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      Ukraine-Russia crisis: who’s winning the international influence war?

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      Ukraine-Russia crisis: who’s winning the international influence war? The balance of power in the diplomatic battle is shifting constantly. But are any of the key players making real advances?Briefly raised hopes of averting a “horrendous” war in Ukraine are fading again after the US predicted an invasion in the “next several days” and British officials said they believed Vladimir Putin, Russia’s president, had decided to attack.The mood in Washington and London had shifted abruptly after Russian-backed separatists shelled Ukrainian targets in the disputed eastern Donbas region. Moscow claimed Kyiv’s forces opened fire first. Clashes are continuing.Analysis: what can the west expect if Putin gives order to invade?Read more US president Joe Biden said that Russia was “engaged in a false-flag operation to have an excuse to go in” and was increasing, not reducing, troop numbers. That analysis was echoed in other Nato and EU countries, which are preparing punitive sanctions. Diplomatic efforts to halt the slide to war are not yet exhausted. Antony Blinken, the US secretary of state, is due to meet his Russian counterpart, Sergei Lavrov, in Europe this week – assuming there is no invasion. They will discuss Russia’s demands, delivered in writing last week, for a Nato withdrawal from eastern Europe and curbs on US missile deployments. Lavrov will also insist Ukraine be permanently denied Nato membership.In the documents, which are a formal response to American proposals for continued dialogue, Russia warns it will be forced to take measures of an unspecified “military-technical character” if its concerns are not addressed.Western leaders, including Boris Johnson, Kamala Harris, the US vice-president, Olaf Scholz, Germany’s chancellor, and Ukraine’s president will discuss the crisis this weekend at the annual Munich security conference. Unusually, Russia and China will not attend.Meanwhile, global stock markets reacted badly to increased fears of war, with share prices falling sharply. Gloom about the prospects for peace overwhelmed a midweek surge of optimism, sparked when predictions that Russia would invade last Wednesday proved wrong. Instead, Putin said he was pulling back some forces from Ukraine’s border. It seemed catastrophe had been averted. Yet within hours US and Nato officials were claiming the pullback was illusory. The White House flatly accused Russia of lying, saying troop numbers have swelled to around 150,000.For his part, Putin alleged, without evidence, that “genocide” against ethnic Russians was under way in the Donbas – another possible pretext for invasion. He continues to insist his troops are withdrawing and that there is no intention to attackWho and what to believe? The next few days could be a turning point. Or the stand-off could drag on inconclusively for months. The only certainty is that the future of Ukraine, and of relations between Russia and the west, hangs in the balance this weekend. Although an armed invasion has not yet happened, the 2022 “war for Ukraine” is already being waged on multiple non-military, political, diplomatic, economic, technological and covert fronts. So who’s winning so far?Vladimir PutinThe question on everyone’s lips: what does Putin want? One theory is this former low-level KGB officer and part-time taxi driver has a massive chip on his shoulder.He has a small man’s visceral need to prove his (and Russia’s) superiority to the western victors of the cold war – but also to the former Soviet elites, from whose ranks he was excluded.A less complex explanation is that Putin views Ukraine as an integral part of historical Russia and Ukrainians and Russians as one people. He claims Ukraine is not a real country. For him, re-absorption into the fatherland is natural and logical, while efforts by Kyiv’s leaders to align with the west are anathema.Experts say Putin is intent on recreating the supposed glories of the Soviet era. He calls the collapse of the Soviet Union a geopolitical tragedy.Looked at this way, a conquest of Ukraine is part of a larger scheme to rebuild a Russian sphere of influence encompassing eastern Europe and central Asia. More mundanely, Putin’s actions can be explained by genuine fear that Russia’s security is threatened, his (disputed) belief that Nato broke a pledge not to expand up to Russia’s borders, and concern that it may accept Ukraine’s membership. Putin, a de facto dictator, feels threatened by a pro-western, democratic Ukraine on his doorstep.Is he winning? Putin has succeeded in forcing the west to consider his security concerns. He has intimidated Ukraine. And he has reminded a rattled Europe of its dependency on Russian gas.At the same time, he has hugely reinvigorated Nato, permanently changed western security assumptions, united the US and Europe against him, and reinforced Russia’s reputation as a rogue state that ignores international law and breaks its word.Joe BidenThe US president was relatively quick out of the blocks over Ukraine. He needed to be. Last year’s chaotic US troop withdrawal from Afghanistan and the resulting damage to Nato’s credibility were laid at his door. With Covid and economic woes already hurting his domestic approval ratings, Biden could not afford a repeat foreign policy disaster.Having made promotion of democracy and human rights around the world a key foreign policy objective, Biden could also not stand back as Russia threatened a free, independent, democratic state.Biden’s approach to the crisis is influenced by two additional strategic factors. One is his aim to reboot the transatlantic alliance, undermined by his predecessor Donald Trump. The other is his desire to demonstrate to China, Russia’s ally, that the US will stoutly support its friends, be they in Ukraine or Taiwan.Biden has sent US troops to reinforce Nato’s eastern flank, assured Kyiv of non-military US support, and stiffened European backbones via an intense diplomatic offensive. In an unusual step, the US continues to disclose detailed (mostly unsubstantiated) intelligence about Russian intentions in an apparent