and using a transformed international monetary system for working towards low carbon and climate-resilient development. We have reached a fork in the monetary road: one direction is to continue with reformist proposals for IMF and reserve currencies keeping an international order in place that enrich the few, impoverish the many and imperil species and planet; the other direction is to embark on a transformed international monetary system based upon a de-carbonization monetary standard and the new currency of the Tierra with the new institutional arrangements of a carbon account in a nation’s balance of payments and anUN Monetary Board which would have greater authority than the 1944 Keynesian International Clearing Union.
Reasons that governments, CSOs and business are to take the transformational route are the following:
We have to go beyond the reformist proposals of the 2009 UN Stiglitz Commission and the BRIC countries for a non-national or supranational reserve currency and the sophisticated interpretations of the UNDESA and UNCTAD proposals for international reserve currencies and move toward a transformed international monetary system that does not need reserve currencies which costs the developing world some $100 billion annually;
A transformed international monetary system is able to dealing with the integrated financing of development and climate measures by the issuance of a carbon-based international currency within an equitable system, thus providing liquidity without causing inflation by spending credit into circulation without becoming indebted to the privately-owned banking systems;
Only a transformed international monetary system is able toprovide the necessary monetary stability for international finance, trade and economics to flourish
The IMF and its SDRs are unable to lead in this transformation because of its limitations in distributional justice and of its inability to deal with the climate crisis in a fair, formidable and fast way.
TIERRA FEE & DIVIDEND SYSTEM
Integrates the transformed international monetary system with a carbon reduction approach that produces faster, fairer and more formidable results than the presently dominant approach of cap-and-trade;
Its monetary architecture is based upon the de-carbonization monetary standard, a most appropriate standard in these carbon-constrained times.
It also includes the principle of government as regulator and driver based upon the contextual sustainability framework of a sustainability economics that includes a bioregional focus with the novel concept of frugal trade
NEED FOR THE ESTABLISMENT OF THE UN COMMISSION ON MONETARY TRANSFORMATION AND THE CLIMATE CRISIS
·Looking for bold delegations that take leadership in having the GA pass a resolution in the same way that GA in October 2008 instituted the UN The UN Commission of Experts on the Monetary and Financial Crisis and its Impact on Development
·To be followed by prompt intensified cooperation between the UN agencies such UNFCC, INCTAD, UNDESA and UNEP, CSOs, business and academe.
·For additional information, see forthcoming Cosimo Publication THE TIERRA FEE & DIVIDEND SYSTEM: A Monetary Approach to Low Carbon and Climate-resilient Development by Frans C. Verhagen, M.Div., M.I.A., Ph.D.
During these carbon-constrained times scant attention is being paid to the challenges of the climate crisis in monetary conferences and in academic articles dealing withmonetary and financial affairs. Each area of human endeavor seems to exist in supreme isolation. It is time thatthe dynamic interaction and the synergies between the international monetary system and the climate crisis social system be explored and be used to rejuvenate both systems.
To that effect I am proposing that both the climate crisis, the global economic development, the climate justiceand the monetary communities begin laying the groundwork for a UN Commission on Monetary Transformation and the Climate Crisis, to be established by the Cancun COP 16 of the UNFCCC in December 2010 or at COP 17 in 2011, so that its results can become part of the political process of the Rio 2012 Earth Summit. It is further suggested that UNDESA’s World Economic and Social Survey (WESS) continues focusing into greater depth on international monetary system reform than it did in its Geneva workshop in early February in preparation of WESS 2010.
Expressed in terms of global financial imbalances—the bane of our present economic malaise—and of global ecological imbalances—the bane of poor climate negotiations—the challenge becomes to find ways to resolve those two types of global imbalances creatively.
Important for this daunting challenge is to find agreement on a value-based framework such as the Earth Charter that make all participants look into the same direction.
·To explore how a reformed or transformed international monetary system can be used as a means to strengthen solutions to the climate crisis and to promote global economic development
·To explore how the recommendations of the June 2009 Report of the UN Commission of Monetary and Financial Experts can be integrated with reformed or transformed international monetary system
·To evaluate the various proposals made for international monetary reform, particularly in respect to global reserve system
·To evaluate various proposals that integrate the monetary systemwith social system dealing with the climate crisis, particularly the Tierra Fee & Dividend system which is based upon a de-carbonization monetary standard
·To explore the contents and process of climate negotiations and how they can be strengthened by a transformed international monetary system that uses present monetary reforms as basis for its transformation
·Develop a Plan of Action
PROGRAM OF WORK
·Determine the value-based framework that will guide the Commission
·Review the fact of ecological indebtedness and its future role in climate change negotiations, using, among others, findings of the Cochabamba Conference of April 2010
·Review the contents and process of the climate crisis negotiations and explore ways how they can be strengthened by their dynamic interaction with the international monetary system; Review the 2009 Commission recommendations in light of its potential for reducing the climate crisis
·Review the present proposals for the reform of global reserve system as discussed in the WESS work shop’s background paper by professors D’Arista and Erturk and the UN-DESA Policy Brief #27 of January 2010 in light of reducing the climate crisis
·Survey the present climate funding facilities, including the recent High Level Advisory Group, and the efficacy of pledging conferences and compare them with the needed budgetary transfers to fund climate mitigation and adaptation measures and development.
