S.T. JOHN’S, Antigua, CMC – I was astonished recently to be told by one of the representatives of the Caribbean on the Board of the World Bank (W.B.) that Antigua and Barbuda, The Bahamas, Barbados, St Kitts-Nevis and Trinidad and Tobago, should not expect any change in the Bank’s policy not to make concessional loans to them because, supposedly, they are ‘high-income countries.
My astonishment did not result from the sharp finality of the statement but rather because it came from a person charged with the obligation of representing the views of Caribbean governments on the W.B.’s board. An outdated arrangement, like many aspects of the W.B.’s structure and operations, requires urgent reform. No Caribbean government has a seat on the Bank’s board. Instead, Caribbean countries are represented by Canadian or Brazilian Executive Directors.
I always remember the observation of the late Prime Minister of Barbados, Owen Artur, that it was offensive that he, as the head of government of his country, could not address a meeting of the W.B.’s Board without the permission of a Canadian official.
But all that is part and parcel of being small and powerless and the seeming inability of Caribbean countries to pool their sovereignty to argue jointly for the reform the W.B. urgently requires to make it fit for purpose. An integral part of being fit for purpose today is raising the massive amounts of capital necessary for the coming years to help countries adapt to and mitigate a changing climate.
While climate financing has grown in importance recently as part of the policy of the W.B., mainly due to the emphasis placed on it by the Bank’s most prominent member, the United States of America (U.S.), under its present Biden Administration, it is still a far way from what it should be. Last year, the Bank lent US$32 billion for climate-related projects. And while this was a vast improvement over previous years, it was still woefully short of the needed money.
Noteworthy is that countries classified as ‘high-income,’ like Antigua and Barbuda and St Kitts-Nevis, did not qualify for a cent of the allocated US$32 billion. The only ‘high-income’ countries that did manage to access particular loans were those in an IMF budgetary support program with all its harsh conditionalities.
Authoritative bodies estimate that an additional US$2.5 trillion of financing will be needed annually until 2030 to reach the 2015 Paris Agreement climate goals and achieve the Sustainable Development Goals (SDGs) agreed upon by all countries at the United Nations (U.N.). If the W.B. is to play any meaningful role, it has to get more money. It has to change its lending policies to access concessional funding from so-called ‘high-income’ countries in the Caribbean and elsewhere, which share similar circumstances to neighboring states of extreme vulnerability and lack of resilience to Climate Change and its impacts. The W.B. needs to revisit and revise this rule, which may be convenient for denying funding but needs to be more comprehensive in neglecting a growing problem and threatening countries’ viability.
Here’s an even more troubling situation related to funds available to the W.B. and how they are allocated. Many developing countries are deeply concerned that even as the Bank attracts more funding, allocations for climate-related projects (36 percent of the Bank’s lending last year) will reduce the amount of money available for infrastructural development and improving social services. Thus, with considerable justification, they argue that funding for coping with the impacts of climate change and global warming should be separate from traditional financing for development.
In all this, therefore, a greater responsibility falls on the countries that are the most significant CO2 emitters to ease the burden on the World Bank and to create a unique and different mechanism to fulfill their promises to mobilize US$100 billion a year to fund mitigation and adaptation in countries that Climate Change is irreparably damaging. It is easy to identify which countries are responsible for the present situation. Studies by the Centre for Energy and Climate Solutions show that from 1751 (the beginning of meaningful industrialization) to 2017, the share of cumulative CO2 emissions is: the U.S. (25%), the countries of the European Union and Britain (22%), China (12%), Russia (7%), Japan (4%) and India (3%).
However, this is unlikely to happen. Indeed, even providing sufficient money to the W.B. appears increasingly remote, as countries such as China and Britain opt to provide their loans and grants bilaterally than through international institutions.
So, the prospects for securing funding for developing states to meet their development challenges, particularly building resilience to the impacts of Climate Change, are not promising. Novel ideas have been proposed, including the “Bridgetown Initiative,” a proposal by Barbados Prime Minister Mia Mottley to increase concessional financing by multilateral development banks to US$1 trillion, among other things.
Much hope is also being placed in Ajay Banga, the former chief executive of Mastercard, who the Biden Administration has nominated as the next president of the World Bank. But he alone – however skillful he may be – cannot bring about the needed transformation, or the required political will, to change the policies of the W.B., which its wealthiest members make. And right now, nationalism and self-preservation prevail among the world’s powerful nations.
Developing countries should unite the global South, using their resources and purchasing power to defend and advance themselves. That goal must never be dismissed as unattainable. To do so is surrendering a significant strength that could be a game changer. There is a vacancy in committed leadership; it should be filled.
*Sir Ronald Sanders is Antigua and Barbuda’s Ambassador to the United States and the Organization of American States. He is also a Senior Fellow at the Institute of Commonwealth Studies at the University of London and Massey College at the University of Toronto. The views expressed are entirely his own)
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