The FT trashes the CDM, endorses per capita convergence

The FT’s leader on Copenhagen this morning was exactly right. First it trashed the CDM (see here for CDM-trashing here on Global Dashboard over the last two years):

The CDM inherits the UN’s suffocating bureaucracy, so smaller projects struggle to gain approval. But more important than what it keeps out is what it lets in. The criterion of “additionality” is supposed to rule out projects that would not be undertaken without CDM payments. Not only is this counterfactual approach utterly unverifiable; it is also an ideal target for gaming.

And then it suggests an approach based on a stabilisation target, a safe global emissions budget, and binding targets for all allocated on the basis of ultimate convergence to equal per capita entitlements as what we should be doing instead (ditto):

…the solution to the CDM’s problems is more carbon trading, not less. It matters little for the climate where or what activities greenhouse gas emissions come from. But it matters enormously for the cost of cutting them. That is why the best solution is a global emissions cap and tradeable national quotas (ultimately based on equal per capita amounts) coupled with a scientific mechanism for measuring national emissions.

Bravo, FT. Expect my subscription renewal forthwith.

Afghanistan: does July 2011 mean July 2011?

Yesterday, President Obama announced the U.S. would start drawing down in Afghanistan by July 2011.  Sounds pretty specific, huh?  Or maybe not.  Here are extracts from the NYT‘s (first-class) live blogging of today’s Senate hearing on the plan, starring Hillary Clinton and Robert Gates plus Chairman of the Joint Chiefs, Admiral Mullen:

9:55 a.m. Senator McCain sharply questions Admiral Mullen and Mr. Gates about the president’s announcement that a drawdown of troops would begin by July 2011. The senator grilled the military leaders, saying he found it contradictory that on the one hand, a decision to withdraw would depend on evaluating conditions on the ground and on the other, a withdrawal timeline was in place. “Which is it?” Mr. McCain asked, asserting “you can’t have both.”

Mr. Gates told the senator that the military would do a thorough review in December of 2010 to evaluate whether the withdrawal objective could be met. But Mr. McCain, who has derided the idea of a withdrawal timetable at this juncture, said that a specific date – without clarifying that more evaluation will be needed before withdrawing – gave the “wrong impression” to the American public, soldiers and to the enemy.

Why July 2011 anyway?

10:25 a.m. Secretary Gates interjects that the July 2011 withdrawal date was arrived at, in part, because it will then be two years since the Marines arrived in Helmand.

That feels just a bit arbitrary, doesn’t it?

12:18 p.m. About that July 2011 target date for beginning to withdraw — how does it square with the idea that the actual conditions at the time will determine what happens? Several Senators have wanted to know that. Here are some of the answers from the witnesses. Mr. Gates: “I think the president, as commander in chief, always has the option to adjust his decisions.” Admiral Mullen: “The president has choices, as the president.” Mrs. Clinton: “It is the best assessment of our military experts — as evidenced by Secretary Gates and Admiral Mullen, General Petraeus, General McChrystal and others — that by July 2011, there can be the beginning of a responsible transition that will of course be based on conditions.” The real point of the target, she suggested, was to make sure that the Afghans know we don’t want to occupy their country.

This one could run and run…

Putting the “EU” back in Eurasia?

Ninety minutes from now, Barack Obama will give his Afghanistan speech, and almost certainly say he wants NATO allies to send 10,000 more troops to match 30,000 new U.S. personnel.  It’s a bit iffy, but my guess is that he’ll get about half that number from the Europeans.  This will make everyone feel good about transatlantic cooperation after a few months of stories about how America doesn’t love Europe any more

But, as I argue in a new piece for the Indian magazine Pragati this week, the fact that NATO will cough up a few more troops shouldn’t conceal the lack of a real strategic debate in Europe about Afghanistan:

The quality of strategic debate on Afghan affairs in EU capitals is far lower than that in Washington. “We ask what pulling out of Afghanistan would mean for the transatlantic alliance,” one respected French strategist admits, “but not what it’d do to Afghanistan.”

He could go further. Although European commentators are typically well-informed about Pakistan’s instability, they rarely put “AfPak” in a wider strategic regional context.

How would a NATO failure in Afghanistan affect relations between China and India? What impact would it have on Russia’s Central Asian ambitions, or Iran’s defiance of the West? These are not questions you are likely to hear seriously discussed in Europe.

Why so? Here are a few possible reasons:

Defence intellectuals and politicians share an underlying duty of care for soldiers in the field. If—as many European observers have concluded—those soldiers are being killed for a lost cause in Afghanistan, it would be immoral not to prioritise their welfare and sacrifices.

But power politics has to be factored in too. And the Afghan case confronts Europeans with the harsh fact that their global power is diminished. Yes, they could fly more troops to Central Asia. But they would still be secondary players (by a very long distance) to the Americans—and China and India would still have far greater influence in the region.

