Sunday, December 14, 2008

Brazil & Mexico Emerging on Global Issues of Climate & Economic Growth

The President of Brazil recently proposed a framework for establishing new global financial systems in the face of global failures by the G-7 industrialized nations. He presented this proposal at last month’s G-20 summit. President Lula wants to see the G-7 expanded to include Brazil, the world’s 10th largest economy, along with Mexico and other developing nations.

Brazil is also requesting greater say with the International Monetary Fund and World Bank. “Brazilians view the current economic crisis as an opportunity” according to Brazil expert Jeffery Carson. They want to see Brazil “in a leadership position on behalf of poor countries. Brazil has a strong fiscal standing with $200 billion in foreign reserves to address the global meltdown.

After towing the line with IMF guidelines for decades, many Latin American economies are at least as solid as the USA’s nose diving economy. In addition to fiscal strength, Latin American countries are important producers feeding much of world demand for food and fuel.

Brazil is the world’s #1 exporter of orange juice, bio fuels, poultry, beef and coffee. It produces more iron ore than the USA and is fast approaching our levels of grain exports. Mexico is the fruit and vegetable basket of the USA. Venezuela is the world’s #5 oil exporter with a proposal to create an alternative to the World Bank.

Brazil also wants more influence within the United Nations. President Lula is quick to point out that it has one of the world’s largest stable democracies.

Mexico has recently taken a global warming leadership role with a plan to cut greenhouse gas emission levels in half by 2050, making it the only developing country to set emissions caps below existing levels. The plan is intended as a wakeup call to the G-7 and includes emissions limits on its main polluting industries which produce cement and electricity and refine oil. Companies will be able to sell unused emission allowances.

Rich industrial countries are facing growing criticism for damaging international financial markets and the environment through their unwillingness to address the interwoven nature of the global economy and ecosystems that draw their own borders. Brazil and Mexico won praise at recent UN talks in Poland attended by 145 environment ministers. Meanwhile, the USA and UK remain focused on their financial catastrophes with the notable exception of California.

California just adopted the USA’s most comprehensive climate plan. Gov. Schwarzenegger believes “these regulations will spur the state’s economy and serve as a model for the rest of country. When you look at today’s depressed economy, green tech is one of the bright spots out there, which is yet another reason we should move forward on our environmental goals.” California’s cap and trade system is similar to Mexico’s in that it provides companies financial incentives for reducing carbon emissions.

President Bush circumvented California’s tough 2006 restrictions on auto pollution by blocking the law from taking effect, but California officials trust that President-Elect Obama will remove this obstacle to clean air and growth in the state’s green economy industries. According to environmental ministers to the UN, “the attitude of rich countries borders on the immoral and is counterproductive”.

Brazil and Mexico are seeking a larger role in convincing an expanded G-7 that they can aid ailing international markets and reduce havoc from carbon emissions. The UN Secretary-General urged leading economies to provided real leadership on these two issues by answering the calls of emerging economies. He stating in Poland, “The economic crisis is serious; yet when it comes to climate change, the stakes are far higher.”

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