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St. Petersburg International Economic Forum 2018: Building a Trust Economy

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SPIEF 2018 was held under the slogan “Building a Trust Economy,” and this year reached new heights, both in terms of scale and results. With its numerous achievements, it would be fair to call it an innovative, technological, and indeed breakthrough event.

“In spite of the sanctions imposed by a number of countries, the St. Petersburg International Economic Forum demonstrated that Russia is a land of opportunity. The 17,000-plus participants arriving from 143 countries is testament to that fact. Over the past few years, SPIEF has developed to become an international platform, with its main achievement being the creation of a space where the spirit of trust prevails. Trust is a key asset in the business world, and discussions at the Forum focused on this crucial aspect,” said Advisor to the President of the Russian Federation and Executive Secretary of the SPIEF Organizing Committee Anton Kobyakov at the event’s closing press conference.

Guests from every continent, and representatives from international organizations such as the UN, IMF, OPEC and others spoke ever more profusely on the need to operate in a single economic space and find new areas of common ground in a changing world. President of France Emmanuel Macron was one of the honoured guests at the Forum. He commented that “Russia must have a leading voice in the Council of Europe.” He also expressed the belief that Russia and the EU’s united approach to the inviolability of underlying multilateral agreements in international politics was a key factor for the world today.

Prime Minister of Japan Shinzō Abe commented, “The slogan of our Forum this year is ‘Building a Trust Economy.’ It is my belief that we can deem Japan and Russia as together engaged in building this economy of trust… We now stand at a historical turning point; the path we should take and efforts we should make are all entirely clear. It is working for future generations in Japan and Russia. It is Japan and Russia becoming a major force for safeguarding and fostering regional and global prosperity for the Japanese and Russian peoples, further deepening their relationship, mutual trust, concluding the peace treaty and building up lasting peace and stability between our two nations.”

Speaking at the Forum plenary session, Christine Lagarde, Managing Director of the International Monetary Fund, noted that “Russia has put in place an admirable macroeconomic framework – saving for a rainy day, letting the exchange rate float, introducing inflation targeting, and shoring up the banking system.”

“This year, the Forum has come to resemble a crossroads of civilizations. Only at SPIEF has everything been put in place to ensure that discussions are open, as opposed to politically charged. It is where participants from various countries and growing economies discuss economic issues. There is no place in the world other than SPIEF that provides such an opportunity, which is why we have seen the numbers of participants grow from year to year,” said Anton Kobyakov.

During this year’s St. Petersburg International Economic Forum, over 3,000 flights arrived at and departed from Pulkovo Airport, including over 800 private flights. By way of comparison, SPIEF 2017 saw over 2,500 flights, including over 700 private flights.

Business Programme

The main programme incorporated over 150 business events across the Forum’s numerous venues. These events were split into four distinct themes: “Technology for Leadership,” “Harnessing Russia’s Growth Potential,” “Human Capital in the Digital Economy,” and “The Global Economy in an Era of Change.”

The Forum’s central event was the plenary session, featuring President of the Russian Federation Vladimir Putin. He commented: “Today what we need are not trade wars, or even temporary trade armistices, but rather a fully-fledged trading world. The slogan of this year’s Forum in St. Petersburg is ‘Building a Trust Economy’. I am convinced – and experience bears this out – that the role of trust as a factor affecting development will grow further.”

Events Held On the Eve of SPIEF 

In the run-up to the FIFA World Cup, SPIEF held a special event entitled “From the First to the Twenty-First” for officials and business figures from Latin America and the Caribbean. In a ceremony broadcast live on Russia 24, television presenter Sergey Brilev handed a capsule of earth from the Estadio Centenario to the government of St. Petersburg. The Estadio Centenario in Montevideo (Uruguay) has a special place in global football history as the stadium that hosted the first World Cup in 1930.

23 May also saw the “Australia–Russia Business Re-connection: How and Why?” business breakfast take place for the first time. The event was organized by the Roscongress Foundation’s partners in Australia: the Australia–Russia Dialogue Forum and the ADC Forum. Later on, a business lunch took place entitled “Development of Trade and Economic Cooperation between the EAEU and ASEAN. Russia’s Role in the Process.” The event was attended by business representatives from EAEU and ASEAN.

