A multi - faceted:

Global Crisis

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The following article is based on the address made by Environment and Natural Resources Minister Patali Champika Ranawaka at the Nairobi conference

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US President Barack Obama has recently signed his economic stimulus package in which the Obama administration has proposed a series of new tax concessions and bail out packages to the crisis ridden banking, Agro and Industrial sectors of the US economy.

However, it contains two important themes. First one is Neo protectionism of National Economics sounded by an old slogan, “Be American Buy American” and the second one is to introduce new policies to prioritise renewable energy sector so that fossil fuel dependency of the US economy could be eased and most importantly to introduce green economic policies.

Globalization

The USA and EU countries pioneered to form IMF, WB and most importantly WTO and GATT to promote globalization processes. By using these instruments they punished the countries which tried to adopt protectionism or National Economic policies. But secretly these so-called developed world has implanted a series of economic policies to subsidise their Agro and industrial Business while imposing heavy taxes on imports.

However, various countries and organizations have fought courageously against this globalization process and the climax was the famous “Battle in Seattle” where the WTO meeting was violently interrupted in 1999. But due to the economic recession, Obama is now going to advocate measures against the free flow of capital and goods from the other countries to save jobs and markets.

Globalization and Neo liberalism which are the god like ideologies of the US are seem to be over. China has warned G-7 countries specially the US on their new policies.

Although the process of globalization is beneficial to the US and EU they are now forced to advocate protectionist policies against globalization in order to protect their industries and jobs. So, the Neo liberal measures adopted by Ranil in his Regaining Sri Lanka is now over.

The National Economy promoted by ‘Mahinda Chinthanaya’ is now being embraced by Barack Obama himself, the change we can believe at last. Obama’s second policy that is green economic initiatives are being praised by everyone specially the environmentalists.

This time the theme of the 25th of Governing council meeting of United Nations Environmental Programs (UNEP) which was held in Nairobi - Kenya (16 - 20 Feb - 2009) was Green is the new big deal in which serious discussion was initiated to advocate and implement green economic policies.

For the past 12 months we have witnessed a multi faceted global crisis based on food energy, water and finance. Climate change caused by excessive emissions of the so - called developed Nations aggravates the crisis. Most economists are now getting scared about whether the current credit crunch could lead to another ecological crunch or the economic recessions could lead to another environmental crisis.

Principle

The general principle is that the financial crisis and the economic recession could be reversed. But global ecological crisis are irreversible in nature. Early stages of human civilizations could be able to change their civilizational regions whenever environmental problems arose. So they could be able to recommence a new civilization in another region.

Now this process of globalization has tightly integrated all the civilizations. So one country’s pollution affects the others. One country’s biological loss affects the others.

If there were environmental catastrophic explosions each civilization would suffer globally and the only solution would be to find a suitable planet to recommence or restore the human kind.

So in a globally integrated world this global environmental crisis means the survival of the existence of the human beings. It seems the so - called developed countries could not be able to assess the gravity of the crisis they caused.

Their over consumption, amassing a mass of wealth and the extravagances could be the threat to humanity even though extreme poverty could be a shame on humanity.

Food Prices Increased

In mid 2007, world food prices increased by 24% and from January to August 2008 it surged to 51% affecting all economies of the world. We were affected too. Now prices have come down to its 2006 levels owing to global financial crisis and drop in world crude oil prices. While food prices now appear to have stabilized, they are expected to remain high over the medium to long term.

Due to global threats such as climate change, water stress, scaring of and degradation of natural resources including fossil fuel etc. So food prices could be expected to be well above their 2004 levels. Pausing a continuing challenge specially to poor people who are losing job opportunities and new income sources due to global recession.

The most challenging crisis that the world is now experiencing is the global water crisis. Fresh water is becoming a very scarce resource. Only 2.5% of the world water is fresh water out of which 70% is stored in the form of ice and remaining 30% is in the from of ground water, soil moisture, swamp water and permafrost.

Only 0.3% of the countries rivers and lakes where we can benefit. Already global human population exploited 54% of this limited scared resource. It is estimated that by 2025, 1/5 of the global population will be living in regions with absolute water scarcity and 2/3 of world population could be living under water stress conditions.

Climate change, deforestation, toxic chemicals, erosion etc. will aggravate the current situation. Sri Lanka too will face the droughts, floods, salinity intrusion that will affect our food security.

The deepest crisis that was experienced in 2008 was the fuel crisis. Fuel prices went up from $ 40 per barrel to $ 150 within six months. The main factor could be cited as market manipulation and other factors like production capacity, scarcity, climate change and demand might play a role.

However, we should be mindful that world oil reserves may last within next 40 years and coal may supply energy for another hundred years. On the other hand oil is being in its maximum capacity in these days (2005-15) and will decline there after.

The world economy is based on fossil fuel and 86% of the energy is supplied by it. On the other hand, 60% of the greenhouse gas is attributed to burning of fossil fuels. So the main factor which creates the bloated development or progress of the human kind also creates the most dangerous threats within.

Energy

We experienced an eco - social crisis when oil prices went up in 3 fold.

What happens when oil has exhausted or before that GHG caused climate change forced us to abandon fossil fuels as the energy source. Whether Scarcity or pollution, whatever the reason, the world should not depend on the fossil fuel.

So we have to improve renewable sources further as main sources of energy. In order to avoid carbon emission temporary measures like carbon capturing or switching to nuclear energy would not be the answer.

Though cheap fuel prices discourage the investments on renewable, $ 144 billion was invested in 2008 with small down turn when we compare it with $ 148 billion in 2007. Whatever the reason the most important thing is the transition from fossil fuel to clean energy and it needs huge investments.

That is why every futurist argues that at least 30% of the stimulus packages should be devoted to promote renewable energy. The financial crisis in the US mar gage market in 2007 converted to a credit crisis and stock market crash in mid 2008. Now it is clear that this new economic recession is evolving and it is deeper than 1930’s recessions, which led to the Second World War.

The same bailout package that was given to banking sector (i.e. Citygroup, American Banks) simply evaporated showing the gravity of the problem. It is now estimated that Obama’s $ 789 billion or $ 600 billion EU package is not enough. Real figure could be $ 4000 billion - 8000 billion (10% of world GDP) that could not be supplied within the existing money market.

IMF already warned that all the economics of developed world may contract in 2009 leading to social and political explosions.

To be continued