Ultimatum

by Matthew Glass

  Olsen liked the approach. That was the level of pressure he wanted to apply. “Sounds good.”

  “Before I do that, Mr. Secretary, I need to make sure it’s okay. I want to be able to say to them that if they don’t have a proposal next time we meet, we don’t sit down.”

  “That’s okay. Say it.”

  “Mr. Secretary, they might come back with nothing.” Lisle paused. “Before I do this, I need to know the president would agree to me laying it out as an ultimatum in this way. Would he be comfortable with that?”

  “The president’s not running this negotiation,” said Larry Olsen.

  Lisle glanced at Wu. “Mr. Secretary, they really might come back with nothing. Mr. Secretary? If I say this, and they do come back with nothing, I need to know the president is going to back me a hundred percent when I walk away. Because if he doesn’t, if he makes me sit down with them, you’ll have to find yourself a new negotiator. My credibility will be shot.”

  Lisle and Wu stared at the phone, listening for Olsen’s response. There was silence.

  “Mr. Secretary, if you need to talk to the president, I can wait. I can wait until tomorrow. I don’t need to tell them tonight. But I need to know he’s going to back me.”

  Still there was silence.

  “Mr. Secretary?”

  “Tell them tonight.”

  “Are you sure?”

  “I’m sure.” There was another moment’s silence on the line. “How long do you think you should give them to come back? If we can get there, the president’s talking about announcing the deal on the Fourth of July.”

  “The Fourth of July?”

  “You don’t think it can be done?”

  Pete Lisle frowned, calculating. “I guess it’s not impossible, but I wouldn’t bet on it. If we’re shooting for that, we can’t give them more than two weeks to come back. I’ll give them a week, and if they push, I’ll give a little and make it two. I guess we’ll see how they respond.”

  “Let’s get it started,” said Olsen. “Tell them tonight. They can take the data, but when they come back they come with a proposal, or they don’t come back at all.”

  ~ * ~

  Friday, June 10

  Oval Office, The White House

  The discussion was getting heated. Jackie Rubin had just summarized a set of scenario outputs for the Marion group. While the negotiations in Oslo had been getting under way, she had pulled a group together to work intensively modeling the economic impact of different emissions reduction options, among which were the ones Pete Lisle and Oliver Wu might be taking back to Oslo. Joe Benton listened to the discussion in the group and made notes on a pad. When about twenty minutes had gone by, he called the discussion to a halt.

  “Let’s get back to what we’re trying to do here,” he said. “We have four objectives.” He read from the notes he had made. “One, to determine the level of global cut we need to get. Two, to figure out how we apportion shares between us and China, in the first instance, on the understanding that other major emitters will follow suit. Three, to put that into a formula we can sell to the Chinese. Four, to figure out the negotiating strategy so we end up with that formula.” He looked around. “Have I missed anything? Okay, let’s start at the top. What level of cut are we looking for? From what I understand, Jackie, at a minimum we need twelve percent over the next five years, and another twelve percent in the five years after that. Do we agree that’s right? Is it enough? Is it more than we need?”

  “Mr. President, as I’ve said before, this is a judgment,” said Rubin. “If you’re prepared to accept economic ruin, you can stop environmental degradation in its tracks. But if we’re looking at something that’s reasonable as a way of balancing action on emissions with the economic implications— and that’s the balance we’ve got to get right—our initial analysis showed that the optimal Relocation ceiling is in the region of thirty-five million people here in the U.S., so that’s what we worked from. To keep the Relocation to that level, those are the kind of emissions cuts we’re looking at. As I said, the exact numbers, as close as we can say, are 12.3 percent in the first five years and 11.4 in the following five.”

  “Let’s stay with twelve and twelve,” said Benton. “It’s easy, it’s clean. Can we agree on that?”

  Rubin nodded. The others were silent.

  “Jackie, what if you change the Relocation ceiling?” asked John Eales.

  “To get Relocation down significantly below thirty-five million will take emissions cuts that inflict extraordinary economic damage. And if you go the other way, because of the geography of the sea levels and the demographics, until you’re prepared to accept a sixty or seventy million Relocation, the level of cuts doesn’t come down much. Twelve and twelve is the optimal level.” Rubin turned back to Benton. “Mr. President, there’s an important assumption here that the cut will be shared globally in proportion to current emissions. If the United States has to take a bigger hit, the numbers are different. You also talked about exempting the poorest twenty percent of the world’s population from any cuts. You should be aware that adds another half percent to the rest of us. It’s not much, but it’s something.”

  “So what if we have to end up taking proportionately bigger cuts because of our starting position as the highest emitter on a per capita basis?” asked Benton.

