By Fadhel Kaboub
Climate finance requires a minimum of $2.4 trillion of transformative grant-based investment and transfer of technology for climate adaptation and mitigation by 2030. We are nowhere near that target at the end of COP28. Climate finance is a climate debt owed by the historic polluters of the Global North to Global South countries that are on the front lines of climate change. The Global North is in default and is refusing to pay its debt.Subscribe
If you owe me $100, you are supposed to pay me. Instead, you give me a $10 loan with conditionalities to control how I use my money. You give me another $10 in exchange for having control over my forests (aka carbon markets). You invest another $10 in green electricity that I must export to you on favorable terms. You outsource another $10 worth of low value-added added manufacturing to produce cheap consumer goods for you. None of this should count as climate finance. It is a climate debt default green-washed with neocolonial debt traps.
We can stop paying our debt too
If a Global South country defaults on its external debt, the Southern District of New York court will allow Wall Street private banks to confiscate any financial assets that country has in the US banking system including export revenues that pass through the US banking system. We need to establish a climate debt court in the Southern District of the Globe, staff it with the most qualified legal minds from the Global South, and start prosecuting climate debt cases using legal precedents that have been used to impoverish and abuse the people of the Global South.
We are owed at least $2.4 trillion in climate finance by 2030, so we need to withhold and confiscate the equivalent of that debt in cash and in-kind until the debtors come forward and pay their debts in the form of unconditional grants and transfer of technology. Unfortunately, the Global South has yet to build an unbreakable united front. Instead, we see countries settling for bilateral deals that amount to financial crumbs and structural traps. This must change now before COP28 goes down as yet another failed climate finance event for the Global South.
The biggest blind spot of COP28
The debate about reforming the global financial architecture to create a fit for purpose climate finance model is encouraging, but it needs to recognize that the financial architecture is a subset of a global economic architecture that also includes the international trade, investment, and taxation architecture. We are making some progress on transforming the global tax architecture thanks to a recent Global South victory at the United Nations general assembly voting overwhelmingly for a UN Tax Convention.
We are also finally having a serious discussion about transforming the global financial architecture. At COP28, Colombia, Kenya, and France announced the establishment of an independent expert review on debt, nature and climate. The expert group will examine the way sovereign debt is limiting the fiscal space needed to take climate action, decarbonize the economy, and protect nature. This is, of course, a promising initiative to help redesign the global economic architecture.
However, this leave the rules of international trade and investment as the main blind spot in the COP28. There is no mention of the World Trade Organization (WTO), no mention of unfair bilateral trade agreements that are unfavorable to the Global South, no mention of reforming the Trade-Related Intellectual Property Rights (TRIPS) in the context of transfer of technology for climate action on adaptation and mitigation, no mention of the need to overhaul the Investor-State Dispute Settlement (ISDS) mechanism or Investment Court System (ICS) through which Global South countries can be sued by foreign investors if the State takes action that interferes with the investor’s (extractive) business plans.
