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Climate Change and Poverty are Inseparable

"Both Sweden and Norway are following the principle of focusing; I mean, there should be a focus of the foreign aid. Sweden has focused on a more limited number of countries. We are focusing in a very different way on the broad development programs we try to run through U.N., World Bank and other global institutions that applies to education, to health, and all these broad sectors. … We are focusing our direct bilateral aid not on specific nations but in specific areas where we believe Norway has a specific competence."

Oliver Subasinghe : June 10, 2009

Poverty and climate change are sometimes seen as mutually exclusive issues. But to Erik Solheim, Norway's minister for the environment and international development, solutions to both are interconnected. His rhetoric is backed by the European nation's $4 billion aid budget, which, despite the financial crisis, will not be cut this year.

Norway, a nation of 4.6 million people, is the world's third largest donor in terms of aid as a percentage of the gross domestic product. Its efforts target sectors where the country has a comparative advantage to other donors such as peace building, environmental sustainability, resource management, gender equality and access to capital. Norway's aid programs are fully untied; thus competition for funding opportunities is open to non-Norwegian organizations.

Following the restructuring of Norway's aid program in 2004, the Ministry of Foreign Affairs and embassies took over managing bilateral aid projects and funding to international organizations from the Norwegian Agency for Development Cooperation. Norad provides advice to the ministry, particularly on matters such as humanitarian aid and cooperation with multilateral groups. Its main aim is to ensure effective aid delivery.

Solheim is a veteran member of Norway's parliament known as Storting and has been deeply involved in facilitating a resolution to Sri Lanka's 26-year civil war, which recently drew to a violent end.

We spoke with Solheim about Norway's aid agenda, the financial crisis, the upcoming Copenhagen meeting on climate change, producing good peace negotiators, aid coordination, and if aid money should have a deadline for its use.

Norway gives a lot of aid as a percentage of its GDP. How did the financial crisis and declining price of oil affect this generosity?

It has not affected that at all. I mean, we will continue to keep our foreign assistance at or above the 1 percent level. With Sweden, I believe we are the biggest per capita donors of foreign assistance, and we will keep it at that level, fully knowing that many developing nations would be struggling to keep up at the time of the financial crisis.

However, I am more worried than with the aid. I am worried with the private investment, export earnings and reduced remittances. All of these factors will negatively impact upon a number of developing nations. … Certainly, if all this comes on top of each other, you may have reduced exported earnings, reduced private investment, reduced remittances and reduced aid. It may have an enormous impact on certain developing countries.

The Swedish development agency is scaling back the number of countries it partners with, while Norway has been expanding. Why the difference? How does Norway select the countries it partners with?

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Both Sweden and Norway are following the principle of focusing; I mean, there should be a focus of the foreign aid. Sweden has focused on a more limited number of countries. We are focusing in a very different way on the broad development programs we try to run through U.N., World Bank and other global institutions that applies to education, to health, and all these broad sectors. … We are focusing our direct bilateral aid not on specific nations but in specific areas where we believe Norway has a specific competence.

For example … everything that is related to women's issues and gender, we believe Scandinavia is probably the most advanced place on the Earth when [it] comes to gender issues. Now, there [is the] oil and gas sector where we think we have a highly transparent, efficient sector, and a lot of nations are interested in sharing our experiences. So while Sweden has been focusing on specific nations, we have been focusing on specific sectors and leaving the manner of the broad sectors to the global institutions.

What can the rest of the world learn from the diplomatic and development cooperation between the Nordic countries and the developing world?

Well, first of all, the Nordic countries can learn a lot more from the world than we can teach the world. We have a lot to learn from the United States, China and Africa.

When it comes to what other nations can learn from us, I believe that includes civil affairs system in all Nordic nations; [it] is a point of departure where most trade unions and governments and business is taking together rather than fighting each other every day.

I think other nations can learn from our strong emphasis on climate change. We believe that Denmark – being the host nation of the conference on climate change in December – we [are] all focusing a lot on the need to fight against climate change because climate change will affect the poor much more then it will affect the rich. You simply cannot distinguish between climate adaptation and development.

A third area is conflict resolution. A huge part of the very poor in the world are living in nations in civil war or just coming out of wars. … We spend a lot of both money and diplomatic efforts and political capital trying to resolve conflicts because we believe that as long as there is a conflict, no one will invest. Everyone can be raped or killed, and development is very, very difficult.

Some development thinkers are advocating for a time horizon on foreign assistance. For example, Rwanda has already set a date for that country to finish its use of outside aid. Should there be a deadline for the use of development assistance? Will this make it more effective?

I applaud Rwanda for being on the forefront on that debate. Rwanda has been very successful in developing development efforts since the genocide in 1994. So I think it's a positive initiative.