The discussion platforms Russian Small and Medium-sized Enterprises Forum (SME Forum) organized by the Roscongress Foundation together with All-Russian Non-Governmental Organization of Small and Medium Business OPORA ROSSII and the SME Forum partner Russian Small and Medium Business Corporation saw lively debates on business practices, some of which were held in a new, interactive format. The topic of small and medium enterprise continued as part of the main SPIEF 2018 business programme.

This was the third year that issues related to women in business also took centre stage on the eve of SPIEF 2018. An international forum entitled “Increasing the Contribution of Women to Economic Growth and Prosperity: Creating an Enabling Environment” brought together around 200 female participants representing the Russian regions.

Elsewhere, the Chamber of Commerce and Industry of Leningrad Region’s “Women as Leaders” conference saw animated discussions on the involvement of women in a changing economy.

The initial discussions on these topics will continue in just a few months’ time, with St. Petersburg hosting the Second Eurasian Women’s Forum on 21–22 September.

Officical SPIEF Programme

The official opening ceremony took place on the first day of the Forum – 24 May. Welcoming addresses were given by Governor of St. Petersburg Georgy Poltavchenko, and Under-Secretary-General of the United Nations Achim Steiner. Poltavchenko made assurances to Forum participants that Russia has been and will always remain a reliable partner.

In total, 68 business events took place that day in various formats. Topics under discussion included digitalization, the future of the labour market, energy, and a breakthrough in the Far East. Participants at the Valdai Discussion Club session focused on the effect the crisis in international relations is having on the global economy, and possible ways to resolve the standoff between Russia and the West. The first day ended with a discussion on smart cities.

Issues concerning international cooperation came under focus on the second day, which also saw a number of business dialogues between countries take place. Participants identified new opportunities for implementing joint projects, modern mechanisms by which to promote exports on overseas markets, and ways to cooperate on removing administrative barriers. The business programme for 25 May included 51 events. The highlight was the plenary session, featuring President of the Russian Federation Vladimir Putin, President of the French Republic Emmanuel Macron, Prime Minister of Japan Shinzō Abe, Vice President of the People’s Republic of China Wang Qishan, and Managing Director of the International Monetary Fund Christine Lagarde. Furthermore, country’s leaders conversed again during Russia–France and Russia–Japan bilateral dialogues. Additionally, Vladimir Putin met with the heads of world’s information agencies and a held a meeting with the leaders of international companies.

Events took place as panel sessions, roundtables, and business dialogues. They provided platforms by which leading specialists, experts, and politicians could discuss topics such as the resources and economy of the Global Ocean, the potential of the Arctic, and the in-demand technologies of the future.

The closing day of the Forum saw 41 events take place, including 22 events held as part of the International Youth Economic Forum – a permanent SPIEF fixture for the younger generation. The day began with a business breakfast for representatives of the IT industry. According to those present, as much as 20% of global GDP today is tied to digital transformation, making it perilous to underestimate its impact. On the same day, American Chamber of Commerce in Russia and EY unveiled the results of a joint study on trade and economic ties between Russia and the USA.

The B20 Regional Consultation Forum was a special event at SPIEF 2018, and saw participants discuss recommendations for G20 leaders for the forthcoming summit in Buenos Aires, which will take place this year from 30 November to 1 December.

In what has now become tradition, SPIEF hosted the presentation of the results of the Russian Regional Investment Climate Index for the fourth time. Tyumen Region climbed five places to convincingly take first position. Completing the top five were Moscow, Tatarstan, Leningrad Region, and Tula Region.

The Roscongress Foundation is a socially oriented non-financial   development institution that puts a special emphasis on the health care in the Russian Federation, including improving the quality of life (creating the system of long-term care for senior citizens, developing palliative care in Russia, promoting healthy life style, etc.).

SPIEF 2018 held a number of sessions and interviews on increasing life expectancy that brought in representatives of the Government of the Russian Federation, as well as Russian and foreign experts.

Investing special effort in this area, the Roscongress Foundation strives to become the leading single platform for discussing national goals, objectives and priorities to improve the quality of life in Russia (in accordance with Executive Order of the President of the Russian Federation “On National Goals and Strategic Objectives for Development of the Russian Federation through to 2024” dated 7 May 2018).

Agreements

The global character of SPIEF was made even more apparent – and the communication platform even more attractive for talks – by the number of major projects and agreements that took shape. As of 30 May, 593 agreements had been signed at SPIEF, worth a total of RUB 2.625 trillion (counting agreements where the figures were not classified as commercial secrets).

