## pov-nasr

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### Shifting Sands — Geostrategic and Geoeconomic Trends
- US retrenchment and regional self-reliance
  - Since the 1979 revolution in Iran the United States has served as the mainstay of the region’s security architecture; since the high point of post‑9/11 engagement, US attention has shifted to other global priorities, notably managing China’s rise.
  - Washington is no longer keen on entanglement in Middle East conflicts; it seeks containment of Iran but not at the cost of direct confrontation.
  - In the absence of ironclad American security guarantees, regional powers are mitigating threats and reducing tensions through diplomacy and greater economic engagement.
  - Recent diplomatic shifts:
    - The Abraham Accords (2020).
    - Rapprochement between Iran and Saudi Arabia.
    - Gulf monarchies mending ties with Qatar, Türkiye, Iraq, Iran, and Syria.

- China, Russia, and new geoeconomic dynamics
  - China:
    - China is now Saudi Arabia’s largest energy partner; its investments in the kingdom outpace those of all other countries.
    - China has invested more than $56 billion in Pakistan as part of its Belt and Road Initiative.
    - China is discussing investment in trade and infrastructure in Iran.
    - China views the Greater Middle East as critical to its vision for Eurasia and as a route to balance maritime dependencies.
  - Russia:
    - Russia’s war in Ukraine reduced its involvement in Syria but deepened its ties with Iran, including Iranian drones and ordnance contributing to Russia’s assault on Ukraine.
    - Moscow is increasingly looking to a transit corridor from Astrakhan (Caspian Sea) through Iran to Chahbahar (Arabian Sea) for trade.
    - Growing Russian trade with Iran has connected Iran with port cities on the southern shores of the Persian Gulf.

- Economic integration as strategic choice
  - Regional powers are pursuing economic statecraft—trade, investment, and infrastructure—to build and sustain new strategic relationships.
  - Investment and trade trends:
    - The Gulf monarchies are investing in Israel, Iraq, and Türkiye; the UAE’s trade with Iran has grown over the past two years.
    - Saudi Arabia has hinted it may invest in Iran if normalization occurs.
  - Large-scale connectivity vision:
    - Discussion of a Persian Gulf–to–Mediterranean trade corridor with roads and railways linking Oman → Saudi Arabia → Iraq → Jordan → Syria → Türkiye, with lateral connections to Iran and Israel.
    - The United States supports a broader Persian Gulf–Levant‑India connection (aimed partly at limiting China’s role).
  - Energy and pipeline projects:
    - Europe’s move away from Russian oil and gas increases dependence on North Africa, the Middle East, the Caucasus, and Central Asia.
    - Algeria and Egypt are first‑order suppliers for Europe; Morocco and Tunisia could benefit via Mediterranean supply chains.
    - Plans for a network of pipelines to connect oil and gas to Europe are under consideration, with Türkiye envisaged as a transit hub.
    - Saudi Arabia and Qatar are contemplating pipelines that could carry their resources and Iraq’s to a Turkish hub.
  - Preconditions and milestones:
    - Plans depend on resolution of conflicts along routes (Syria cited as a major obstacle).
    - November 2022: Israel and Lebanon signed a historic deal setting borders in the Mediterranean—a necessary prelude to developing their respective gas fields; the United States helped negotiate that deal.

- Broader regional expansion of economic ties
  - The economic boundaries of the Middle East have expanded to include Central Asia, the Caucasus, the Horn of Africa, and South Asia.
  - Examples of shifting trade patterns:
    - Today India is the UAE’s largest trading partner.
    - East Asia and China play an important role in the region’s ascendant economic vision.
  - Strategic corridors:
    - The Arabian Peninsula is vital to East Asia’s trade with Africa and Europe.
    - Iran and Pakistan offer corridors connecting Europe and the Arabian Sea to China through Central Asia or overland into Xinjiang.

