The Asia-Pacific Economic Cooperation (APEC) countries may become a good example of how to deal politically with deadlocking issues. At their summit in Honolulu last week,they agreed to reduce import tariffs to boost trade in products that cut fossil fuel use and reduce pollution. 

With dismal expectations for the COP17 climate change talks, which will open in Durban, South Africa later this month, this agreement looks like a lesson on how to bridge differences and reach consensus. It could also somehow inspire the parties to the climate convention about to gather in South Africa. Durban’s COP17 risks provoking the collapse of the UN climate change negotiations architecture if it ends on a standstill.

The APEC meeting started with sharp differences between the U.S. and China. Opening statements from both countries’ leaders, Barack Obama and Hu Jintao, explicitly mentioned their disagreements. Obama even showed a trace of irritation with Chinese trade practices. “We’re going to continue to be firm that China operate by the same rules as everyone else,” he said at the close of the 21-nation APEC summit, after saying that “enough is enough”.  It looked like a deadlock would be unavoidable.

In his opening statement, Hu Jintao insisted on more clout for China as an emerging global power. He also made clear Beijing prefers to work through existing global trade architecture rather than allow itself to be subject to U.S.-led efforts to open Asia-Pacific markets at any cost. Chinese officials also warned that the U.S. decision to launch a probe that could lead to anti-dumping duties on Chinese-made solar cells and modules could impair energy cooperation within APEC.

But, at the end of the meeting, both countries managed to agree to cut import tariffs on environmental goods (mainly clean energy products) to 5 percent by 2015. APEC members also pledged to eliminate domestic content requirements that distort environmental goods and services trade by the end of 2012.

Additionally the APEC leaders agreed to:

* rationalize and phase out inefficient fossil-fuel subsidies that encourage wasteful consumption, and set up a voluntary reporting mechanism on progress, to be reviewed annually;

* promote energy efficiency by taking specific steps related to transport, buildings, power grids, jobs, knowledge sharing, and education in support of energy-smart low-carbon communities; incorporate low-emissions development strategies into our economic growth plans and leverage APEC to push forward this agenda;

* a goal of reducing the region’s energy intensity by 45 percent by 2035;

* work to implement appropriate measures to prohibit trade in illegally harvested forest products and undertake additional activities in APEC to combat illegal logging and associated trade.

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Sergio Abranches (for The Great Energy Challenge)

When president Barack Obama arrived in Copenhagen for the Summit of chiefs of government, Congress was still discussing a comprehensive climate and energy bill. Expectations were set too high for COP15. Most delegates and environmentalists hoped that Obama would lead the way towards a global climate agreement. EPA administrator Lisa Jackson explained on a side event her agency would soon start regulating carbon emissions.

The Copenhagen Accord fell short of expectations, but Obama’s last minute deal with the leaders of the emerging powers was pivotal to its approval. The Cancun Agreements would not be possible without the groundwork done in Copenhagen. One of its major achievements was to make core elements of the Copenhagen Accord official. The most important were mitigation pledges and provisions for transparency.

On the eve of COP16, there was generalized concern that parties from the developing world could refuse to close a deal because the U.S. failed to approve a legal framework to enforce federal climate policy. U.S. top climate negotiator Todd Stern stated repeatedly that a climate law was Obama’s final goal, but there were other means to enforce domestic mitigation actions. EPA’s forthcoming rules on carbon emissions were mentioned as part of a broader climate change policy.

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The last round of pre-COP15 announcements by countries pivotal to closing a firm deal in Copenhagen have added political weight to a summit that was about to wither away. COP15 seemed to be about to flop, particularly after the unfortunate joint US-China statement in Singapore, during the APEC meeting.

Sergio Abranches

Everything seemed to add to the sentiment of an impeding failure. An off-agenda meeting in Singapore with Danish Prime Minister Lars Lokke Rasmussen have apparently staged a fast-track exit solution to save face: a brief political memorandum of understanding loosely mentioning future commitments.

Strong negative reaction from global and domestic civil society, scientific circles, helped to turn the wheel of future history. Major developed and emerging countries, one by one, either reasserted their commitments – case of the EU and Japan – or shifted from a noncommittal attitude to one of active cooperation.

Among the developed countries the most important shift came from the US. The announcement by the White House that president Obama will go to the beginning of the Copenhagen summit, with numbers to lay down on the negotiation table, was a turning point.

China followed suit also announcing a quantitative commitment that several analysts argue represent a tough challenge to the country.

A few days before, the Brazilian government had also said it would commit to a voluntary quantitative target for future emissions reduction. Subsequently the Senate approved a law of climate change that included the government’s plan.

After a decade of denial, three pivotal players, for the first time, admit making international commitments for carbon emissions reductions that are measurable and verifiable. It may turn out that instead of just a turning point we’re on the verge of a political tipping point. If these commitments become an effective, binding and accountable political agreement, Copenhagen may be a historical landmark. A decade-long deadlock will be broken, and climate diplomacy will enter into a new era.

Not everything is that bright though. The sum total of national pledges does not add up to the minimum required by science. There still remains a decoupling between the politics and the science of global climate change. Once the political deadlock is broken, however, to negotiate an upward adjustment of targets could be easier, depending on the extent of the political consensus to be reached in Copenhagen. Perhaps breaking down the targets into smaller cycles – 2010-2015; 2015-2020; 2020-2030;2030-2050 – could do the trick (oops! any skeptical reading me?).

Provided these pre-COP15 announcements are honored in Copenhagen and a strong political deal is sealed tight, we may finally be heading to a post-2012 global climate policy.

APEC has become the opportunity for the US to try to recast the expectations about Copenhagen. Secretary of State Hillary Clinton had already forewarned that the US was “100-percent committed to creating a framework agreement, not a legally binding treaty.”

Sergio Abranches

President Obama had already decided to only accept internationally binding mitigation commitments that were already voted by Congress. Although EPA has a broad mandate, the Executive felt it still needs a Federal Climate Change bill approved by Congress to fully define its range of action at the global arena.