  “We modeled a whole bunch of these scenarios. For example, say we agree to take a fifty percent greater cut proportionately, we couldn’t realistically do it in the timescale. So if the rest of the world made their cuts in two equal five-year lots, we’d have to go roughly sixty percent of our allocation in the ten years and the other forty percent over another eight.”

  “So we trade that,” said Eales. “Timing for volume.”

  “We could. I don’t think that’s something we can decide now.” Rubin glanced at Pete Lisle and Oliver Wu, who were back in Washington and sitting in on the meeting. “That’s something for the negotiators to bear in mind.”

  “All right,” said Benton. “We’re saying twelve and twelve globally. The half percent issue isn’t material, so let’s leave it off the table for now.” The president looked back at his pad. Working out the total level of required cuts was the easy part. It was figuring out how to divide it up and sell it to the Chinese that worried him. “Let’s say we take this to the other side as it is. What do the Chinese say to it?”

  “No,” said Alan Ball.

  “Reason?”

  “It’s absolute numbers. Like Jackie said, these cuts are based on the absolute volume of each country’s emissions. First thing they’re going to say, look at our populations. We’ll cut emissions, but we’ll do it on a per capita basis.”

  “What about on a GDP basis?”

  “Their GDP’s higher than ours so that makes it just as bad for them.”

  “It’s not quite as bad for them,” said Rubin, “because proportionately their share of global GDP is lower than their share of emissions. But yes, if they have to use absolute GDP numbers, it’s still higher than ours, so they still won’t like it. If I was them, I’d go per capita, like Alan says.”

  “And that argument lets India and Brazil and Russia off the hook right there,” said Larry Olsen. “It catches us, Japan, and the EuroCore. We can’t admit that argument.”

  “So what are you going to do?” demanded Ball. “Put your hands over your ears?”

  “It’s no-win for us.”

  “Why do they care?”

  “Hold on,” said the president. Hoffman was trying to break into the exchange between Olsen and Ball. “Ben, what did you want to say?”

  “What’s the principle here?” asked Hoffman. “If we have to agree on something, there has to be a principle of equity.”

  “Sure,” replied Ball. “Their principle’s going to be everyone should have the same standard of living. Every person. There it is right there, GDP per capita. That’s the measure. That’s a tough argument for a democracy like us to rebut. Ever
y person’s life is worth as much as everyone else’s, right? Are you going to say our citizens have a right to a higher standing of living than they do?”

  “We have a higher standard of living than they do,” said Olsen. “They have to take that into account.”

  “Exactly. Here’s an opportunity to address that imbalance.”

  The president glanced at Alan Ball. He was taking almost too much pleasure, Joe Benton thought, in playing devil’s advocate.

  “What about an equality of pain?” said John Eales. “We take away from each country equally.”

  “Per capita?”

  “Maybe.”

  “In percentage or absolute terms?”

  “We could run that,” said Rubin.

  Alan Ball shrugged. “Same situation. You start with less per capita, you should have less taken away. Look, we’ve got a fundamental problem here. It’s a long time since the United States was either the world’s biggest emitter or its biggest economy in absolute terms, but we’re still the biggest per capita on both criteria. So you can look at what we’ve got left or what you take away, but either way, on a per capita basis, we’re going to hurt the most.”

  “Which is why you don’t admit the argument in the first place,” said Olsen.

  “Which is why the other side says thank you very much and walks away.”

  “Jackie,” said the president, “what does it look like for us if we do it on GDP per capita? Have you looked at that?”

  “We’re in the stone age.” Rubin consulted the handheld in which the models were stored. “We modeled a scenario where we take total global emissions down twelve and twelve percent, roughly, over the next ten years—which is what we’ve been talking about—but distributed in proportion to the GDP per capita for each country.”

  “Which means we take the biggest hit?”

  “Correct. Followed by the EuroCore.”

  “And?”

  Jackie tapped a couple of times on the handheld. “We contract eight to nine percent year on year for at least four years. We won’t be growing again for six.”

  The president made notes on his pad. “And what if we weight it based on absolute GDP?”

  “China takes the biggest hit—because they’ve got the biggest GDP— followed by us, followed by the EuroCore, followed by Japan, then India.”

  “And the numbers in that case?”

  “This is pretty close to the unweighted scenario I outlined at the beginning. We shrink thirteen percent total over three years, then we’re static for two, then we start growing again.”

  “China?”

  “For various reasons, its dip is slightly shallower than ours, but longer.”

  “How long?”

  “Eight years before they grow.”

  Joe Benton made a note, then looked at Oliver Wu. “You think the party would survive that?”