- Country-level implications and outlook
  - Great power rivalries (US, China, Russia) are increasingly binding countries closer together economically rather than forcing confrontation.
  - Economic integration is presented as a potential solution to persistent security concerns, analogous to present-day Southeast Asia.
  - The Middle East’s most ambitious powers (Saudi Arabia and the UAE) aspire to be notable global economic players and require security to build service industries and attract investment.

### Jordan’s Fiscal Ownership and IMF Engagement (Mohamad Al‑Ississ)
- Context and shocks
  - Jordan experienced three consecutive “black swans”: COVID‑19, the Russia‑Ukraine crisis, and global stagflation.
  - Regional shocks previously had amounted to 44 percent of Jordan’s GDP.
  - An influx of Syrian refugees comprised 20 percent of Jordan’s population essentially overnight.

- Policy strategy and implementation
  - Adopted a homegrown EFF program aiming to widen the tax base instead of raising marginal tax rates, instill discipline over the primary deficit without cutting safety nets or growth.
  - Revenue-side measures:
    - Cut sales tax rates on essential goods in the 2020 budget.
    - Lowered and unified customs tariffs in 2022.
    - Closed tax loopholes via legislative changes such as transfer pricing.
    - Unified the tax administration and cracked down on tax evasion.
  - Expenditure-side measures:
    - Sharpened targeting while expanding safety nets.
    - Attempted to pay back arrears.
    - Boosted capital expenditure for the first time in years.

- Outcomes and indicators
  - Jordan’s April 2023 Eurobond issuance was six times oversubscribed.
  - In 2022, Jordan had met its income tax target for the year by August.
  - In the first quarter of 2023, domestic revenue rose 9.1 percent year over year, driven mainly by taxes on income and profits.
  - Jordan achieved its EFF program targets ahead of schedule, in June 2023.
  - Fiscal discipline in 2022 yielded a primary deficit that outperformed the IMF program target, thanks to higher-than-expected domestic revenues.

- Constraints and ongoing risks
  - Rising global interest rates mean gains on income tax revenue are directed toward the rising cost of servicing debt instead of improving public services.

- Recommendations for IFIs, especially the IMF
  - Add preventive tools to the roster; systematically embed adjustors (e.g., COVID adjustor) into programs.
  - Provide buffers against globalization’s challenges and mobilize resources to balance need and availability.
  - Promote proactive policies to ensure middle‑class household buffers (e.g., before mortgage defaults).
  - Serve as an apolitical institutional memory to keep unresolved challenges on the global agenda (example: Syrian refugees in Jordan).
  - Empower countries’ ownership of their reform agenda; Jordan’s case demonstrates equitable, progressive fiscal policies can be fiscally viable and socially stabilizing.

### Climate Financing That Puts People First — Shortfall, Priorities, and Solutions
- Urgency and scope of the shortfall
  - An unprecedented number of climate events—floods, heat waves, superstorms, droughts, and forest fires—are causing human, economic, and environmental harm and create an urgent need for concrete implementation of climate action.
  - Over 75 percent of global climate financing is spent in the countries where it is raised.
  - Regional imbalance examples:
    - Africa contributes less than 8 percent of global greenhouse gases.
    - Africa receives less than 5.5 percent of global climate financing despite being identified by the United Nations as a highly vulnerable region.
  - Estimated financing needs versus current spending:
    - $4.5 trillion a year by 2030 is needed to prevent catastrophic environmental degradation.
    - $6 trillion a year by 2050 is needed.
    - $632 billion is spent annually today.
  - Gaps and omissions:
    - About 60 percent of developing economies’ needs are not included in their Nationally Determined Contributions.
    - The $100 billion pledge made in 2009 at COP15 in Copenhagen is characterized as pitifully inadequate.
  - Resilience and adaptation underfunded:
    - Just 7 percent of climate financing today is earmarked for resilience and adaptation.
    - Global Commission on Adaptation 2019 estimate: investing $1.8 trillion in initiatives such as early-warning systems and climate-smart practices over 10 years could yield $7.1 trillion in total benefits.

