Prosperity before climate change action?

Hoax press release puts spotlight on Canada

This morning a group of protesters rolled out the welcome mat -- literally -- for Canada's prime minister, Stephen Harper, who arrived in Copenhagen today. They mingled with Christmas shoppers outside the Canadian embassy by the main shopping drag in Copenhagen. There was a quirky element to the protest, with a gift basket of treaties for the prime minister to sign presented at the embassy door, but the atmosphere was serious. Speakers included Naomi Klein, who has been very prominent on the activist circuits this week.

The demonstration was organised by the Indigenous Peoples of Canada and called for a stop to the extraction of oil from the tar sands region in Alberta. Tar sands mining is the most energy-intensive and environmentally damaging method of extracting oil. It also destroys Canada's boreal forests, which store a vast amount of carbon.

Canada also figured prominently on the climate change blogosphere today. A hoax press release, which was picked up by the Wall Street Journal, raised false hopes among Canadian campaigners. It outlined a drastic shift in the country's environmental policy, doubling greenhouse-gas reduction targets to 40 per cent below 1990 levels by 2020. But Ottawa responded quickly with a statement saying: "Canada's binding responsibility is to supply the world -- including its burgeoning developing portion -- with those means of transport, health and sustenance that prosperous markets require. Stopping short of these dictates would violate the very principles upon which our nations were founded, and endanger our very development."

"Without the dynamism of our oil sands industry, we in Canada would not have the energy -- moral, financial and literal -- to develop the alternative energy future the whole world craves," says Bruce Carson, a special adviser to Environment Canada.

Also released today was the Climate Change Performance Index report. The report was produced by the NGO German Watch, and ranks nations according to their environmental achievements. Canada was ranked 56th, out of 57 countries. Draft regulations on cap-and-trade in the country have been repeatedly delayed and are not expected until late 2010 at the earliest, while emissions continue to increase at 26 per cent over 1990 levels. In the past few months, the present administration has made it clear that it will ape US environmental policy, but continues to lag behind its neighbour in reducing emissions and investing in renewables.

Canada, the only nation to drop out of the Kyoto Protocol, has shown today that it will continue to put prosperity before climate change prevention. It could be a huge obstacle to achieving a transformative agreement this week.

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Leader: The unresolved Eurozone crisis

The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving.

The eurozone crisis was never resolved. It was merely conveniently forgotten. The vote for Brexit, the terrible war in Syria and Donald Trump’s election as US president all distracted from the single currency’s woes. Yet its contradictions endure, a permanent threat to continental European stability and the future cohesion of the European Union.

The resignation of the Italian prime minister Matteo Renzi, following defeat in a constitutional referendum on 4 December, was the moment at which some believed that Europe would be overwhelmed. Among the champions of the No campaign were the anti-euro Five Star Movement (which has led in some recent opinion polls) and the separatist Lega Nord. Opponents of the EU, such as Nigel Farage, hailed the result as a rejection of the single currency.

An Italian exit, if not unthinkable, is far from inevitable, however. The No campaign comprised not only Eurosceptics but pro-Europeans such as the former prime minister Mario Monti and members of Mr Renzi’s liberal-centrist Democratic Party. Few voters treated the referendum as a judgement on the monetary union.

To achieve withdrawal from the euro, the populist Five Star Movement would need first to form a government (no easy task under Italy’s complex multiparty system), then amend the constitution to allow a public vote on Italy’s membership of the currency. Opinion polls continue to show a majority opposed to the return of the lira.

But Europe faces far more immediate dangers. Italy’s fragile banking system has been imperilled by the referendum result and the accompanying fall in investor confidence. In the absence of state aid, the Banca Monte dei Paschi di Siena, the world’s oldest bank, could soon face ruin. Italy’s national debt stands at 132 per cent of GDP, severely limiting its firepower, and its financial sector has amassed $360bn of bad loans. The risk is of a new financial crisis that spreads across the eurozone.

EU leaders’ record to date does not encourage optimism. Seven years after the Greek crisis began, the German government is continuing to advocate the failed path of austerity. On 4 December, Germany’s finance minister, Wolfgang Schäuble, declared that Greece must choose between unpopular “structural reforms” (a euphemism for austerity) or withdrawal from the euro. He insisted that debt relief “would not help” the immiserated country.

Yet the argument that austerity is unsustainable is now heard far beyond the Syriza government. The International Monetary Fund is among those that have demanded “unconditional” debt relief. Under the current bailout terms, Greece’s interest payments on its debt (roughly €330bn) will continually rise, consuming 60 per cent of its budget by 2060. The IMF has rightly proposed an extended repayment period and a fixed interest rate of 1.5 per cent. Faced with German intransigence, it is refusing to provide further funding.

Ever since the European Central Bank president, Mario Draghi, declared in 2012 that he was prepared to do “whatever it takes” to preserve the single currency, EU member states have relied on monetary policy to contain the crisis. This complacent approach could unravel. From the euro’s inception, economists have warned of the dangers of a monetary union that is unmatched by fiscal and political union. The UK, partly for these reasons, wisely rejected membership, but other states have been condemned to stagnation. As Felix Martin writes on page 15, “Italy today is worse off than it was not just in 2007, but in 1997. National output per head has stagnated for 20 years – an astonishing . . . statistic.”

Germany’s refusal to support demand (having benefited from a fixed exchange rate) undermined the principles of European solidarity and shared prosperity. German unemployment has fallen to 4.1 per cent, the lowest level since 1981, but joblessness is at 23.4 per cent in Greece, 19 per cent in Spain and 11.6 per cent in Italy. The youngest have suffered most. Youth unemployment is 46.5 per cent in Greece, 42.6 per cent in Spain and 36.4 per cent in Italy. No social model should tolerate such waste.

“If the euro fails, then Europe fails,” the German chancellor, Angela Merkel, has often asserted. Yet it does not follow that Europe will succeed if the euro survives. The continent that once aspired to be a rival superpower to the US is now a byword for decline, and ethnic nationalism and right-wing populism are thriving. In these circumstances, the surprise has been not voters’ intemperance, but their patience.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump