A meeting of G20 finance ministers at St. Andrews, in Scotland, on Sunday failed to reach an agreement on funding climate change, as developed countries continued to dither over the amount of money they were willing to offer to developing countries to help them adopt environmental-friendly schemes.
The failure was seen as a blow to the prospects of reaching a global legally-binding deal on carbon emissions at next month’s crucial climate change summit in Copenhagen.
Green activists expressed their disappointment saying it meant the Copenhagen summit was doomed.
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The meeting, attended by a high-level Indian delegation led by Finance Minister Pranab Mukherjee, also failed to agree on a common strategy for withdrawing the massive public funding that has gone into stimulating the global economy in the past year.
As recession starts to wane in many of parts of the world, there is a view that the time has come to withdraw the stimulus, but some countries, including Britain, are opposed to an abrupt withdrawal, arguing that growth has not picked up sufficiently to withstand a sudden loss of “life-support.”
Before the meeting, Mr. Mukherjee said that instead of a blanket withdrawal strategy, each country should be left alone to choose its own “exit policy” depending on the scale of recovery.
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Proposal rejected
Meanwhile, a row erupted over Prime Minister Gordon Brown’s proposal for a tax on financial transactions by banks, with the United States, Canada and the International Monetary Fund (IMF), among others, rejecting the idea.
Mr. Brown had suggested that the proposed tax could be used to build a global fund to bail out failed banks in future.
U.S. Treasury Secretary Timothy Geithner rejected the proposal outright saying: “That’s not something that we’re prepared to support.”
Canadian Finance Minister Jim Flaherty said Canada was “not in the business of raising taxes but in the business of lowering taxes.” He added: “It is not an idea we would look at.”
Dominique Strauss-Kahn, head of IMF, said imposing a transaction tax would not be feasible because transactions were “very difficult” to measure.