On October 31st the centre of the city of Buenos Aires was put on lockdown by the police, the military, and secret services. Martial law provisions were to continue for three days. US aircraft carriers lay offshore on the river plate and the airspace over the city closed. 40,000 police were on the streets of the city to protect twenty top government representatives and a few multilateral bankers; men and women like to refer to themselves as ‘leaders’.
While the final official declaration notes that “Strong and effective international financial institutions help underpin growth and sustainable development” this article points out systemic inconsistencies in the “long-term low greenhouse gas emission development strategies and alignment to international finance flows” and the lip-service paid in the final declaration to the “latest IPCC Special Report on the impacts of global warming of 1.5 degrees centigrade”.
What is the G20?
The G20 is a big boy’s club. Yes, some G20 leaders are women; three to be precise: chancellor Merkel, prime minister May and Ms. Lagarde of the IMF. The United Nations (sometimes called the G196) has a seat for each nation but not here in Argentina. Membership of the G20 is available only to the top-20 nations measured by Gross Domestic Product (GDP), a measure closely correlated with territorial transactions by transnational corporations and the financial power of those twenty nation’s banking sectors.
So what’s wrong with having a big GDP?
Gross Domestic Product and the IMF’s role
GDP is an apparently neutral accounting device, a rough measure of national production. In international trade GDP is indeed the force to be reckoned with, related as it is to trade balances — deficits and surpluses in a nation’s ‘external’ accounts. Big GDPs and big exports give surplus nations like China, Germany or Saudi Arabia extra cash. Deficit countries, on the other hand, are on the receiving end of this curious imbalance. The growth in national debt, that results from importing more than exporting, is the global motor for national debt, some of which is owed to the IMF but most of which is owed to private banks.
The global trading system works like this, surplus nations have greater investment options. However deficit nations buy on credit. This debt is accrued — up to a point anyway — by emitting more and more bonds paid back with interest by future national taxation. If the government that accrues this debt is lucky enough to lose the subsequent elections then paying off this debt will hamper the popularity of their political opponents. This seems to be president Macri’s plan. When deficit countries get into deep trouble they no longer have choices, instead they fall into the hands of the International Monetary Fund (IMF). IMF consultants are like firefighters running around the planet chastising errant governments with large deficits and external debt obligations.
The IMF’s sees its task as rebuilding growth and prioritising debt repayments to external creditors, the majority of which are in the private sector. To do this their consultants rewriting local economic policy, effectively guaranteeing the profits of investors abroad who speculate on foreign debt repayments. The IMF policy stipulations are generally referred to as ”structural adjustments”, in Greece they are called austerity measures and here in Argentina as ajustes, Spanish for ’adjustments’. The Argentine citizens in the streets of the G20’s poorest nation are calling for the expulsion of the G20 as they associate the G20 nations with the damage done by debt (and debt repayments) in the last financial collapse in 2001-2002.
Christine Lagarde smiles widely for G20 photos. IMF officials like to work with flexible right-wing governments who are willing to put their citizens into future debt (at exorbitant interest rates) to prop up their deficit enlarging policies, much of which is done through corruption and subsidies.
Argentina under Macri is a debt bonanza gone wrong (for the taxpayers not the investors (yet!)). There is simply no better place to invest, Could it be too good to be true. In June of 2017 the Macri government sold 2.75 billion dollars in 100-year bonds currently paying almost 10% in US dollars per annum. Local short-term bonds Argentine bonds called Lebacs pay 60% interest rates in pesos on an annualised basis, spiking earlier this year above 85% and the government called in the IMF. This led to the IMF’s largest ever loan to Macri’s Cambiemos government, the first IMF disbursements proved insufficient, so the government went back to Ms. Lagarde cap-in-hand to ask for more. She obliged but for a little extra interest.
In more technical terms GDP is a national measure of the sum of goods and services, including financial services. Financial services include bond investments and also foreign direct investments as used for corporate buy-outs or land grabs. Funds make their investment decisions out of offices in G20 financial capitals like New York, London, Frankfurt and Tokyo. That the G20 nations are also the largest purveyors of weapons of mass destruction, both armaments and fossil fuels, is hardly coincidental. Saudi Arabia is also present in Buenos Aires, a G20 nation whose business is selling oil and which buys more US arms than any other nation.
My nation first!
Possibly the most destructive concept of all at the G20 is economic competition itself, the primitive pursuit of an ever larger national GDP irrespective of the cost. This is not the only option. The G20 could, alternatively, promote solidarity between nations rather than competition. By combining their vast wealth, the research from their greatest universities, the smartest ideas of their most able people, the G20 could help tackle international emergencies like climate change but there was little evidence of this in Buenos Aires.
Neither nationalist priorities nor the IMF logic of GDP growth make this possible. The ‘D’ in GDP stands for Domestic! Domestic politics, domestic elections, domestic product! President Trump’s recent anti-globalist rhetoric embodies this nationalism. Trump is more bombastic and less subtle than many of his fellow G20 leaders, but his attitude to trade is hardly exceptional. Maximizing national GDP remains the logic of finance a revolving door of interest driving profit and driving growth.
