Tag Archive | "finance"


The Climate is Changing too Fast for a Purely Environmental Perspective to Remedy the Changes


The IPCC reports that financial and economic views must also be taken.

As the Paris Convention for a new climate change regime approaches in 2015, the Intergovernmental Panel on Climate Change’s (“IPCC”) release of the final volume of their Fifth Assessment Report on Climate Change on April 15, 2014, is important in shaping the negotiations. The gist of their findings is that climate change must be viewed from financial and economic perspectives, in addition to environmental viewpoints, to effectively mitigate climate change because the problem is of unique global scale. That is, “economic efficiency and equity” must also be accounted for. The authors of the report, Working Group 3, research and suggest climate change mitigation solutions and policies.



The IPCC’s statement will be crucial at the Paris Convention in 2015 because the United Nations Framework Convention on Climate Change (“UNFCCC”) utilizes the IPCC as an authority on climate change data. At the 2013 Warsaw Conference, the UNFCCC parties discussed financial and economic solutions to climate change. The Conference aimed to “keep[] governments on a track towards a universal climate agreement in 2015.” Public climate finance pledges to help developing nations came from countries including the European Union, Finland, Germany, Japan, Norway, the Republic of Korea, Sweden, the United Kingdom, and the United States. Financial mechanisms included facilitating loans between countries, clean development mechanisms, and creating large carbon markets. The Green Climate Fund Board should start its “initial resource mobilization process” to get more money from developed countries before 2015. What exactly constitutes “climate finance” is disputed.

With respect to economic perspectives, the parties acknowledged that they need to figure out solutions for poverty eradication and better account for the needs of developing countries. The Climate Technology Centre and Network is one such mechanism as it responds to developing countries’ requests for technology transfer and assistance from developed countries so they can address climate change. This is intended to help developing countries “leapfrog” over using older technologies that emit more greenhouse gases and utilize cleaner, more efficient technologies that developed countries have already created. Significant mitigation action is possible in developing countries where populations are rapidly urbanizing and moving into cities, which implicates a growing need for “governance, technical, financial, and institutional capacities.”

2015 Paris Convention

In context of the 21st Conference of the Parties in 2015, the UNFCCC parties will convene with the goal of drafting a new climate change regime that hopefully gets universal support from developing and developed countries. Some of the goals include:

  • Decisions “to initiate or intensify domestic preparation for their intended national contributions towards that agreement, which will come into force from 2020”
  • “[C]lose the pre-2020 ambition gap by intensifying technical work”
  • “[E]stablish an international mechanism to provide most vulnerable populations with better protection against loss and damage caused by extreme weather events and slow onset events such as rising sea levels”

Climate Change

Working Group III’s research findings have been released in the IPCC’s reports on climate change mitigation solutions and policies.

Climate change has been of international focus since about 1979 when it was declared “an urgent world problem.” In 1988, General Assembly Resolution 43/53 declared that it is a “common concern of mankind.” Through various treaties like the UNFCCC, parties to the treaty acknowledged that human activity largely contributed to climate change. Since the late nineteenth century, the global temperature has warmed about 0.85 degrees Celsius. It was not until 2009, that the Copenhagen Accord stated that the global temperature cannot exceed two-degrees Celsius. What’s more is that the IPCC anticipates human activity to remain largely unchanged, and thus, the global temperature will probably go beyond the two-degree goal before the 21st century is over. Therefore, solutions to mitigating climate change must be broadly based on environmental, economic, and financial approaches.

As the UNFCCC Executive Secretary, Christiana Figueres, stated after the Warsaw Conference, “We have seen essential progress. But let us again be clear that we are witnessing ever more frequent, extreme weather events, and the poor and vulnerable are already paying the price.” Thus, the involvement of all governments is necessary, and the IPCC report will be important in grounding country involvement. The 2015 Convention “will mark a decisive stage in negotiations on the future international agreement on a post-2020 regime.”


