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Results of the COP-26 conference – An analysis

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Glasgow Climate World Summit: There is no Planet B
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The much-discussed COP-26 conference is over. The conference was scheduled to take place in Glasgow, Scotland from October 31 to November 12, but the time was extended by one day as there was no consensus within the stipulated time. In addition, the next 2022 and 2023 COP conferences will be held in Egypt and the United Arab Emirates respectively. The main goal of the UN at the COP-26 conference was to halve carbon emissions by 2030, which would require a 45% reduction in carbon emissions. Moreover, by 2050 emissions will have to be brought to zero percent. The UN’s second goal at the conference was to increase assistance to the poorest countries in the climate crisis, so that they can adapt and spend money to address the damage caused by climate change.

 Climate experts say global temperatures have risen by 0.5 degrees Celsius in recent decades to 1.1 degrees Celsius. Due to this, various natural disasters including floods, tidal surges, cyclones and fires have increased abnormally. The United Nations has said that if the current rate of carbon emissions continues, temperatures will rise to 2.7 degrees Celsius. The increase in the use of fossil fuels is 100% responsible for this, said Associate Director of Oxford University.

 Climate change was pledged 100 billion a year in 2009. It was said that this assistance will be effective by 2020. However, it has been postponed again till 2023, but this promise is not being fully fulfilled. As a result, the poorest countries affected by climate change are being hit hardest. The UN’s IPCC says 100 billion a year in compensation will not benefit poor countries affected by climate change. Now it will take a trillion dollars a year to deal with their losses.

 If the temperature rises by two degrees Celsius, it will cost billions of dollars every year in Africa alone. The IPCC also claims that spending 1.8 trillion over the next decade on sectors such as infrastructure, agriculture and mangrove forest conservation to tackle the climate crisis would avoid 7.2 trillion in losses. On the other hand, scientists say that if tough climate policies are not implemented now, 200 million people a year will need new humanitarian aid by 2050. Which is twice as much as it is now.

 However, three consecutive agreements were drafted at the COP-26, because of disagreements over how to reduce atmospheric altitude. Finally, under the pressure of China and India, the word ‘phase down’ was added instead of ‘phase out’ in the agreement on coal use. More than 200 countries have agreed to an agreement called the Glasgow Climate Pact, which aims to increase climate crisis compensation by 2025 and update each country’s NDCs each year. Now it will take a long time for the UN member states to sign. It is difficult to say now how many countries will sign in the end.

 Meanwhile, the pros and cons of the deal are being discussed around the world. In it, most of the negotiators have expressed a negative attitude, especially people and environmentalists from least developed and developing countries. Young people have called the conference a ‘greenwash’. The chairman of the conference, British Minister Alok Sharma, said, “Fragile victory.” According to the UN president, the agreement only aims at a temperature of 1.5 degrees Celsius. “This is an important step, but not enough,” he said. “It’s a big step,” said Boris Johnson, the prime minister of the United Kingdom. US Climate Ambassador John Kerry said Paris had created the field and the Glasgow race had started from there.

 According to experts, the decision taken at the Glasgow Conference, if implemented properly, will prevent the rise in atmospheric altitude even if it does not decrease to the desired level, which is beneficial for the world. But there is no guarantee that the agreement will be fully implemented, as evidenced by the Paris Agreement. The agreement was not fully implemented. As a result, the world has to pay its ultimate compensation. The same could be said of the Glasgow Agreement. Needless to say, the agreement is a beacon of hope, on the basis of which we can move forward.

 Apart from the COP-26 agreement, there are a number of commitments to reduce carbon emissions by 2030. Such as: stop using coal, protect forests, reduce methane gas, build climate tolerant and low carbon emissions healthcare systems, stop building fossil fuel based vehicles, net zero etc. In addition, Scotland has initiated funding (1.4 million) to fund climate change issues. The biggest surprise of the COP-26 conference is the announcement by the US and China to work together to tackle the climate crisis.

