By now, many of you have read about the turmoil surrounding World Bank President David Malpass. (Cheat here if he doesn’t have a sheet.)
The truth is that it’s just the tip of the iceberg.
There is growing dissatisfaction with the very rules of the global financial system represented by the World Bank. Climate-vulnerable countries accuse these rules of being trapped in a vicious cycle of debt as they try to recover from the dangers of climate change that they did not create.
According to the International Monetary Fund, 60% of low-income countries Default or at risk of defaultmeans that your debt service obligations are so high that you are either delinquent or seeking to renegotiate your payment schedule.
Last week, I heard some provocative calls for change on the sidelines of the United Nations General Assembly. He expects to hear more as we head into COP27, the global climate negotiations in Egypt in November. Key Points of Debate: Who Will Pay the Price for Climate Change?
complete disaster
Consider the case of Antigua and Barbuda. One night in September 2017, a hurricane with gusts of 185 mph (Ian made landfall in Cuba on Tuesday morning with winds of about 125 mph) devastated Barbuda. I had to rebuild everything. road. House. Hotel. Its main source of income is tourism.
Price tag: $220 million. “It’s almost 100% of our income,” Prime Minister Gaston Browne told me in an interview on Friday.
At the time, Brown sought funding from the World Bank to build a new road, but was told his country was ineligible for long-term, low-interest loans. Like many small countries in the Caribbean, Antigua and Barbuda’s per capita income is middle-income. According to Brown, the terms of the loan offered by the bank were out of reach.
look beyond the income
These standards are obsolete in the age of climate change, argued Brown. International lenders need to consider the many vulnerabilities of countries like him. For example, how vulnerable are you to extreme weather and how much debt you were in before the extreme weather hit.
Especially after a hurricane essentially shut down the economy. “When our economy is ravaged by hurricanes, we have to go into debt to recover,” Brown said. “That means we don’t have a lot of resources for adaptation.”
His country is part of an early effort to create a new index designed to measure various vulnerabilities. He said he hoped to expand funding to countries “justifiably needed but excluded”.
It remains to be seen whether development banks and donors will agree to the new indicators.
new rule
United Nations Secretary-General Antonio Guterres agreed with this ideaOn Friday, in a speech calling itself a group of 77+ China, a coalition of mostly low-income countries, he told the International Development Bank not just about income, but “a real picture of the vulnerabilities facing developing countries.” I asked him to consider his point of view. Popularization of low-interest loans.
He went further and called for a review of a set of international rules drawn up at a time when most African countries and much of Asia were still colonized. “We need to reform the morally bankrupt global financial system,” Guterres said. “This system was created by rich countries to benefit them.”
Barbados Prime Minister Mia Mottley called for a series of reforms to the rules of the International Monetary Fund and the World Bank. She offered low interest loans for infrastructure. This will help countries become more resilient to climate change shocks and stop the interest surcharges that large borrowers currently have to pay when they need additional funds.
For Antigua and Barbuda’s Prime Minister Brown, being disqualified for low-interest loans means he will have to turn to commercial banks and pay higher interest rates that are even harder to repay. “It creates a very unfair position,” he said.
Important news from The Times
Stronger and Faster: Hurricanes are intensifying unexpectedly and rapidly as the earth warms. This is a problem for safety personnel who have less time to assess threats.
Addressing inequalities: EPA has created an Office of Environmental Justice to address the disproportionate harm caused by pollution and climate change in communities of color.
“Climate-friendly” agriculture: The Biden administration has pledged $20 billion to help farmers adopt less harmful technologies.
Protect New York: The Army Corps of Engineers has proposed a $52 billion project to install a mobile breakwater system to protect cities from storm surges.
Chinese car market: More electric vehicles are expected to be sold in the country this year than in the rest of the world combined.
High seas depletion: China’s fishing fleet, the world’s largest, operates largely unregulated on the high seas. But its impact is felt across the ocean.
Wildfire aftermath: A routine burn set by the Forest Service has turned into a massive fire in New Mexico. The ash is now causing a drinking water crisis.
Before You Go: How to Save a Whale from a Ship Collision
So far this year, at least four whales have been killed by ships around San Francisco Bay. Scientists are now using artificial intelligence to help. The system predicts where whales are likely to be and listens to whale songs to warn the ship when it needs to slow down. It’s been successful elsewhere.
Thank you for being a subscriber. I will be back on Friday.
Manuela Andreoni, Claire O’Neill and Douglas Alteen contributed to Climate Forward. View past newsletters here.