It is unlikely that Congress will approve a climate change bill within the next 20 days. Without it the US would not help designing a legally binding treaty in Copenhagen.

The problem is that without a definition from the US, China will hardly play all the cards it has prepared to take to Copenhagen. The US and China are the two pivotal players to seal a global climate change deal.

The fate of the Copenhagen Summit now depends on a tree-way dilemma, a variation of sorts of the “Prisoner’s Dilemma” game. Obama will only commit the US internationally to what Congress writes into law. China will only move forward after the US plays its hand. As Congress stalls the climate change bill, Obama retreats from his own personal pledge to lead an ambitious climate deal, and China also holds its hand. This amounts to both the US and China defecting from a deal in Copenhagen.

Enters the solution of a “politically binding”, rather than a “legally binding” agreement. It helps Obama to save face, and gives him more time to wrestle with a recalcitrant Democratic majority and a hardline Republican opposition to get a climate change bill voted. But it also breaks the momentum that has been building up towards sealing a meaningful deal in Copenhagen.

China had made an important move at the New York Summit, announcing it was prepared to decide on a relevant reduction of the carbon intensity of its GDP by 2020. The details of what a “relevant reduction” would mean were left to be laid down at the table in Copenhagen. The condition was that the US also made a significant commitment. The European Union has already made a concrete commitment. The Japanese prime-minister Yukio Hatoyama stated that the new government he leads is committed to deeper emissions cuts than his predecessor had approved. Brazil announced, for the first time, its own commitment to a quantified target for emissions cut, just a few hours before president Lula took the presidential plane to visit his French colleague.

Why should all, now, step backwards, just to come into line with the US? Is the fact that president Obama’s domestic leadership has not been strong enough to get Congress to act reason enough for a regress? Should we loose momentum so arduously gained over the last months to keep waiting for Obama’s own momentum?

What would this compromise solution look like anyway? How different would it be from simply redrawing the “Bali Roadmap”?

Denmark’s Prime Minister, Lars Lokke Rasmussen, also chairman of the climate conference, flew to Singapore on Saturday for an emergency meeting to help answer this question.

As Jonathan Weisman reported for The Wall Street Journal, this Sunday, what he said was:

“Even if we may not hammer out the last dot’s of a legally binding instrument, I do believe a political binding agreement with specific commitment to mitigation and finance provides a strong basis for immediate action in the years to come.”

According to The Wall Street Journal:

Mr. Rasmussen laid out in some detail his goals for the Copenhagen summit. He said leaders should produce a five- to eight-page text with “precise language” committing developed countries to reductions of emissions thought to be warming the planet, with provisions on adapting to warmer temperatures, financing adaptation and combating climate change in poor countries, and technological development and diffusion. It would include pledges of immediate financing for early action.

That doesn’t sound much different from the “Bali Roadmap”, and we should be reminded that the Roadmap led us nowhere but to the same deadlock we were before. Remember the Poznan dismal ending.

Mr. Rasmussen was also very much concerned to make it clear that his idea does not serve to save face:

“We are not aiming to let anyone off the hook,” Mr. Rasmussen told the leaders. “We are trying to create a framework that will allow everybody to commit,” reported the Wall Street Journal.

Helene Cooper, writing from Singapore for The New York Times says  Michael Froman, the deputy national security adviser for international economic affairs has explained that:

“There was an assessment by the leaders that it is unrealistic to expect a full internationally, legally binding agreement could be negotiated between now and Copenhagen, which starts in 22 days.”

Nothing that secretary Clinton had not said prior to the APEC meeting. Most of the difficulty now lies on the side of the US, not of other pivotal players that could lead the Copenhagen talks towards a real deal.

The US government keeps talking about a remote future on vague terms. Typical diplomat’s escapist phases were rapidly learned by Secretary of State Clinton to adorn the US pledge for more time. At a news conference earlier this month, she warned that the parties to the climate summit could not

“let the pursuit of perfection get in the way of progress.”

She also said that

“if we all exert maximum effort and embrace the right blend of pragmatism and principle, I believe we can secure a strong outcome at Copenhagen and that would be a stepping stone toward full legal agreement.”

This sounds pretty much like what has been done in Bali. In Poznan, the world agreed to wait until president Obama’s administration fully took hold of affairs so that it could make its pledge at COP15, in Copenhagen.

Most of the nations have already moved a step forward regarding both COP13 and COP14. Only the US remains basically where it was since Obama’s inauguration. Would it not now be the time for the US to get some speed of its own?

President Obama could surely use a “framework agreement” (Secretary Clinton has never used the term “politically binding”) as a powerful resource to persuade the Democratic majority to vote more swiftly the climate change bill, before next year’s midterm elections. But that would come at the cost of another year lost.

It should come as no surprise that president Obama choses the Asia-Pacific Economic Cooperation (APEC) meeting to state the US  position about what is feasible to do in Copenhagen.

It is well known that the US and China have been discussing a common strategy for Copenhagen for some time now. Although they are not playmates entirely at ease with one another, the fact that China conditions its own commitment to the US’s perfectly suits the Obama strategy. Obama needs to seem to be leading the US into a meaningful attitude at the climate talks, to differentiate himself from the Bush era climate diplomacy. He doesn’t want, however, to commit to any concrete action before knowing what Congress has approved. A “framework agreement” suits him well, and he expects China to follow suit.

Their interplay has, however, already raised some strong reactions among other pivotal leaders in Copenhagen. Presidents Sarkozy, of France, and Lula da Silva, of Brazil, reacted to the US-China entente by declaring they would push for a complete deal in Copenhagen. President Lula went as far as raising suspicion that the US and China were trying to create “a G2” to impose their common interests to the rest of the world.

