It is necessary to reform the global financial system, says Frenchwoman – 05/16/2023 – Environment

The world spends around US$ 200 billion per year on human development projects, biodiversity protection and change in the climate model.

It seems like a lot, but it would be necessary to invest around 20 times more to meet the objectives set by the international community in these areas, and public money is not enough. It is essential to have a global discussion about new forms of financing.

This was the subject brought to Brazil by Amélie de Montchalin, 37, the French representative at the OECD (Organization for Economic Cooperation and Development).

On a visit to Brazil on May 10th and 11th, she met with government officials to invite President Luiz Inácio Lula da Silva (PT) to participate in an international conference on the subject that French President Emmanuel Macron will promote in Paris on June 22nd and 23rd.

60 to 70 heads of state are expected, in addition to representatives of the international financial sector, philanthropic entities and civil society.

“Brazil has a very special voice, it has things to say because of the Amazon, its development model and because of its own challenges, which are very important to be included in the global debate that France is organizing”, he says.

Macron’s ally and member of his Renaissance party, Montchalin has held various roles in the current government. She has an emotional connection with Brazil: she lived in Campinas (SP) for three years as a teenager, when her father worked at Danone, and she speaks Portuguese with very little accent.

How were your contacts with Brazilian authorities? France and Brazil have a historical relationship, we are neighbors. Brazil is the country with which we have the longest border, we are also an Amazonian country [em referência à Guiana Francesa]. I’m here because President Macron has a plan to bring together leaders from many countries in Paris in June to discuss and accelerate the reform of the global financial system.

It is a subject in which we know that President Lula is very interested, because we have a common perception that, if we want to achieve our objectives in terms of human development, fight against poverty, climate transition and protection of biodiversity, the current functioning of the system global finance is not right.

We don’t have enough money, whether public or private, to fund the priorities that were set in Addis Ababa by the UN on sustainable development goals, in Paris on climate and in Montreal on biodiversity.

Brazil has a very special voice in this debate, it has things to say because of the Amazon, its development model and because of its own challenges, which are very important to be included in the global debate that France is organizing.

Brazil will have the leadership of the G20, we hope it will have the presidency of the COP30 and it is organizing a summit on the Amazon.

What is the French proposal? Something like the Tobin tax [cobrança de um percentual sobre transações internacionais para financiar projetos de desenvolvimento]for example? We have technical proposals from all countries and we have ideas. But the most important thing is not that it is a French summit about a French idea, but a global summit where we will have heads of state, but also the financial sector, large multilateral organizations, development banks, civil society, philanthropists, foundations, to have a discussion to accelerate the reform of the global financial system.

We are in a very special moment. We had Covid and impacts on food prices, which are being affected by Ukraine’s aggression from Russia. We are at a time when climate shocks are more frequent and severe. We see droughts, floods. We feel that there are multiple crises that need financial means to be faced.

Is there a target of how much money could be raised? Today, the way we traditionally count international aid, it’s $200 billion a year. According to the UN, we would need US$ 2 trillion to achieve the goals of sustainable development.

If you listen to climate economists, that’s another $2 trillion for transitioning to zero emissions and protecting biodiversity. If we just take public money, we have to multiply by 20.

This is not very believable and leads to a lot of disappointment and frustration. Part of the debate in Paris will be about mobilizing the private sector, because there are resources in Brazil, in France, in the USA. How can we mix public and private money to achieve the goal of decarbonizing energy in some countries? How to invest in social and health infrastructure?

Would the idea be to raise this money and pass it on to the affected countries, as is the case in Brazil with the Amazon Fund? It’s not a pledge of funds conference, it’s not a time when people come in with checks. It is a discussion about the framework, the system, the governance, the instruments, both technical and political.

And this political discussion is about how in the future we can adapt institutions that were created in Bretton Woods in 1944 [FMI e Banco Mundial] for two things that have happened since then: the Paris Agreement and the biodiversity agreement, to align the financial system with these objectives, which are essential for the survival of humanity.

We feel that there is a triangle: we cannot distinguish or separate what we need to do for people, for the climate and for biodiversity. Brazil’s development model is one in which President Lula and many other authorities see the value of thinking about human development with the protection of nature and the climate. In other countries, this view that these elements cannot be separated is not as widely shared as it is here.

As Mrs. Do you see the Brazilian government’s commitment to environmental protection? We see it as central and encourage everything that can protect this global good. A few weeks ago President Macron was in Gabon, where he organized a summit on the forest.

For us, the protection of forests and biodiversity, of the planet, must be done in the name of humanity. We’re not just protecting trees, we’re protecting our humanity’s ability to remain on a habitable planet where we’re not exposing more and more people to climate hazards. It is an essential battle.

Does France intend to invest in the Amazon Fund? I’m not here to make announcements, I’m here to mobilize Brazil, France and many other countries on topics we agree on, we have urgencies and needs. We are very committed to the forest. Let my president and the authorities announce what must be announced.

As you know, Latin America is one of the most exposed regions on the planet to the consequences of climate change. If you are poor in a country that is very exposed to climate change, you have a double problem.

There is a feeling in economic sectors in Brazil that Europe’s environmental discourse is just a pretext for protectionism. They mention, for example, the European attempt to reopen the discussion of the chapter on this topic in the agreement with Mercosur. As Mrs. responds? France is very committed to a rules-based order that respects what the WTO says. We need these rules to have fair trade, based on reciprocity and balance. The Paris Agreement and commitments to biodiversity should be built into the way we do business.

Trade only works if it is recognized as a source of joint and legitimate value for both parties. If we have rules in our country, we cannot import things that do not respect these rules, because our producers will say that it is unfair.

I know there are discussions, and I’m not here for those negotiations. I come from an agrarian family and we value how food production is an essential need for humanity. Farmers are among the first to be impacted by climate change.

Mrs. Are you optimistic about closing the deal this year? I was once minister for European affairs, I’m not anymore. I prefer not to debate.

A question about your current job then: the previous Brazilian government was very interested in joining the OECD. Mrs. do you see the same in Lula’s government? I cannot speak for the Brazilian authorities. Brazil is one of the ten largest economies in the world. The OECD is a place where we try to resolve issues where coordination is essential, such as climate, trade, innovation, technology. And Brazil has a special voice.

It would be extremely positive if Brazil joined the OECD, but it is a sovereign and democratic choice. We OECD members would be highly supportive of Brazil joining. France would greatly appreciate having the voice of Brazil there.

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Amelie de Montchalin, 37

Born in Lyon (France), she graduated in History from the Sorbonne and in Economics from the University of Paris-Dauphine, with a Master’s in Administration from Harvard. She was a federal deputy (2017-19), secretary for European Affairs (2019-20), minister of transformation (2020-22) and minister of ecology (2022). She is currently the representative of France at the OECD (since November 2022).

_{The Planeta em Transe project is supported by the Open Society Foundations.}