The art of picking the price tag for European leadership
Pawel Swieboda*
October 28, 2009
President Klaus has spoilt the party that the Swedish presidency has been preparing for the forthcoming European Council following the Irish vote on the Treaty of Lisbon. The approach now is to deal with the maverick Czech leader gently and seduce him into signing the ratification documents without undue pressure to ensure that face-saving does the trick. There will be speculation about names to fill the top posts but without President Klaus’s pen touching the right paper in the right place, not much can happen.
This means that the financing of climate change adaptation and mitigation measures in the developing countries will make or break the summit meeting. The odds are not strong that the EU leaders will manage to rise to the occasion and substantiate their claims to leadership with real money. The presidency will need to apply massive pressure on the member states for them to agree to put on the table specific amounts of money at this stage of the international negotiations. In the agreed language prior to the Pittsburgh summit, the EU leaders quoted the European Commission’s estimate that the total cost of measures in the developing countries would amount to 100 bln euro annually by 2020. Not everyone was happy about the citation but people could have lived with it. Now the logical next step comes and it has to do with footing and sharing the bill. The presidency feels the heat since the EU itself at its June summit said it would make a decision on the financing issue in October.
The figures are not overwhelming, especially given that a lot of what the EU generously grants to the developing countries will return in orders for equipment from European firms. Nevertheless, the Europeans play with the contribution key, so as not to put up more than 10-20 percent of the global effort which is the percentage that broadly reflects their share of global emissions. If wealth was the yardstick, the EU would need to cough up 30 percent of the money needed.
It is true that logically the EU might prefer to wait attentively to what the United States puts on the table before it makes its own offer but this type of logic would mean the US calling the shots on climate issues, not Europe. What is at stake is Europe’s credibility at Copenhagen in pushing for enforceable legal commitments rather than voluntary and unilateral declarations which the US tends to have in mind. The White House is apparently desperate for the Europeans not to come up with the figures at this stage since this would risk to jeopardise the climate bill in the Senate. The country that would happily hold its breath until the US makes a move is France. Paris is generally relaxed in the negotiations as it sits comfortably on a growing number of orders for its nuclear industry and does not want to pay for others to sell their wind turbines instead. Clear enough.
Now, the problem with the key to sharing the global effort is that if the EU sticks to emissions as the basis, it will be tempted to apply the same principle in dividing the effort internally. This would be bad news for the new member states who have a higher share of emissions than income in the EU (Poland has 8 percent share of emissions and 3 percent share of income). The new members are bound to be the only new donors to financing climate-change related measures in the developing countries in the post-Kyoto framework. They are not annex two countries in Kyoto, so would not need to come up with anything if there were not EU members. The difficulty with asking the new members to pay is four-fold: a) they have just started paying large amounts of money in Overseas Development Aid, b) they need to foot the bill for meeting climate objectives in their own economies, c) they are mostly (with the exception of Poland) going through a particularly vicious economic crisis with enormous slashes of public expenditure in the Baltic states, d) they are not that well-off and some of them (Bulgaria, Romania) could end up paying richer countries, such as Brazil, to adapt. Verging on the absurd.
Various ways of solving the puzzle have been tested in the past but they faltered on either French or German opposition. The European Commission proposed a single European contribution which would use the level of income as the basis for burden-sharing. France rejected the proposal because it is much better off if emissions are the yardstick. The compensatory mechanism allowing the new members to make lower contributions was blocked by Germany who realized that it would pay twice vis-a-vis France – in footing the European bill based on the level of emissions and then in footing the bill for the compensation for new members.
So what is the solution? It looks like there is another great opportunity for Franco-German leadership. If the EU is to come with figures at this summit, France and Germany need to want to happen. They also need to sort out among themselves how to square the circle of the EU’s global contributions and compensation for new members. For once, don’t blame the new members.
* Pawel Swieboda, President of the Board, demosEUROPA – Centre for European Strategy.
Publised in www.demoseuropa.eu
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