 The unexpected announcement said the two countries would work together to keep atmospheric temperature rise within 1.5 degrees Celsius within this decade. The United Nations and the European Union have called the announcement a “very urgent and encouraging step.” Then there are India, Russia and the EU. Now, if they join the Sino-US initiative, carbon emissions will be much lower.

 Furthermore, 190 countries and organizations have pledged to stop using coal. Many countries and organizations have announced to stop financing the coal sector. If this promise is implemented, the amount of carbon emissions will be greatly reduced. So it is conceivable that the rest of the world will follow suit. And if that is the case then the great sacrifice of renewable energy will start worldwide. The use of nuclear power to meet the demand for electricity will also increase a lot. 124 countries have pledged to stop deforestation.

 One of the ways to save the planet is to get the necessary forest cover and 25% forest cover, which all countries have to create, and it has to be fruit, herbal and forest based. Planting fruit trees will meet the nutritional needs. Besides, the demand for wood for furniture will also be met. Also, if medicinal plants are planted, the demand for medicine will be met. Therefore, in the case of tree planting, all these must be given importance. Tall and strong trees to deal with storms, floods, tidal surges and salinity should be planted in coastal areas and drought tolerant trees should be planted in desert areas. With this, all-round measures have to be taken to protect the forest. Otherwise, the forest hunters will destroy the forest as it is now if they get a chance.

 There will be huge employment in the creation of forests. Social forests are very helpful in alleviating poverty. Therefore, it is the responsibility of the government and the society as well as the individual to create and protect the necessary forests in a planned manner. In collaboration with the World Health Organization, 50 countries have pledged to build climate-tolerant and low-carbon health care systems. If it is implemented, people will benefit a lot. 90 countries have pledged to provide private funding to achieve net zero. If it is implemented, the environment will improve a lot.

 At the COP-26 conference, hundreds of countries pledged to reduce greenhouse gas emissions by 30% by 2030. It did not say how it would be done. According to a recent research report, agriculture is responsible for 12% of the world’s greenhouse gas emissions, mostly due to methane gas. Agriculture and livestock together produce about 40% methane. Cows emit the most methane among cattle. A cow releases about 220 pounds of methane a year. According to the United Nations, the tendency to consume beef and milk will increase by 70% in the next few years. The number of cows will also increase.

 As a result, methane will be emitted at a proportional rate. So global warming will increase further, but there is no reason to worry. This is because Jelp in the UK and Cargill in the US have created a special cow mask to protect cows from methane. Although like a mask, it is actually a device that is attached to the cow’s nose. The device filters the methane emitted in a special process and converts it into carbon dioxide.

 So now it is necessary to make arrangements for all the cows to wear masks. Then the amount of methane gas will decrease. Experts are talking about changing diets to reduce carbon emissions. Every year, 14.5% of the world’s greenhouse gases are emitted for animal feed. Scientists are of the opinion that it is possible to reduce the level of carbon in the atmosphere by increasing the speed of carbon storage at the bottom of the ocean.

 According to the British government, during the COP-26 summit, six of the world’s leading car manufacturers (Volvo, Ford Motors, General Motors, Mercedes-Benz, BYD and Land Rover) announced that they would stop making fossil fuel-based vehicles by 2040. This did not include Toyota, Volkswagen AG, Stellantis, Honda, Nissan, BMW and Hyundai. But there is no way to make the world carbon-free without their involvement. Because, different countries have already banned the use of fuel based vehicles. By 2030, most countries will do the same. According to the IAA, the transportation sector is responsible for 25% of global carbon emissions.

 Road vehicles are most responsible for this. Bill Gates, in an article published based on his experience of attending the COP-26 conference and surrounding issues, said that by 2050, the world will have to emit zero carbon. Achieving this will require a green industrial revolution, where we will de-carbonate virtually the entire physical economy. This will include making things, generating electricity, moving around, producing food and heating and cooling buildings. However, this will require extensive innovation. Emphasis should be placed on innovation of environment friendly technology.