- Compounding shocks and distributional impacts
  - Recent shocks have worsened financing and implementation:
    - The COVID-19 pandemic and Russia’s invasion of Ukraine raised food and energy prices and tightened financial conditions, adding fiscal burden and testing socioeconomic and environmental resilience.
    - These events have siphoned resources from sustainability projects and caused capital retrenchment that threatens to reverse development gains.
  - Development and poverty risk:
    - The World Bank estimates climate change could push 132 million people into poverty by 2030, particularly in Africa and South Asia.

- Financing mobilization potential and barriers
  - Scale and potential sources:
    - If multilateral development banks dedicated all their funds to the green transition, it would amount to about 4 percent of the financing needed (World Bank 2020).
    - Shifting only 1–1.5 percent of global private sector assets—worth over $450 trillion—could bridge the climate financing gap (FSB 2021).
    - Philanthropic climate-mitigation financing in 2020 ranged between $6 billion and $10 billion, which is less than 2 percent of all philanthropic financing worldwide.
  - Barriers in developing economies:
    - 77 percent of developing economies’ sovereign credit ratings are “non-investment grade” and are thus associated with high risk.
    - Large information gaps exist regarding opportunities, investor appetite, and investment impact.
  - Importance of closing information gaps:
    - Better information could clarify risk-return profiles, lower transaction costs, enable new financing mechanisms, and help generate high-impact investable projects that are Paris-aligned and contribute to country priorities.

- Country-led solutions, instruments, and principles
  - Egypt’s Country Platform for the Nexus of Water, Food and Energy (NWFE):
    - Launched during COP27 to emphasize country ownership and a country-led, programmatic, bottom-up approach.
    - Aims to introduce investable projects, bridge the information gap, harmonize stakeholder efforts, and design concrete mitigation and adaptation projects.
    - Mobilized concessional financing and catalyzed private investment using innovative financing, including blended finance and debt swaps for climate action (Al-Mashat and Berglöf 2023).
  - Global and institutional initiatives:
    - International calls for a restructured global financial architecture to step up climate action and crowd in private investment include the Bridgetown Initiative and the G20 Capital Adequacy Framework.
    - The Sharm El Sheikh Guidebook for Just Financing (launched by Egypt during its COP27 presidency) seeks to help stakeholders move from pledges to implementation by identifying key players, clarifying opportunities, risks, and potential partnerships for a climate-resilient future.
  - Just financing definition and principles:
    - The guidebook introduced the first definition of “just financing” to operationalize people-centered allocation of climate finance.
    - Focus areas: equitable allocation of benefits and burdens, safeguarding the social dimension of the transition, country ownership, access, affordability, resource allocation bias, additionality, and good governance.
    - Just financing includes 12 corresponding guiding principles and “accounts for historical responsibility for climate change while ensuring equitable access to quality and quantity climate financing that supports resilient development pathways, leaving no one behind.”

- Policy implications and recommended actions
  - Mobilize a bigger pool of funds from public, private, and philanthropic actors through multistakeholder partnerships.
  - Prioritize broad access to climate financing, especially for vulnerable regions with limited historical emissions but high exposure.
  - Close information gaps to reveal investable, Paris-aligned projects and to lower perceived and actual risks for private investors.
  - Scale up concessional financing and innovative instruments (for example, blended finance and debt swaps) to catalyze private investment.
  - Adopt country-led, programmatic approaches (as illustrated by NWFE) to ensure projects are implementable and aligned with national priorities.
  - Operationalize “just financing” principles to ensure equitable allocation, additionality, and good governance in climate finance flows.