The biggest of these were the following:

  • A strategic cooperation agreement between Rosneft, Vnesheconombank and VEB Leasing worth up to RUB 400 billion for financing projects and providing leasing services.
  • An agreement of intent between the Eurasian Development Bank and Belkomur Interregional Company to form a syndicated loan of up to RUB 278 billion to fund the construction of the Belkomur railway line.
  • Several long-term contracts with a total value of USD 2.1 billion between Rosneft and 12 importing companies based in Mongolia for the supply of petrol and diesel fuel.
  • An agreement worth USD 1.5 billion to construct a natural gas processing plant in the town of Ust-Luga (Leningrad Region), signed by the Russian Direct Investment Fund, the Japanese company Marubeni Corporation, the Baltic Gas Chemical Company, and Invasta Capital. The plant, which will convert natural gas to methanol, will have a capacity of 1.7 million tonnes per year.
  • An agreement between Nizhnekamskneftekhim and Deutsche Bank (Germany) to open a credit line of EUR 807 million, to be provided by a consortium of five European banks.

In addition, the Roscongress Foundation signed cooperation agreements with the Association of Lawyers of Russia and 21 Russian federal subjects: the Leningrad, Kaliningrad, Kirov, Murmansk, Novgorod, Penza, Pskov, Rostov, Ryazan, Samara, Saratov, Sverdlovsk, Tver, Tomsk, and Chelyabinsk Regions, and the Republics of Adygea, Altai, Buryatia, Karachaevo-Cherkess, Crimea, and Khakassia. The aim of the agreements is to build collaboration between the parties on raising the investment attractiveness and export potential of the regions.

The Roscongress Foundation’s international partner network is continuing to increase. SPIEF 2018 saw the signing of agreements with the Association of European Businesses; the Federation Of Pakistan Chambers Of Commerce & Industry; the Union of Chinese Entrepreneurs in Russia; the ASEAN Business Club, the Norwegian-Russian Chamber of Commerce; the Mexican Business Council for Foreign Trade, Investment and Technology (COMCE); the General Confederation of Entrepreneurs of Argentina; the Croatian Chamber of Economy; the Israeli Russian Business Council; the Polish Investment and Trade Agency; the Ladies in the Frontline business association, MEDEF International; the Boao Forum for Asia; the Moscow Centre for International Cooperation; and the Centre for the Development of Women’s Entrepreneurship.

A number of agreements with charity and socially oriented organizations has been signed as part of a plan to develop the social platform launched by the Roscongress Foundation.

The agreements cover cooperation within the social development sphere.

Additionally, agreements have been signed with sports organizations, such as the Russian Golf Association and the Golf Estate Management Company. This cooperation will focus on running sporting programmes for economic forums, including golf tournaments held at Peterhof Golf Club under the aegis of the St. Petersburg International Economic Forum to promote sport, both in the corporate sphere and among the general public.

Other organizations to sign cooperation agreements with Roscongress were the Central Union of Consumer Societies of the Russian Federation; the Boris Yeltsin Presidential Library; Rosconcert; Rostelecom; VSK; MZS and Partners; the Deposit Insurance Agency; the Water Supply and Treatment Cluster Management Company in St. Petersburg; SVEKO FSUE; and Electrificatciya PJC.

In 2019 under the auspices of the United Nations Organization Russia will host the Global Manufacturing and Industrialization Summit (GMIS). The event will take place at the INNOPROM venue in Yekaterinburg. The appropriate agreement has been signed during SPIEF 2018.

Importantly, an agreement was signed between the management of the Made in Russia national brand and Novgorod Region to work together on promoting the Novgorod Rus regional brand. An agreement with Zenden Group will result in the establishment of Made in Russia’s first regional office, also in Novgorod Region.

International Youth Economic Forum (IYEF)

Following the decree of the President of the Russian Federation on establishing an on-going youth platform during SPIEF, the Forum hosted the International Youth Economic Forum (IYEF) organized by the Roscongress Foundation and the Federal Agency on Youth Affairs (Rosmolodezh). During the event young leaders of local and international business discussed contemporary challenges and awarded the winners of the All-Russia competition My Country – My Russia.

IYEF brought together graduate and post-graduate students from more than 15 Russian universities, including St. Petersburg State University, Moscow State Institute of International Relations, Higher School of Economics, National University of Science and Technology MISIS, Russian Social University, People’s Friendship University of Russia, St. Petersburg State University of Economics, etc.