MEMBERSHIP OF THE COMMISSION
·several members of the 2009 UN Commission of Experts
·several staff members of the UNFCCC, UN/DESA, UNCTAD
·monetary economists from academe and business
·CoNGO representatives and their designees
We live in a complex world where the role of governments of regulators and drivers is not to be decreased, but to be increased. This dual role cannot be accomplished without striving for policy coherence and international cooperation. A UN Commission on Monetary Transformation and the Climate Crisis has at least to explore the possibility and feasibility of having both rejuvenate one another and of bringing a coherent climate funding system into existence .
“Without vision, people perish” Proverbs 28:19
“Whatever you can do, or dream you can, do it. Boldness has genius, power and magic in it.”
On September 7 UNCTAD released its Trade and Development Report 2009 with its major emphasis on the financial and monetary system and a minor emphasis on the climate change challenge. On September 10 Dr Stiglitz and UN General Assembly President Father Miguel D'Escoto Brockmann held a news conference at UN Headquarters about the forthcoming report of their Commission of Experts to be released on September 22, the day of the Ban Ki-moon’s high level conference on climate change.
Both reports agree that more effective regulation and supervision of financial market activity is indispensable to prevent a repeat of the current global financial and economic crisis and that, equally important, reform of the international monetary and financial system is needed aimed at reducing the scope for gains from currency speculation, and at avoiding large trade imbalances. Both reports strongly advocate the need for a global reserve currency that is not nationally or regionally based.
The UNCTAD report, more than the Commission report, focuses on the bane of speculation. The authors, Detlof Kotte and Heiner Flassbeck both of whom are very outspoken in their interviews about the scourge of speculation and its minimal contribution to the real economy, point to the large majority of financial market participants who react to the same set of "news" with very similar patterns of risk taking. This is why financial speculation leads to upward and downward overshooting of prices, or even to price movements in a direction that is not justified by fundamentals. In particular, speculation has increased price volatility in commodity markets and has caused instability and misalignment of exchange rates. These can cause lasting damage to the real economy and to the international trading system. They strongly argue for a mutually agreed framework of a new managed exchange rate system. Such system would well-nigh cut out speculation on currencies.
Edward Conway, the economics editor of the UK Telegraph newspaper and website, recognizing the major punch of the UNCTAD report, headlines his blog with “UN plans for new world monetary system have come too late.”He and others believe that the “green shoots” discourse may have taken the wind out of the sails of monetary reform. On the other hand, the recession is not over and the “green shoots” may dry up in our shriveled global economic system, thus prompting the G20 to start thinking about real reforms, and perhaps a transformational change.
Where does this situation of two outstanding reports that may be too late leave the Tierra Monetary Paradigm with its carbon-based global reserve currency, its fixed or managed exchange rate mechanism, its integrated balance of payments that keeps account of the financial and ecological indebtedness of nations in the global North and South?
Both reports present an agreement on the fundamental analysis of the past and present global economic system and offer challenging, but realistic proposals to reform the system. The Tierra Monetary Paradigm goes one step further and asks for monetary transformation to simultaneously deal with both the economic and climate crises of our times or, put into a longer time frame, of the financial and ecological indebtedness of nations in the global North and South. Though the UNCTAD Report made some good suggestions in dealing with the climate crisis, it did not make the connection of monetarily connecting it with the excellent proposals to counter unproductive speculation. The UN Commission’s report only mentions the climate crisis without going into detail, let alone connecting both crises in one overall perspective. However, one of its commissioners, head of the UN Department of Social and Economic Affairs, told me at the end of a panel discussion in June to “keep at it”, i.e. keep pushing the transformational route for international monetary change. I am resolved to do this by finishing the writing of the Tierra book this fall and by continuing to connect the Tierra Monetary Paradigm to important events such as the two reports this week. I still firmly believe that this transformational route is the best roadmap, not a blueprint, to dealing with an international economic and social system that still enriches the few, impoverishes the many and imperils the planet.