  “The question, sir, is whether the party thinks it would survive it. The party’s source of political legitimacy is prosperity. What happens if the Chinese economy not only doesn’t grow, but contracts? The party might be able to weather a year or two, but I don’t think they believe they’d be able to survive the kind of contraction we’re talking about, not one that goes on for eight years.”

  “So they won’t risk it?”

  “If I was Wen—unless I was incredibly motivated to deal with this issue and I was prepared to gamble everything in the attempt, including the party’s actual existence—I wouldn’t. And frankly, Mr. President, nothing in Wen’s record suggests he’d be thinking like that.”

  “Except the note he sent me,” said Benton.

  “Whatever happens,” said Eales, “they have to face up to this.”

  “But they don’t have to agree to the cuts we demand,” said Wu.

  “What happens to them if it goes on a GDP per capita basis?” asked the President.

  Jackie Rubin worked at her handheld. “They shrink only four percent over two years, then they’re growing again in three.”

  “Well, there you go,” said Alan Ball. “That’s it right there. Dr. Wu just told us they can live with that, and they have a principle of equity that gives it to them. That’s what they’ll go for. I bet they’re doing the same calculations right now.”

  Jackie Rubin shook her head. “In that scenario, six years out, we’re not much more than two thirds of the economy we are today. That’s not possible, Mr. President.”

  “Agreed,” said Benton. “Our society would tear itself apart. That’s not a principle of equity we can live with.”

  There was silence. The faces around the president were grim.

  “Mr. President? May I?”

  It was Pete Lisle. Benton nodded.

  “I’d like to put this in a slightly different way. With all due respect to Mr. Hoffman, this isn’t about equity. Not in an objective sense, anyway. In a negotiation, equity is subjective. It’s really about what each side, for their own reasons, is prepared to take. When I’m approaching a negotiation over an extremely painful issue—when the outcome for each side is inevitably going to involve pain—there are two things I’m looking for.” Pete Lisle paused. “I don’t mean to be lecturing, so I’ll stop if I’m out of order.”

  “No, go ahead Mr. Lisle. I’d like to hear what you have to say.”

  “Two things. One, both parties have to believe they have to do a deal. Because no matter what the deal is, both of them are going to hurt. So if even one of them believes they don’t absolutely have to do a deal—that they might do better later if they hold on now—they won’t. The second thing, they have to be able to sell it to their base, by which I mean their support base that’s going to let them ratify the deal or make sure they don’t get voted out of office or not get overthrown in a coup or whatever’s relevant in the political context. They have to be able to sell it so it looks like a success to their base. When it’s a matter of pain on both sides, that success often means making it look like the other side is taking more pain than it was prepared to. In other words, making yourself look tough, so even though you’re taking pain, it looks like you got away with less pain to yourself than anyone else would have managed.”

  “What do you think the Chinese need to be able to sell the deal to their base?” asked John Eales.

  “Mr. Eales, I’m not a China expert so I’m not best qualified to say. That’s why we’ve got Oliver here, to tell me stuff like that. But one thing I will say. At this stage, from what I’m hearing, I’m not even sure about the first thing, that the other side is convinced—really, truly believes—that they have to do a deal.”

  Oliver Wu nodded.

  “I guess we find out when we see the response to the data,” said Eales.

  “I agree,” said Lisle. “That’ll be the best indication. Our argument, what we’re saying, is that the data says we all have to do something. If they don’t buy that—or if they think that, even if they agree they have to do something, they can’t sell it to their base—we’re not going to get anywhere.”

  “And if they do accept it?” said the president.

  “We may have to give them enough so they can take the deal to their base and make it look like they beat us up. We may have to be prepared to hear them say that.”

  “We can’t give them parity of reduction on a per capita basis,” said the president. “We can’t live with that.”

  “That’s clear. That’s something they’re going to need to understand. There’s another principle that’s relevant in a negotiation—at some point, each side needs to understand what’s genuinely impossible for the other. They need to know what’s negotiable and what isn’t, otherwise they’ll keep pushing on everything. The only question is when you let them know. In this case, I’d be inclined to let them know early.”

  “We could give them a little,” said Eales. “We start with a case for cuts on an absolute basis, they’re going to come back with a case for cuts on a per capita basis, so we give a little, we find some formula that gives
them a percentage point or two. They can represent that as a victory over us, they forced us to concede.”

  “True,” said Lisle. “On the other hand, their opponents can represent it as defeat. Always remember what it looks like from the other side. Let’s say we go twenty-five percent of the way towards their position—their opponents can say their own side came seventy-five percent of the way to our position.”

  “So you’re saying we have to go more than fifty percent towards them?” said the president.