The Almighty Buck

An anonymous reader quotes a report from the Recent York Times: Twenty countries most vulnerable to climate change are considering halting their repayment of $685 billion in collective debt, loans that they are saying are an “injustice,” Mohamad Nasheed, the previous president of the Maldives, said on Friday. When the World Bank and the International Monetary Fund conclude their annual meetings in Washington on Sunday, Mr. Nasheed said he would tell officials that the nations were weighing whether to stop payments on their debts. The finance ministers are calling as a substitute for a debt-for-nature swap, wherein a part of a nation’s debt is forgiven and invested in conservation. “We live not only on borrowed money but on borrowed time,” said Mr. Nasheed, who brought global attention to his sinking archipelago nation within the Indian Ocean by holding an underwater cabinet meeting in 2009. “We’re under threat, and we should always collectively discover a way out of it.” Mr. Nasheed said poor nations were locked in a Sisyphean trap: they need to borrow money to ward off rising seas and storms — only to see disasters made worse by climate change destroy the improvements they make. However the debt stays, and sometimes countries are left to borrow once more.

The debt discussions on the I.M.F. and World Bank meetings come as diplomats from nearly 200 countries prepared for global climate change negotiations in November. That United Nations conference, which is able to happen in Sharm el Sheikh, Egypt, will focus heavily on whether wealthy nations most accountable for the carbon dioxide emissions driving climate change should compensate poor countries which might be suffering the worst impacts. Many developing countries and low-lying island nations are pressing for the creation of a global fund that will compensate them for losses and damage attributable to climate change. The USA, Europe and other wealthy countries which have historically emitted the majority of greenhouse gases have opposed the creation of such a fund, partly because they fear being held legally accountable for skyrocketing disaster costs.

Mr. Nasheed said he believed specializing in a debt swap could bypass contentious debates over making a recent international fund for reparations. He also noted that many funds which were created have gone unfilled, he said. If debts owed by countries were shaved by 30 percent and that cash was as a substitute invested in projects similar to improving water systems or preserving mangrove forests that protect shorelines from hurricanes, “it might have a big impact,” Mr. Nasheed said. Kristalina Georgieva, the top of the I.M.F., said last 12 months that such debt swaps could help developing countries address climate change and pledged to work with the World Bank to “advance that option” on the United Nations climate meeting in Egypt. Based on the World Bank, 58 percent of the world’s poorest countries are in danger or are in “debt distress.” At the identical time, the loss and damage needs for vulnerable countries are projected in a single study at $290 billion to $580 billion annually by 2030. David Theis, a spokesman for the World Bank Group, said in a press release the banks were “committed to comprehensive debt solutions that bring real advantages to people in poor countries, particularly countries with high debt vulnerabilities that lack the financial resources to take care of the challenges they face.”


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