It is unlikely that the United States and China could solve all their conflicts of interest to form an alliance to play a two-party hegemonic role in world affairs. It is true, nevertheless, that the two are the key players regarding many critical global issues, climate change being paramount among them. It is far better that they try to work together, than to build a new bipolarity as the one between the US and the USSR, during the Cold War, that plagued most of last century’s international relations. But this maneuver to delay an agreement in Copenhagen clearly deviates from the endeavors of several other players.

According to The Wall Street Journal, Michael Froman interpreted the decision as meaning that “Copenhagen would be the first step to a legally binding agreement.” This two-step doctrine was also behind the Bali Roadmap, to no avail.

We need far more than that to break the deadlock. If a political agreement is the only way, it cannot be drafted on such vague terms as US authorities have been using. It has to point to concrete political solutions to the hurdles that are still holding back a treaty.

The scientific and technical details for such a deal are well known and there is not much room to deviate from them. It is the political groundwork that is still lacking, and most of what is lacking must come from president Obama and the US.

In other words: it would have to be far more of a “politically binding” agreement, than a “framework agreement”. The US would have to commit to far more real action than it has been willing to do so far. And it would still be a second best, or suboptimal, outcome.

The deadlock and the divide among countries are set into political, not technical grounds. This is a fact. Another roadmap for future talks is not a solution to this political deadlock, only its reiteration.

Copenhagen has not been politically saved yet. It is up to the other world leaders to urge the US and president Obama to come up with a more substantive response. After all we are still talking about the world’s largest emitter.

With Barcelona just waiting for the final plenary session, all hopes of a breakthrough seem to have already vanished.

Sergio Abranches

Even the most unyielding European leaders now admit that a new comprehensive and legally binding treaty is unlikely to be attained in Copenhagen.

All are now converging towards the  conclusion that the nations should cut a political deal at COP15. A high level political commitment to set the parameters, rules, and the procedural terms for a new treaty to be detailed over 2010.

Is this such a bad outcome as to conclude that Copenhagen is likely to flop? Isn’t there a way to cope with the signs of failure and flip the cards the right side?

The US will be the pivotal actor among the great powers in Copenhagen to this effect. If Obama does get a climate law, he can still make a substantial difference. Even a political agreement would be more credible, deeper and encompassing with a firm commitment from the US, especially if Obama does make it to Copenhagen.

There is an enormous difference between a political agreement negotiated and signed by heads of governments, and one made by diplomats. Diplomats can negotiate treaties. Political commitments are an affair for chief political officers.

I’ve heard questions in Barcelona about whether this political accord would have numbers on it.  I’ve also watched delegates in Barcelona being asked whether what the US Congress is discussing wouldn’t fall too short of what should be demanded from the US. Many doubt Obama could really to take a leading role in the negotiations with such dismal numbers.

They would amount to something between what the House has already approved -17 percent below 2005; 4 percent below 1990;  and what the Kerry-Boxer bill proposed in the Senate – 20 percent below 2005; 6 percent below 1990. Greens and the G77 will probably say it is not enough.

But are these first figures really as important as getting the US in the playing field? I think not.

Obama will be more at easy to discuss financing figures and technological terms, than emissions figures. After years of denial and vetoes at global summits, it is only natural that the politics of a first bill be that hard to tackle. Let us remember that EU’s numbers are relatively new. The first European figures were nothing very impressive either. The US is late. It really is. Blame it on George W. Bush.

More important than the US numbers in themselves would be the breadth of the legislation. If it is able to alter the structure of incentives in the economy, it may trigger investments that will make the R&D pipelines for clean technologies and renewable energy to move faster. It could also stimulate companies to move ahead and go deeper with their sustainability and low carbon strategies, to gain a competitive edge given this new set of incentives.

There is also the demonstration effect to take into account.

It is hard for politicians, under the crossfire of lobbyists, to discuss cost and benefits at an abstract level, or looking at simulations that vary from one set of assumptions to the other. Green lobbyists would show simulations pointing to smaller costs and higher benefits, while the lobbyists for the high-carbon industries would show simulations pointing to high costs and low benefits.

Once the bill becomes law, and companies start acting within the new framework of inducements and constraints it sets, actual costs and real benefits start to show. The correlation of forces among organized interests starts to shift in the direction pointed by the new gains and benefits generated by the new rules of the game. Politicians start to see more clearly what really is feasible, and how to proceed.

This process tends to be fast, depending on how dynamic the economy is. I’d say that in the US it could take from 2 to 5 years. More to the lower end, because of the competitive structure of the economy, the progress already achieved in several states and large cities, and the unique role venture capital has in accelerating R&D in the US.

With the economy already moving in the right direction, these initial targets can be easily overcome and the bar can be set higher at a much lower political cost.

Another important point is that not all the difficulties are related to the US standing. The G77 said in Barcelona it will not support any agreement unless industrialized countries cut their emissions by at least 40 percent below 1990 levels by 2020. That won’t happen. And that is not a necessary and sufficient condition for a global climate treaty to be effective.

Some of the G77 demands are more workable. One of its spokesperson said that “an equitable agreement can be reached in Copenhagen” provided that the industrialized countries make “a firm commitment of reduction of emissions; a firm commitment on finance; and a firm commitment on technology”. Quite right, and fair enough. To set 40 percent over 1990 as a sine qua non is to deny any possibility of agreement. Several countries, the US first among them, will not arrive at that in the short run.

Obama will not commit to what he cannot get approved by Congress. Midterm elections are nearing and if he looses the majority, or it narrows downs, it will become even harder to deal with Congress. He is only too realistic to promise only what he can agree with Congress.

The US needs time for experimentation with the first Federal climate change bill ever, before it moves ahead. This is not a dreamworld, it is the real world we’ve got to cope with.

The conditions spelled out by G77 in Barcelona also included that the agreement “remain within Kyoto.” This is a good example of mixing opportunism and ideology.

Why Kyoto? Because it has the Annex-1 and nothing else. Such a demand generates immediate polarization. Representatives from Japan and the EU immediately answered they do not see why “non-Annex-I” countries should not commit to binding emissions cut themselves. Kyoto is not a relevant issue any longer.

