New US climate finance proposal opposed by developing countries

By: Isyana Artharini on October 7th, 2009

A new scheme for a global climate fund proposed by the United States in UN climate talks in Bangkok was opposed by negotiators from developing countries and China. The role of the World Bank is a key sticking point.

The negotiating bloc known as the G77 countries and China, the major group comprising developing countries, opposed on Monday a fund using already existing financial institutions like the Global Environment Facility and the World Bank. Indonesia is a member for the G77.

An Indonesian negotiator from the National Council of Climate Change, Ismid Hadad, said that giving the World Bank a key role would ensure domination by rich and developed countries. He favored a scheme that gave decision-making power to all countries participating in the UN climate change negotiations.

He likened the new scheme to a “one dollar, one vote” process, rather than the “one country, one vote” approach favored by the G77+China. The preferred scheme would be a new climate fund created under the UN system. Recipients of the funds would then be guided by and accountable to the UN, not the US-dominated World Bank.

Ismid also opposed Mexico’s addition to this US proposal, which would require that all countries contribute to the global climate fund. He said that money to help developing countries cope with climate change should instead come from developed countries.

European Union climate negotiator Artur Runge-Metzger reinforced the US position on Tuesday, saying that the new climate financial scheme would be better handled by already existing financial institutions. This US proposal, he said in his keynote speech at the Thai Foreign Ministry, will not replace the current financial institution used in distributing the funds, which is World Bank. He said that setting up an entirely new financial institution would take a very long time. He predicted that there will be up to 50 billion Euro in this fund by 2020.

An activist from the Climate Action Network, a global network of hundreds of nongovernmental organizations, Raman Mehta, said this position by the United States and European Union was helping to cause a deadlock in climate negotiations. According to Mehta, this was just one of many ways the developed countries are trying to renege on their obligations to address the effects of climate change.

Although this is the first time the United States clearly stated its position on a climate funding scheme Mehta views this as merely a negotiation tactic in the long run. “With India and China opposed to this proposal, the United States can say, ‘Hey, look, we already changed our position, but now India and China are the bad guys because they are the ones blocking the negotiation process.’”