UN chief fears Great Fracture will divide and cripple global economy

UN Secretary-General António Guterres has urged leaders in Davos to act as the threats facing the planet and the economy become “critical”.

Speaking at the World Economic Forum he highlighted the major threats facing the world, from the economic crisis to war and pandemic, he said: “We are looking into the eye of a Category 5 storm.”

On climate change, Guterres called on world leaders to put forward credible and transparent transition plans to achieve net-zero emissions and to submit their plans before the end of the year.

“The transition to net zero must be grounded in real emissions cuts – and not rely essentially on carbon credits and shadow markets,” he added. “That’s why we [the UN] created an Expert Group on Net-Zero Emissions Commitments.”

“Every week brings a new climate horror story,” he said, in a call to industrialised nations to “finally deliver” on their $100 billion climate finance commitment to support developing countries. “Greenhouse gas emissions are at record levels and growing. The commitment to limit global temperature rise to 1.5 degrees is nearly going up in smoke. Without further action, we are headed to a 2.8-degree increase.”

Unless tough political decisions are made to tackle the climate crisis, Guterres warned that “for many, it would mean a death sentence”.

He warned private industry needed to do more to help the climate too, he insisted, before calling on corporate leaders attending Davos to abide by UN-backed net-zero guidelines, and not “dubious or murky” benchmarks.

“Without creating the conditions for the massive engagement of the private sector, it will be impossible to move from the billions to trillions that are needed to achieve the Sustainable Development Goals (SDGs),” the Secretary-General maintained.

Guterres urged businesses to follow’s the expert group’s guidelines for credible, accountable net-zero pledges.

Drawing a parallel to the tobacco industry in the 1970s – where companies knew of the dangerous health effects – he said “Big Oil” must be held to account for the damaging impact of fossil fuels on the planet.

On recent reported revelations that some energy firms “were fully aware in the 1970s that their core product was baking” the planet.

“Some in Big Oil peddled the big lie,” the UN chief continued, “yet we know the ecosystem meltdown is cold, hard, scientific fact”.

In an appeal for greater international cooperation and trust-building to solve so many interlinked problems, Guterres said the critical threats facing the world, one of the most dangerous is what he termed the “Great Fracture”, the decoupling of the world’s two largest economies, the United States and China – “a tectonic rift that would create two different sets of trade rules, two dominant currencies, two internets and two conflicting strategies on artificial intelligence.”

He added that such a fracture had been costed at $1.4 trillion to the global economy by the International Monetary Fund.

And although it was to be expected that US-China relations differ on human rights and security issues, it is essential that both continue to engage meaningfully on climate, trade and technology, “to avoid the decoupling of economies or even the possibility of future confrontation”.

He warned a “morally bankrupt financial system” is amplifying systemic inequalities. As such he called for a new debt architecture that would provide liquidity, debt relief and long-term lending to enable developing countries to invest in sustainable development.

“Developing countries need access to finance to reduce poverty and hunger and advance the Sustainable Development Goals,” Guterres said, adding that he has urged the G20 to agree on a global SDG Stimulus Plan to support the countries of the Global South.

The multilateral development banks must also change their business model. Beyond their own operations, he said, they must concentrate on systematically directing private finance towards developing countries, providing guarantees and being first risk-takers. “Without creating conditions for massive inflow of capital to developing countries, there is no future.”