The World This Week

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The World This Week
The High Seas Treaty, Global Financing Pact Summit, and the IMF-Pakistan Deal

  GP Team

The World This Week #220, Vol. 5, No.24
02 July 2023

New High Seas Treaty: Beyond National Jurisdiction 
Rishika Yadav

What happened?
On 29 June, the governing board of the Global Environment Facility (GEF) approved the establishment of a Global Biodiversity Framework Fund during a GEF Council meeting in Brazil. GEF also broadens its remit to support the new Agreement on marine biodiversity beyond national jurisdiction, strengthening conservation efforts on the high seas.

On 19 June, the UN adopted a groundbreaking international treaty titled "Biodiversity Beyond National Jurisdiction treaty or the BBNJ treaty." The treaty focuses on areas beyond national jurisdiction (ABNJ), encompassing the high seas and the Area (seabed beyond national jurisdiction), which constitute around two-thirds of the world's ocean. 

What is the background?
First, unregulated resources and illegal practices. The world's oceans, particularly ABNJ, lack adequate protection, with only 1.2 per cent currently safeguarded. This has raised concerns about biodiversity loss and ocean degradation, exacerbated by climate impacts and other factors. The adoption of this treaty is crucial as its 75 articles offer protection against destructive practices, addresses pressing issues like plastic pollution and overfishing, and promote sustainable management and the establishment of marine protected areas (MPAs). The treaty incorporates the "polluter pays" principle and mandates environmental assessments before undertaking projects on the high seas.

Second, a brief note on the collaboration for conservation. The evolution of the new High Seas treaty began with the establishment of the Convention on Biological Diversity (CBD) in 1993. The process started with the first session of the BBNJ in September 2018, initiated by a UNGA resolution in December 2017 to convene an Intergovernmental Conference under UNCLOS. The treaty is a result of the fifth session of the Intergovernmental Conference (IGC-5) on Marine Biodiversity of Areas Beyond National Jurisdiction (BBNJ) held in New York in 2023. The treaty was agreed upon after more than 15 years of deliberations, including four years of official negotiations and a series of lengthy discussions.

Third, the disagreements. In 2022, UN member states were unable to reach an agreement on the treaty. Disagreements over several crucial components were the focus of IGC-5, leading to the slow pace of negotiations. Contentious issues such as access and benefit-sharing mechanisms, monetary benefit-sharing, and intellectual property rights remained unresolved. Similar disagreements were observed during the fourth round of negotiations as well. One of the treaty's main objectives was to facilitate the creation of MPA; however, delegates failed to reach an agreement on this matter. 

What does it mean?
First, the road ahead. Currently, international waters lack a comprehensive treaty, and the establishment of MPAs and other safeguards remains legally challenging due to the patchwork of international bodies and treaties managing resources and human activities in these areas, often with overlapping jurisdictions. Opposition by non-European countries could further hinder the implementation of  Article VI of the Agreement since national governments need to adopt and ratify it. By promoting sustainable management and establishing MPAs, the treaty contributes to achieving the 2030 Agenda.

Second, filling the gaps. The International Seabed Authority (ISA) does not have the authority or scope to address broader issues related to the conservation and sustainable use of marine biodiversity in ABNJ. On the same, UNCLOS only serves as the legal framework for all ocean-related activities and does not explicitly address marine biodiversity. The new High Seas treaty aims to fill these gaps and provide a comprehensive framework. While it is currently being negotiated and has not yet entered into force, the goal is for it to become a binding norm rather than a soft law.

Third, the road to ratification. The efficacy of the High Seas provisions would be significantly compromised in the absence of ratification. The intended impact and practical implementation of the High Seas measures would be undermined, leading to an uncertain and weakened framework for the conservation and sustainable use of marine resources.
 


France: Summit for a New Global Financing Pact 
Sneha Surendran

What happened?
On 23 and 24 June, France hosted the New Global Financing Pact summit in Paris. Barbados and India were the co-hosts. Heads of state, officials from international organizations, NGOs, and activists attended the event. In his address, host Prime Minister Emmanuel Macron stated the intended result of the summit, saying: "Policymakers and countries shouldn't ever have to choose between reducing poverty and protecting the planet." The two-day summit saw officials deliberate upon climate change, climate financing, reforms of multilateral financial institutions and the impacts on economies due to the pandemic and wars. 

