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16 July 2021

What it will take

Does it matter whether the fuel-driven motorcar is abolished in 2035 or 2040? Or whether we widen the remit of CO2 emissions trading?

It does. But if the world succeeds to bring climate change under control, I would dare speculate that future historians will not remember the European Commission’s fit-for-55 programme, or the European green deal, least of all the European Central Bank's climate action plan. Nobody will remember the date when we phased out the diesel car.

What they will remember instead are breathtaking innovations that allowed sustainable energy production, commercially viable agriculture and the exploitation of hydrogen energy -  all funded by what might be the largest investment program in human history. But of all the things future historians will look back on the most, it will be that moment when the US, the EU, China and Russia put their differences aside and agreed a way to co-operate - in what would the equivalent of a 21st century Yalta.

To get to this point would require a big shift in our foreign policy. In my column last week I wrote about the notion of operator overload, about the danger of trying to achieve too many goals with a single set of tools. What is true for central banking also applies to foreign policy. We can prioritise human rights in our relationship with China. Or we can do it like the Germans, who couldn’t care less about anything for as long as they can sell their diesel cars.

I am generally hesitant to translate good advice for business to the world of politics, but the tasks we are facing now are very similar to those in the corporate world. Google is search. Amazon is online retail. Facebook is social media. Mercedes used to be simply the best car. General Electric was the quality appliance. Excellence was based on a totally simple description, behind which existed a complex, hidden machinery to deliver it.

Foreign policy needs its Google moment, especially in Europe, where strategic thinking in this area is largely absent. Focusing on one thing implies, by definition, not focusing on another. I can see an argument that we should prioritise human rights instead. If goes as follows: If a country does not respect human rights, it won't care about climate change. Climate change action and human rights are two sides of the same coin. I agree with the argument conceptionally. But it won't get us there in time. We have to address climate change as a matter of priority now.

I am therefore concluding reluctantly that the US and the EU should not make it our job to fight revolutions in the street of Beijing, Moscow or Minsk. We should leave that job to the people in those countries. In the meantime, we co-operate with whoever is in power - for as long as they deliver on their international commitments.

What would a climate-change focused foreign policy look like? A useful start would be to explicitly add climate change conditionality to existing and future trade deals. Climate change needs to play a much bigger role in competition policy cases. It is only right that countries that violate international climate change commitments should face commercial discrimination if they break them. This is ultimately a level-playing field argument, except that the goal is not to protect domestic producers, but encourage compliance with climate agreements. 

A foreign policy focused on climate change should be critical about Nord Stream 2, too, but for different reasons. The pipeline keeps Europe dependent on fossil fuels for longer than necessary. That, not Germany's perhaps too cosy relationship with Russia, is the real issue. The G7 should give Russia a conditional pathway back into what used to be the G8. Our sacrifice would be to leave Russia’s annexation of Crimea behind us, and move on. There can be no effective global strategy for the Arctic without Russia - and that means, for the foreseeable future, without Vladimir Putin.

The alternative to a foreign policy that focuses on one issue, is one that focuses on none.

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