EUROPE'S CHIEF DIPLOMAT DELIVERS A WAKE-UP CALL In his annual address to the EU's ambassador corps, the bloc's chief diplomat, Josep Borrell, said a bunch of things his predecessors either didn't understand or wouldn't admit, starting with the admission: "we have decoupled the sources of our prosperity from the sources of our security." Why the EU now pushes for strategic autonomy: "Our prosperity has been based on cheap energy coming from Russia … (and) access to the big China market … on the other hand, we delegated our security to the United States." Made in Europe: "The best energy is the one that you produce at home," Borrell said, which is just another way of talking about energy independence, which has for years animated American energy debates. Love America … but: "Who knows what will happen two years from now, or even in November? Who is inspiring this new messaging? Oliver Schmitt, a French professor of war studies, based at the University of Southern Denmark. REALITY CHECK: Olaf Scholz is another European leader who has found new messaging this week, including the claim that "I was always sure" Putin would "use energy supplies as a weapon." This is the same Scholz who, as finance minister in Angela Merkel's government, helped Germany rely too much on Russian oil and gas. Red flag: Scholz is planning to travel to Beijing from Nov. 3-4, making him the first G-7 leader to visit Beijing since the start of the coronavirus pandemic. The frequent visits of previous chancellors have been premised on the idea that Germany is big enough to shake off EU cousins and negotiate one-to-one with Beijing. Given that, and Germany's Russia mistakes, it's an open question: Has Scholz learned anything from the Russia debacle? INTERVIEW — ACHIM STEINER, UNITED NATIONS DEVELOPMENT PROGRAMME Steiner leads one of the largest U.N. agencies, and is the third-ranked official in the U.N. system. He spoke to Global Insider Tuesday about UNDP's call for urgent debt restructuring as the world heads towards recession. Fifty-four developing economies, accounting for more than half of the world's poorest people, are careening towards default, for what UNDP says are reasons out of their control. But the finance ministers and central bankers aren't devoting much attention to those issues. This week's IMF and World Bank meetings "will inevitably be dominated by short term crisis management and geopolitical division. We are struggling to have a communique agreed, we may end up defaulting to chair summaries. This is how serious the divisions are," Steiner said. The poor are not at fault: "Most of the drivers of this debt crisis are not rooted in domestic policy. These countries are victims of a global pandemic that was not due to domestic policy mistakes. They have not caused the inflationary pressures: it is Russia's invasion of Ukraine that did that. The interest rate rises in OECD countries are turning their debt management into a potential debt default. And on top of that, climate change: 28 of the 54 are the most climate vulnerable." Because those countries account for only 3 percent of global GDP, they're virtually powerless at IMF and World Bank tables as finance ministers and central bankers gather in Washington, D.C. this week. Boston University Global Development Policy Center has a new report on how to reform the quotas that leave much of the world voiceless at these events. It's self-interest, stupid: Dealing with this debt "is not about handing out some goodies to developing countries," Steiner said. The "global economy is so interwoven' that there is no longer clear separation of interests. "It is wiser, more effective, less costly, and certainly less disastrous for poor countries and the poor to act now, before we enter into default scenarios, and indeed a global recession," he said. UNDP proposes that the G20's Common Framework for Debt Treatments shifts focus to comprehensive restructurings. "We need to inject liquidity in our global economy," Steiner said. The IMF agrees that the current tools aren't working, worrying that special debt suspension plans put in plan for Covid are now expiring, without any of the underlying economic conditions improving. Finally, some good news : "Energy transition is, in most countries, becoming part of the DNA of national planning and national budgeting," Steiner said, pointing to developing countries delivering some of the quickest green transitions. "A country such as Gabon absorbs more carbon than it emits, Bhutan is a net zero emitter. Kenya and Uruguay generate 90 percent of their electricity with renewables," he said. REALITY CHECK: My colleague Sara Schonhardt reported that Kristalina Georgieva, the IMF's managing director, said that while governments and other organizations are now planning $630 billion in annual spending to reduce climate change, the needs are between $3 trillion and $6 trillion Georgieva said.
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