Lord Nicholas Stern, author of the Stern Review of the Economics of Climate Change, sketched the outlines of a grand bargain between rich and poor countries on climate change in the third annual Richard H. Sabot Lecture last week. CGD president Nancy Birdsall comments on the highlights of the lecture, noting a surprising consensus: when it comes to climate change, developing countries find themselves in the unaccustomed role of dictating conditionality to the rich world.

Yes, India has a global inflation problem because world demand, especially for commodities, is running ahead of world capacity. The phenomenon is global but policy responses will be national.

So, which countries are going to act decisively to curtail demand? Of the three economically significant global players—the United States, the European Union, and China—it is only the European Union that has kept demand in check through relatively tight monetary policy. The United States and China have not. The United States, in order to preserve its financial system and avoid a slowdown, has followed expansionary monetary and fiscal policies, aggravating global price pressures, and while China has tightened, it has been small in magnitude and done with reluctance because any serious slowdown to the Chinese growth juggernaut is anathema to the Party.

Congress will consider new legislation this week that would contribute $400 million to a multilateral Clean Technology Fund (CTF) administered by the World Bank to promote low-carbon energy production in developing countries. But before any money changes hands, lawmakers are demanding key reforms to World Bank investment policies that mirror recommendations CGD senior fellow David Wheeler set out in congressional testimony earlier this month. CGD outreach and policy associate Joel Meister reports that the new bill requires CTF investments to show a preference for zero-carbon energy alternatives like solar thermal power and directs the multilateral development banks to adopt carbon accounting. Meister commends the provisions and says if the House Financial Services committee maintains them during markup of the bill this week it could mean big changes for the World Bank's role in addressing the climate crisis.

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The global food crisis will be at the top of the agenda when leaders of the world's eight richest industrial nations meet in Hokkaido Toyako, Japan for their annual summit next month. Despite a recent drop in rice prices, at least in part due to CGD's push for Japan to release its surplus rice back onto the world markets, millions of people in Africa and elsewhere continue to face hunger and starvation because food prices remain too high. While the U.S. gave Japan the green light to export the rice in mid-May, Japan has yet to do so. CGD senior fellow Vijaya Ramachandran, visiting fellow Tom Slayton, and non-resident fellow Peter Timmer urge the Japanese government to take the lead at the G8 Summit by releasing its 1.5 million metric tons of unwanted rice to the World Food Programme or to international markets and by doing so, set an example for other governments to help swiftly mitigate the immediate impacts of the food crisis.

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