Issue :   
November 2018 Edition of Power Politics is updated.         November 2018 Edition of Power Politics is updated.
Issue:November' 2018

GLOBAL AFFAIRS REVIEW

Policy options for saving climate

S. Narendra

The United Nations Intergovernmental Panel on climate change has issued what it says is a final warning to political leaders around the world about the need to halve the global warming set to rise by 3c by the end of the century or face huge unpredictable consequences. This has coincided with the announcement of Economics Nobel prize to two economists who seem to show a way to heed IGP warning.
A total of 180 countries signed a historic agreement in Paris (2015) to limit the global warming to 2c by the end of the 21 century; The latest report by UN experts estimate that the current efforts were inadequate as it overshoot’s the target by 1c. In the opinion of the Panel, the Paris target of 2c rise was insufficient. So member-states should take ‘rapid’ steps that work for a lower 1.5c temperature rise,likely to be reached as early as 2030, just 11 years away.
The half a percentage point reduction in target, for example, would help save the Arctic from total meltdown,save an additional 420 million humans (and farms) from severe heat waves, extra 10 or more million from rising sea levels.
The Panel has listed a number of policy action options, including suggestions for removing hundreds of billions of tonnes of carbon from the atmosphere. These suggestions, many emanating from research work of the two Nobel laureates, require rapid implementation, if the world is to be saved from irreversible climate consequences.
Economist William Nordhaus,an advocate of carbon taxes, has developed models showing sensitivity of climate to various assumptions behind carbon taxes . Paul Romer, known for his ‘endogenous growth theory’ ,has expounded on the important role ideas play in spurring growth and the necessity of facilitating the generation of ideas through research and other efforts. He has shown how policy and rules interventions are powerful in changing the market behaviour and sustainable growth.
Studies have shown that countries like the USA which are in lower temperature zones would experience the impact of global warming much more suddenly, more devastatingly, than the countries in the hotter,poorer, regions which are already reeling under its effect.
The estimates of cost of limiting carbon emissions and limiting global warming vary. According to IGP 2014 report, steps taken to meet the Paris accord target of 2c rise in temperature would reduce the global economic growth by 0.06 per cent.For example, if the global economic growth is 2.3 per cent, it will dip to 2.24 per cent. A scientist group in 2015 estimated that if global warming is limited to 1.5c (in place of the Paris target of 2c*),the global economy could save $20 trillion by 2100, at cost of about $300 billion.
IGP urges every individual to consciously reduce his or her carbon footprint without waiting for government or global efforts.

Weapon of trade

President Trump’s new trade policy is forcing US trading partners to its trade and political wars, bypassing WTO. While replacing NAFTA, the new US trade agreement with Canada,Mexico stipulates that members cannot have a bilateral trade pact with ‘non-market economy’, a code word for China.It also forbids dealing with economies where state firms dominate. Already the US sanctions against Iran, Russia enables it to punish countries trading with them.

New higher education destination

According to the Foreign Policy magazine, since 2014, the number of enrolment of African and Asian students in Chinese universities exceeds that in US ones.In 2017, their number was 490,000, just 10000 short of the Chinese government target to host 500,000 foreign students by 2020. Studenes hail from over 200 countries,including the US that sent 20,000 plus.Full scholarships and tuition fee waivers are not the only attractions. A large number of Chinese educational institutions have figured among the global top 500. Since 2006, the government is picking a dozen or more institutions for upgrading them to world class educational centres. At present 775 institutions host foreign students.Enrolment in China is much less expensive, if one can cope with Mandarin and whatever goes as English language. Offering education to students from abroad is euphemistically called public diplomacy. Essentially, it is investment in soft-power’ ( attraction and influence) Expansion. The US had its Fulbright and various other scholarships which have been scaled down. The Soviet Union had set up a separate Lumumba University . The British had Commonwealth scholarships and ODA for buying influence in the future when scholars became somebody important in his or her firmament. India had its Technical Cooperation programme under the Colombo Plan. India missed the bus by not looking into the quality of education and nurturing more centres of excellence like IIS,IITs, IIMs and others targeting foreign students.Some countries set up dedicated centres for foreign scholars, that enables them to use their own foreign aid money to subsidise domestic academia. A number of private educational entrepreneurs are setting up quality Indian educational institutions.The government could consider extending its public diplomacy reach to cover them.

Too big to be accountable !

Nirav Modi Nearly 200 billion pounds passed through Denmark’s DANSKE bank tiny branch in tiny Estonia,whose GDP did not match the transacted amount.The ongoing investigation into this huge money that appeared and disappeared, hints at money laundering, with mysterious links to London, Germany’s Deutsche bank and Russia, including its President.Neither the banks management, its internal audit, nor the external audit by the global giant auditing firms,nor a super financial regulator of Denmark were alerted by this unusual sum flowing through the system.
From 2010 to 2016, Danske’s accounts were audited in turn by Grant Thornton (merged with PwC), Pwc,Deloitte, KPMG,EY, a period in which the tiny Estonian branch was reporting startling profits. How and why the auditors did not notice such eye-popping numbers ? This is among the many questions now being probed by Danish parliament. When the 2008 financial crisis hit the world, the audit firms were found guilty of giving triple A rating to junk CDOs,but escaped punishment.
Now the British government is examining whether the monopoly of the big four should be ended by breaking them up,as well as separating their audit functions from their tax advice and consultancy work. They have been found to be lenient to companies that pay their bills in order to continue their auditing contract and look out for consultancy.
For Indians, the Danske scandal and failure of audit sounds familiar, especially after Nirav Modi and PNB, Indian bank’s $1.8 billion scam.