The statements and demands of the G77 mix some fair points (criticisms of the uncertainty about industrialized countries’ commitments) to opportunism and ideological prose in unequal proportions.

The real fact is that it is too heterogeneous to legitimately speak with only one voice for all its members. First of all they are 130 members. Secondly, countries like China, Brazil, India, South Africa, Qatar and Bahrain – to name a few – should admit they do not belong together with Ethiopia, Afghanistan, Burundi, Congo, and so many other poorer nations. Even more so when discussing high carbon emissions. They are using the poor opportunistically, as shields to elude their own responsibilities.

They belong to an “Annex-II” with binding though differentiated commitments. They would still be eligible to financial and technological assistance, but at different conditions when compared to the poor countries.

The poor developing world is entitled to a greater financial assistance for adaptation, and all help in developing low-carbon development plans.

Emerging powers should be asked to present mid and long-term plans to cut emissions and build a low carbon economy. To do that they would be entitled to special financing mechanisms for mitigation and technological partnerships to develop low-carbon alternatives.

Another major obstacle to a new ambitious treaty lies on the the rules of the Climate Convention. They turn every player – rich or poor, relevant emitter or not, oil producing or oil consuming, large or small – into a veto player: one who is decisive to whether or not a decision will be made. All have the same power, because decisions are by unanimity.

This is only apparently a fair rule. In fact it treats very unequal actors very equally, feeding opportunism, and leading to a deadlocked situation that inevitably gives room only to muddling through, incremental policies as outcomes. It leads to a typical opportunistic situation in which a player maneuvers to shift the burden of deadlock to other players and to appear as the most righteous among the players.

Copenhagen is not flopping. It couldn’t deliver what it has been expected to deliver. But Copenhagen could successfully cope with the major obstacles preventing us to make real progress. Coping the right way with divergence and asynchronous national situations among the industrialized and the emerging powers we could still make progress towards the scientific requirements to prevent the worst case scenarios. Coping might be the only way to scape the BAU syndrome: the business as usual straightjacket were in.

First, it is in our powers to converge toward short and mid term objectives, and on accelerating rates dynamically adjusting the outcomes to the scientific requirements.

Second, we can try to solve once for all the financial hurdle that keeps several developing countries from playing the cooperative game. We have the expertise, and the resources to do it.

Third, we could do the same thing with the difficulties to get a firm technological commitment. The US technological partnerships with China and India are a good starting point that could lead us into a general model for technological cooperation in critical areas for mitigation of carbon emissions.

Fourth, countries need to be better, and positively, discriminated. The industrialized countries are correctly under one set of commitments proportional to their historical contribution, and their present level of nominal and per capita emissions.

Large emerging powers should agree to a different set of commitments proportional to their present nominal and per capita emissions and the trajectory of their emissions under BAU for the next decade.

Poor countries should be asked no emission cuts, but assisted in designing low-carbon development programs, to lead them to the new pattern without sacrifice, and at the same time enabling them to eradicate misery along the way.

This could be written into firm a political agreement, with the necessary elements for a new treaty to be negotiated and detailed over 2010. Meanwhile the large emitters – industrialized and emerging – could cut a deal of their own, sometime between next year and 2012, to establish national policies in line with their commitments written into the political agreement.

This is in our power to do, and Copenhagen could yet deliver such an outcome. So let’s hope we can have a COPEnhagen, not a FLOPenhagen.

When Cop 10 failed in Buenos Aires, December 2004, there were two culprits for the deadlock of climate change negotiations: the US and G77. Bangkok ended deadlocked last September. The main agents leading to the standoff were the US and G77. The US, however, had completely changed its attitude towards a global climate change deal.

Sergio Abranches

At the time, Italy’s Environment Minister, had proposed that the Kyoto Protocol be abandoned by 2012, if a new and broader agreement were not possible. It was an act of protest against US vetoes, and the announcement by the UK and Japan that they would not be able to meet the meager Kyoto emissions reduction goals.

Cut. Bangkok, October 2009. The last preparatory meeting before COP 15, in Copenhagen fails. Reason: conflict between the US and G 77, with China leading the confrontation for the “small states league”. The US was pushing  for a replacement to the Kyoto Protocol. The G77 defended its permanence. It wanted the maintenance of the Protocol’s outdated bipolarity: “Annex I countries”, with binding commitments, and “Non-Annex I countries”, with no obligations. US criticism of the Kyoto Protocol is fully correct and has the agreement of the European Union. Kyoto is outdated. It has never worked properly.

The G77 major countries know that this group of countries makes even less sense than the Kyoto Protocol. They argue that Kyoto would be replaced by a lax scheme, with no clear obligations and no guarantees. But that is what the Kyoto Protocol has become. What’s being proposed is quite different: an ambitious deal, with much higher targets for reducing emissions, including binding commitments for the emerging powers: China, India and Brazil, in particular. These big emitters are using a bad geopolitical fiction called G77 to evade their obligations.

COP 10 was held on a different world. The UK, then unable to meet the dismal Kyoto targets, is today ahead of most other European countries in its endeavors to mitigate GHG emissions. Japan’s new prime minister, Yukio Hatoyama, announced last September, at New York’s climate change summit, that his Administration will commit to a 25% reduction of 1990 emissions by 2020. In the COP 10 world, Japan was defaulting Kyoto. Barack Obama’s election has removed the US veto to an ambitious climate deal. For the first time there is a present and concrete chance that the US could have e federal climate change law.

Brazil had, in 2004, a per capita income of US$ 7,770.00 (by purchasing power parity criteria – ppp). Its Human Development Index was 0,775. Today, its per capita income is US$ 9,577.00, and its HDI, 0,813. At COP 10, in Buenos Aires, Brazil worked most of the time shifting positions as mouthpiece for G-77 with Tanzania (per capita income of US$ 580.00 -US$ 1208.00, in 2007- and HDI of 0,407 – 0,530, in 2009). That was signal enough there was something weird about this group of countries. Brazil and Tanzania have never had common interests regarding GHG emissions, or economic development issues. Their agenda was, and continues to be, totally different.