*Source: F&D — SEPTEMBER 2023 (Point of View: Vali Nasr; Mohamad Al‑Ississ).*

### Section 1

### Shifting Sands (Point of View — Section 1)

### Geostrategic shift: US retrenchment and regional self-reliance
- Since the 1979 revolution in Iran the United States has served as the mainstay of the region’s security architecture; since the high point of post‑9/11 engagement, US attention has shifted to other global priorities, notably managing China’s rise.
- Washington is no longer keen on entanglement in Middle East conflicts; it seeks containment of Iran but not at the cost of direct confrontation.
- In the absence of ironclad American security guarantees, regional powers are mitigating threats and reducing tensions through diplomacy and greater economic engagement.
- Recent diplomatic shifts cited:
  - The Abraham Accords (2020).
  - Rapprochement between Iran and Saudi Arabia.
  - Gulf monarchies mending ties with Qatar, Türkiye, Iraq, Iran, and Syria.

### China, Russia, and new geoeconomic dynamics
- China’s role:
  - China is now Saudi Arabia’s largest energy partner; its investments in the kingdom outpace those of all other countries.
  - China has invested more than $56 billion in Pakistan as part of its Belt and Road Initiative.
  - China is discussing investment in trade and infrastructure in Iran.
  - China views the Greater Middle East as critical to its vision for Eurasia and as a route to balance maritime dependencies.
- Russia’s role:
  - Russia’s war in Ukraine reduced its involvement in Syria but deepened its ties with Iran, including Iranian drones and ordnance contributing to Russia’s assault on Ukraine.
  - Moscow is increasingly looking to a transit corridor from Astrakhan (Caspian Sea) through Iran to Chahbahar (Arabian Sea) for trade.
  - Growing Russian trade with Iran has connected Iran with port cities on the southern shores of the Persian Gulf.

### Economic integration as strategic choice
- Regional powers are pursuing economic statecraft—trade, investment, and infrastructure—to build and sustain new strategic relationships.
- Investment and trade trends:
  - The Gulf monarchies are investing in Israel, Iraq, and Türkiye; the UAE’s trade with Iran has grown over the past two years.
  - Saudi Arabia has hinted it may invest in Iran if normalization occurs.
- Large-scale connectivity vision:
  - Discussion of a Persian Gulf–to–Mediterranean trade corridor with roads and railways linking Oman → Saudi Arabia → Iraq → Jordan → Syria → Türkiye, with lateral connections to Iran and Israel.
  - The United States supports a broader Persian Gulf–Levant‑India connection (aimed partly at limiting China’s role).
- Energy and pipeline projects:
  - Europe’s move away from Russian oil and gas increases dependence on North Africa, the Middle East, the Caucasus, and Central Asia.
  - Algeria and Egypt are first‑order suppliers for Europe; Morocco and Tunisia could benefit via Mediterranean supply chains.
  - Plans for a network of pipelines to connect oil and gas to Europe are under consideration, with Türkiye envisaged as a transit hub.
  - Saudi Arabia and Qatar are contemplating pipelines that could carry their resources and Iraq’s to a Turkish hub.
- Preconditions and milestones:
  - Plans depend on resolution of conflicts along routes (Syria cited as a major obstacle).
  - November 2022: Israel and Lebanon signed a historic deal setting borders in the Mediterranean—a necessary prelude to developing their respective gas fields; the United States helped negotiate that deal.

### Broader regional expansion of economic ties
- The economic boundaries of the Middle East have expanded to include Central Asia, the Caucasus, the Horn of Africa, and South Asia.
- Examples of shifting trade patterns:
  - Today India is the UAE’s largest trading partner.
  - East Asia and China play an important role in the region’s ascendant economic vision.
- Strategic maritime and overland corridors:
  - The Arabian Peninsula is vital to East Asia’s trade with Africa and Europe.
  - Iran and Pakistan offer corridors connecting Europe and the Arabian Sea to China through Central Asia or overland into Xinjiang.