attempt to pre-empt and forestall Putin’s next move.Biden’s tactics may have succeeded in heading off an invasion until now. There are two large caveats. One is that Washington’s attempts to find a diplomatic solution have struggled, while its tough stance may have compromised European efforts. This vacuum is dangerous. The other big reservation is that Biden controversially vowed from the start that US forces would not fight to defend non-Nato Ukraine – despite past US interventions in non-Nato Iraq, Afghanistan, Syria and elsewhere.Putin could yet take catastrophic advantage of this most un-American display of caution.Volodymyr ZelenskiyUkraine’s president impressed world leaders in the Munich security conference this weekend with a brave and punchy speech after ignoring warnings to stay at home for fear of a Russian-inspired coup attempt. His response to the unfolding crisis has surprised some in the west. Criticising alarming claims in Washington and London about an “any day” invasion, Zelenskiy said such suggestions risked causing panic and harming his country’s economy. As Russian military pressure increased last week, the official tone in Kyiv shifted. But by and large Ukrainians appear unimpressed by frantic talk of war. A “day of unity” last Wednesday – the supposed invasion D-day – was not widely supported. As western diplomats and nationals hastily evacuate, most Ukrainians are firmly staying put.One explanation is that people have learned to live with threats from Russia. Low-intensity conflict with Russian-backed Donbas separatists has become the new normal since 2014, when Moscow annexed Crimea. Last week’s passage of a resolution in the Russian Duma (parliament) supporting independence for the breakaway Donetsk and Luhansk “people’s republics” in the Donbas was an attempt to increase Putin’s leverage. Such a unilateral move would spell the end for the so-called Minsk accords, whose terms are disputed by both sides.Ukraine’s aspiration to join Nato lies at the heart of the crisis. Zelenskiy is being pressed by European governments to drop this objective, a key Russian demand, and adopt a neutral, non-aligned status. So far at least, the Kyiv government, cast in the role of underdog, has benefited from increased international support, weapons deliveries and financial aid. It says any war would be about Europe’s future, not just Ukraine’s.True or not, Ukrainians will be the big losers if Putin resorts to force.Emmanuel Macron and Olaf ScholzEmmanuel Macron, the French president who also holds the rotating presidency of the EU council of ministers, has thrust himself into the diplomatic frontline. As the Americans and Russians haggled over Moscow’s demands for new security arrangements in Europe, Macron met Putin in Moscow and sketched possible compromises.These ideas, including recognition of Russian concerns about Nato expansion, its forward deployments in eastern Europe, and current and future US missile capabilities in Poland and Romania, may yet provide the basis for a deal. Macron also raised the possibility of Ukraine adopting neutral status, not unlike Finland during the cold war.Macron publicly supports the US-orchestrated plan to impose severe sanctions on Russia should it invade, and insists he acts in close consultation with Washington. But his Moscow talks raised eyebrows. British officials accused him of appeasement and of undermining the west’s united front.While Macron can shrug off criticism from London, he needs the backing of Germany, the biggest European player. But Olaf Scholz, its newly elected chancellor, has appeared in two minds. On the one hand he wants to salvage the Nord Stream 2 gas pipeline from Russia. On the other he is under intense pressure from Biden to abandon it in support of anti-Kremlin sanctions.Yet Scholz surprised his critics last week when he met Putin in Moscow. He delivered a feisty performance, raising questions about media freedom and human rights.That may have reassured hawkish allies such as Poland and the Baltic republics, which have accused him of being “soft” on Russia. At the same time, Scholz extracted a commitment from Putin to continue dialogue in line with Macron’s approach.The EU commission has been sidelined during the crisis. But the French and German leaders have emerged with reputations enhanced. So far.Boris JohnsonBeset by scandals arising from illegal lockdown parties and reportedly anxious to change the subject, Boris Johnson seized on the Ukraine crisis in late January after having previously largely ignored it.At his direction Downing St began briefing about a big, cross-departmental Whitehall push to tackle the crisis. Britain, Johnson claimed, would lead western attempts to deter Russia. But saying it does not make it so. Suggestions that this new effort to aid Ukraine was part of so-called Operation Save Big Dog to rescue his career were denied, naturally.The UK has since sent extra troops to Estonia, missiles to Ukraine, and placed Royal Navy ships on alert. It is typically iffy about accepting refugees, but has offered humanitarian aid.But Britain’s emphasis on muscular deterrence has come at the expense of diplomacy. It has contributed almost nothing to peace-making efforts. When Liz Truss, the foreign secretary, met Lavrov in Moscow, their talks ended in an icy standoff.Johnson has gratuitously undermined Macron’s Moscow initiative while Ben Wallace, the UK defence secretary, spoke disparagingly of a “whiff of Munich”. Meanwhile, the government has yet to enforce effective measures to curb Russian money-laundering in London.All else aside, the Ukraine crisis has brutally underscored Britain’s diminished international influence abroad. Separated by choice from the EU, the UK is now viewed in Russia (and much of Europe) as little more than a cheerleader and errand boy for America.When Johnson asked Biden what else the UK could do in a phone call last week, the US president replied: “We’re not going anywhere without you, pal.” That summed up Britain’s war to date. The rule of thumb for post-Brexit foreign policy: ask politely what Washington wants, then follow directions.TopicsUkraineThe ObserverRussiaVladimir PutinUS politicsJoe BidenVolodymyr ZelenskiyEmmanuel MacronfeaturesReuse this content More