 However, the earth must be saved.  Human, fauna and biodiversity must be protected. Therefore, the agreements and commitments of the COP-26 conference must be fully implemented to limit the altitude of the atmosphere to 1.5 degrees Celsius by 2030. This is the responsibility of all the people and countries of the world. However, the greatest responsibility lies with the rich. Because, they have the main responsibility for increasing the height of the atmosphere. They emit 30 times more carbon emissions than the poor. So they have a greater responsibility to reduce carbon emissions. The rich must help 134 poor and developing countries to implement the Green Revolution, because they can’t afford that.

 The main responsibility in this case lies with the World Bank, IMF and international financial institutions. Otherwise the green revolution of the countries will not succeed. As a result, the loss of carbon emissions will continue. Needless to say, it should not be based on rich countries alone. Poor and developing countries should also try their best.

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A Labour Government Should not Frighten the Horses

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The UK general election is likely to mean changes, but Gulf citizens need not be too worried.

By James Drummond

If the tension was killing you, now you know. If it wasn’t, then be aware that a general election in the United Kingdom will be held on July 4 – less than six weeks away.

For the hapless Rishi Sunak, it looks like a case of “If it were done when ’tis done, then ’twere well it were done quickly.” Polls indicate that after 14 years of conservatism, real or imagined, voters are likely to elect a new Labour government.

What does this mean for us here in the Gulf?

The six Gulf states are certainly exposed to Britain. The extent of GCC holdings in the UK is enormous, ranging from Qatari ownership of the Shard building in London, stakes in the Sainsburys supermarket chain and Barclays bank, to Sheikh Mohammed bin Rashid’s Godolphin stables in Suffolk.

Manchester City and Newcastle United football clubs are owned by Emirati and Saudi interests, respectively. Kuwait’s wealth is managed by the Kuwait Investment Office near St Pauls Cathedral.

Labour has been careful to detail very few policies (or hostages to fortune, as its strategists may see it), but last week, David Lammy, the likely new foreign secretary, outlined a further campaign against dirty money.

Britain is a “corruption services centre”, while London is a “hotbed of kleptocracy”, Mr Lammy said. He said that he wanted to reward whistleblowers and clamp down on “enablers” of financial crime.

Given the paucity of public announcements, Lammy’s speech is significant, because it implies that the incoming government is likely to act. Fighting financial crime is relatively uncontroversial and attracts cross-party support – although in the UK’s case with limited success.

British politicians have made similarly grandiose statements before. But after Russia’s invasion of Ukraine, London has moved particularly against Russian dirty money, and sanctioned individuals. It finally introduced an obligation mandating the disclosure of beneficial owners of property.

Overseas trusts are also now required to disclose their ultimate beneficial owners, and there is now greater transparency when registering entities at Companies House.

This seems to have had only limited effect, however. Last week Andrew Mitchell, the deputy foreign secretary, cited estimates that 40 percent of the world’s dirty money still passes through London.

Spotlight on Corruption, a non-governmental organisation, wrote in October last year that “major reform is needed to how lawyers and accountants, the property sector and company formation agents are regulated for money laundering.” Lammy may choose to take further action against these and other professionals.

Other so-called enablers include retired politicians, some of them in the House of Lords, who work as advisors to unsavoury actors. Labour could move to tighten disclosure, although several of its senior former members are likely to lobby against further transparency.

It is also possible that Labour will go further in taxing expatriates. In its limited public commitments, the party has promised to clamp down on “tax dodgers”.

Those with property in the UK already pay tax on rental income they receive, and worldwide assets are subject to Britain’s inheritance tax. Some Gulf Arab families with UK property have been caught by inheritance tax.

A government led by Sir Keir Starmer, the Labour leader, could go further, as the US does, in taxing worldwide income of its citizens, more than 200,000 of whom live in the UAE alone. The argument is that if you have the privilege of carrying the passport, you have an obligation to pay tax.

Another question surrounds nationalisation. Labour is committed to re-nationalising the railways for one, although the infrastructure is already under central government control.

But another target may – may – be England’s water supply network, which was privatised in 1989. Shareholders in various of the rump companies include the Qatar Investment Authority and Adia of the UAE.