### Country-level implications and outlook
- Great power rivalries (US, China, Russia) are increasingly binding countries closer together economically rather than forcing confrontation.
- Economic integration is presented as a potential solution to persistent security concerns, analogous to present-day Southeast Asia.
- The Middle East’s most ambitious powers (Saudi Arabia and the UAE) aspire to be notable global economic players and require security to build service industries and attract investment.

### Jordan’s fiscal ownership and IMF engagement (Mohamad Al‑Ississ)
- Context and shocks:
  - Jordan experienced three consecutive “black swans”: COVID‑19, the Russia‑Ukraine crisis, and global stagflation.
  - Regional shocks previously had amounted to 44 percent of Jordan’s GDP.
  - An influx of Syrian refugees comprised 20 percent of Jordan’s population essentially overnight.
- Policy strategy and implementation:
  - Adopted a homegrown EFF program aiming to widen the tax base instead of raising marginal tax rates, instill discipline over the primary deficit without cutting safety nets or growth.
  - Revenue-side measures:
    - Cut sales tax rates on essential goods in the 2020 budget.
    - Lowered and unified customs tariffs in 2022.
    - Closed tax loopholes via legislative changes such as transfer pricing.
    - Unified the tax administration and cracked down on tax evasion.
  - Expenditure-side measures:
    - Sharpened targeting while expanding safety nets.
    - Attempted to pay back arrears.
    - Boosted capital expenditure for the first time in years.
- Outcomes and indicators:
  - Jordan’s April 2023 Eurobond issuance was six times oversubscribed.
  - In 2022, Jordan had met its income tax target for the year by August.
  - In the first quarter of 2023, domestic revenue rose 9.1 percent year over year, driven mainly by taxes on income and profits.
  - Jordan achieved its EFF program targets ahead of schedule, in June 2023.
  - Fiscal discipline in 2022 yielded a primary deficit that outperformed the IMF program target, thanks to higher-than-expected domestic revenues.
- Constraints and ongoing risks:
  - Rising global interest rates mean gains on income tax revenue are directed toward the rising cost of servicing debt instead of improving public services.
- Recommendations for international financial institutions (IFIs), especially the IMF:
  - Add preventive tools to the roster; systematically embed adjustors (e.g., COVID adjustor) into programs.
  - Provide buffers against globalization’s challenges and mobilize resources to balance need and availability.
  - Promote proactive policies to ensure middle‑class household buffers (e.g., before mortgage defaults).
  - Serve as an apolitical institutional memory to keep unresolved challenges on the global agenda (example: Syrian refugees in Jordan).
  - Empower countries’ ownership of their reform agenda; Jordan’s case demonstrates equitable, progressive fiscal policies can be fiscally viable and socially stabilizing.

*Source: F&D — SEPTEMBER 2023 (Point of View: Vali Nasr; Mohamad Al‑Ississ).*

### Section 2

### Climate Financing That Puts People First

### Urgency and scope of the climate financing shortfall
- An unprecedented number of climate events—floods, heat waves, superstorms, droughts, and forest fires—are causing human, economic, and environmental harm and create an urgent need for concrete implementation of climate action.
- Over 75 percent of global climate financing is spent in the countries where it is raised.
- Regional imbalance examples:
  - Africa contributes less than 8 percent of global greenhouse gases.
  - Africa receives less than 5.5 percent of global climate financing despite being identified by the United Nations as a highly vulnerable region.
- Estimated financing needs versus current spending:
  - $4.5 trillion a year by 2030 is needed to prevent catastrophic environmental degradation.
  - $6 trillion a year by 2050 is needed.
  - $632 billion is spent annually today.
- Gaps and omissions:
  - About 60 percent of developing economies’ needs are not included in their Nationally Determined Contributions.
  - The $100 billion pledge made in 2009 at COP15 in Copenhagen is characterized as pitifully inadequate.
- Resilience and adaptation underfunded:
  - Just 7 percent of climate financing today is earmarked for resilience and adaptation.
  - Global Commission on Adaptation 2019 estimate: investing $1.8 trillion in initiatives such as early-warning systems and climate-smart practices over 10 years could yield $7.1 trillion in total benefits.

