COP-3 opened as a Victorian drama, with the U.S. position in imminent peril as its prime defender, Undersecretary of State Tim Wirth, suddenly abandoned the fray and rushed off to make some "real" money. Still, the U.S. team blustered on, railing against the binding energy restrictions demanded by the hard-line environmental zealots, yet still seeking to gain the approval of the virtuous environmental "maiden." How, oh how, they complained, can we reconcile the protection of our planet with the need to safeguard the sovereignty and economy of the United States?
As demanded by such plots, the U.S. and the EU publicly quarreled, accusing each other of blocking (horrors) consensus! The U.S. team issued the expected symbolic threat - If the world doesn’t respect our position, it will withdraw from negotiations.
But, as is the case with such conventional dramas, the abundance of such symbolic smoke is fully consistent with the absence of any reality of fire. The prologue and opening acts of the Kyoto drama were little more than the posturing so typical of past international negotiations. The Kyoto players have never really been in serious disagreement; everyone agrees that voluntary arrangements have "failed" (read: the market doesn’t seem to respond the way the politicians and their environmental allies would like) and therefore we must do "something." As long as that something strengthens political control of the energy economy, the details can be nuanced. Thus, a Kyoto treaty which gives each side something has always been in the cards.
When Vice President Al Gore arrives next week, expect the traditional "surprise" ending. The politicians will save the Kyoto Treaty at the last possible minute and will take their bows as the curtain comes down on a world dedicated to increased political control of energy use. The business villains, once again, will have been vanquished.
Thus, expect phrases such as "limited, carefully bounded differentiation" to emerge as the key elements of the New Global Order. Such phrases have become the Universal Solvent needed to dissolve away all negotiating difficulties. The concept makes it possible for all nations to agree to "tight" controls while preserving the "flexibility" needed to do whatever they would have done in any event.
The global environmental establishment will complain that all this is too little, too late, but the fact is they will have gained much. The Clinton-Gore team will have gained vast powers over the domestic energy sector - in effect, nationalizing this critical sector of the U.S. economy -- giving the U.S. federal government effective control over 7.5 percent of U.S. GDP. They will use this power creatively.
This Strategy Finesses Compliance with the Byrd-Hagel Resolution
To date, the Byrd-Hagel resolution (passed in the U.S. Senate 95-0) constitutes the only formal effort by conservative and business interests to restore reality to the Kyoto drama. Under this provision, the U.S. cannot enter into any agreement that would impose "excess" costs on our economy or that would exempt the developing countries from incurring comparable costs. But, these restraints dissolve away under the "limited, carefully bounded differentiation" language emerging from Kyoto. Melinda Kimble, a key U.S. spokesman, still speaks fiercely of the need for "meaningful participation of key developing countries," but that requirement is readily met in this new "differentiated" flexible world. Indeed, the newly coined approach of "evolution" in which such nations might be required to do nothing more than ensure the gradual reduction of normalized energy use in their nations (per capita, per dollar of GNP?) may greatly reduce the apparent costs of compliance by developing nations.
Still, policy does have implications. To sanction anti-energy use policies anywhere will have ramifications everywhere. If Kyoto leads to further energy restrictions in the U.S. the world will notice the impacts of declining economic and technological progress. Kyoto is all too likely to produce what CEI President Fred Smith terms "a baby step on the escalator to oblivion."
Even such initial economic costs would likely exacerbate already troubling protectionist tendencies in the U.S. and elsewhere. Any effort by the U.S. to use the Kyoto Treaty to curtail energy would mobilize the business community into arguing for treaty enforcement via trade sanctions. David Montgomery, an economist with Charles River Associates, discussed this protectionist risk at the Competitive Enterprise Institute’s Costs of Kyoto conference. He noted that the pressures and the tools for enforcing climate treaty measures will be trade -- not environmentally -- driven. Few outside the environmental establishment believes that trade wars will prove beneficial. In a world of "differentiated" compliance, the Byrd-Hagel resolution may well evolve into a new force for protectionism.
You Stay Poor, We Pile Up Credits
In the wake of Asian currency crises in South Korea, Indonesia, and Thailand, Third World countries cannot possibly accept "equivalent" emissions reduction targets. Nearly everyone recognizes this reality, but few are willing to come to terms with it. With economic turmoil as a backdrop, the U.S. delegation came forward with another major "concession" -- it will support Joint Implementation which promises financial credits to developing nations moving toward reduced energy use. But this suggests that Annex I countries would create new foreign aid and technology assistance programs for those developing nations willing to curtail carbon emissions. The end result: The Third World must go on welfare so the climate will stay cold.
Looking for a different point of view? Check these "contrarian" web sites: www.cei.org , www.globalwarming.org . Contact: Fred Smith, tel. (81 75) 344 8888. For back issues of Kyoto Update, check out www.cei.org  or call Emily McGee, tel. (202) 331-1010.