What is the background?
First, delayed promises and climate debt. Several countries have taken the pledge to achieve net-zero emissions by 2050. However, studies show that climate action continues to lack commitment. For instance, during COP15 in Copenhagen in 2009, developed countries decided to collectively secure USD 100 billion every year by 2020 to assist climate projects in developing countries. In 2020, the OECD reported that the net amount raised was USD 83 billion. Macron reiterated the commitment to this scheme, saying that he is "confident" of the target being reached this year. A March 2023 UN report titled 'Tackling debt and climate challenges in tandem' showed that the debt crisis in developing countries was aggravating climate change. 29 out of 69 poor countries plus lower-middle-income countries that defaulted are at crossroads of high debt and climate vulnerability. The report called for the restructuring of global financial systems. With natural disasters increasing in number and intensity, climate-vulnerable nations find themselves borrowing money for relief and reconstruction. 

Second, the hesitant private sector. Twenty-five per cent of global climate investments happen in South Asia, Latin America, and Africa, which have some of the most ecologically vulnerable zones. Countries here can access loans only after agreeing to several conditions. Further, the tax structures within low and middle-income countries and weak institutional frameworks deter private companies from investing in green schemes. The private sector cannot quantify the risk and benefits they could face in these countries regarding climate change impacts. Additionally, the inability to forecast high returns makes them cautious about investing.

Third, the North-South divide. Presently, the countries of the Global North are responsible for the accumulation of high atmospheric emissions. Historically, the US has emitted the highest share of carbon, followed by EU countries and China. In comparison, the countries of the Global South have contributed a significantly lower percentage of emissions. However, the numerous climate pacts today tend to focus on the actions taken by the Global North. The two sides end up shifting blame, with questions on climate justice factoring in.

What does it mean?
First, the Global South gearing up to fight climate change. Barbados' Prime Minister Mia Mottley, who has emerged as a new voice leading the call for climate action, called for a "total transformation" of international institutions. Her Bridgetown Initiative was an important agenda at the event. It is a five-point proposal that addresses climate financing, global inequality and poverty in developing countries while providing possible solutions incorporating global financial institutions. The carbon footprint of the Global North is over 100 times greater than the Global South. However, emerging economies face the brunt of climate change while industrialized nations are better equipped, technology and finance-wise, to deal with it. 

Second, the relevance of contemporary financial institutions. Contemporary global institutions like the World Bank and the IMF were products of a post-World War II rebuilding effort. Since then, the world has undergone massive changes, including pandemics, shifting geopolitical relationships and a worsening climate. Moreover, these challenges have had a disproportionate impact on the developing and under-developed nations. The inability of global institutions to help alleviate their troubles, coupled with the dominance of developed countries within these institutions, has slowly chipped away the trust in them. A look at the policies of these institutions also reveal that they have exacerbated the debt crisis in poor countries. This has increased the call for institutional reforms over time.  
 


Pakistan: Finally, a deal with the IMF
Ankit Singh

What happened?
On 29 June, the IMF, in its press release, announced a new USD 3 billion Stand-By Agreement (SBA) reached with Pakistan. The staff-level Agreement would be subject to management approval by IMF's executive board in mid-July. The Finance Minister of Pakistan claimed that the deal would make sure the disbursement of USD 1 billion shortly after IMF board approval. 

What is the background?
First, a brief note on the Stand-By-Agreement (SBA). The SBA is different from the Extended Fund Facility(EFF). The EFF is an IMF instrument usually employed when structural impediments subdue a country's growth sentiment and needs financing to deal with institutional weakness while maintaining macroeconomic stability. While SBA as an instrument is used for supporting short-term financing needs. Nathan Porter, under whom the IMF team discussed with Pakistani authorities, also mentioned that external shocks had defeated efforts by Pakistani authorities to remain aligned with benchmarks of previous EFF. 

Second, Pakistan's revised budget and related actions as a prelude to the IMF deal. The week leading to the announcement witnessed several important policy actions to convince the IMF of the new SBA. The most important was the State Bank of Pakistan's decision to withdraw all import restrictions and effectively leave the PKR to be determined at a market-based exchange rate. SBA had also hiked the policy rate by 100 basis points to 22 per cent, the highest ever in the history of Pakistan. While on the ministry and legislative front, the finance ministry had to present a revised budget with additional taxes worth USD 731 million and reduce the expenditure by USD 289 million. However, the new taxes are limited to the salaried class and organized sector. The untaxed sectors like retail, agriculture and real estate have remained primarily out of the new tax net.