Brazil could only find itself at home among most of the G77 countries by sheer opportunism. The same is true for China. I’m talking about countries such as Tanzania, Burundi (per capita income: US$ 630.00, in 2004, and US$ 341.00, today; HDI: 0,339 e 0,394, respectively), Democratic Republic of Congo (per capita income: US$ 650.00 and US$ 298.00; HDI: 0,365 and 0,389), Ethiopia ( p/c income: US$ 780.00 and US$ 779.00; HDI: 0,359 and 0,414) or Haiti (p/c income: US$ 1610.00 and US$ 1155.00; HDI: 0,463 e 0,532).

The G-77 is one of those relics the United Nations preserves. It has actually much more than 77 states today. They are already 130. It might as well be called the G-130: a disjointed set of heterogenous countries created in 1964, in an even more distant world, of Cold War, communist countries, and latino military dictatorships.

Brazil was then a Third World dictatorship, with a modest and closed economy. China wasn’t even dreaming of a process of economic opening and modernization that would turn it into a powerhouse of the capitalist world.

Such a disparate group of nation-states has no capability to define a proactive agenda related to social and economic development, even less a climate change agenda. It is, by definition, a veto group.

Sociologically speaking this amorphous mix has countries with tiny populations like the Maldives’ 300 thousand people, and mega-populations like China’s 1.4 billion. It puts together urban and rural countries; industrialized and industrializing ones. Their per capita incomes vary from Zimbabwe’s US$ 261.00, to Brunei Darussalam’s U$ 30,000.00. What could those countries have in common?

When the G-77 was created, the Brazilian population was growing at 3% a year; the birth rate was on average 6 births per female; its urban population was only 50% of a 78.6 million population; infant mortality was 116:1000; adult literacy was 55%; and per capita income was US$ 1,400.00.

Today, Brazilian urban population is 85% of a total of 114 million people; annual population growth is 1.2% and the birth rate is under 2 children per female. Infant mortality has dropped to 23,6:1000, 80% less. Adult literacy is 90%. Per capita income has increased sixfold.

Changes in China have been even more impressive, although they don’t show as much because of the enormous absolute size of its population.

Brazil cannot keep hiding behind 120 poor countries to evade its responsibilities for global climate change. The same is true to China, and to India. They belong to a different league. One that the financial market has come to know as “BRIC countries”, the intermediate economic powers of today, the stardom of the emerging markets. These countries may become mega-economies, in less than three decades, and are already large GHG emitters.

In Goldman Sachs’s study, the economists who concocted the acronym “BRIC”, to refer to Brazil, Russia, India and China, estimated that in less than 40 years, their GDP would sum more that G-6’s GDP. Only the US and Japan would have economies as large as theirs. The US would be the second largest, after China, and Japan, the fourth, after India, but still ahead of Brazil, the fifth, and Russia, the sixth.

The BRIC league would grow from 15% of G-6’s present economic power to more than 50% by 2025. The growth rates necessary to achieve this status conform to a less than best case scenario. Brazil would need an annual average growth rate of 4%, over the next four decades, to get there. China would have to sustain an average annual growth of between 7% and 8%, over the first 10 years, reducing progressively to less than 5%, to end the period growing between 3% and 4%. India would have to grow by at least 5% every year during the next 40 years.

In spite of having around 15% of G6’s GDP today, they represent about 30% of global GHG emissions. Almost half of that emission comes from China. Even looking at per capita emissions, these three countries are much larger emitters that most of the G77’s 127 other nations.

We’ve got to separate the emerging powers from the smaller G77 countries. Those who belong to the G20, a geopolitical grouping that makes far more sense, and to MEF, the Major Economies Forum, created by President Obama, should leave the G77. The MEF will meet next November, in the UK, to try to solve the deadlock preventing an ambitious global climate change deal in Copenhagen’s COP15. It would be a good opportunity for China, Brazil and India stop behaving as small league players, and take obligations proportional to their actual size.

The countdown to COP15 in Copenhagen tells me, at the moment of writing, we have only 63 days left to pave the way to seal a safe deal. It seems impossible. Is it really?

Sergio Abranches

The meeting in Bangkok failed to reach a consensus on a new draft agreement for a global comprehensive deal. One which would meet the scientific requirements of avoiding a 2^oC warming, and reducing our emissions to stabilize them at 350 ppm.

The draft agreement we have so far is an open one. It contemplates options for all possible outcomes: a bold deal, a compromise deal, a symbolic deal.

As a response to the lack of progress on the diplomatic front towards a climate consensus, UN Secretary-General Ban Ki-moon said negotiators had just 10 days left to secure a global climate deal. He also said governments must not be hindered by domestic troubles, according to Reuters/NYT. Ban Ki-Moon was referring to the existing opportunities for formal negotiations, and was still counting Bangkok as a ongoing one. As Bangkok fails, there will only be 5 days left to secure the deal, during the official preparatory meeting in Barcelona, November 2-6.

Prime-minister Gordon Brown is said to host an informal gathering of the Major Economies Forum (MEF), in early November. MEF was created by president Obama, in March 2008, to facilitate dialogue between mature and emerging economic powers. The inaugural meeting was held in Washington, at the end of April, and the first full meeting in L’Aquila, Italy, in July. Neither was very helpful for consensus making.

Obama has asked Gordon Brown to host a new one to discuss the points that are deadlocking a climate change agreement. But MEF doesn’t have a formal diplomatic role. That’s why Ban Ki-moon is considering convening an extra formal meeting, also in November, to create yet another opportunity for countries to deal with the obstacles on the way to Copenhagen.

Ban Ki-moon is doing his best, but clearly the UN lacks the power and the authority to break the deadlock. The key players that can lead to a deal are indeed in the MEF. They are the pivotal veto players as far as climate change politics is concerned: Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States. They can reach and agreement and give the guidelines for official negotiators to seal the deal in Copenhagen.