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      AOC calls Tucker Carlson ‘trash’ for saying she is not a woman of colour

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      AOC calls Tucker Carlson ‘trash’ for saying she is not a woman of colour‘You’re a creep, bro,’ says New York congresswoman after Carlson attacked Ocasio-Cortez in Fox News segment The Fox News host Tucker Carlson attacked Alexandria Ocasio-Cortez on Friday night, claiming the US congresswoman was not a woman of colour.“She’s a rich entitled white lady,” he said.In return, the New York Democrat, popularly known as AOC, said: “This is the type of stuff you say when your name starts with a P and ends with dejo.”Dictionary.com defines pendejo as “a mildly vulgar insult for ‘asshole’ or ‘idiot’ in Spanish”.It’s Trump’s time to tell the truth, the whole truth and nothing but the truth | Lloyd GreenRead more“Once again,” Ocasio-Cortez added, “the existence of a wife or daughters doesn’t make a man good. And this one is basura.”Basura is Spanish for “trash”.She also accused Carlson of sexual harassment.Ocasio-Cortez’s mother is from Puerto Rico, her father from the Bronx. She has described herself as a woman of colour.Carlson said: “No one ever dares to challenge that description, but every honest person knows it is hilariously absurd.“There is no place on Earth outside of American colleges and newsrooms where Sandy Cortez” – Carlson’s derisory nickname for the New York congresswoman – “would be recognized as a quote, woman of color, because she’s not!“She’s a rich entitled white lady. She’s the pampered obnoxious ski bunny in the matching snowsuit who tells you to pull up your mask while you’re standing in the lift line at Jackson Hole. They’re all the same. It doesn’t matter what shade they are.”The leading provocateur in Fox News’ evening line-up was discussing a book about Ocasio-Cortez, Take Up Space: The Unprecedented AOC, written by Lisa Miller, a reporter at New York magazine.Carlson said Miller’s book was “like a box of Fig Newtons. You know it’s wrong to open it, but the temptation is strong, and so we did.”As the media watchdog Mediate put it, several of the passages Carlson read were “fawning in nature and weave mundane videos AOC has posted online – such as her assembling Ikea furniture – into a grand narrative about her life”.In one passage, Carlson said, the congresswoman is described as “pointedly” saying into a camera, “I’m alone today”.“Is it just us or does that sound like an invitation to a booty call?” Carlson said.“Maybe one step from ‘What are you wearing?’ Either way it’s a little strange. It’s definitely over-sharing and yet, according to the book, over-sharing is the key to Sandy Cortez’s success.”Ocasio-Cortez wrote: “Remember when the right wing had a meltdown when I suggested they exhibit obsessive impulses around young women? Well now Tucker Carlson is wishing for … this on national TV.“You’re a creep, bro. If you’re this easy with sexual harassment on air, how are you treating your staff?”TopicsAlexandria Ocasio-CortezFox NewsRaceUS politicsDemocratsNew YorkPuerto RiconewsReuse this content More

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      What does it mean to ‘plead the fifth’ – and will Donald Trump do it?

