Copenhagen Climate SummitWe are only in the first week of the climate change summit and every day something new and exciting happens, both in the U.S. and in Copenhagen. Of course, the conference is politicized; that is a given. It is astounding to see how politicians, financiers and opportunists with different interests can come forth at this juncture to make their voices heard. First there is Sarah Palin — in an op-ed in the Washington Post she strongly denounced President Obama’s attendance at the conference, calling it a “political move.” Instead, she suggested that Obama should have boycotted this conference that is based on “agenda-driven science.” How is her rhetoric any less political than Obama’s?

Then there is George Soros, the philanthropist who came up with a seemingly novel but quite complex idea of using Special Drawing Rights (SDRs) from the IMF to help developing countries deal with climate change. SDRs, he explained, are a “virtual currency with a value set by a basket of real currencies, backed by gold reserves at the IMF.” My interpretation of his idea is that since the SDRs are sitting idle, we might as well use it as a “financing tool” for the climate adaptation fund of $10 billion a year that rich countries have promised to pay. From my understanding, SDRs are reserves held at the IMF and they do not represent any “new” money — in fact, they are a claim on the currencies of IMF members, and they are only as good as the members’ (read: United States’) willingness to honor them. Given that the IMF’s funds were originally intended to help with the development of poor countries anyway, does this method represent the donation of any “new” funds? Note that this is technically not an original idea — the last time SDRs were freely allocated was August 2009, when the G20 decided that it would provide liquidity to countries suffering the most from the global financial crisis.

Written by Florence Au