UK Prime-minister Gordon Brown was the first to say he will be in Copenhagen to try to persuade reluctant leaders to seal the necessary deal. His presence could be a differentiating factor. But, as Ban Ki-moon has said to Reuters: “It is true, a fact of life, that without U.S. participation, this deal cannot be done.” He is also right to alert that “it seems it may be difficult for President Obama to come with strong authority (to Copenhagen) because this bill is still in the Senate.”

President Obama’s leadership in Copenhagen depends critically on what happens to the Kerry-Boxer bill. If he goes with empty hands to the Kingdom of Denmark, his presence may be ineffective. How could he ask any country to commit to take concrete actions to curb emissions, if he is not able, or willing, to unite the Democratic majority and use it to get a climate bill, that commits the US?

The Obama Administration seems comfortable with the fact that Congress will not vote the bill this year. It is a political mistake. Showing complacency with political bickering, or despondency with the majority’s inability to approve such an important bill amounts to relinquishing Executive leadership.

It is true that the bill and Obama are in a crossfire. Environmental radicals say the Kerry-Boxer bill is not enough. That it falls short of US responsibilities towards global warming. The high-carbon lobbyists and several Republicans say that the bill, and Obama are putting the US economy in jeopardy adopting actions inspired by terror science fiction. Both opinions, are wrong, and both lead to the same conclusion, already proved mistaken: costs are too high and benefits too little. There is no higher cost than the consequence of global warming.

This verdict of insufficiency serves as an alibi for other Nations to reject commitments of their own. India’s Environment Minister Jairam Ramesh said that much: “the Senate bill, which calls for a 20 percent cut in emissions by 2020, fell short of what would be needed to get India to make binding commitments of its own at upcoming international climate talks in Copenhagen.”

Obama is under pressure to go to Copenhagen. The question is whether he will go as a sort of “motivational speaker”, or as a powerful political persuader. To have a leading role he needs the Senate to vote the Kerry-Boxer bill within the next two months. It depends on Obama’s leadership among the Democratic majority. As John Bruton, the EU Ambassador to the US, has said in a recent interview: we should “hope President Obama will be put in a position that he can go to Copenhagen in December because the U.S. has legislation passed or is near being passed.” He added that having the bill passed on the Senate “would enable the U.S. to lead by example on climate change. I’m really hoping a return trip to Copenhagen will be possible for the president.”

It depends as much on the Senators as on what Obama is willing to do. If the President sets aside other priorities and dedicates his agenda, over the next two months, to secure the Senate majority vote for the bill, he would return to Copenhagen empowered to lead the deal.

Those who seriously argue that the Kerry-Boxer bill is insufficient are missing the point. It may not fulfill all that will be asked from the US as a contribution proportional to its emissions to the global mitigation goal. The US will certainly have to do more in the near future than is written into the bill. But the bill is a sound starting point. This criticism fails to see the difference between having no policy and having a real policy. The distance between 0% and 20% of emissions reduction is much greater than the distance between, say 20% and 40%. The first one measures the shift from the status quo to a new situation, a new framework for action; from inertia to action. The second one, is simply the distance between an initial target and an enlarged one, within the same framework.

To be fair to the high-carbon lobbyists and the Republicans: they see this difference, and that’s why they try to thoroughly disqualify the bill.

A climate change bill can trigger a paradigm shift for the US economy, in the same way that a sufficiently comprehensive deal can be the beginning of a paradigm shift for the global economy.

Jeffrey Sachs, director of Columbia’s Earth Institute, writes that it is too late to seal a detailed international climate deal. He is right. But that’s not what Copenhagen should be about: a detailed agreement. It should try to get, as he says, a political framework. A political framework, however, that contains principles and defined targets that will serve as binding parameters for the ensuing negotiations of a detailed Protocol. We do have time to work out the details until 2012. That would give us two years (2013-14) to enforce new policies and adapt to the new Protocol. Meanwhile, less complex policies and regulations could be agreed upon and implemented along 2010 and 2011, already oriented by the principles and clear targets settled in Copenhagen.

I agree with Sachs, that “a range of real actions that can begin to tackle the global threat of catastrophe” is much better than one more political statement. We should fight for it in Copenhagen. However, a set of real actions, to be meaningful, do require a comprehensive agreement with clear principles, and effective, quantitative global targets. All relevant nations must commit to these principles and targets. Every country should start implementing the range of real actions that will allow each nation individually, and humankind globally, to move effectively towards meeting those agreed goals. Everything else could be dealt with in the upcoming years. But we must make no mistake: failure to reach a meaningful comprehensive and concrete agreement in Copenhagen amounts to a political and diplomatic disaster that will cost us all dearly. Especially if the US also fails to start implementing a serious climate policy within a very few months.

But the odds against an effective deal are increasing. The NYC Climate Summit and the G20 meeting did not break the deadlock. Negotiators are working on a raft agreement in Bangkok this week. Meanwhile the UN has released the latest draft.

Sergio Abranches

Meetings of heads of governments and states have rarely led to very specific and detailed policy communiqués. But the last two, the Climate Summit in New York City, and the G20 meeting, in Pittsburgh were even more vague than official communiqués use to be.

Both meetings were a lost opportunity to sort out the differences that are stalling sound decisions on critical matters. Both failed to raise hopes that the climate deadlock might be approaching its end, and that COP 15, in Copenhagen, could be different from the others. We don’t need another roadmap. We need a substantive deal.

The G20 made no real progress regarding a climate deal. It has also failed to advance on new regulation to the domestic as well as global financial industries. The financial markets are returning to pre-crisis behavior due to the lack of new rules for their game. Governments are again getting as complacent as the markets.

The financial crisis was the result of both market and regulatory failures. The signs are that we will do nothing to prevent both to happen again. I know it is impossible to eliminate the risk of market or regulatory failure. But it is entirely within our possibilities to prevent the same sort of failure to happen again. That’s why new regulation is needed. And that’s why this lack of substance of government’s responses is a serious risk.