What does it mean?
First, the immediate measure. Pakistan and IMF might go for another EFF after the current SBA expires in the next nine months. The IMF factor in Pakistan's attractiveness is likely to fade over the medium term as Pakistan weighs in on China as an alternative guarantor of the financial viability of Pakistan. 

However, there remains a mistrust not just on the IMF side for Pakistan but on the part of developing countries in the effectiveness of loan programs of IMF. The world is witnessing a phase of neo-populism, and IMF policies and benchmarks have not adjusted to such changing reality. The multilateral institutions based on the Bretton Woods consensus may as well run out of steam. At the same time, regional and developing countries cement their financial collaboration and agree on decoupled macro-derivatives with advanced economies.
 


Regional Roundups
News from around the World 

East and Southeast Asia This Week
China: To strengthen military cooperation with Vietnam 
On 27 June, Li Shangfu, the defence minister of China, met with his Vietnamese counterpart Phan Van Giang expressing that they would like to strengthen cooperation and communication between the militaries of the two countries. He said: "China and Vietnam should continue to work hand in hand and closely unite in the new journey of socialism, safeguard the common strategic interests of the two countries, and make positive contributions to regional peace and stability." 

China: Premiere Li Qiang's address at the World Economic Forum
On 27 June, Chinese Premier Li Qiang addressing the World Economic Forum's 14th annual meeting in Tianjin, cautioned against the politicizing of de-globalization and decoupling and urged the countries to cooperate and work together. He commented on de-risking: "Some people are hyping up the so-called reduction of dependence and de-risking. I think, to a certain extent, these two words to reduce dependence and risk are a false proposition."

Philippines: Russian Pacific Fleet ships enter the Philippine Sea 
On 27 June, the Russian Press Service of the Eastern Military District reported that the Pacific Fleet ships, including the Gromky and Sovershennyy corvettes, entered the southern part of the Philippine Sea. The crews conducted manoeuvres to demonstrate naval presence in the Asia-Pacific region and participated in joint exercises to repel a simulated missile attack and engage mock enemy ships. The Pacific Fleet regularly engages in training sessions to enhance their maritime skills. The ships entered the Philippine Sea after crossing the South China Sea. 

Malaysia: DAP chairman warns against voting for Perikatan Nasional 
On 30 June, Malaymail reported that the DAP (Democratic Action Party) Chairman commented on the upcoming Penang state elections. He warned that voting for the opposition party Perikatan Nasional (PN) in the elections would imply supporting Penang's return to Kedah, against the wishes of Penangites. DAP Chairman emphasized that Penang is now a sovereign state and no longer part of Kedah. He accused the caretaker of Kedah Menteri Besar (Head of the Government) for making inflammatory and seditious remarks about amending the Federal Constitution in facilitating the merger of Penang to Kedah. Lim urged Penangites to vote for good governance, defend Penang's sovereignty, and reject PN in the state polls.

Cambodia: PM Hun Sen orders shootdown of drones from Vietnam 
On 28 June, Khmer Times reported that Cambodian Prime Minister Hun Sen ordered the Royal Cambodian Armed Forces (RCAF) to shoot down drones flying in the border region of Ratanakiri province. This comes after several drones were spotted entering Cambodian airspace from Vietnam. Sen ordered 500 soldiers and 200 air defence weapons to be deployed to address the issue, stating that it is necessary to prevent invasion and espionage until the origin of the drones is determined. The origin of the drones remains unknown, and the Vietnamese government denied any involvement.

South Asia This Week
India: PM Modi in Egypt
On 25 June, Prime Minister Narendra Modi reached Egypt and was received by the President of the Arab Republic of Egypt, Abdel Fattah Al-Sisi, at Al-Ittihadiya Palace. During the visit, Prime Minister Narendra Modi was honoured with the highest award of Egypt, The Order of the Nile. Both countries signed a "strategic partnership" agreement to enhance bilateral ties. Three MoUs were signed in agriculture, archaeology, and Competition Law.
 