The youth platform created by the Roscongress Foundation together with partners allows future managers to take part in the forum with no participation fee. They get a chance to network with big business representatives and hear their success stories. Direct communication between different generations helps raise future entrepreneurs, foster international relations, and get acquainted with potential employers. Within the next five to ten years the entrepreneurs return to the Forum as new participants ready to share their experience, eager to represent their company on the international level, and take part in the international global processes.

A great example of SPIEF 2018 of the latter is presence of opinion leaders from academic, business and media environments from G20, BRICS and EEU invited by the Russian Centre for Promotion of Internal Initiatives supported by the Roscongress Foundation and the Government of St. Petersburg. Among them were the participants of the meeting of President of the Russian Federation Vladimir Putin with youth G20 leaders at SPIEF 2013. During this brief period they managed to find their way in politics and business and now they head various youth, research and civic organizations. Five years later young leaders meet in St. Petersburg again.

Youth agenda at SPIEF 2018 included meetings with officials, representatives of international companies, members of business communities, and experts. Young leaders of G20 and EEU held a series of brainstorms about the place Russian economy occupies in the global world, and about the future of digital economy. Additionally, they discussed creating a youth entrepreneurial network that would help develop horizontal interaction of G20 and EEU young leaders, as well promote business projects among the SME participants.

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Carbon Market Could Drive Climate Action

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Authors: Martin Raiser, Sebastian Eckardt, Giovanni Ruta*

Trading commenced on China’s national emissions trading system (ETS) on Friday. With a trading volume of about 4 billion tons of carbon dioxide or roughly 12 percent of the total global CO2 emissions, the ETS is now the world’s largest carbon market.

While the traded emission volume is large, the first trading day opened, as expected, with a relatively modest price of 48 yuan ($7.4) per ton of CO2. Though this is higher than the global average, which is about $2 per ton, it is much lower than carbon prices in the European Union market where the cost per ton of CO2 recently exceeded $50.

Large volume but low price

The ETS has the potential to play an important role in achieving, and accelerating China’s long-term climate goals — of peaking emissions before 2030 and achieving carbon neutrality before 2060. Under the plan, about 2,200 of China’s largest coal and gas-fired power plants have been allocated free emission rights based on their historical emissions, power output and carbon intensity.

Facilities that cut emissions quickly will be able to sell excess allowances for a profit, while those that exceed their initial allowance will have to pay to purchase additional emission rights or pay a fine. Putting a price tag on CO2 emissions will promote investment in low-carbon technologies and equipment, while carbon trading will ensure emissions are first cut where it is least costly, minimizing abatement costs. This sounds plain and simple, but it will take time for the market to develop and meaningfully contribute to emission reductions.
The initial phase of market development is focused on building credible emissions disclosure and verification systems — the basic infrastructure of any functioning carbon market — encouraging facilities to accurately monitor and report their emissions rather than constraining them. Consequently, allocations given to power companies have been relatively generous, and are tied to power output rather than being set at absolute levels.

Also, the requirements of each individual facility to obtain additional emission rights are capped at 20 percent above the initial allowance and fines for non-compliance are relatively low. This means carbon prices initially are likely to remain relatively low, mitigating the immediate financial impact on power producers and giving them time to adjust.

For carbon trading to develop into a significant policy tool, total emissions and individual allowances will need to tighten over time. Estimates by Tsinghua University suggest that carbon prices will need to be raised to $300-$350 per ton by 2060 to achieve carbon neutrality. And our research at the World Bank suggest a broadly applied carbon price of $50 could help reduce China’s CO2 emissions by almost 25 percent compared with business as usual over the coming decade, while also significantly contributing to reduced air pollution.

Communicating a predictable path for annual emission cap reductions will allow power producers to factor future carbon price increases into their investment decisions today. In addition, experience from the longest-established EU market shows that there are benefits to smoothing out cyclical fluctuations in demand.

For example, carbon emissions naturally decline during periods of lower economic activity. In order to prevent this from affecting carbon prices, the EU introduced a stability reserve mechanism in 2019 to reduce the surplus of allowances and stabilize prices in the market.

Besides, to facilitate the energy transition away from coal, allowances would eventually need to be set at an absolute, mass-based level, which is applied uniformly to all types of power plants — as is done in the EU and other carbon markets.