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      What does it mean to ‘plead the fifth’ – and will Donald Trump do it?The ex-president has been ordered to testify in a New York fraud case. Will he invoke his constitutional right to remain silent? Donald Trump and his two eldest children have been ordered by a New York judge to appear for a deposition within 21 days, as part of an investigation into the Trump family finances. The development presents the former US president with a dilemma: should he invoke his right to silence by pleading the fifth?What does ‘pleading the fifth’ mean?The right of any person to decline to answer questions put to them in criminal proceedings flows from the fifth amendment of the US constitution (hence “pleading the fifth”). The amendment, dating back to 1791, protects individuals from self-incrimination. “Nor shall any person be compelled in any criminal case to be a witness against himself,” it says.Joe Biden to urge ‘deterrence and diplomacy’ in Ukraine crisis – liveRead moreTechnically, the financial investigation into the alleged fraudulent accounting of the Trump Organization is being conducted by Letitia James, the New York state attorney general, as a civil case, and as such is not covered by the right to silence. There is a complication, though – James has made clear that she is working in unison with the Manhattan district attorney Alvin Bragg, who is also looking into Trump finances but as a criminal matter.On Thursday, hours before Judge Arthur Engoron ruled that Trump and his children Donald Jr and Ivanka had to present themselves for questioning, the former president’s lawyers protested that he was being put in an impossible bind.Alina Habba, one of Trump’s legal team, told the court: “They either disclose evidence in a civil investigation or they have to invoke the constitutional right not to testify, thereby triggering an adverse inference in the civil action. How is that fair, your honour?”Does pleading the fifth imply the witness is guilty?In law, not at all. US law could not be clearer. Invoking your right not to answer a question in a criminal case says nothing about your guilt, and no inference may be drawn from it.The supreme court has underlined that point several times. For instance, in the 2001 ruling Ohio v Reiner, the justices stated that “one of the fifth amendment’s basic functions is to protect innocent persons who might otherwise be ensnared by ambiguous circumstances”.Of course, what the law says is not the end of the calculation. Witnesses have to weigh up how a jury might respond were the case to go to civil trial, as Trump’s might. If you are a politician like Trump, there is also the vexed issue of public opinion.Could Trump family members plead the fifth when they face James in the next few weeks?Absolutely. There is a track record for this. Trump’s younger son Eric, the executive vice-president of the Trump Organization, has already been called before the James inquiry to answer questions about whether the family business misleadingly or fraudulently valued its assets to secure loans or pay lower taxes.Eric Trump pleaded the fifth no fewer than 500 times. Allen Weisselberg, the company’s chief financial officer, also invoked his right to remain silent hundreds of times.What is Trump’s take on this?To plead or not to plead the fifth is an especially fraught question for the former president. His lawyers know that he has a tendency to wander off script, which may be fine at a campaign rally surrounded by supporters but is not a good idea if you are facing a dagger-sharp inquisitor like James.Trump has invoked his fifth amendment rights in the past. The investigative reporter Wayne Barrett chronicled how in 1990 Trump declined to answer 97 questions, many about adultery, during his bitter divorce from his first wife, Ivana Trump.On the other hand, remaining silent could make him look weak and hypocritical. Trump has gone on the record several times denouncing those who invoke their fifth amendment rights.At a campaign stop in Iowa during the 2016 presidential race, he said: “The mob takes the fifth. If you’re innocent, why are you taking the fifth amendment?”In 2014, he offered the disgraced comic Bill Cosby “some free advice” in a tweet. He said: “If you are innocent, do not remain silent. You look guilty as hell!”TopicsDonald TrumpUS politicsRepublicansanalysisReuse this content More

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      in World Politics

      The Radical Impact of Canada’s Fringe Parties

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      Although fringe parties are generally “not considered very relevant,” they nevertheless mirror some of the dominant social or economic concerns of their times. One such fringe party that has risen to recent prominence on the Canadian political scene — particularly in the wake of its support for the anti-vaccine Freedom Convoy truck protest — yet remains otherwise neglected by academics and the international media is the People’s Party of Canada (PPC). Formed in 2018 by Maxime Bernier, the PPC seeks to defend so-called “real conservative ideas” on the basis that the Conservative Party has become too moderate. 