Sri Lanka: Bilateral talks with Romania
On 26 June, the fifth round of Sri Lanka – Romania Bilateral Political Consultations was co-chaired by State Minister of Foreign Affairs Tharaka Balasuriya and Romania's State Secretary, Traian Hristea, in Colombo. Both countries identified new avenues for increased cooperation in the sectors relating to labour, trade and investment, ICT, and cyber security. Romania has also showcased its interest in exploring the possibility of entering into a partnership in ports cooperation, particularly in the logistics sector.
 
Sri Lanka: President Ranil Wickremesinghe addresses Sri Lankan business community
On 29 June, amidst the debt restructuring, President Ranil Wickremesinghe addressed members of the business chambers, business leaders, and unions regarding Domestic Debt Optimization (DDO). He urged business leaders to educate their employees to ensure that individuals and industries comprehend the significance of debt restructuring. President has been engaging in widespread explanations among stakeholders of Sri Lanka to communicate the restructuring and its influence on their livelihoods.

Maldives: Foreign Ministry issues a statement on the India Out campaign
On 30 June, after a group of protestors staged a demonstration on the India Out campaign in the Maldives, the Maldives Foreign Ministry issued a statement blaming the opposition for the protests. The statement said the protests "only provoke hatred, but also promote hostility with the objective of tarnishing the country's long-standing cordial ties with India." 

Nepal: ADB approves aid for trade policy reforms
On 29 June, Asian Development Bank (ADB) approved a USD 50 million loan to support the implementation of policy reforms by the government of Nepal to improve its domestic and international trade. ADB South Asia, quoted by The Kathmandu Post, said: "The development of the trade and industry sector will boost competitiveness and help steer the country towards sustainable economic growth," It added: "Furthermore, improved trade facilitation can boost exports and help address Nepal's balance of payment."
 
Pakistan: UN broods over Pakistan's children in armed conflict
On 29 June 2023, The Friday Times reported that a Report on Children and Armed Conflict assembled by the United Nations Secretary-General Antonio Gutteres' office that has been submitted to the United Nations Security Council pointed out a horrific atrocity that at least three children were killed, and 17 others were hurt from January to December 2022. Concerns are brewing about children along the border of Afghanistan and resurfacing of attacks on Pakistani schools. Guterres stated that Pakistan remains listed as a State having a situation of concern for children in armed conflict. Explosives remain the biggest cause of casualties.

Pakistan: UN warns that over 130,000 Pakistani refugees will require resettlement
On 29 June 2023, Dawn reported that The UN Refugee Agency (UNHCR) warned in a new report that almost 134,00 refugees and asylum seekers, most of whom are from Afghanistan, will require resettlement in Pakistan in 2024. The largest refugee hosting states in the Asia- Pacific region are Pakistan, Iran, Bangladesh, and Malaysia, which have repeatedly brought to notice responsibility-sharing and tangible contributions to the refugee response. Pakistan has been one of the largest refugee-hosting countries and provides asylum to over 3 million Afghans. It is not a signatory to the 1951 Refugee Convention or the 1967 Protocol.

Middle East and Africa This Week
Sierra Leone: Julius Maada Bio sworn in as President
On 28 June, BBC reported that Maada Bio had been re-elected as Sierra Leone's President by securing 56 per cent of the vote. The opposition has claimed issues with the tallying process and has disputed in court. Kamara, candidate of All People's Congress (APC) who has trailed with 41 per cent of the vote, has claimed the outcome as "daylight robbery."

Senegal: IMF approves USD 1.8 billion loan
On 27 June, BBC reported that the International Monetary Fund (IMF) had approved a USD 1.8 billion loan for Senegal for economic recovery.  Senegal will receive an initial disbursement of USD 216 million and would be given a period of three years. The loan is intended to support Senegal's efforts to cope with climate change and the effects of the Russia-Ukraine war on the economy.
 
South Africa: German foreign minister visits Pretoria 
On 27 June, German Foreign Minister Annalena Baerbock met South African counterpart Naledi Pandor in Pretoria and discussed energy security, climate change and geopolitical issues. The discussions additionally included the impacts of increasing oil prices globally.
 