The water companies have been the subject of a vociferous campaign, for allegedly paying their shareholders high dividends while neglecting maintenance and investment. It is possible that an incoming Labour government will nationalise the industry.

All that said, the primacy of the rule of law and respect for property rights remain strong in Britain.

Barratt, a mass housebuilder, reported earlier this week that London remains the top choice among world cities for UAE investors looking to buy overseas. The holdings of Gulf states and rights of Gulf citizens in the UK remain secure, even with a Labour government.

James Drummond is Editor-in-Chief of the AGBi

Courtesy: The AGBI.Com


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Kuwait’s Political Crisis Adds to Economic Uncertainty

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Kuwait’s latest standoff is deeply concerning for both the near and long term, writes Andrew Cunningham

The decision by Kuwaiti emir Sheikh Mishal Al-Ahmad to dissolve the country’s recently elected parliament just days before its inaugural session on May 14 presents overseas investors and Kuwaiti citizens with more uncertainty.

The situation raises concerns about the country’s economic prospects over both the short and long term.

Disputes and stand-offs between Kuwait’s emirs and its boisterous parliament are nothing new. Parliament has been dissolved, and the constitution suspended, numerous times over the past 40 years. The country has held four elections in the past four years.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

Squabbling between the two sides is rooted in political disagreements and this most recent outbreak is no different.

A major factor behind the latest dissolution is believed to have been parliament’s objection to Sheikh Mishal’s choice of crown prince. Although the crown prince is nominated by the emir, the appointment has to be ratified by the parliament.

But these political, and sometimes personal, disputes have real consequences for Kuwait’s economy and financial system and, ultimately, for the long-term welfare of its citizens.

Kuwait is a prosperous country. If we take a snapshot today, we see it producing nearly 2.5 million barrels of oil per day (bpd), and there are plans under way to increase production capacity to 4 million bpd by 2035.

State foreign reserves are around $930 billion, according to National Bank of Kuwait, the country’s largest bank. With a population of a little over 4 million, its GDP per capita is one of the highest in the world.

In March this year, rating agency Fitch described Kuwait’s fiscal and external balance sheets as among the strongest of any of the governments it rates.

But when we look at long-term trends, the picture is more complex and less secure.

Kuwaiti government spending remains overwhelmingly dependent on oil and gas revenues. The government has made almost no progress, over many decades, in diversifying the economy away from oil, or in reducing the huge burden of government salaries and welfare payments.

Oil and gas revenues currently account for nearly 70 percent of total income and, according to IMF projections, will continue to do so for the rest of the decade.

These revenues have served the country well in the past, despite the volatility of oil prices, but such overwhelming dependence looks foolhardy when consumers worldwide are striving to reduce consumption of oil and gas and investors and energy firms have pivoted towards renewables.

Nearly all of the Kuwaiti government’s non-oil and gas revenue arises from overseas investments and from dividends from state-owned companies. Tax revenues account for less than 1 percent of total government income.

Looking beyond the fiscal imperative to diversify the economy is the need to provide employment opportunities for Kuwaiti citizens.

No less than 84 percent of the Kuwaiti workforce was employed by the government at the end of 2022. It is hardly surprising that nearly half of government expenditure is allocated to the salaries of public employees.

Pressure for social spending will increase in the years ahead. A World Bank report, published last year, showed that levels of obesity and Type 2 diabetes were higher in Kuwait than in any of the other GCC countries and nearly double the average in OECD countries.

Partly as a result of this, the World Bank estimated that Kuwait’s old age dependency ratio – the number of people over 65 years old in relation to those of working age – will be nearly double that of its neighbours by 2040.

Kuwait is also a country that is being significantly affected, even today, by climate change. Temperatures during the summer can exceed 50 degrees, making Kuwait one of the hottest places on earth.

These are difficult and complex challenges, both economic and social, but they are hardly unique to Kuwait. That they are, in some cases, more acute in Kuwait than elsewhere is due to decades’ long procrastination and political paralysis.

