"I wish to commend Your Excellency for Britain's leadership on climate change issues and your Government's unqualified support for the success of the Bali conference.  Ambassador Humfrey and his capable staff also worked closely with Indonesian officials, including with my office."
His Excellency Dr Susilo Bambang Yudhoyono, President of the Republic of Indonesia in his letter of 19 December 2007 to Prime Minister Gordon Brown

The challenges presented by globalisation to a prosperous, just and secure world became ever more apparent in 2007. Global financial turmoil over the summer reminded us that integration in the global economy creates risks as well as benefits. The Inter-governmental Panel on Climate Change produced the most authoritative report yet on the science of climate change, concluding that its effects are likely to be even greater than previously thought. High oil prices demonstrate the impact that demand from emerging economies is having on the global economy. And continued openness to global trade and investment is increasingly challenged by rising protectionism.

Building a low carbon, high growth global economy – based on achieving climate and energy security, securing growth and reducing poverty – is therefore a major challenge for the UK. The FCO’s global network is uniquely placed to make a difference.

Lord Malloch-Brown
Minister for Africa, Asia and the UN

Climate security

2007 was a turning point for climate change. Aided by the publication of Lord Stern’s Review of the Economics of Climate Change  in 2006, worldwide public awareness of the urgency of the challenge has grown rapidly. Climate change is now high up the domestic and international political agenda. The challenge ahead is enormous because the global economy needs to be redirected towards a low carbon growth future. This will only be achieved through co-operation across governments, business and civil society.

Throughout the year, the FCO network used its influence to build new working relationships with key groups that have a role in making this change happen. The network is essential for its knowledge, listening and engagement skills. Ministerial and governmental interventions can influence debate. But businesses, for example, can often be a more powerful voice for the economic opportunities of reducing carbon emissions, and the risks of delay. The report Climate Change, Everyone’s Business, published by the Confederation of British Industry in November 2007, is one such example.

Since the publication of his review, the FCO network has worked with Lord Stern and his team to spread the report’s key findings to over 50 countries. Using the Global Opportunities Fund (GOF), the FCO has worked with DEFRA and DfID to broaden and deepen evidence on the economic impacts of climate change regionally and nationally, including in Brazil, Mexico and South-East Asia.

In April 2007 then Foreign Secretary, Margaret Beckett, called the first ever UN Security Council debate on the security implications of climate change. This was the best attended themed debate ever in the Security Council, and increased understanding that climate change is a threat to security as well as prosperity. It helped pave the way for the UN Secretary General, Ban Ki Moon, to call a successful UN high-level meeting in New York in September 2007, attended by many world leaders. The FCO mission in New York has provided strong support to the Secretary General, as he brings together world leaders and promotes a stronger collective response from UN agencies.

In December 2007 the UK delegation at Bali, led by Hilary Benn, played a central role in launching comprehensive negotiations on a post-2012  framework to reduce greenhouse gas emissions and these negotiations will be concluded by 2009. This significant success was the result of a year of intensive public and private diplomacy by the FCO network, working hand-in-hand with partners across Government, and it involved close co-operation between the British Embassy in Jakarta and the Indonesian presidency. An FCO official who liaised with the Indonesian authorities and a DEFRA official on secondment to the Indonesian environment ministry both played important roles in building Indonesian capacity and improving communication with key countries.

Energy security

At a time of increasing uncertainty about the global security of energy supplies, the UK is now having to import gas and oil to meet demand as it no longer produces enough for its needs. Global oil and gas reserves are increasingly concentrated in relatively unstable regions. ‘Resource nationalism’ is rising, which means that there is increased state intervention in these areas and this undermines equal access to energy resources. Competition for resources is also increasing as global demand for energy grows rapidly as a result of strong economic growth in emerging economies. The FCO works closely with BERR, other government departments and our network of energy attachés in our overseas posts to manage the geopolitical risks.