European analysts who see Afghanistan in transatlantic terms (“What does this do to NATO?”) are in denial on this point. The future of Afghanistan is clearly of far greater significance to the triangular strategic relationship between China, India and the United States than it is to European affairs. But no-one likes to admit they are a second-order issue.

I’m not the first person to argue that the EU should measure its global influence by Asian metrics. I’ve previously cited the work of James Rogers here – he focuses on maritime security, and the Indian Ocean in particular. James blogs at European Geostrategy – a new outlet with lots of good contributors – and so does Luis Simon, who has been thinking about the EU’s place in Eurasia. I recommend their stuff.

But I also recommend another new piece by Tomas Valasek of CER on European policy towards Iran – which obviously rivals Afghanistan as a test of Europe’s relevance in the Eurasian wilds.  He has a warning for the EU’s new foreign policy chief:

Catherine Ashton, like Javier Solana before her, will be expected to maintain dialogue with Tehran while the UN debates sanctions, and after the Security Council agrees a new regime. But one wonders if this is the EU’s last hurrah on Iran. If the combination of sanctions and talks fails, and if Israel strikes Iran’s nuclear facilities, Tehran will certainly call off the EU-led talks. The other choice before the world is to start working on containing a nuclear Iran, by making its neighbours feel secure (so as to discourage them from building nuclear weapons themselves). But this will almost certainly be a job mainly for the US, rather than the EU. So while Baroness Ashton will spend a lot of time on Iran at the beginning of her term, the EU may gradually lose its leading role.

We can add that to the list of “scenarios we aren’t thinking enough about”…

Wall Street ready for war

From Bloomberg

“I just wrote my first reference for a gun permit,” said a friend, who told me of swearing to the good character of a Goldman Sachs Group Inc. banker who applied to the local police for a permit to buy a pistol. The banker had told this friend of mine that senior Goldman people have loaded up on firearms and are now equipped to defend themselves if there is a populist uprising against the bank.

I called Goldman Sachs spokesman Lucas van Praag to ask whether it’s true that Goldman partners feel they need handguns to protect themselves from the angry proletariat. He didn’t call me back. The New York Police Department has told me that “as a preliminary matter” it believes some of the bankers I inquired about do have pistol permits.

Uh-oh. Next we’ll hear that Goldman partners are getting together at weekends to watch classic Kurt Russell movies…

A new war in Africa – part 2

The UN is pessimistic about the situation in Guinea. In Tambacounda last night, in the south-eastern wastes of Senegal, I met a World Food Programme employee from Dakar. Like everyone else in this one-horse town, he was on his way somewhere else, in this case to Kedougou, near the border with Guinea. He is going to investigate whether there are sufficient telecoms and internet facilities there, in case war breaks out in Guinea and a flood of refugees pours into Senegal. Similar preparations are taking place in Guinea-Bissau, Mali, Sierra Leone and Liberia.

The UN’s caution may be well-founded. Guinea’s increasingly-unhinged leader, Dadis Camara, has recruited South African mercenaries to train his supporters in the art of war, in case the majority Peul population decides it has had enough of him and moves to unseat him from power. I asked the WFP man what the Senegalese government’s position is. He said that the president, Abdoulaye Wade, supported Camara when he took over last December, and has maintained a discreet silence since. “Guinea is rich in resources,” he explained. “It doesn’t pay to antagonise those who control them.”

Hey! Look! Climate policy that would actually work!

So imagine if you will that you’re a small energy company. You’re thinking about building a wind farm, say, off the coast of Yorkshire. Problem is, you’re struggling to find investors to finance the project. Every time you talk to venture capital companies, private equity firms or other financiers, you get the same response.  They’re worried about the risk – specifically, the risk of politicians lacking (how to put it?) lead in their pencil.

What, the investors ask you, happens if policy failure means that fossil prices stay low, so your wind farm can’t compete? Or, for that matter, if prices for emissions permits stay at rock bottom because government caves in to lobbying on permit allocation? What happens if the government simply misses all of its climate targets?

So maybe the investors agree to finance your project, but at punishing rates of interest. Or maybe they decide not to finance it at all. Either way, your energy firm and the government are stuck together in a vicious circle of self-fulfilling prophecy. The government can’t deliver its climatepolicy targets unless people like you build things like wind farms.  But you can’t access capital at reasonable rates unless the investors are convinced that there’s a real future for what you want to build – and they figure that the government’s record of fudges kind of speaks for itself.

This is the kind of dilemma that David and talked about in our report on institutional architecture for climate change, where we argued that a key requirements for moving forward on climate policy was clearer signals from the future – whereby everyone believes that the low carbon economy is actually going to happen, and consequently acts in ways that deliver exactly that outcome.

Well, Michael Mainelli – a good friend of ours whom we worked with on the London Accord, which brought together a raft of investment banks in a collaborative research project on climate change – has come up with a delicious proposal that would in effect amount to just such a signal from the future. You’ll like this.

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