Stern Warning

Posted January 2, 2006

Categories: Articles

The Stern Review on the Economics of Climate Change released in England last week—and named after the former World Bank economist Nicholas Stern—predicts a 20% cut in global economic activity if climate change continues unabated. Environmentalists have been arguing that global warming will eradicate species, ravage ecosystems, and lead ultimately to the “end of nature” if not the end of mankind. But those warnings were not dire enough. The shrinking of the global economy by one-fifth and the equivalent reduction in profit margins and trade revenues? Forget about polar bears and melting ice caps, this is serious business!

The Stern Review has a rather unstern conclusion. For a mere 1% of global Gross Domestic Product by 2050—about $600 billion—world leaders can arrest this disastrous trend. For a bit more than what the United States spends annually on the military, the world could save itself. Overall, the Review estimates that economic benefits from shifting to the green path will total $2.5 trillion down the road. We never really got that much-promised Peace Dividend after the Berlin Wall crumbled. When we finally confront the real threat facing the planet, Stern promises a Green Dividend.

That’s all rather optimistic. Like the price tag for German reunification, the bill might turn out quite a bit larger when it comes due. But do we really have a choice in the matter? Unfortunately, the United States, which produces one-quarter of the world’s greenhouse gasses, believes that non-action is an option. The Bush administration couldn’t even be bothered to go along with the Kyoto Protocol.

In a more perfect world, voters going to the polls in the United States this week would be evaluating candidates not on their charisma, their ability to sling or shrug off electioneering mud, or their capacity to bring home the pork. Voters would ask candidates how they stood on the fate of the earth and the global economy. But it’s hard to turn such concerns into a soundbite or a campaign ad.

Lame (Duck) Solutions

For every global economic problem, Washington has one simple answer: free trade. The United States is hunkering through several rounds of negotiations with South Korea to hammer out a free-trade agreement. With Peru, the Bush administration is trying a different tactic. As FPIF contributors Sarah Anderson and Sara Grusky argue in their new commentary, the administration will try to push the agreement through after the elections and before the new Congress takes office.

“The fact that the Bush administration had to negotiate a bilateral deal with a relatively small economy like Peru is a reflection of the failure of their trade agenda for the hemisphere,” Anderson and Grusky argue. “The original plan was a Free Trade Area of the Americas that would include 34 countries. But that grand initiative appears be to dead after several years in intensive care, due to opposition from many of the region’s bigger economies, namely Brazil, Argentina, and Venezuela.”

Iraq, North Korea, Nicaragua

The costs of the Iraq War continue to escalate. As FPIF’s policy outreach director Erik Leaver points out in a new analysis, estimates of the war’s price tag now approach $1 trillion. On a state-by-state basis, California is shouldering the greatest burden of $42 billion and even tiny Rhode Island has shelled out over $1 billion.

One of the few spots of global good news last week was North Korea’s decision to return to the negotiating table. As I argue in a commentary, “the boost given to each country—a modest ‘October surprise’ for the Bush administration, a diplomatic achievement for China, and a stronger negotiating position for North Korea—will not carry over into the negotiations themselves. A decision to talk, after all, does not translate automatically into a decision to compromise.”

If you’re weary of the U.S. elections, there’s plenty of other elections around the world to follow. The early results from the Nicaraguan election are in and Sandinista leader Daniel Ortega is likely to return to the president’s office. Although Ortega is now a fervent Catholic who opposes abortion rights, Washington is not pleased with his political rebirth. The United States tried nearly everything to tilt the elections. “U.S. officials have publicly censured Ortega, attempted to unify his opposition, and threatened that an Ortega win would endanger U.S. financial support,” writes Ben Beachy in a new Americas Program analysis.

More FPIF Analysis

FPIF columnist Conn Hallinan won an award from Project Censored for his November 21, 2005 article exposing U.S. military operations in Paraguay, Bolivia, and Ecuador. You can read his original article along with an update as well as the Americas Program special report on U.S. bases in Paraguay that shared the award.

FPIF commentator Saul Landau investigates the double standards of the Bush administration in their treatment of Cuban terrorist Luis Posada Carriles, who helped to blow up a Cuban commercial jet. “Even though the Justice Department filed papers in mid October 2006 at the El Paso federal court, acknowledging that Posada is “an unrepentant criminal and admitted mastermind of terrorist plots and attacks on tourist sites,” they refuse to charge him,” Landau writes. “That casts doubt on Bush’s supposed tough standards on terrorism. Double standards? In fact, Bush has shown he has no standards.”

And, in a Right Web analysis of U.S.-Syrian relations, Jim Lobe concludes that “Pressure in the United States for Washington to work out some kind of accommodation with Damascus is rising.”

FPIF, November 6, 2006

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