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      Indeed, as the Canadian truck protests spread across the globe, the PPC is of particular relevance given that Bernier has been quick to visit the protesters and become a vocal defender of their actions, calling upon Canadians to defend their liberté. Nevertheless, the PPC is also of interest for another reason, namely its detrimental impact in the 2019 and 2021 federal elections upon Canada’s more moderate/center-right Conservative Party. 

      Consequently, two questions stand out from the growing significance of the PPC that have implications for fringe parties in general. First, could these parties ever evolve into mainstream political parties? Second, could they, as the Canada Guide suggests, “‘spoil’ races in very close elections by pulling votes away from other mainstream parties”?

      Context: Fringe Parties in Canada

      Although there are currently five “major” political parties represented in the current Canadian House of Commons — the Liberal Party, the Conservative Party, the Bloc Québécois, the New Democratic Party and the Green Party of Canada — at the time of the 2021 election there were some 17 eligible federal political parties registered. These 17 are often referred to as “fringe” parties because they have not secured electoral success, their party membership is small, they often only promote a single issue, and their supporters tend to be few and far between. 

      They can also be widely divergent. Some, such as the Communist Party of Canada, are of a leftist political persuasion and have been in existence for a century. Others, such as the Canadian Nationalist Party, have only been in existence for a short while and are of an extreme-right predisposition.

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      Nevertheless, labels such as “fringe” are open to debate. Indeed, the Green Party, for example, is theoretically the nation’s fifth major party. Yet at its height, it has only ever secured three seats in the Canadian Parliament in 2019 with 6.5% of the popular vote. Its parliamentary representation dropped to two seats in the 2021 election, with 2.3% of the national vote. In this context, it is not surprising that there is “no universally accepted definition of what constitutes a ‘fringe party.’”  

      In Canadian politics, it seems that success at the ballot box appears to be the nebulous cut-off point for differentiating between fringe and mainstream parties. The example of the Green Party is again illustrative of this, as it went from being a fringe party to being a major one. Yet the 2.3% that the Greens received in 2021 was less than the nearly 5% the PPC won that same year. The fact that a so-called major party received a smaller share of the vote than an ostensible fringe party testifies to the problematic nature of the term “fringe.” Furthermore, it implies that the PPC could morph into a mainstream political force. 

      Radical Impact

      However, it is the second question relating to pulling votes from mainstream parties that presents the crux of this cautionary tale. Following the creation of the Reform Party of Canada in 1987, some had argued that it had split the anti-Liberal vote on the moderate conservative right. The same outcome is true in Britain, where there existed “a widespread willingness among current Conservative Party members in Britain to countenance voting for the United Kingdom Independence Party (UKIP).”

      In order to evaluate the importance of the PPC to the Canadian landscape, it is vital to look at the party’s electoral impact. In the 2019 federal election, the PPC achieved a mere 1.6% of the popular vote. However, analysis by CBC news showed that “even with its dismal level of support — the PPC cost the Conservatives seven seats in the House of Commons by splitting the vote.”

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      Moreover, irrespective of the PPC’s election results, it is impressive that, in just over a year, Bernier “managed to create a new federal political party, found candidates to run in all of Canada’s 338 federal electoral districts and participated in all the televised pre-election leaders’ debates.” If Bernier achieved all of this within 12 months, what can he achieve within 12 years? 

      Although the PPC failed to win any seats in the 2021 federal election, the party’s share of the popular vote increased from 1.6% to 4.94%. The detrimental electoral significance of the PPC was recognized by the Conservative leader Erin O’Toole in the run-up to the election. Direct personal communication with a source within the PPC further underlined the threat that the party’s “presence on the ballot may have cost the Conservatives about 21 ridings in this year’s election.” 

      Given the failure of O’Toole to win in 2021, an additional significant outcome of the emergence of the PPC is that the Conservative Party could face pressure to move further to the right in order to win a greater share of the popular vote. Indeed, O’Toole’s leadership position immediately came under threat by far-right elements within his own party on the grounds that he was too moderate. By February 2022, he was removed from the party’s leadership.