The current carbon-intensity based allocation mechanism encourages improving efficiency in existing coal power plants and is intended to safeguard reliable energy supply, but it creates few incentives for power producers to divest away from coal.

The effectiveness of the ETS in creating appropriate price incentives would be further enhanced if combined with deeper structural reforms in power markets to allow competitive renewable energy to gain market share.

As the market develops, carbon pricing should become an economy-wide instrument. The power sector accounts for about 30 percent of carbon emissions, but to meet China’s climate goals, mitigation actions are needed in all sectors of the economy. Indeed, the authorities plan to expand the ETS to petro-chemicals, steel and other heavy industries over time.

In other carbon intensive sectors, such as transport, agriculture and construction, emissions trading will be technically challenging because monitoring and verification of emissions is difficult. Faced with similar challenges, several EU member states have introduced complementary carbon taxes applied to sectors not covered by an ETS. Such carbon excise taxes are a relatively simple and efficient instrument, charged in proportion to the carbon content of fuel and a set carbon price.

Finally, while free allowances are still given to some sectors in the EU and other more mature national carbon markets, the majority of initial annual emission rights are auctioned off. This not only ensures consistent market-based price signals, but generates public revenue that can be recycled back into the economy to subsidize abatement costs, offset negative social impacts or rebalance the tax mix by cutting taxes on labor, general consumption or profits.

So far, China’s carbon reduction efforts have relied largely on regulations and administrative targets. Friday’s launch of the national ETS has laid the foundation for a more market-based policy approach. If deployed effectively, China’s carbon market will create powerful incentives to stimulate investment and innovation, accelerate the retirement of less-efficient coal-fired plants, drive down the cost of emission reduction, while generating resources to finance the transition to a low-carbon economy.

(Martin Raiser is the World Bank country director for China, Sebastian Eckardt is the World Bank’s lead economist for China, and Giovanni Ruta is a lead environmental economist of the World Bank.)

(first published on China Daily via World Bank)

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The EU wants to cut emissions, Bulgaria and Eastern Europe will bear the price

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In the last few years, the European Union has been going above and beyond in dealing with climate change. Clearly, this is far from being a case of disinterested endeavour to safeguard the planet and the environment. On the contrary, the EU’s efforts aim at reinforcing its “normative power”.  In effect, the EU has gained some clout on the international stage, even vis-à-vis faraway countries like Vietnam and China. Yet, in doing so the Union embroiled in the apparent rush for more and more ambitious climate standards and targets. Therefore, Brussels needs to start acting and deliver on its promises to keep staying ahead of the pack. Even more so given US President Biden’s strengthened engagement with friends and foes alike on the climate and human rights.

Last week, the European Commission manifested its acknowledgment of this need by unveiling the Fit for 55 (FF55) growth strategy. Overall, this new, beefed-up Green Deal should reduce greenhouse gas emissions to 55% of their 1990 level by 2030. In some analysts’ view, the FF55 plan is a game changer in the long-term race towards climate neutrality alas. In fact, it could “both deepen and broaden the decarbonisation of Europe’s economy to achieve climate neutrality by 2050.” Moreover, they expect the FF55’s 13 measures to generate a number of positive ripple effects across EU economies.

True, wanting to reduce greenhouse gases significantly by 2030 and reaching net-zero-emission by 2050 goal is commendable under many regards. Still, the FF55 includes a number of measures that could impact ordinary people’s life massively across Europe. Nevertheless, the 27 Member States of the EU are responsible for as little as 8% of global emissions. As such, it is necessary to take a deeper look at how the FF55 will affect different countries and demographics.

The transition’s social cost

The realisation that reduction of capitalism’s dependence on fossil fuels will have serious socio-economic consequences is not at all new. Contrariwise, scholars and politicians have been outspoken about an indisputable “conflict between jobs and the environment”, since the early 1990s. Together, the pandemic-induced recession and the signing of the Paris Accord have brought the notion back on the centre stage.

Factually, pushing the energy transition entails facing mass lay-offs, generalised workforce retraining and taxes hikes on ordinary consumers. For instance, these hardships’ seriousness is evident in the progressive abandonment of coal mining for energy generation in the US. Moreover, the energy transition requires strong popular backing in order to be effective. Yet, measures pursued to achieve environmentally friendly growth tend to generate strong, grassroot opposition. Most recently, France’s gilets jaunes protests shows that environmental policies generate social discontent by disfavouring middle and lower classes disproportionately.