One crucial problem with an ever expanding global GDP is that the energy powering each G20 economy (communist China included) still comes primarily from fossil fuels. There has been a lot of talk about the expansion of renewables but this has not meant that burning fossil fuels has peaked; quite the contrary. Greenhouse gas emissions from burning fossil fuels continues to change the composition of our atmosphere, causing changes in the climate as a result of global warming. Fossil Fuels are also a big player in the extinction of biodiversity, increasing pollution (especially in the third world), plastics in our seas and the bleaching of corals.
So what to do? First let’s take a negative example; what not to do! Then we can see how the G20 have experimented with positive initiatives that have subsequently failed.
What not to do for the environment
In mid November Argentina proudly proclaimed the preparations for the nation’s first large export shipment of Liquefied Natural Gas (LNG). This natural gas is mined in the Vaca Muerta field in the Patagonian province of Neuquen. Vaca Muerta (which translates to “Dead Cow”) has been heralded as the world’s second largest unconventional oil and gas field. Liquid Natural Gas (LNG) shipments to customers abroad are planned using a floating storage/production vessel — a sort of boxy oil tanker — designed for gas transport. This new ship has the humorous moniker Caribbean FLNG.[sic.] Built in China and flying a Liberian flag, this single ship has a twenty nine thousand gross tonnage and weighs twelve thousand tones. They like to do things big here in Argentina.
Paradoxically LNG gas exporters now pay less royalties on gas exports to the Argentine government. The royalties, are charged in Argentine pesos for each US dollar value of LNG exported. Royalties have been reduced from about four pesos to about two. Meanwhile, just in 2018, the peso has depreciated 50% against the dollar. This results in an effective tax cut of 75%. Less taxes on exports means less money for the IMF debt repayments, while assuring higher profits for exporters. Macri’s Cambiemos government reduced royalties on all mining products — a typical right-wing stimulus. US republicans would be proud.
The natural gas exports comes from exploitation in Vaca Muerta mined using the destructive and expensive hydraulic fracturing technique commonly called ‘fracking’, as well as by horizontal drilling. Global greenhouse gasses have risen this year as global emissions resumed upward growth after a short hiatus. If governments really want to control greenhouse gases to maintain a habitable climate, they should be planning to export less and less of such damaging fossil fuels but they can’t. To stop this export would imply a drop in Argentina’s GDP making the external debt harder to repay. Less mining — less of most every economic activity — goes against the logic of the IMF.
For the Argentine government this is a familiar quandary; they almost always choose to ignore the environment and prioritize debt repayments. All GDP-addicted governments do.
On December 1st. a mass protest was organised by a rainbow coalition called #NoAlG20 (No to the G20). Anti capitalist, anti-IMF and various other groups from left, progressive, human rights, indigenous and environmental groups marched as this coalition. The Vía Campesina, a global group representing peasant farmers are capable of implementing positive change for the environment (by reducing fossil fuel use in agriculture) while improving the human food supply. Unfortunately Argentine agricultural initiatives favour export cash crops like soybean oil. Growing transgenic soybeans requires massive fossil fuel inputs for fertilizers, mechanisation, transport and for the crushers used to process soybeans to produce biodiesel burned in transportation. They are not food policies at all rather they produce animal feed as pellets for industrial meat production.
The banners the protesters carried strongly repudiated the repayment of national debt. The anger of the poor in the ‘villas’ (towns built on land without tenure, called favelas in Brazil) was evidenced by the presence of the ‘CCC’ marchers and ‘Barrios de Pie’. People who live in the villas are the most vulnerable to climate change, some of their houses have already been washed into the fetid rivers they are built next to, and their roads are impassable during floods. The poor suffer more in economic down-swings and from high inflation. Their interests conflict with a neoliberal emphasis on protecting land rights. Practically every political party from the Argentine Left was present in the streets including large groups from the ‘MAS’ and the ‘MST’ parties, but there was a notable absence of centrist Peronists, possibly the result if the government negotiations with the corrupt ‘ATE’ trade union to avoid a G20 national strike which it is rumoured involved payments of billions of pesos to unions to call off the general strike plans.
The militarised police forces present on the streets were unusually intimidating at the G20. Many people stayed home for fear of repression but their fears were not merited. Even with their absence the march was massive stretching for twenty city blocks across four lanes of Buenos Aires’ main artery the “Nueve de Julio”, South America’s widest avenue featuring the famous city centre obelisk. The march was hemmed in by massive barriers built across Nueve de Julio and diverted to the Plaza de Congreso along Avenida de Mayo. The marchers sang and danced while the police looked on from behind their visors. The city centre resembled a rat’s maze with few exits. In the end the agreements to keep the peace — but to march anyway — held. There were no broken windows in fast food outlets or any attempts to take on the militarised police forces. The day ended peacefully. The people on the streets demonstrated their displeasure at global institutions of neoliberal capitalism which they do not feel represent their interests.