      Although the PPC remains a so-called fringe party, this is not to deny its impact. It was responsible for sometimes splitting the center-right vote and contributing to the Liberal Party’s success, as well as now possibly helping to force the Conservative Party into a more radically right-wing direction. Indeed, some contenders for O’Toole’s now-vacant seat as party leader have also started to speak out in support of the convoy. However, it is also worth noting that the PPC’s electoral impact might not necessarily be the beginning of a new trend. 

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      The COVID-19 pandemic presented Bernier with the opportunity to appeal to an outlier proportion of the population which, without the PPC, might not have had a sympathetic ear in Parliament — anti-vaxxers and anyone vehemently opposed to health measures instituted to contain the pandemic. Although the majority of Canada’s population champion vaccines, mask-wearing and similar public health measures, the fact that the PPC was the only political party opposed to vaccine passports allowed it to generate additional support from this cohort that accounts for 8%-10% of the population. 

      This support is further demonstrated by the fact that the PPC did best in those provinces with the lowest vaccination rates, namely Alberta, Saskatchewan and Manitoba. The PPC’s anti-lockdown rhetoric and strong stance against Liberal Prime Minister Justin Trudeau’s vaccine mandates were, therefore, partly responsible for its rise in the polls, as suggested by some academic experts who state that “Historically, populism … tends to appear in times of crises.” 

      Ideological Impacts

      The PPC has not only had a tangible impact on Canadian politics, but also an ideological one. Canada has traditionally been seen as “immune to the outbreak of right-wing populism observed in other established western democracies.” That is, until now, as Republican figures such as Ted Cruz and Donald Trump praise the actions of the Ottawa protesters and denounce Trudeau as a “far left lunatic.” 

      Bernier’s campaign manifestos of 2019 and 2021 also look similar to populist and nationalist counterparts elsewhere, namely UKIP and the Republican Party under Donald Trump in the US. The PPC manifesto, for instance, states its opposition to climate change policies (“Withdraw from the Paris Accord and abandon unrealistic greenhouse gas emission reduction targets”); commitment to end to Canada’s participation in global institutions (“Withdraw from all UN commitments”); and xenophobic resentment in its anti-immigration plans (“Substantially lower the total number of immigrants and refugees Canada accept every year”).

      A noteworthy addition to the PPC’s 2021 manifesto that also has echoes of other nationalist/populist party positions is its consideration of race. In the lead-up to the 2021 federal election, the mainstream parties focused on the economic and political rights of indigenous peoples following the uncovering of unmarked graves of hundreds of indigenous children on the properties of former residential schools. The PPC, by contrast, went in the opposite direction and instead looked to repeal the Multiculturalism Act of 1988, which aims to not only preserve but enhance multiculturalism in Canada.

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      This, in addition to the PPC’s call to reduce the number of immigrants, contradicts a widely-held belief that “nativism has become impossible, even unthinkable, for a competitive political party in Canada today.” It is for this reason that “Bernier’s embrace of radical right-wing populism has heightened concerns about the importation of Trumpism and other far right ideologies into mainstream Canadian politics.”

      The emergence of the PPC has pointed a light at a potentially darker underbelly within Canadian politics, one that may demonstrate violent sentiments. The throwing of gravel at Trudeau during the 2021 election campaign by the former PPC president of the London Riding Association is a case in point. 

      The potential political impact of the PPC is undeniable. At a theoretical level, it points to a need to consider the importance of fringe parties in discussions of Canadian politics in general. The PPC also stands as a bellwether, representing a potential future trend. Furthermore, the party is significant as it has had a detrimental impact on the electoral success of the Conservative Party and possibly its future direction of travel.

      Most concerning, however, is its ideological impact. As David Moscrop posits in Global News, “The People’s Party of Canada has become a rallying point for extremists who existed before it did, but who now have an organisational anchor and home.” 

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

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      Is Sustainable Finance More Hype Than Hope?

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      In recent years, and even more in the wake of the COVID-19 pandemic, it has become evident that finance must contribute to the development of a more sustainable economy. However, the current sustainable finance landscape is characterized by heterogeneous concepts, definitions, and industry and policy standards, which tend to undermine the credibility of this nascent market and open the door to greenwashing.