The poorest families and countries will bear the costs

One of the FF55’s main policy innovation regards the creation of a carbon trading market for previously exempt sectors. Namely, companies working int the transport and buildings sectors, be they public or private, will have to follow new rules. As it happened in the energy industry before, each company will have to respect a “carbon allowance”. Basically, it is an ‘authorisation to pollute’ which companies can buy from each other — but the total cannot increase. Despite all claims of just transition, this and other measures will have a gigantic, re-distributional effect within and between countries. And it will be of markedly regressive character, meaning that poorer families and countries will pay more.

Taxing transport emission is regressive

Historically, these sectors were trailing behind most others when it comes to decarbonisation for a variety of reasons. First of all, the previous emission trading system did not include them. Moreover, these are far from being well-functioning markets. As a result, even if the cost of emissions was to rise, enterprises and consumer will not react as expected.

Thus, even as they face higher costs, companies will keep utilising older, traditional vehicle and construction technologies. With taunting reverberations on those poorer consumers, who cannot afford to buy an electric car or stop using public transport. Hence, they “will face a higher carbon price while locked into fossil-fuel-based systems with limited alternatives.” Moreover, the EU could worsen these effects by trying to reduce the emission fees on truck-transported goods. Indeed, the commission is proposing a weight-based emission standard that would collaterally favour SUVs over smaller combustion-engine car and motorbikes. 

In a nutshell, higher taxes and fee will strike lower-class consumers, who spend more of their incomes for transportation. Even assuming these households would like to switch to low-emission cars and buildings, current market prices will make it impossible. In fact, all these technologies ten to have low usage costs, but very high costs of acquisition. For instance, the cheapest Tesla sells at over €95,000, whereas a Dacia Sandero “starts at just under €7,000.”

Eastern Europe may not be willing to pay

At this point, it is clear that the FF55 plan will deal a blow to ongoing efforts to reduce inequalities. In addition, one should not forget that EU Member States are as different amongst them as they are within themselves. Yet, the EU is not simply going to tax carbon in sectors that inevitably expose poorer consumers the most. But in doing so it would impose a single price on 27 very diverse societies and economies. Thus, the paradox of having the poorest countries in the EU (i.e., Central- and South-Eastern Europe) pay the FF55’s bill.

To substantiate this claim, one needs to look no further than at a few publicly available data. First, as Figure 2 shows, there is an inverse relation between a country’s wealth and consumers’ expenditures on transport services. Thus, not only do poorer people across the EU spend more on transport, poorer countries do as well. Hence, under the FF55, Bulgarians, Croatians, Romanians and Poles will pay most of the fees and taxes on carbon emission.

Additionally, one should consider that there is also a strict inverse relation between carbon emissions and the minimum national wage. In fact, looking at Figure 3 one sees that countries with lower minimum wages tend to emit more carbon dioxide. On average, countries with a minimum salary of €1 lower emit almost 4.5mln tonnes of carbon dioxide more. But differences in statutory national wages explain almost 32% of the cross-country variation in emissions. So, 1.5 of those extra tonnes are somehow related to lower minimum salaries and, therefore, lower living standards.

The EU’s quest for a just transition: Redistribution or trickle down?

Hence, the pursual of a ‘just’ transitionhas come to mean ensuring quality jobs emerge from these economic changes. However, many of the FF55’s 13 initiatives may worsen disparities both within countries and, more importantly, between them. Thus, the EU has been trying to pre-empt the social losses that would inevitably come about.

From the Just Transition Fund to the Climate Social Fund

In this regard, the European Union went a step forward most countries by creating the Just Transition Fund in May. That is, the EU decided to finance a mix of grants and public-sector loans which aims to provide support to territories facing serious socio-economic challenges arising from the transition towards climate neutrality [… and] facilitate the implementation of the European Green Deal, which aims to make the EU climate-neutral by 2050.

Along these lines, the FF55 introduces a Climate Social Fund (CSF) that will provide “funding […] to support vulnerable European citizens.” The fund will provide over €70bln to support energy investments, and provide direct income support for vulnerable households. The revenues from the selling of carbon allowances to the transport and building sectors should fund most of the CSF. If necessary, the Member States will provide the missing portion.