I think it's hard to set a specific date or timeline. But of course development aid should be seen historically, on the shorter- and medium-term perspective. I mean, we don't want to do this indefinitely. … Nations should develop the most important factors for development … domestic resources, good political systems, and stake in the markets in the nations themselves.

We should definitely have a time horizon for the development aid. The aim is to reduce it as soon as possible.

You recently suggested a new development policy plan to the Storting. What does this plan focus on, and how would it affect potential partners and contractors, both inside and outside Norway?

There are three main focuses to the ones already mentioned – climate change, and peace and conflict resolution. The third focus is on capital.

Because aid is a small capital flow in the world, and [there are] a lot of capital flows, which are much bigger and also much more important for development: trade, private investment and remittances, as well as illegal capital. Illicit capital flows out of the developing nations, and we try to use development aid strategically to influence the other – that is, for instance, public-private partnerships with big business where aid can be used to increase the level of private investment or support for anti-corruption measures, which may reduce the illicit capital flow out of developing nations. I mean, a lot more money that is now illicit [is] taken out of many developing countries and carrying in the form of aid. So we should use developing aid strategically to curb these flows.

Norway is very much respected for its conflict resolution efforts and diplomats. What are the "ingredients" in producing talented peace facilitators?

I think Norway saw the opportunity after the Cold War. … During the Cold War, of course, Norway was so closely linked to one of the two camps – I mean, we were part of the Western camp. Since nearly all of the conflicts during the Cold War took an East-West or communist-versus-capitalist design, it was very hard for Norway to do anything.

After the Cold War, Norwegian politicians saw some area for Norwegian involvement here [peace building]. … It's a small group of people who have been involved, but they exchanged views. We have capital available, so money is hardly … a limitation when it comes to diplomatic efforts. We have good relationship to all main powers, be it the United States, China, or India, European Union, or whoever it is.

You hold two Cabinet portfolios, as minister of international development and environment. What types of creative financing mechanisms can tackle both at the same time? How does Norway do it?

Well, remember that still these two worlds are far more separate than they should be. Many environmental ministers in Europe or developed nations have very little experience from the poor world, while many development ministers, at least up till now, saw the environment as an obstacle. These two versions must be brought together.

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The most obvious area that we have been able to do – that is, our support for global action on protection and conservation and sustainable use of rain forests. We have made available a fairly large amount of money in the range of $500-$600 million a year for this purpose, and through that money, we have been able to bring together the U.N. organizations, the World Bank and key rain forest areas. We have brought them together in [a] program called U.N.-REDD. REDD means Reduced Emissions from Deforestation and Degradation. This is very innovative because in the driver's seat are the rainforest nations themselves. They know the issue.

I think [we] have a catalyst role, and that is a prime example of how you can bring the environment and development together. This is about protection of rain forest; it's about biodiversity. But it's also the livelihoods of poor people living in forests in Congo, or Papua New Guinea, or the Amazon.

What will Norway lobby for at this year's Copenhagen meeting on climate change? And how can emerging markets and developing countries play a positive role at this meeting?

I think there are two issues at the plate in Copenhagen, and basically only two. One is emissions targets. [The] United States must set comparable target that what the EU and Norway have done, and so must other developed nations have done. … China and India and other developing nations must try and find ways to making efforts, which are fair from the standard, from what we can expect from them. We cannot expect the same as the developed world, but still, they must also contribute.

Second issue is financing. There must be generous financing for technology transfer, for rainforest protection, and for climate adaptation. Norway suggested that climate adaptation should be financed through the carbon market by auctioning off 2 percent of carbon permits within both carbon markets that will generate approximately $20-$30 billion a year. There are other suggestions as well, and we are ready to work on other proposal. But we think this is the most hopeful proposal.

Norway gets high marks in indexes that measure development assistance in terms funding, foreign investment, security and the environment. But one area where Norway received a poor rating is trade policy toward developing countries. How do you view trade as a part of an overall development assistance policy, and how can this be improved?

Well … that is a fair criticism. The main reasons for why we have a much lower score on trade than on most other issues is of course our vulnerable Arctic agriculture, which needs protection, and we have not so far, through the World Trade Organization …  found the right way of opening that market to goods from developing nations. That's the main reason for why we score lower on that matter than other developing matters. I mean, the arctic agriculture is much less productive than, of course, other agriculture in other parts of the world.

(Author Oliver is a Devex international development correspondent in Washington, D.C. He previously served as a microfinance fellow for Kiva.org in Kenya and Uganda. This article is also availlable at http://www.devex.com/articles/for-norway-climate-change-and-poverty-are-inseparable)

 

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