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Global Economic Order
Policymakers in Pakistan need to pay more attention to what is happening in the country related to climate change.
It is not an exaggeration to say that the year 2024 has been a year of significant elections. So far, millions of people across the globe have gone to the polling booths to elect those who will occupy policymaking positions in the countries of which they are citizens. Going in alphabetical order, there were elections in Bangladesh, the European Union, France, several German states, and Pakistan. The next big election will be on November 5, when the Americans will choose who will occupy the White House from 2025 to 2029. The decision by President Joe Biden not to seek a second term in office, which the Constitution allowed him. He was abandoned by the influential leadership of the Democratic Party, which he had served for several decades. A consensus had developed among the party’s leadership that Biden no longer had the physical strength and mental sharpness to govern for another four-year term. He opted out of the race and endorsed Kamala Harris, his Vice President, to contest the next election. Harris had an unusual background. She was the daughter of a Black Jamaican father and an Indian mother. If elected, she will be the first woman to lead the United States and the second Black person to occupy that presidential office.
Once the year 2024 comes to an end, and results are available from the major elections held during the year; what are the significant issues the new leaders will need to confront?
In this brief write-up, I have focused on five issues that confront the world at this time in global history. At this point, I can identify five issues most elected leaders will confront. One is what kind of political system would be sold to people around the globe. After the end of the Second World War, there was a consensus that the people should be governed by an inclusive system of governance in which the leadership was chosen in elections held at regular and specified intervals.
Second, which country or group of countries should oversee the system of governance across the globe? Third, there is growing concern that the global economic order that was put in place after the Second World War no longer had the support of the people across the globe. Fourth, there is now broad recognition among those who know that the world is heading towards a major catastrophe unless the emissions of greenhouse gases are brought under control. Fifth, and finally, how should ventures into space be regulated? Since I don’t have the space to discuss all five issues, I will focus in this short article on just two: tensions in the global economic order and the need to deal with global warming.
The post-Second World War economic system was based on two crucial principles. One, no country would work alone, but the world’s economic affairs would be based on the consensus among nations. The result would be an economic order guided by a cluster of institutions that would be broadly representative and follow agreed governance principles. Several institutions were created to govern globally. These included the United Nations and the system of organizations that formed part of the collective body. The International Monetary Fund (IMF) was to regulate the financial system that would save the world from repeating the chaos that led to the Second World War. The World Bank Group and the associated regional development banks would provide affordable capital to developing nations – the group that is now called the “Global South.” Eventually, the World Trade Organization (WTO) was created to regulate the flow of goods and services among nations.
Until the arrival of Donald Trump to the American presidency and his advocacy of what he called Make America Great Again, or MAGA, Washington was contended to follow internationally accepted norms for the flow of goods, information, and capital across international borders. These norms constituted what in the 1980s came to be called the process of globalization. However, the consensus that had international support has eroded, and the world has divided itself into several sub-international clusters of nations. These include the Group of Seven (G7), the Group of Twenty (G20), and various Asian blocks. It should be noted that Pakistan is excluded from all these groups.
There is growing concern that the global economic order established after the Second World War no longer has the support of people worldwide.
The second issue is global warming. According to Copernicus Climate Change Service, a Europe-based institution, global temperatures between June and August 2024 were 1.5 degrees Celsius above the preindustrial level, beating the record set in the summer of 2023. The hot season reached its apex in late July when Copernicus’s sophisticated temperature analysis program detected the four hottest days ever. The temperatures for the year to date have far exceeded anything seen in the agency’s 80 years of record keeping, making it inevitable that 2024 will be the hottest year known to science. According to Carlo Buontempo, the institution’s director, the onslaught of broken records is sobering but unsurprising. The world continues to burn fossil fuels at an ever-increasing pace, and the concentration of carbon dioxide in the atmosphere is higher than the world has seen in roughly 3 million years. “If you keep doing the same thing, you cannot expect to get different results,” said the director. Unless we limit greenhouse gases, we will only exacerbate these temperatures.
According to Sarah Kaplan, who wrote a story for The Washington Post published by the newspaper on September 7, which was based on the work done by the Copernicus Institute and United Nations Intergovernmental Panel on Climate Change, the consequences were felt by people on every continent, notably the countries of the South Asian sub-Continent. “A turbo-charged monsoon triggered landslides that killed hundreds of people in India’s Kerala state. The Atlantic Ocean saw its earliest Category hurricane on record, while deadly floods have wreaked havoc from Italy to Pakistan, to Nigeria, to China.”
Policymakers in Pakistan – in Islamabad and the provincial capitals – need to pay more attention to what is happening in the country related to climate change. Global warming is melting the ice covers in the mountain ranges on the country’s north and north-eastern borders. This is bringing more water into the country’s rivers than the system is currently designed to handle. The additional water, after causing floods, flows into the ocean. In a study done by the World Bank some years ago, there was a suggestion that a system of a dozen dams on the Indus and its western tributaries should be built to save this water for future use.
There are other steps the federal and provincial governments can take to reduce the impact of global warming. The governments in the country could follow India and replace the diesel-powered auto-rickshaws with those driven by electric power. Such a move would help improve the quality of air that sits on top of the country’s major cities. Unfortunately, the administrations in Islamabad and most provincial capitals are too preoccupied with governance issues to pay attention to climate change.
The writer is a professional economist who has served as a Vice President of the World Bank and as caretaker Finance Minister of Pakistan. He can be reached at sjburki@gmail.com
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