The EU Commission may give the impression of having design the CSF to favour poorer households and countries. However, it may actually be a false impression. In fact, it is clear that the entire carbon pricing initiative will impact poorer household and countries more strongly. However, only a fourth of the carbon pricing system’s revenues will go to fund the CSF. The remaining portion will finance other FF55 programmes, most of which have a negative impact on poorer communities. Thus, despite the CSF, the final effect of the entire FF55 will be a net redistribution upwards.

Stopping a redistribution to the top

Nevertheless, there is a way to fix the FF55 so that it can work for poorer households and lower-income countries. Given that the CSF is too small for the challenge it should overcome, its total amount should be increased. In fact, the purpose of higher carbon pricing is in any event not to raise revenue but to direct market behaviour towards low-carbon technologies—there is thus a strong argument for redistributing fully the additional revenues

Hence, the largest, politically sustainable share of carbon-pricing revenues from transportation and housing should ideally go to the CSF. In addition, the Commission should remove all the proposed provision that divert CSF money away from social compensation scheme. In fact, poorer families will not gain enough from subsidies to electric car, charging stations and the decarbonisation of housing. One contrary, “using the fund to support electric vehicles would disproportionally favour rich households.”

Finally, the allocation of CSF money to various member states should follow rather different criteria from the current ones. In fact, the Commission already intends to consider a number of important such as: total population and its non-urban share; per capita, gross, national income; share of vulnerable households; and emissions due to fuel combustion per household. But these efforts to look out for the weakest strata in each country could backfire. In fact, according to some calculations, a Member State with lower average wealth and lower “within-country inequality could end up benefiting less than a rich member state with high inequality.”

Conclusion

A number of well-known, respected economist have been arguing that environmental policies should account for social fallouts attentively. Goals such as emission reduction and net-zero economies require strong popular support in order for the transformation to succeed. Or at least, the acquiescence of a majority of the public. Otherwise, the plans of well-intentioned and opportunistic governments alike will derail. After all, this is the main lesson of the currently widespread protest against the mandating of ‘Covid passes’ and vaccines.

If the FF55 will deal poorer households a devastating blow, social unrest may worsen — fast. But as long as it will also hurt Eastern European countries as a whole, there is a chance. Hopefully, European parliamentarians from riotous Hungary or Poland will oppose the FF55 in its current shape. Perhaps, in a few years everyone will be thankful for these two countries strenuous resistance to EU bureaucracy. Or else, richer countries may force Central- and South-Eastern Europe to swallow a bitter medicine. Even though, whatever happens, Europe alone cannot and will not save the planet.

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Entrepreneurialism & Digitalization: Recovery of Midsize Business Economies

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Observe nations around the world, especially those with the largest numbers of IT professionals, rich and well-groomed government departments and their related agencies, with matured bureaucracies and unlimited numbers of computers but still no signs of thriving digital economies buzzing on global platforms. What is so mysterious about digitization of small medium businesses, smoothly leading to ‘virtualization of economies’ creating global bounce of trade? Well, it is surrendering to the realization that entrepreneurialism is the main driving engine of such challenges and not the herds of IT teams, deluxe bureaucracies and accountancy-mindsets.

What is a digital economy? It is definitely not when all businesses have websites and are all doing social media postings, at the outset understanding  digitalization of a single enterprise is already a fine art, and to make it fly on global trade platforms is a science. Unless economic development teams can articulate, what is and how ‘virtualization of economies’ work, uplift and upskill vertical trade sectors and create an entrepreneurial bounce of trades’, the entire exercise of digitization might as well leave to early video game players or early grader IT personnel. Observe how The Silicon Valley and e-Commerce revolutions of the world never created by large IT teams, but categorically by “techie-entrepreneurs” of the day that in turn occupied millions of IT professionals and created hundreds of millions IT experts driving e-commerce of today. Of course, IT teams needed but in very reverse order.

Why is the digital economy an entrepreneurial economy?  Digitization of the economy is simply not an IT exercise rather a strategic entrepreneurial maneuver of placing a midsize business economy on wheels using easily available digital platforms with abundance of software to choose from to make right entrepreneurial-based decisions to create creative bounce. The survival strategies for the post pandemic economies have less to do with accountancy-mindsets and bureaucratic attitudes, as it is all about entrepreneurial global age execution with superior digital performances.