### Compounding shocks and distributional impacts
- Recent shocks have worsened financing and implementation:
  - The COVID-19 pandemic and Russia’s invasion of Ukraine raised food and energy prices and tightened financial conditions, adding fiscal burden and testing socioeconomic and environmental resilience.
  - These events have siphoned resources from sustainability projects and caused capital retrenchment that threatens to reverse development gains.
- Development and poverty risk:
  - The World Bank estimates climate change could push 132 million people into poverty by 2030, particularly in Africa and South Asia.

### Financing mobilization potential and barriers
- Scale of the financing gap and potential sources:
  - If multilateral development banks dedicated all their funds to the green transition, it would amount to about 4 percent of the financing needed (World Bank 2020).
  - Shifting only 1–1.5 percent of global private sector assets—worth over $450 trillion—could bridge the climate financing gap (FSB 2021).
  - Philanthropic climate-mitigation financing in 2020 ranged between $6 billion and $10 billion, which is less than 2 percent of all philanthropic financing worldwide.
- Barriers in developing economies:
  - 77 percent of developing economies’ sovereign credit ratings are “non-investment grade” and are thus associated with high risk.
  - Large information gaps exist regarding opportunities, investor appetite, and investment impact.
- Importance of closing information gaps:
  - Better information could clarify risk-return profiles, lower transaction costs, enable new financing mechanisms, and help generate high-impact investable projects that are Paris-aligned and contribute to country priorities.

### Country-led solutions, instruments, and principles
- Egypt’s Country Platform for the Nexus of Water, Food and Energy (NWFE):
  - Launched during COP27 to emphasize country ownership and a country-led, programmatic, bottom-up approach.
  - Aims to introduce investable projects, bridge the information gap, harmonize stakeholder efforts, and design concrete mitigation and adaptation projects.
  - Mobilized concessional financing and catalyzed private investment using innovative financing, including blended finance and debt swaps for climate action (Al-Mashat and Berglöf 2023).
- Global and institutional initiatives:
  - International calls for a restructured global financial architecture to step up climate action and crowd in private investment include the Bridgetown Initiative and the G20 Capital Adequacy Framework.
  - The Sharm El Sheikh Guidebook for Just Financing (launched by Egypt during its COP27 presidency) seeks to help stakeholders move from pledges to implementation by identifying key players, clarifying opportunities, risks, and potential partnerships for a climate-resilient future.
- Just financing definition and principles:
  - The guidebook introduced the first definition of “just financing” to operationalize people-centered allocation of climate finance.
  - Focus areas: equitable allocation of benefits and burdens, safeguarding the social dimension of the transition, country ownership, access, affordability, resource allocation bias, additionality, and good governance.
  - Just financing includes 12 corresponding guiding principles and “accounts for historical responsibility for climate change while ensuring equitable access to quality and quantity climate financing that supports resilient development pathways, leaving no one behind.”

### Policy implications and recommended actions
- Mobilize a bigger pool of funds from public, private, and philanthropic actors through multistakeholder partnerships.
- Prioritize broad access to climate financing, especially for vulnerable regions with limited historical emissions but high exposure.
- Close information gaps to reveal investable, Paris-aligned projects and to lower perceived and actual risks for private investors.
- Scale up concessional financing and innovative instruments (for example, blended finance and debt swaps) to catalyze private investment.
- Adopt country-led, programmatic approaches (as illustrated by NWFE) to ensure projects are implementable and aligned with national priorities.
- Operationalize “just financing” principles to ensure equitable allocation, additionality, and good governance in climate finance flows.

*Point of View — Rania Al‑Mashat, Egypt’s minister of international cooperation.*

---


_Source: https://www.imf.org/-/media/files/publications/fandd/article/2023/september/pov-nasr.pdf_