The Energy White Paper published in May 2007 set out the Government’s international energy and climate change strategy, which is designed to protect the security of our energy supplies and speed up the change to a low-carbon global economy. The FCO played a key role in the publication of this paper, working closely with BERR and other government departments.

The FCO worked for improved coverage and capacity on global energy issues in the EU, the G8 and the International Energy Agency (IEA). We promoted more open global dialogue between producer and consumer countries through these institutions.

Throughout the year, the FCO continued to strengthen EU energy policy, and supported moves towards removing restrictions within the European market and looking for new suppliers for the EU’s energy supplies. In September 2007 the European Commission published proposals on freeing up the energy market, which is a key part of the climate and energy package agreed by European leaders at the Spring European Council in March 2007. The FCO worked closely with the European Commission and other member states to encourage the development and maintenance of a coherent EU external energy policy.

The FCO supported the IEA’s efforts to reach out to non-member countries, such as China and India. Through the Global Opportunities Fund the FCO is funding:

• projects to help increase energy efficiency in Russia
• training programmes for statisticians to measure energy efficiency indicators more effectively and
• pilot projects using energy-efficient methods to generate power.

Sustainable growth

Throughout the year, the FCO supported economic reforms in key emerging and developing economies to promote stable and sustainable growth globally. For example, throughout 2007 the FCO worked closely with key partners across the Chinese Government and the private sector to support financial services and broader economic reforms.  Our FCO posts in China supported this process by establishing and strengthening links with key Chinese counterparts. This will result in the first high-level UK–China economic and financial dialogue to be headed by the UK Chancellor later in 2008.

The FCO, working with HM Treasury and others, held successful high-level economic dialogues with Brazil, India and Mexico covering a wide variety of issues of common interest. These included: trade and investment, climate change and money laundering. In Nigeria, the FCO supported new federal laws promoting the responsible handling of monetary and tax issues, sound public procurement (buying of goods and services) and the Extractive Industries Transparency Initiative. In Brazil, FCO-GOF (Global Opportunities Fund) projects focused on reducing barriers to doing business, improving revenue collection and setting up public–private partnerships.

Working closely with colleagues in HM Treasury, DfID and BERR, the FCO continued to recommend the benefits of open markets for global trade and investment, The FCO supported broader government efforts to reach a successful conclusion to the Doha Development Agenda. The pamphlet Global Europe, published in October 2007, has joint forewords by the Prime Minister, Gordon Brown, and the Foreign Secretary, David Miliband, and it sets the agenda for the future direction of an outward-facing EU focused on the concerns of its citizens. The declaration on globalisation which was adopted by the European Council in December 2007 supported the UK approach. Preventing a rise in protectionism will continue to be a key theme for 2008/09.

The FCO led the UK’s co-ordination activities for annual G8 summits. Our posts played an important role in preparing the way for successful outcomes in line with UK objectives during Germany’s presidency of the G8 in 2007, notably on climate change and Africa. The German summit  also launched the Heiligendamm Process, which is a structured dialogue between the G8 and the group of five major emerging economies (Brazil, China, India, Mexico and South Africa). This focused on development, investment, innovation and energy efficiency. Climate change and development will be the main themes of Japan’s G8 presidency in 2008.

The Organisation for Economic Co-operation and Development (OECD) agreed to open talks with Chile, Estonia, Israel, Russia and Slovenia about the possibility of them joining the OECD. It also agreed to increase its engagement with Brazil, China, India, Indonesia and South Africa. The FCO supports the OECD’s closer engagement with these countries, including making clear the benefits to host governments of working more closely with OECD technical groups and committees.

In July 2007 the Prime Minister, Gordon Brown, launched the Millennium Development Goal (MDG) ‘Call to Action’. The FCO, particularly overseas posts, played a key role in building support for the Call to Action from world political and business leaders. By the end of March 2008 a further 12 countries had joined the original 14 government and 21 business who had signed up to the MDG in pressing for accelerated action to meet the MDG commitments. There was also support from Commonwealth partners at the Commonwealth Heads of Government Meeting in Kampala in November 2007.