Calling Entrepreneurial Business Mindsets:  The new horizons beyond pandemic call for “simultaneous synchronization” a need to merge ‘mental-blocks’ the lingering ‘productivity-silos’ ‘digital-divides’ ‘mental-divides’ all such negative forces balanced with positive forces of ‘innovative excellence’ and ‘superior-performance’ thrown all in an entrepreneurial-blender to make a great progressive multi-flavored shakes. To mix and match with our realty checks of today and the blended calamites; Economy + SME + MFG + AI + VR + AR + Officeless + Remote + Occupationalism + Globalization + Exports + Upskilling, all in one single sandbox need progressive advancements with entrepreneurial guts and clarity of vision for any serious stable economic balance. If such were a monopoly game, printing of currency would be the norm.  

National Mobilization of Entrepreneurialism: Needed are deep studies of the prolonged trajectory of entrepreneurial intellectualism spanning a millennia… the word ‘entrepreneurialism’ was only invented over a century ago… but our civilization was built on similar principles, driven and strong people. Declare an economic revolution as a critical cure to desolate periods and call the nation but will they listen? With credibility of institution and political promises tanked, audible to the populace now is the grind of mobilizations, thundering deployments of action packed strategies, but how do you fund them? National mobilization of entrepreneurialism is the hidden pulse of the nation, often not new funding dependent rather execution hungry and leadership starved, so what makes it spin? Entrepreneurial warriors

As if a silent revolution mobilized, the nouveau entrepreneurialism in post pandemic economy in action, where talents on wings of digitalization, flying on trading platforms, visible in smart data and shining amongst upskilled midsize economies. Lack of upskilling, lack of global-age expertise, and most importantly lack of entrepreneurialism is what keeps digitization of economies lost in the past. How naïve is it to believe post-pandemic economic issues some PR singsong election campaigns? Only deployment, execution, mobilization will be the message now acceptable by the billions displaced, replaced and misplaced workers, but what is stopping nations, their Ministries and trade groups to have all out discussions and table immediate action plans? Ouch, do not forget the entrepreneurial blood in the economic streams, exciting the bureaucracies and accountancy-mindsets.  The next 100 elections over the coming 500 days will be full of surprises, but serious transformation for survival is inevitable, with or without upskilled ministries of commerce. Which nations and regions are ready to engage in this tactical battlefield of global-age skills?  Study how Expothon Africa is in deployments with selected countries.

The deciding factors: Never ever before in the history of humankind,the economic behaviorism across the world suddenly surrendered to a single calamity, affecting the majority of the global populace suffering in prolonged continuity. The side effect of such complexity juxtaposed with technological access can bring sweeping changes to our assumed complacency. All traditional problem solving and conventional thinking styles now considered too dangerous to economic growth and social balances.  

Recommendation and Survival Strategies: Discover and establish authoritative command on digitization and virtualization of economies, study more on Google.Allow micro-small-medium enterprises a tax-free window on the first USD$5-10 million revenues in exports, this will create local jobs and bring foreign exchange. Allow micro-small-medium enterprises free access to all dormant Intellectual Property, Patents rolled up due to lack of commercialization. Allow Academic Experts on innovative technologies and related skills on free voucher programs to the SME base to uplift ideas and special expertise. Optimization of telecommunication and internet structures worth trillions of dollars with global access at times completely ignored and wasted by wrong mindsets deprived of entrepreneurial undertakings. Allow micro-small-medium enterprises free full time MBA as 12 months interns so MBA graduates can acquire some entrepreneurialism while enterprises can uplift their ideas in practice.

“Allow Million qualified foreign entrepreneurs to park within your nation for 5-10 years under a special full tax-free visa and stay program. Which nations have qualified dialogue on such affairs? Bring in, land million entrepreneurs in your nation, and create 10 million plus jobs and new wealth in following years. Let your own institutions and frontline management learn how such economic developments created.  Be bold, as the time to strategize passed now time to revolutionize has arrived”. “Excerpted from keynote lecture by Naseem Javed, Global Citizen Forum, Dubai, 2013.”

Allow National Mobilization of Entrepreneurialism Protocols mandated to engage trade and exports bodies. Allow National Scoring of entrepreneurialism to measure, identify and differentiate required talents. Digitize from top to bottom and sideways, futurism fully digitized and without real transformation, it is like a nation without any internet. Act wisely. Digitalization of economies without entrepreneurial minds is more like pre-pandemic archives of mostly failures. Needed are the economic revolutions, based on entrepreneurial meritocracy and national mobilization of midsize economy.
The rest is easy 

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