Will Copenhagen be a business as usual conference of the parties to the Climate Convention? The likelihood of a positive answer increases with each new failed summit. The signs are mixed, and are raising controversy: here, here, and here. The New York Summit was an opportunity for some countries to show part of the cards they are expected to play in Copenhagen.

Most of the uncertainty regarding an effective climate deal lies on what president Obama will be able to do about it. The fact that the US is no longer in denial has a significance of its own, but will not be enough. The effectiveness of a US shift towards a scientifically sound deal will be strongly mitigated if the US Congress fails to approve a substantial climate change bill. In Europe there is much concern about a US inertia that could ruin the prospects for a good deal in Copenhagen.

The second major source of uncertainty is China. President Hu Jintao’s address in New York on China’s new plans was very much welcome. The core of these policies is the program for reducing the Chinese economy’s carbon intensity by unit of GDP. It is an important step, but it falls short of what is expected from China. The same is true of the changes in India’s and Brazil’s last announcements regarding their intentions to act more effectively on climate change mitigation.

If the Us cannot show the capability to act domestically, developed nations will probably reduce the intensity of their own commitments. That is not to say nothing will happen. EU countries will certainly move forward. The new Japanese government is likely to implement what prime-minister Yukio Hatoyama has announced in New York. But these unilateral moves, though helpful, would not be enough.

We still have time to save the deal. Reuters said this Monday that the United States has “asked Britain to hold the meeting of the 17-member Major Economies Forum (MEF) it set up earlier this year, to provide an informal forum to discuss climate issues in London on October 18 and 19”. The meeting “will cover most of the climate issues discussed in the official UNFCCC (UN Framework Convention on Climate Change) talks ahead of Copenhagen but is not an official part of the negotiations,” Britain’s Department of Energy and Climate Change said in a statement, according to Reuters. “Real commitment from all countries is needed to secure a breakthrough deal,” says the statement.

Delegates are currently in Thailand to discuss an outline of the new institutional arrangement to replace the Kyoto Protocol. The UNFCCC has released a “Draft Agreement” today. The 200-page long text is a difficult read not only because of diplomatic jargon, but also because it is full of optional clauses and remittances to previous drafts and documents.

A first reading of the document shows that delegates are prepared for a breakthrough deal as well as for a watered down one. Let me show two good examples of texts that might be developed into a stronger commitment by all parties.

On page 15, an optional phrasing of two paragraphs says: “All Parties should aim at a long-term goal of achieving at least fifty per cent reduction in global emissions of greenhouse gases from their current level by 2050, with a reference to scientific knowledge of the Intergovernmental Panel on Climate Change through realization of a low carbon society and development of innovative technologies. In order to achieve this goal, peaking-out of the global emissions of greenhouse gases in the next ten to twenty years, 2015 for developed countries and 2025 for developing countries, should be pursued and all Parties should share the vision on how to pave the way to reduce global emissions by 2050 with flexibility and diversity of nationally appropriate actions.”

The major problem is that the text fails to set these goals as binding commitments. Rephrased to commit all parties it could be a good starting point.

On page 59, the draft also has an option that points to an effective deal:

“Parties recognize that in this context greenhouse gas emissions must be stabilized as far as possible below 350 ppmv CO2 eq, with temperature increases limited to as far as possible below 1.5^oC above pre-industrial levels; hence global emissions must peak by 2015, and then be reduced by more than 85 per cent below 1990 levels by 2050.

Economy-wide emission reductions by all countries shall be set as a stabilization of GHG concentrations in the atmosphere at 350 ppm carbon dioxide equivalent (CO2 eq) and a temperature increase below 2^oC above the pre-industrial level. For this purpose, Parties shall collectively reduce global emissions by at least 45 per cent from 1990 levels by 2020 and by at least 95 per cent from 1990 levels by 2050.

To stabilize the concentration of greenhouse gases in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate, the Parties recognize that the global temperature increase should be limited to 2^oC above the pre-industrial level.

In accordance with scientific findings, this implies that the aggregate greenhouse gas emissions by developed country Parties shall be reduced by [25–40] per cent by 2020 compared with 1990. Emissions from developing country Parties shall collectively deviate significantly from business as usual by [15–30] per cent by 2020. The global greenhouse gas emissions should peak by 2015.

Parties shall further collectively reduce global emissions by 50–85 per cent by 2050 compared with the 2000 level. These collective obligations should be adjusted in accordance with best available scientific information, including the Fifth Assessment Report of the IPCC.”

Add the proper wording to create a biding commitment to all parties, even if at different time frames, and we could seal an effective deal. Especially if another provision contained in the draft agreement holds: the one determining a review of goals and commitments every five years, the first review being set to 2015. Gradualism and effectiveness coupled with sound targets for all would do the trick.

The UNFCCC’s rules require all parties to sign the deal. This unanimity rule turns all parties into veto players. It’s a major obstacle to any ambitious agreement. But politics is never egalitarian. If the 40 major powers and emitters sign the deal, it will very likely be approved by all.

Is the financial crisis over? Is the global economy any different from before the meltdown? Have the governments done their homework? Are we any safer?

Sergio Abranches

I’ve seen several economic analyses of the global financial crisis on the anniversary of the Lehman Brothers’ fall.

The large majority boils down to: a. the projections of the crisis were too pessimistic; b. the worst has already passed; c. the world economy is slowly recovering; d. the fiscal stimuli did the trick; e. governments failed to adopt better precautionary rules and to redesign the regulatory framework. Some have criticized the excessive amount of fiscal stimulus, especially in the US. Others say Germany, for instance, has not done enough on the fiscal side. There has been moderate praise for fiscal coordination among the larger economies, basically through the action of G20. The performance of the IMF and the World Bank have been positively rated as well. Is it all really that good?