Iran: President Ibrahim Raisi expresses support for Putin
On 26 June, Iranian President Ibrahim Raisi expressed his support for Russian President Vladimir Putin following the aborted Wagner mutiny. An Iranian official stated that Putin had briefed President Raisi on the events related to the mutiny. President Raisi reiterated that Iran does not support Ukraine in the ongoing war between Ukraine and Russia. President Raisi issued a statement that Iran supports Russian sovereignty.
 
Afghanistan: UN report states Afghanistan accounts for a majority of drug production
On 27 June, the United Nations Office on Drugs and Crime (UNODC) stated that eighty per cent of opium production came from Afghanistan in 2022. Additionally, the report stated that more than 3.5 million drug users were from Afghanistan, which accounts for 10 per cent of users globally. Taliban spokesman Mujahid dismissed the claims as no research was conducted on opium production and reiterated the ban on poppy production for the past two years.
 
Iran: EU to retain ballistic sanctions against Tehran
On 29 June, European diplomats stated that they plan to retain European Union ballistic missile sanctions on Iran, set to expire in October under the defunct 2015 Iran nuclear deal. Officials cited Russian usage of Iranian drones, transfer of ballistic missiles to Russia and Violation of the accord by Tehran as the reasons for the retention. Iran denied seeking nuclear weapons.

Iran: Faces challenges importing from India
On 29 June, Iranian officials stated the country faces challenges to import owing to its depletion in rupee reserves. Iran mainly imports basmati rice, tea and pharmaceuticals which were bought using rupee reserves during oil export to India. New Delhi terminated the oil import following US sanctions in 2019. In 2022-23, India exported goods worth USD 1.66 billion but imports from Iran was worth USD 672 million. Iranian officials have flagged the issue to India during meetings and offered to export oil.
 
Afghanistan: Envoy expresses concerns on climate change
On 30 June, Afghanistan's envoy, Mohibullah Taib, stated that Afghanistan has been the most impacted by climate change at a UN Human Rights Council meeting. Taib noted that more than hundreds of thousands of civilians were displaced due to climate change, and that natural disasters in the north and northeastern region. The shortage of water due to unseasonal rains have affected the citizens and farmers. Additionally, he remarked Afghanistan ranked the 8th most vulnerable country in the Notre Dame Global Adaptation Index.

Europe and the Americas This Week
Switzerland's Federal Council to support ban on commercial exploitation of international sea bed 
On 28 June, the Federal Council announced its support for a moratorium on the commercial exploitation of the international seabed area until its impact on the marine environment was studied scientifically. The decision will be relayed by Switzerland's representatives in the 28th session of the International Seabed Authority (ISA) that will be held in Jamaica in July. The Federal Council's decision is in line with Switzerland's Maritime Strategy for 2023-2027 which was adopted on 02 June. While it has given licenses for exploration operations in the area, certain states and companies have been requesting access to commercially exploit the mineral resources. This has drawn concerns from scientists and environmental activists who are calling for a moratorium before a final decision.
 
Greece: New Democracy party wins in the second round of elections
On 25 June, Prime Minister Kyriakos Mitsotakis's New Democracy party (ND) won a second victory in the Parliamentary election, with 40.5 per cent. The election consisted of 9.8 million, with 32 political parties represented. After the triumph, Mitsotakis announced: "The people have given us a safe majority. Major reforms will proceed rapidly." Earlier in the May elections, the party missed by five seats in forming a single majority party in Parliament. The Syrian party, considered the far-left received only 18 per cent vote, followed by PASOK with 13 per cent, KKE with seven per cent and the Spartans party received five per cent. The Syrian left party leader stated: "We have suffered a heavy electoral defeat." Mitsotakis promised a strong economy and combat unemployment rates under his leadership.
 
Ukraine: Officials reveal plans to hold Crimea hostage
On 30 June, Washington Post reported the intention of Ukrainian officials to station long-range weapons near Crimea in order to gain the upper hand in future peace negotiations with Russia. According to the report, the Ukrainian leadership is said to have shared the plans with CIA head William Burns during his secret trip to Kiev in June, where he met with President Vladimir Zelensky. The officials are said to have devised plans to end the fighting "on terms that are acceptable to Russia and the Ukrainian people." To achieve this, they hope to gain leverage over Moscow by retaking "substantial territory by the fall," and, "in an ideal scenario," station artillery and rocket systems on the border with Crimea, where the headquarters of Russia's Black Sea Fleet is located. Moscow responded to this by saying that multiple Ukrainian assaults were repelled, where Kiev's forces had suffered heavy losses.
 