Jaclyn Cook is a 3L and a Staff Editor on the Denver Journal of International Law and Policy

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Critical Analysis: Holdouts and Hard Sells for Argentina’s Bond Swap

The European Union is not the only one finding themselves in deep financial trouble of late. Recently, attention has been diverted to Argentina, and it is not for their delicious wine. After Argentina’s economic collapse in 2001 and its ensuing record-breaking $100 billion default in foreign debt, Argentina was reluctant to negotiate any sort of re-payment option from the start. After refusing to negotiate for four years, Argentina finally made some attempt by offering creditors roughly thirty cents on the dollar and threatened that those who refused to take the offer would get nothing. And after renewing its meager offer again in 2010, it managed to get 93% of creditors to agree and take the offer. However, some of the remaining 7% were hedge fund bonds and those owners did not want to get only thirty cents on the dollar, so they refused to partake in such negotiations. As a result, the owners of those hedge fund bonds took Argentina to court in hopes of achieving a better financial outcome.

On August 23, 2013, the United States Court of Appeals for the Second Circuit in New York came back with a decision that favored the hedge fund holdouts and worried bodies like the International Monetary Fund (IMF) and the Treasury Department. The decision articulated that due to a “pari passu” (i.e. equal treatment) clause, Argentina cannot pay some of its creditors without paying all of its creditors at the same time. This means that if Argentina pays interest on its restructured bonds, it must also pay on the bonds where people refused to restructure. And since those bonds are in default, the entire principle and interest are due. In real dollars this amounts to Argentina owing these hedge-fund hold-outs over $1.33 billion in addition to the money owed to the 93% of creditors who agreed to restructure and get only thirty cents on the dollar. With this decision, however, and because of the Court’s interpretation of “pari passu,” Argentina could be blocked from paying 93% of creditors because of its refusal to pay the remaining 7%. This would cause Argentina to default again and cause even more harm to its fragile economy, which already has to deal with roughly a 25% inflation rate. The United States government, however, disagrees with the Court’s interpretation of “pari passu” and argues that instead, selective repayments should be allowed.

president of Argentina

President Cristina Fernandez de Kirchner stands in front of an image of Argentina’s currency (Reuters)

Through its decision, the Court of Appeals warned banks in both the United States and around the world, that if they accept any such payments from Argentina when Argentina is only selecting some creditors to pay instead of paying them all, contempt charges could be filed against such banks.

After the decision came down, a senior Treasury Department official commented on the potential repercussions when saying, “[W]e have serious concerns that the Second Circuit’s decision will undermine the orderliness and predictability of sovereign debt restructuring and could roll back years of progress.” The IMF shared similar concerns. Even the United States government voiced serious concerns about the decision by “warning that the decision could damage the status of New York as a chief world financial center and cause ‘a detrimental effect on the systemic role of the U.S. dollar’ by encouraging countries to denominate their debt in other currencies and put them outside the jurisdiction of United States courts.

In its decision, however, the Court of Appeals did not seem bothered over such concerns. In his opinion, Judge Barrington D. Parker stated:

“[W]e do not believe the outcome of this case threatens to steer bond issuers away from the New York marketplace. On the contrary, our decision affirms a proposition essential to the integrity of the capital markets: borrowers and lenders may, under New York law, negotiate mutually agreeable terms for their transactions, but they will be held to those terms. We believe that the interest — one widely shared in the financial community — in maintaining New York’s status as one of the foremost commercial centers is advanced by requiring debtors, including foreign debtors, to pay their debts.”

Argentina is trying to appeal the opinion and take it all the way up to the United States Supreme Court. In the meantime, both Argentinian stocks and bonds have profited, with investors betting on at least a year delay before a Supreme Court ruling would even be made. However, if the Supreme Court rejects the appeal or refuses to even hear it, Argentina will have to either pay the $1.33 billion to the hedge-fund holdouts or face another default on its bonds. Argentina and the holdout creditors, however, will have to wait until September 30th before learning what the Supreme Court decides to do.

According to Reuters, the Argentine Congress passed a bill on September 11th approving a debt swap for the remaining 7% of holdout creditors, but it involves the same terms as the 2005 and 2010 offer, with a meager thirty cents on the dollar. Even with the renewed offer, most of the remaining 7% who have been holding out for the past eight years are unlikely to participate in the swap now, especially since they have consistently rejected such an offer in the past. I guess for now, we will all just have to wait and see what happens. One thing though for certain is that Argentina’s future involves paying a lot of money.

 Mara Essick is a 3L and Staff Editor on the Denver Journal of International Law and Policy

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University of Denver Sturm College of Law