The government’s General Reserve Fund, which held most of its liquid assets, was entirely depleted in September 2020, according to Kuwait’s own ministry of finance. With AA ratings, the obvious solution was to borrow money – Kuwait’s debt-to-GDP ratio is less than 5 percent. Yet the parliament has still not passed a so-called ‘Liquidity Law‘ that would allow modest issuance of foreign currency debt.

The parliament also held up the introduction of Value Added Tax (VAT), making Kuwait one of two of the six GCC countries not to fulfil a joint commitment to implement a minimum VAT of 5 percent.

Over the past four years, all three of the big international credit rating agencies have downgraded the government of Kuwait.

In their rating reports, all agencies cited a dysfunctional and slow-moving political environment that was reducing the country’s financial flexibility and delaying much needed economic and financial reform.

Politics matters.

It is unrealistic to think that after decades of enmity the ruling family and the parliament will soon form a harmonious working relationship.

But they do need to find some common ground that will enable them to start addressing fundamental economic and social issues while the country still has large financial reserves and strong credit ratings.

Time is running out.

Andrew Cunningham writes and consults on risk and governance in Middle East and sharia-compliant banking systems


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ICD and JSC Ziraat Bank Collaborate to Boost Uzbekistan’s Private Sector

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At the 3rd Tashkent Investment Forum, the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan took a significant step forward in their partnership to empower small and medium-sized enterprises (SMEs) and foster economic growth in Uzbekistan. The forum, held in the capital city of Uzbekistan, brought together key stakeholders from the public and private sectors to discuss investment opportunities and economic development strategies for the region. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is aimed at boosting the private sector in Uzbekistan.

During the forum, ICD and JSC Ziraat Bank Uzbekistan formalized an expression of intent to collaborate on various initiatives aimed at supporting SMEs. One of the key elements of this collaboration is the provision of a Line of Financing (LoF) facility by ICD to JSC Ziraat Bank Uzbekistan. This LoF facility will enable the bank to fund private sector projects as an agent of ICD, thereby providing SMEs with access to the necessary capital to initiate and grow their businesses.

The partnership between ICD and JSC Ziraat Bank Uzbekistan is expected to have a significant impact on the SME landscape in Uzbekistan. By equipping entrepreneurs with the resources they need to succeed, this collaboration will not only support the growth of individual businesses but also contribute to the overall economic development of the country. SMEs play a crucial role in driving economic growth, creating jobs, and fostering innovation, and this partnership will help strengthen the SME ecosystem in Uzbekistan.

JSC Ziraat Bank Uzbekistan, as a strategic partner for ICD, brings a wealth of experience and expertise to the table. As a prominent commercial bank with foreign capital, JSC Ziraat Bank Uzbekistan has a strong track record of supporting SMEs and promoting economic development. The bank’s partnership with ICD further underscores its commitment to advancing the private sector in Uzbekistan and its dedication to supporting the country’s economic growth.

ICD, for its part, is a leading multilateral development financial institution that focuses on supporting the economic development of its member countries through the provision of finance and advisory services to private sector enterprises. By partnering with JSC Ziraat Bank Uzbekistan, ICD is furthering its mission of promoting economic development and fostering entrepreneurship in Uzbekistan and across the Islamic world.

The LoF facility provided by ICD to JSC Ziraat Bank Uzbekistan is just one example of the many initiatives that the two entities are undertaking to support SMEs in Uzbekistan. In addition to providing financial support, the partnership between ICD and JSC Ziraat Bank Uzbekistan will also include capacity-building initiatives and technical assistance programs to help SMEs succeed in today’s competitive business environment.

Overall, the partnership between ICD and JSC Ziraat Bank Uzbekistan represents a significant step forward in supporting SMEs and fostering economic growth in Uzbekistan. By working together, these two institutions are helping to create a more vibrant and dynamic private sector in Uzbekistan, which will ultimately benefit the country’s economy and its people. The collaboration between the Islamic Corporation for the Development of the Private Sector (ICD) and JSC Ziraat Bank Uzbekistan is expected to have a far-reaching impact on the private sector in Uzbekistan.


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