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      One of the challenges is to decide where to draw the line between sustainable and “normal” investments, and how to subdivide the universe of sustainable finance. The lack of clear rules on what can be labeled “sustainable” opens the door to unscrupulous companies and fund managers trumpeting their environmental, social and governance rating ratings — known as ESG — while simply relabeling existing funds without changing neither the underlying strategies nor the portfolio composition. As a result, some observers are concerned that “the overall prevailing mechanism is based on short-term maximization of financial returns, and [that] ESG is still essentially an idea.”

      Thus, the first step to improve the situation, according to Domingo Sugranyes of the Pablo VI Foundation, is to create “an accepted framework of definitions and metrics” at regional or global levels to identify high-level standards and align the actions undertaken by political authorities around the world. But it is also important to act on the other side of ESG, which is direct financing as opposed to the stock market. For example, the European Commission has adopted several regulations to support and improve the flow of money toward sustainable activities.

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      In addition, Archana Sinha of the Indian Social Institute suggests that broader structural reforms may be necessary “to fully integrate climate-aligned structural change with economic recovery.” Not only should the legal framework be changed so “that emissions generate costs,” says economist Ladislau Dowbor, but “international financial transactions must be taxed, so that they leave a trail, shedding light on tax havens while generating resources for sustainable practices.” Other measures, Etienne Perrot says, may include “central bank rediscount policy favoring sectors that do not use fossil fuels; active and pugnacious mobilization of the shareholders most aware of the ecological crisis; [and] monitoring of speculative drifts.”

      If sustainable finance is to become real hope instead of hype, then we will also need governments to step in to fix the rules, with a view to make any financial activity “sustainable by default,” says Eelco Fiole, an investment governance expert. Otherwise, Perrot warns, “the present enthusiasm around sustainable finance may well be short-lived.”

      By Virgile Perret and Paul Dembinski

      Note: From Virus to Vitamin invites experts to comment on issues relevant to finance and the economy in relation to society, ethics and the environment. Below, you will find views from a variety of perspectives, practical experiences and academic disciplines. The topic of this discussion is: What needs to be put in place in order to leverage the present enthusiasm around sustainable finance?

      “…the ‘present enthusiasm around sustainable finance’ may be short-lived… ”

      “Finance is only one of the means: directing public and institutional financial flows toward investments that exclude — or fight against — the carbon economy; central bank rediscount policy favoring sectors that do not use fossil fuels; active and pugnacious mobilization of the shareholders most aware of the ecological crisis; [and] monitoring of speculative drifts. However, whatever financial modalities are adopted, these ecological costs will necessarily weigh on financial profitability. Which leaves me to fear that the ‘present enthusiasm around sustainable finance’ is short-lived.”

      Etienne Perrot — Jesuit, economist and editorial board member of the Choisir magazine (Geneva) and adviser to the journal Etudes (Paris)

      “…labels should apply only to project financing related to clean energy… ”

      “All sustainable finance labels should apply only to project financing related to clean energy. Investment houses should not finance fossil fuel firms in any way to declare themselves deserving of a sustainable finance seal of approval. This also goes for green financing.”

      Oscar Ugarteche — visiting professor of economics at various universities

      “…ESG is still essentially an idea…”

      “The world produces an amount of goods and services amply sufficient to ensure everyone has a dignified life. We have the necessary technologies to produce in a sustainable way. And we presently have detailed understanding of the slow-motion catastrophe climate change represents. While the Paris conference presented the goals, the Addis Ababa conference on how to fund them reached no agreement. The overall prevailing mechanism is based on short-term maximization of financial returns, and ESG is still essentially an idea. The legal framework has to change, so that emissions generate costs. International financial transactions must be taxed, so that they leave a trail, shedding light on tax havens while generating resources for sustainable practices. The key issue is corporate governance.”

      Ladislau Dowbor — economist, professor at the Catholic University of Sao Paulo, consultant to many international agencies

      “…it is not clear that substantial public intervention is needed… ”

      “Sustainable finance is a broad umbrella, but nonetheless has a clear meaning as investment strategies and products that aim at fostering activities that promote environmental, social and governance improvements. The private sector has rapidly developed, having realized that there is a clear appetite by investors for investment with such priorities. Specific products have been created, as well as rigorous metrics and certifications. It is therefore not clear that substantial public intervention is needed (in fostering sustainable finance, by contrast to ensuring proper pricing of, for instance, CO2 where taxes are needed). Public intervention could focus on requiring disclosure of the sustainability dimension of investment by financial intermediaries to facilitate transparency.”