Crisis scenarios were indeed far more pessimistic than reality proved to be. If one believes so, than the criticism about the excessive size of fiscal stimuli doesn’t hold, because they were dimensioned after the doom scenarios presented to policymakers by economic pundits, and the savvy of the endangered financial giants.

Some analysts argue that the size of the fiscal packages in countries like the US and Japan, will lead to a second phase of the crisis marked by high inflation. Because the crisis receded faster than expected, and was less than a tsunami, as most of the scenarios foresaw, fiscal stimuli were oversized in both countries. High inflation will lead to more conservative monetary and fiscal policies that in turn will bring recession back to the scene.

A few others are still more skeptical about the worst having already passed. They still believe a scenario in which a structural crisis of long-duration, with short-termed ups and downs within it, isn’t to be totally discarded. Meaning there will be more crisis events, after the current recovery, and before the worst is really over.

I confess my uneasiness with the brighter pictures that view the crisis as mostly gone. I am concerned with the risk of inflation too. My major concern is about what did not change and what did not happen when the crash brought panic.

The landscape of the financial system has changed a lot. Several icons of the financial empire before the crisis are no longer there. Wall Street became less crowded and more concentrated. Yet, nothing really happened in the deeper undercurrents that determine most of the behavior of financial markets. The change that has happened was at the surface, at the landscape. Underneath, the system remains fundamentally the same.

Moreover, the shockwave had more enduring negative consequences to Main Street, on the form of jobs and real economy businesses destroyed. Part of the wealth lost in Wall Street amounted to savings of the younger strata of the middle classes that were to finance investment on education, housing, or startups in the future. Another significant portion was to pay for retirement and income complementation at retirement age, for the older strata of the middle classes. These are factors of long-term economic disturbances still to come.

A source from the financial market told me almost everything is back to place in Wall Street, the City, and other financial centers of the empire. Complacence is back, risk aversion retreating, the search for short-term killings resumed. Several of those who lost financial jobs have been hired back. Meanwhile, the real economies are moving at a much slower pace. Even in countries like Brazil, where many people, and especially their governments, think things were never really that bad, and recovery was fast and complete, the wounds across the real economy, and particularly inside the homes of the unemployed, are still bleeding.

This week, in New York, I talked to a guy who has a small business in the service sector, and with whom I’d met there, at the height of the crisis. Back then he was desperate. He had just bought a new house near New York City, and was in trouble with his mortgage. The house’s market price was 40% less than he mortgaged. He feared not being able to pay, and he feared most being able to pay, because he’d been paying more than its present value. He was struggling with the risk of a foreclosure, and the weight of paying dear money to the bank, he would never realized when marketing the house. He told me he was trying to renegotiate the mortgage, but failed even to schedule an interview with his bank manager. “He’s having to deal with thousands of cases like mine,” he explained.

I asked the guy, last Wednesday, whether he had solved his mortgage problem.  “No, I’m still waiting for an answer to my application for a renegotiation,” he said. But he was no longer either desperate, or anxious. “I filled all the papers, the manager finally talked to me, now I’m waiting. Things are slowly getting better, though” he explained. “The banks are no longer in crisis, they’re making as much money as before. So, the pressure is over, no danger of a foreclosure. It is taking too long to get an answer from them, but, you know, they have a heavy workload, thousands of cases like mine to process.”

That’s what my source was telling me. They’re making lots of money, looking for more, and forgetting all about the crisis. Complacence is back.

What about regulation? I watched president’s Obama speech to Wall Street, on the anniversary of the Lehman Brothers’ collapse. He repeated all his promises regarding a bill defining a new regulatory framework for the financial sector, especially aiming at sectors and activities that today fall outside the regulatory grasp of any agency. Nothing has been done so far. The reaction among Congresspersons and business representatives was quite negative. Most said there is no need for more regulation. Some saw socialism and statism in Obama’s words.

Presidents Obama, Sarkozy, and Lula, as well as prime-minister Gordon Brown are promising to fight for a multilateral regulatory framework for global financial transactions as well as effective global coordination of domestic regulatory rules at the G20 meeting in Pittsburgh, next week.

President Obama said on his speech that domestic regulation won’t work if there is no global coordination and if all nations won’t adopt a similar framework for their own financial markets.

Australian Prime Minister, Kevin Rudd, and South Korean president, Lee Myung-bak, have made several recommendations to the G20 for macroeconomic policy coordination required to manage the transition from crisis to recovery.

The story is simple: the easy part, with future costs, i.e. fiscal stimuli, has worked, at least to avoid a long and deep economic global depression, and to revert the crisis on the short-run. The hard task, a new regulatory setup as well as regulatory and macroeconomic coordination at the G20 is still to be done.

I’ve asked an economist now at a university, but who has worked in Wall Street for more than three decades and left just before the crisis, whether he believed Obama’s regulatory bill would pass. He said he didn’t. “The crisis is over, you know, complacence is back…”

Political scientist Daniel Drezner, from the Fletcher School of Law and Diplomacy, at Tufts University, says on his blog at Foreign Policy that he’ll believe on macroeconomic policy coordination at the G20 when he sees it. Same here.

It seems that the G20 meeting will deal with two major deadlocked decisions that have the same logic: regulatory and macroeconomic reforms, and a new climate change protocol. In both cases, domestic efforts won’t work unless every relevant country enforces similar policies, even giving room to some diversity of pace and degree, and in the absence of effective global coordination.

I’m not placing high bets on Pittsburgh’s G20 role in breaking these deadlocks either on the required financial and economic retrofitting work to overcome the structural crisis, or on the climate change deal. But I’m ready to bet some chips that the summit will not be a useless one either. There will be some progress on the common understanding of both challenges, and this convergence will be all the more important on the near future, when both economic and climatic events will require decisions tougher than the ones we’re ready to make now.

Sergio Abranches

Obama’s election was, after all, mostly like every other presidential race in the US. A business as usual election of a business as usual administration. So says Princeton’s political scientist Larry M. Bartels.