‘Some Sort of Reparations’Cannot Be Out of the Question
COP27 has exposed the hypocrisy of world leaders who refuse to acknowledge it is incumbent on wealthier nations to invest in worldwide climate adaptation, writes Thomas Perrett
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At this year’s COP27 UN climate change conference in Egypt, former Prime Minister Boris Johnson suggested that the UK could not afford to offer financial support to low income countries affected by climate change.
“Per capita, people in the UK put a lot of carbon in the atmosphere… but what we cannot do I’m afraid is make up for that with some sort of reparations, we simply do not have the financial resources,” he said.
After a turbulent year which has seen an upsurge in climate change, less developed countries have used COP27 to call for increased climate finance commitments from wealthier countries. Mitigation and adaptation are likely to become increasingly important elements of the fight against ecological breakdown, as the UN has warned that “no credible pathway to 1.5°C” is currently in place.
The issue of ‘loss and damage’ – the costs borne by predominantly Global South countries following extreme weather events and rising sea levels – has come to the forefront at COP27.
The Indian delegation has reportedly called for Western countries to play a leading role in mobilising funds for climate adaptation, saying that “historical cumulative emissions should be the guiding principle of further negotiations/discussions and not the current emissions levels”.
In June, a report by Vulnerable Twenty – an organisation of climate ministers representing countries most affected by climate change – estimated the combined climate-linked losses of 55 countries over the past two decades at around $525 billion or about 20% of their collective GDP. According to some sources, such losses could reach $580 billion a year by 2030.
Countries in the Global South are not only more likely to suffer from the physical impact of climate change, but also from economic and political barriers which prevent them from accessing the crucial infrastructure required to keep catastrophic extreme weather at bay.
Predatory loans and structural adjustment programmes implemented by multinational financial institutions often compel developing nations to adopt extractive industries and production methods to pay off debts. The privatisation and liberalisation of these countries’ economies has also prevented them from achieving economic self-sufficiency.
The aftermath of the 2008 financial crash saw an upsurge in financiers lending to Global South countries at high interest rates, as poorer nations were encouraged to take on more debt to facilitate economic development.
Between 2013 and 2020, the number of countries which were – according to the International Monetary Fund – unable to pay their debts had risen from 17 to 39, while the number of countries at low risk of defaulting fell from 21 to just seven. Debt payments increased by 120% between 2010 and 2021, with almost half of all external debt and interest payment owed by low income countries to private lenders, notorious for charging higher interest rates and exacting punitive measures against governments unable to repay loans.
The vulnerability of poorer countries to predatory financial institutions has since been exacerbated by falling commodity prices, an increase in extreme weather incidents and the impact of the pandemic – all of which have lessened government revenues, further drowning developing nations in debt. It has been estimated that, over the next 10 years, countries in Sub-Saharan Africa will be compelled to take on $996 billion in debt – a 50% increase on current debt levels as a percentage of GDP.
These loans significantly weaken poorer countries’ ability to meet international climate obligations, as countries in the Global South are currently spending five times more on debt repayments than on climate mitigation measures. In November 2020, Zambia defaulted on debts it owed to private lenders. Saddled with interest rates as high as 9% from BlackRock and other bondholders who have refused to cancel the debt, Zambia faces the prospect of spending four times more on debt repayments than on addressing climate change this decade.
The debt relief frameworks introduced by the G20 often fail to protect vulnerable countries – neither the Debt Service Suspension Initiative (DSSI) nor the Common Framework for Debt Treatments, both introduced in 2020, took the necessarily punitive action to compel private creditors to participate. As a result, the DSSI was ineffective, with only 23% of debt payments for participating countries suspended and only 0.2% of the funds owed to private creditors written-off. Commercial creditors, able to take small countries to court and potentially enacting crippling pay-outs, were able to continue profiting from substantial debt repayments.
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Predatory loans from Western financial institutions have also compelled developing nations to implement ecologically unsustainable production methods to repay their debts.
A 2022 agreement between the IMF and Argentina suggested that the development of fracking in the Vaca Muerta oil and gas field in Northern Patagonia could remedy the country’s economic problems. Former Argentine Economic Minister Martin Guzman argued that exports could reach $15 billion by 2027 if the country attracted the necessary investment to construct gas pipelines.
The substantial investments required to finance fossil fuel projects often exacerbates developing countries’ economic problems, creating a self-perpetuating cycle of dependency on oil and gas.
In Mozambique, the discovery of natural gas reserves in 2010 led to the development of a Liquefied Natural Gas project backed by the IMF, for which energy giant Total Energies provided around $15 billion. However, onshore and offshore gas projects in Mozambique will increase emissions by an estimated 8% and have yielded few economic benefits for the country. According to Friends of the Earth – which earlier this year sued the UK Government over its decision to pledge more than £9 billion in funding for the project – 550 families had been displaced by corporate land grabs, while human rights abuses rapidly escalated with 700,000 civilians being displaced.
Calls from non-Western countries for wealthier nations to assume greater responsibility for addressing its role in escalating the climate crisis have often been met with derision by Western politicians and pundits, who maintain that China and India are the most egregious polluters based on current statistics – absolving the West of its role in providing climate finance.
Writing recently in the Telegraph, columnist Allison Pearson described loss and damage claims as “absurd”, arguing that “on the list of ‘developing countries’ with their hand out is China. The country which has emitted more carbon dioxide over the past eight years than the UK has since the start of the Industrial Revolution”.
The UN Framework Convention on Climate Change determines each nation’s responsibility for climate abatement by calculating the emissions generated by productive activity within a country’s borders. Despite the fact that today’s developed countries are responsible for almost 80% of cumulative greenhouse gas emissions between 1850 and 2011, it is China and India – with per capita emissions lower than the United States, Saudi Arabia and Australia – which are blamed for the recent rise in global emissions.
But this metric fails to acknowledge the recent shift in trade patterns which has enabled Britain and the US to export productive industries overseas, becoming reliant on financialisation and overvalued currencies while importing goods from China. Yet the majority of China’s emissions have been released after its entry into the World Trade Organisation, as the Working Group III on Mitigation at the IPCC’s Sixth Annual Assessment acknowledged that 40% of developing countries’ emissions represent goods exported for consumption by more affluent nations.
When exported emissions are taken into account, a different picture emerges which indicates that developing nations’ emissions must be understood as a consequence of their participation in a global economic order predicated on compound growth and debt repayment. In 2015, for instance, US per capita emissions based on ‘final demand’ were three times those of China.
COP27 has exposed the hypocrisy of many world leaders who refuse to acknowledge that it is incumbent on wealthier nations to mobilise the investment necessary for worldwide climate adaptation. While developing countries, producing goods for primarily Western markets, are blamed for an upsurge in greenhouse gas emissions, many such countries remain mired in an economic system which encourages fossil fuel usage and the development of ecologically harmful industries to pay back loans to financial institutions.
This cycle of dependency, which prevents developing countries from addressing the climate crisis, is still yet to be broken.