Russia: Lavrov accuses Ukrainian militants of using civilian infrastructure
On 30 June, at an online briefing, Lavrov accused Ukraine of allowing foreign mercenaries and Western generals to use civilian infrastructure to fight against Russia, and vowed to destroy these groups. Lavrov stated that Russia has "not seen confirmation of a single fact of deliberate shelling of civilian targets by the Russian army." Further, he claimed that the Ukrainian side has been "violating international humanitarian law and committing a war crime by allowing mercenaries, Western generals and instructors to use civilian objects to hold all sorts of meetings." This is in the context of the Ukrainian counteroffensive that was launched in June.
 
The US: Treasury secretary claims resilience in US rebound and supports 'Bidenomics'
On 30 June, Treasury Secretary Janet Yellen claimed that dangers of a possible recession are minimized now and the administration will be able to control inflation without compromising on the labor market and employment. She boosted her confidence in 'Bidenomics' which she termed as 'modern supply-side economics'. Bidenomics aims to increase public investment in industry, educating and empowering the workforce and boosting competition by policing monopolistic behaviour. The agenda is to grow the US economy from the middle out and the bottom up, not from the top down.
 
The US: State Department clears USD 5.6 billion deal of F-35 for Czech Republic
On 29 June, The US State Department announced the sale of F-35 fighter jets, munitions and related equipment to the Czech Republic. The deal will enable the Czech Republic to receive 24 Lockheed Martin F-35 joint strike fighters. The statement by State Department said: "The proposed sale will improve the Czech Republic's defence capabilities as well as support NATO operations by guarding against modern threats and maintaining a constant presence in the region." The Czech air force currently flies SAAB's Gripen fighter. According to Breaking Defence, the sale will also include sale of classified software and 25 Pratt & Whitney F135-PW-100 engines.
 
Brazil: Former President Bolsonaro barred from running for President office for eight years
On 30 June, a panel of judges in highest court of the country accused former President Jair Bolsonaro of abuse of power and undermining the electoral body's fairness. Former President Fernando Collor de Mello and current President Luiz Inácio Lula da Silva have also been tried under same accusations but this is the first time a former President has been suspended.
 
Mexico: Year-long 50 per cent tariff imposed on import of white corn 
On 24 June, the country began imposing 50 per cent tariffs on the import of white corn. President Andrés Manuel López Obrador said that the decision was taken to encourage production within the country and prevent the import of genetically modified (GM) corn. Mexico wants to phase out the import of GM corn for human consumption as well as yellow corn for animal feed. The tariff rules comes amidst a trade dispute between Mexico and US - Canada. The US and Canada have maintained that Mexico's apprehensions over genetically modified corn is not "grounded in science."
 
Guatemala: President to be decided after a second round of election 
On 25 June, the country held its general elections. On 27 June, after counting almost 98% of the votes, the Supreme Electoral Tribunal announced that former first lady Sandra Torres of the conservative UNE party had secured 15.7 per cent of the votes, followed by leftist Seed Movement's Bernardo Arévalo at 11.8 per cent. However, since the two leaders did not near the 50 per cent mark to win, the result of the presidential elections will be announced after a second round of voting, which is expected to be held on 20 August. 
 
Mexico: Military continues its influence in the aviation sector
On 27 June, a published decree stated that Mexico would likely hand over control of the capital's main airport to its Navy. The Mexico City International Airport (AICM), the busiest airport in the country, is currently under the transportation ministry. However, the Navy already controls its security area, including customs. President Andres Manuel Lopez Obrador has defended the military's growing involvement in the aviation sector, saying that there has been a reduction in drug smuggling via airports. 
 
About the Authors
Harini Madhusudan, Rashmi Ramesh, Akriti Sharma and Ankit Singh are PhD scholars in the School of Conflict and Security Studies at the National Institute of Advanced Studies. Padmashree Anandhan, Anu Maria Joseph, Femy Francis and Rishika Yadav are Research Associates at NIAS. Sneha Surendran, Prerena P and Ryan Marcus Manuel are Research Interns at NIAS.  

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