Voice

Did the EU get rolled on airline emissions?

For the last several years, the European Union's plan to tax the emissions of foreign airlines flying into or departing from EU airspace has been a sore spot with the United States, China, India, and other major powers. At certain points, it appeared that the dispute might end up in litigation at the World Trade Organization. In the U.S., both the Senate and House approved measures encouraging U.S. airlines not to comply with the EU scheme.

Under intense pressure, Brussels agreed to delay implementation of the proposed tax. The EU's executive arm, the Commission, has already endorsed what is referred to as a "stop the clock" approach. Now, the European Parliament is getting its say. Earlier this week, a key parliamentary committee approved the delay, and the full parliament appears likely to concur in April. 

Europe did extract from key players a committment to engage in negotiations on an international aviation emissions regime. These talks will occur under the auspices of the International Civil Aviation Organization (ICAO). An important negotiating session is scheduled for mid-March, and Reuters already has its hands on the initial U.S. negotiating position. It doesn't look likely to please Brussels:

A U.S. proposal for curbing aircraft emissions would exclude time spent flying over international waters, an approach that some environmental groups say is too timid in addressing the rise in greenhouse gasses from the aviation sector.

The proposal, seen by Reuters, would cover just a quarter of aviation emissions, according to some estimates, and is in sharp contrast to a European Union law that would require all airlines to pay a carbon fee for the entire flight if departing or arriving at EU airports.

In theory, the lingering threat that the EU will reactivate its emissions plan should spur negotiations; the parliamentary committee that approved the delay promised to reinstate the tax if the ICAO negotiations don't make "clear and sufficient" progress. But once talks are underway, it will be awfully tough for the EU to pull the plug. Washington, Beijing, Moscow, and Delhi may have succeeded in blunting Europe's emissions threat with a very European tactic: burying a contentious issue in endless multilateral negotiations.  

The Multilateralist

Who trusts the International Monetary Fund?

The International Monetary Fund usually gets headlines when it's negotiating an emergency loan with some country on the precipice of financial ruin. But the organization intersects with almost every sovereign goverment in much less dramatic fashion. Through its "surveillance" function, the IMF attempts to act as monitor and mentor to finance ministries and central banks around the world. Fund officials value their role as trusted and discreet advisors to national officials.

Through formal surveillance reports and informal conversations, the IMF does plenty of talking. But are its government interlocutors listening? And do they trust the Fund's intentions? The IMF's internal evaluation group recently released a report that attempts to assess how receptive governments are to Fund advice. Drawing on surveys with a broad range of national officials, the report offers mixed news. On the bright side, it finds that the Fund's reputation with member states has soared since the 2007-2008 financial crisis. National officials see the Fund as more responsive and less rigid in its advice:

The Fund staff is now seen as more open, listening more, and having a real dialogue. Indeed, this view was close to unanimous among the respondents to thecountry authorities’ survey. The Fund is perceived as more flexible and responsive. Almost 90 percent of country respondents agreed that the Fund had become more flexible in its approach to [loan] programs. Interviewees cited, for example, IMF support of fiscal stimulus; the shift to being able to use IMF financing for fiscal deficits; a significant drop in the amount of conditionality in programs; the IMF’s support of capital controls in some instances; and a less rigid approach on exchange rates.

But confidence in and receptivity to the Fund varies widely. The major industrialized economies are often "indifferent" to Fund advice, the report found. Most worryingly, the major emerging economies often don't trust the Fund, which they still  see as dominated by and beholden to its advanced-country shareholders [emphasis added]:

A perception among some country authorities that the Fund is dominated by the interests of its largest shareholders undermined the view of the Fund as a trusted advisor. This notion was particularly prevalent among authorities in large emerging markets, almost half of whom noted that this perception, together with a sense of unequal treatment of countries by the IMF, influenced their decisions not to seek the IMF’s advice. These results were mirrored by those from both the mission chief and resident representative surveys, more than 40 percent of whose res pondents believed that the perception that IMF advice reflects the interests of the larger shareholders adversely affected their own capacity to be trusted advisors.

Government of South Africa