Countries of the Global South refuse to host the loss and damage fund at the World Bank

Marta Montojo

Madrid, Nov 11 (EFE).- After eleven months of meetings, the Transitional Committee that was launched to shape the new loss and damage fund - which the countries agreed to create at COP27 - has decided that said fund will be housed provisionally at the World Bank, a decision criticized by the countries of the Global South and by the experts consulted by EFE.

Meeting in Abu Dhabi, the members of the committee - mostly representatives of developing countries, although there are also diplomats from great powers such as the United States, China, Canada, France, Germany or Japan, among others - dispatched the weekend one of the most controversial points in the negotiation on the new loss and damage fund: where to house it.

The decision concluded that the World Bank will host, at least for the next four years, this fund with which the international community aspires to help pay the “climate bill” to the most vulnerable countries to the effects of global warming, which are at the same time the States that have contributed the least to this phenomenon.

In any case, the final decision must be endorsed at COP28, the United Nations climate summit that will take place in December in Dubai, and where the parties to the UN Framework Convention on Climate Change will resume negotiations to agree on the way to tackle the climate crisis.

The World Bank was not the option chosen by the countries of the Global South, which had been demanding this mechanism for three decades so that large emitters could bear the economic costs caused by phenomena associated with climate change, a request that concluded at the Sharm summit on Sheikh, in December 2022, with the commitment to create a new fund.

But, as the director of the Costa Rican NGO La Ruta del Clima, Adrián Martínez Blanco, reminds EFE, among the requirements of this historic demand was that the fund remain outside the World Bank, that it integrate the principle of “common but differentiated responsibilities.” , and that “it would not create more debt with loans even if they were concessional.”

Thus, for Martínez Blanco the decision “does not bring us closer to justice,” since there is no differentiation of historical responsibilities in the emission of greenhouse gases and he also warns that “more debt can be created.”

"What we see is that the developed countries that already have the obligation have never contributed what they voluntarily offer, much less what they are legally entitled to," laments the Costa Rican, who has been an observer in the Transitional Committee processes, and does not understand how the representatives of the Global South have been able to give in like this in the negotiations.

“We reached four meetings, the process was not followed in the fourth meeting, this extraordinary meeting was held in the fifth meeting, and perhaps they, in good faith, said, well, if what the developed countries want is the World Bank, Let's give it with conditions, but after offering that they received nothing in return other than what they had already been offered," he alleges.

Countries in the Global South have doubts about access, the type of financing provided by the World Bank and the high costs of administrative fees, says E3G climate diplomacy specialist Tom Evans, who has also closely followed the international community's discussions on loss and damage.

This is also expressed by Juan Pablo Olsson from the Debt x Climate movement, who fears that “if the agenda of financial colonialism carried out by the International Monetary Fund and the World Bank deepens in the countries of the Global South, these regions will be condemned to scenarios that will not be able to have resources for mitigation and adaptation, and will not be able to guarantee the quality of life and human rights of a large part of its inhabitants.”

In parallel, Evans highlights, there is another controversial issue that divides countries in relation to the fund: who should contribute.

From the European Union, as well as the United States, the demand has always been to expand the donor base, so that it includes countries that 30 years ago were considered "developing" but that now have the financial capacity to contribute money. , like China.

On the other hand, countries will talk at COP28 about unlocking “innovative sources” of financing, such as tax revenues from the fossil fuel industry.

For Evans, the important thing is to clarify "where the money will come from to ensure that the loss and damage fund is not emptied; in the current situation, this is not entirely clear because we have not seen that countries have committed to filling the fund. background".