At the march the international media was conspicuous by its absense. National media emphasised a few small concessions negotiated by president Macri on export products like lemons to the USA and soybeans and cherrys to China. President Trump left early to be present at the funeral of former US CIA director/President George Bush Senior and Angela Merkel arrived late delayed by communication problems in her plane. Local media highlighted the nationalist extravaganza in the recently renovated Colon theatre. G20 leaders present seemed to enjoy this though some seemed uncomfortable when cast members broke into a repetitive chant of “Argentina, Argentina!!”. The tears in the eyes of emotional President Macri were described by the mainstream press as ‘orgullo nacional’ the pride of the nation! Finally everyone went home to their luxury hotels.
After the Conference
If October’s IPCC report is correct, and the IPCC usually err on the side of optimism, then the G20 could be pivotal in guaranteeing the inevitability of the collapse of human civilization in just twelve years of business as usual. G20 nations together produce about 80% of the world’s greenhouse gases from transport, mining, agriculture, warfare and consumption, the same economic activities encouraged by the IMF to prioritise debt repayments. Competitive GDP growth is linked inexorably to the destruction of the environment, it is also a motor for global inequality.
How much more evidence will it take to convince our leaders that maximising GDP could be the deciding factor in our mutual destruction. Could it be that many leaders really don’t care? Are they just happy that their families and friends are on the happy side of global inequality?
While three thousand accredited journalists in Buenos Aires write copy on the horse-trading between Saudi and Turkish leaders over the dismembered body of a US journalist. While others defend ever greater free trade against a political spat between the US and China, time is running out for our finite, fragile little planet.
Economists have proven that GDP growth cannot be ‘decoupled’ from the energy sources that power economic growth. Put simply you need more energy to power more GDP and most of this energy still comes from fossil fuels. The planet needs a new energy source. We know now that we cannot burn all of the known reserves of fossil fuels (like Vaca Muerta) into our atmosphere. Explaining this to an oil or coal company is analogous to giving an alcoholic a bottle of whiskey and telling him not to drain the last sip. But as the oil companies point out they just extract the oil they don’t burn it. Industry will not change either because, for a while anyway, any transition from fossil fuel implies less energy consumption. Less energy means less profits and less GDP, which means less debt repayments and less economic growth!
Scientists tell us we need to get off fossil fuels fast. Such a transition to a new global economy that will consume less energy is incompatible with linear economic growth, in just the same way as burning ever more fossil fuels into the atmosphere is incompatible with our life on this planet.
A Positive Example Missed
One climate damaging public policy recognised by the G20 is public subsidies funding oil, gas and coal companies. In 2009 at the London G20 summit leaders declared that they would try to deal with this issue, agreeing to eliminate these subsidies in the ‘medium term’. NGO’s, such as the UK-based as well as the powerful International Energy Agency (IEA) track these subsidies. The IEA also tracks CO2 emissions. Initially progress was made, but subsidies are again on the rise.
If the Buenos Aires G20 meeting could just agree on the complete elimination of fossil fuel subsidies by the end of the decade, it would be an important step. Sadly instead these leaders failed to mention subsidies in their 2018 declaration instead they are back-tracking on their previous decisions. Expensive energy is just not popular.
The planet is still waiting for the global economy to clean up its act. We humans too, including 70% of us who live in G20 nations. The G20 representatives in Buenos Aires hold the keys to making this happen, but the growth-driven economic system promoted by the IMF prevents them from turning the lock and opening the door. Who do these leaders represent in Argentina if not their citizens who live on their coastlines, on their floodplains, at the margins of their deserts, or in their fire-prone forests? Their citizens depend on a stable planetary weather systems for food production, and ultimately they need this to live full lives. We all do.
How long do these representatives reckon they can ignore the inconsistencies in their economic policies? How many more G20 summits will it take for our representatives to act as leaders? Are they, like the oil companies, so addicted to oil and economic growth it drives, that they really can’t help themselves? Does the competitive economic system reduce their policy space? These are questions that need to be answered soon.
On to Poland?
Soap made from coal is displayed at the Katowice booth at the COP24 climate talks. Meghan Shea
Another attempt to answers these urgent questions will come next at the United Nations Framework Convention on Climate Change (UNFCCC) meetings in Poland when more government delegates jet off to the coal and coke sponsored COP24 conference in Katowice, Poland later in December 2018. That the dirtiest fossil fuel companies are sponsoring the UN Climate Change conference in a mining city in Poland is testament to the stubbornness of certain political elites when it comes to climate change and fossil fuels.
COP24 represents another year in two dozen critical years of failure to produce a binding agreement between national governments which could coordinate the replacement of fossil fuels and give our planet a chance to restabilise its atmosphere and its environment.
Global activists have called to “Make Coal History!” but in Katowice international delegates shall be tempted not by elegant Tango shows and deep red malbec wine but by a tour of the historic Wujek Coal Mine and an “eco tour” of the centre for clean coal technologies at the Institute for Chemical Processing of Coal, lunch included.
The show goes on.