      Cedric Tille — professor of macroeconomics at the Graduate Institute of International and Development Studies in Geneva

      “…every financial decision should take climate risk into account… ”

      “Globally, the private sector needs altering processes, such that their investments do not worsen climate change. The Indian government needs to introduce guidelines to standardize climate-related revelations in all financial statements and push private companies to manage their exposure to climate risks in their tasks and processes. A lack of clarity about true exposures to specific climate risks for physical and financial assets, coupled with uncertainty about the size and timing of these risks, creates major vulnerabilities. It is suggested that the only way forward is to fully integrate climate-aligned structural change with economic recovery needing a fundamental shift in the entire finance system. Meaning that every financial decision should take climate risk into account and climate finance is integral to the transformation process.”

      Archana Sinha — head of the Department of Women’s Studies at the Indian Social Institute in New Delhi, India

      “…green rating for business firms…”

      “Rendering sustainable finance an effective, practical concept depends, inter alia, on (1) measures regarding definitions, sustainability reporting and regulation; (2) genuine commitment to mitigation of climate change; and (3) honest and sound assessment of outcomes. Under 1, [it] can be singled out the extension of the definitions and accounting essential to regulation, with special attention to the concepts of natural capital and of contingent assets and liabilities. Under 2, there is the need for senior bankers and other key decision-makers to evaluate and explain the charting and navigation of the new business routes required for mitigation. Under 3, there are roles for many different parties — governments, central banks, research institutions and NGOs. The roles could include development and application of green ratings for business firms and other relevant institutions, which draw on historical experience with credit ratings.”

      Andrew Cornford — counselor at Observatoire de la Finance, former staff member of the United Nations Conference on Trade and Development (UNCTAD), with special responsibility for financial regulation and international trade in financial services

      “…an accepted framework of definitions and metrics…”

      “The movement toward ecological sustainability is still in its infancy in the world economy. It is real and probably here to stay, but companies and governments will meet many economic, physical and human hurdles on the way, including raw materials bottlenecks and lack of specialized talent. ESG investment can be seen as an expression of demand for sustainability in society, pressing in the right direction. But to confirm their effectiveness and credibility, ESG-motivated investors will need an accepted framework of definitions and metrics (the ‘taxonomy’ being discussed at the EU level). Ideally, one would imagine a worldwide, self-regulated consensus about environmental cost, similar to the one which led to the international acceptance of the International Financial Reporting Standards (IFRS).”

      Domingo Sugranyes — director of a seminar on ethics and technology at Pablo VI Foundation, former executive vice-chairman of MAPFRE international insurance group

      “…a point of reference in public debate…”

      “A transition from enthusiasm to reality requires 3 steps:

      1: From the experts’ room to the public sphere. Sustainable finance cannot flourish without being a point of reference in public debate and a ‘visible’ concern in everyday life. Such a paradigm shift can only be initiated through a participatory, sociopolitical justification.

      2: Toward a glocal perspective. As it happens with every declaration, the 17 sustainable development goals (SDGs) and the Agenda 2030 provisions need to be part of the national and local development strategy both as aims and evaluation measures.

      3: From wishes to accountability. Various actions — mirrored in national and international law — are required to empower accountability: legislation initiatives that forbid hazardous products, give motives for ‘clean production’ and favor a circular economy, annual monitoring on sustainable practices, reduction of waste/emission and a regulatory framework for investment plans.”

      Christos Tsironis — associate professor of social theory at the Aristotle University of Thessaloniki in Greece

      “…any finance activity needs to be sustainable by default…”

      “Given that rational justice requires the current generation to have a fiduciary duty to the future generation, any finance activity needs to be sustainable by default. In that sense, we need to distinguish between finance and unsustainable finance, and [we] need to focus on diminishing unsustainable finance to the benefit of finance. This means finance needs to be defined as purposeful and needs to account for all interests at stake. This then needs to be coded into law and into incentive systems. While ESG data is important, assessing and certifying impact on a case-by-case basis gives true input for governance and direction toward social and environmental sustainability, all things considered. This requires a new moral psychology for leadership.”

      Eelco Fiole — investment governance expert, board director and adjunct professor of finance ethics in Lausanne and Neuchatel

      *[An earlier version of this article was published by From Virus to Vitamin.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More