Global finance and climate change – Countdown to COP28

A September conference, organised by the Commonwealth Foundation, became a Commonwealth starting pistol in the countdown to COP28.

The 12 September ‘Global Finance for people and planet’ discussion was part of the Foundation’s Critical Conversations series. The over-subscribed session brought together civil society groups, climate specialists and activists from across the planet.

The panel started with comments from Avinash Persaud, billed as the “architect” of the Bridgetown Initiative, which has become the go-to proposal for climate activists. Pioneered by Barbados Prime Minister Mia Mottley, the Initiative has been providing answers, palatable to rich, poor and middle-income countries, for forging a pathway to funding climate debt.

Mr Persaud, who is the special envoy to Prime Minister Mottley, told the conference that there is “no silver bullet” for debt issues. On his Initiative’s proposal to restructure the world’s global financial institutions, he outlined the core message of the plan to make institutions, including the World Bank and the International Monetary Fund (IMF), fit for purpose for today’s needs.

“Let’s make them better … make sure they make less mistakes than in the past,” he said.

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“Start again”?

Other panellists were Dr Grieve Chelwa, Associate Professor of Political Economy at the Africa Institute, Heidi Chow, the Executive Director of Debt Justice (formerly known as Jubilee Debt Campaign), and the former Principal Director of Climate Change for the Jamaican government, Una May Gordon. The Chair was Heba Aly of The New Humanitarian (formerly IRIN News).

Dr Chelwa argued against the Bridgetown Initiative, making the case for tearing down institutions built in the Bretton Woods era.

“We have to ask ourselves,” Dr Chelwa said,” Do we start again?”

Heidi Chow said that such institutions had been “re-engineered” in the 1980s, following a period of “bad lending” in the 70s. This had led to the current situation where 54 countries are in debt crisis at the highest debt levels in 25 years. She added that this “unsustainable debt” was undermining the ability of countries to fund development.

Jamaica’s Una May Gordon said that her country had been forced to borrow in a cyclical way as it found itself hit by storms, drought and annual events which had led to a “spiralling” circle of debt. She said that Jamaica had managed to restructure its debt to become a “good story”, but debt currently stood at 80% of GDP, holding back spending on national development and needs.

A better IMF

In a lively panel session, speakers put forward their cases either for improving existing financial institutions or tearing them down to start again. The virtual chatroom was equally lively with representatives from civil society groups across the Commonwealth sharing links, views and solutions on tackling climate-related debt.

Dr Grieve said that International Monetary Fund (IMF) lending conditions had hurt parts of Africa.

“Austerity costs lives,” he said.

Avinash Persaud argued with the idea of starting from scratch and proposed the aim to “get a better IMF than we have today”. He said that the government of Barbados had negotiated new clauses into restructured debt arrangements. He pushed for changing repayments rather than changing the debt.

Heidi Chow pointed out that such debt clauses would work for future contracts but might not help with existing debts. She said that the G20 Common Framework also needed a mechanism to compel private creditors to discuss debt restructuring as much of the global discussion had been around government lenders.

Arguing against the restructuring case, Dr Grieve said about the Bridgetown Initiative aim: “We’ll have this fantastic cathedral at the end of the day … but, at the end of the day …. people are still suffering”.

Debtors Club meets Paris Club

One of the early Q&A suggestions came from Owen Tudor of the Commonwealth Trade Union Group, CTUG. The recommendation for a club of debtors to match the Paris Club of creditor nations led to much discussion from panellists and members of the virtual audience on the need to pull together countries in debt or heading towards debt to discuss solutions on their own terms.

One questioner suggested the merging of global debates over climate debt, climate reparations and the ongoing debate over historical wrongs, including slavery reparations, moving towards agreement over a climate debt vulnerability index.

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Some comments in the virtual chatroom and in the Q&A session formed around the need to tackle corruption in the national public and private institutions of countries receiving loans and grants, the importance of countries in the Global North committing to their promised funds and a role for Commonwealth finance ministers to lobby for grant-based financing.

Dr Grieve said: “There’s power there in organising …. therein lies a strength for the Commonwealth”. He added that the formation of a “borrowers’ club” might be useful. “There’s power in numbers,” he added.

Some argued for a Commonwealth Development Bank.

Una May Gordon pulled together a number of the strands, suggesting that the world needed a “one track discussion”, bringing together finance, development and people. She said that meaningful progress on the world’s future financial architecture would need to be a conversation involving the people of the Commonwealth, not just the finance ministers, the money people and journalists.

Avinash Persaud responded to the reparations/ climate debt concept, saying that the Global South could not force reparations. He said that some rich countries were not even funding their own health systems, adding that there was no point following the “notion that they owe us … they are not going to send us any money”.

On the idea of forming a borrowers’ club, he said that Bridgetown would be happy to host a discussion on this.

The Critical Conversation continues on the Commonwealth Foundation’s website and Commonwealth Finance Ministers meet from 9-10 October.  COP28 takes place in November.

Debbie Ransome is the website editor for the Commonwealth Round Table.

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