“More than 50 poor countries in danger of bankruptcy” in an economic climate | Cop27

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More than 50 of the poorest developing countries risk defaulting on their debt and effectively becoming bankrupt unless the rich world offers urgent aid, the head of the United Nations Development Program has warned.

Inflation, the energy crisis and rising interest rates are creating conditions in which a growing number of countries risk defaulting, with potentially disastrous impacts on their peopleaccording to Achim Steiner, head of global development at the UN.

“There are currently 54 countries on our list [of those likely to default] and if we have more shocks – interest rates go up further, borrowing gets more expensive, energy prices, food prices – it becomes almost inevitable that we will see a number of these economies unable to pay,” he said. “And that creates a doomsday scenario – look Sri Lanka [which has descended into civil strife] with all the social, economic and political implications that entails.

Speaking to the COP27 UN Climate Summit, Steiner said such a default would create new problems for solving the climate crisis. “It will certainly not help [climate] act,” he said.

Without measures to help them get into debt, he warned, poor countries could not cope with the climate crisis. “The issue of debt has now become such a big problem for so many developing economies that managing the debt crisis is becoming a precondition for truly accelerating climate action,” he said. “We need to inject targeted cash into countries to be able to invest in energy transitions and adaptation [to the impacts of extreme weather].”

The climate crisis is further compounding the problem, he warned, as countries grapple with the growing effects of extreme weather. Poor countries are not receiving the funding promised by the rich world, but face a growing danger of storms, floods, droughts and heat waves.

Steiner has warned that some developing countries risk dropping out of UN climate talks if developed country governments fail to fulfill a long-standing promise to poor countries of $100bn (£86bn) per year of aid, to help them reduce greenhouse gas emissions and adapt to the impacts of extreme weather conditions.

“Whether Cop27 does not propose a convergent path on the 100 billion dollars, I think that many developing countries will leave Sharm el-Sheikh at least thinking about their commitments to the global climate process. And I say that very deliberately, because it doesn’t mean that they’re going to stop doing things at home, which they already do,” he said.

Countries could slow down their efforts, he warned. “Part of accelerating our ability to deal with climate change is that all countries need to do something. So the highest risk is that we slow things down again, some would say even more.

But developing countries were already taking their own steps to tackle the climate crisis, he added. “The developing world already invests multiples of $100 billion contribute to accelerating the energy transition. In the eyes of a taxpayer in London, Berlin or Paris, why are we being asked to pay for everything that happens outside our country in the developing world? And that’s just not true. China, India, countries like Kenya, South Africa, Ghana, Morocco, Egypt, all are investing their own resources in the clean energy transition. It doesn’t matter what extraordinary resources they have to mobilize when a climate-related extreme weather event occurs.

One of the most contentious issues during the COP27 talks is loss and damage, referring to the most devastating impacts of extreme weather events, against which countries cannot protect themselves. Steiner said the question is often misunderstood.

“It builds on something that in many of our countries is established practice. When extraordinary floods occur and the taxpayer essentially steps in, the government pays homeowners for damages that could not be recovered from insurance companies,” he said. “We have an established practice that the Common Wallet steps in when a catastrophic event occurs. But when a Caribbean island sees a third of its GDP wiped out in 12 hours by a hurricane, there’s no one to turn to.

That’s why a fund for loss and damage was needed, he said. “This is where the injustice of climate change becomes so stark in the eyes of many developing countries. Not having been, even remotely, a main causal factor [in the climate crisis]they are now paying an extraordinary price because of the damage they suffer.

He predicted there would be no final settlement at COP27 on how a loss and damage financing mechanism might work, but said the countries meeting in Egypt, where talks are now nearly halfway -way, should be able to make substantial progress.

On Thursday, the topic of discussion at the talks was science, youth and future generations. Hundreds of young activists were present to show their support for climate action, but the protests were quashed as the Egyptian government kept tight control over demonstrations outside of the talks. Some civil society groups have raised concerns about intimidation and surveillance.

However, no such restrictions have been imposed on lobbying in theaters – a coalition of NGOs revealed on Thursday that more than 600 fossil fuel lobbyists were among the attendeesa much higher number than in previous years.

Also during the talks, new analysis showed that countries seeking alternative gas suppliers to Russia after its war on Ukraine, had “exceeded”. European and other governments are now planning new gas infrastructure and supply contracts that would far exceed the amount of gas countries previously imported from Russia, according to data from Climate Action Tracker. If all of these contracts were fulfilled and infrastructure built, temperatures would exceed the crucial 1.5C limit, according to the analysis.

In rare good news, however, the Norwegian oil company has postponed development of exploitation of the world’s northernmost oilfield. The Wisting field is said to be a $10 billion project, but it has been frozen for four years. The the company blamed an “increase in costs due to the increase in global inflation” and “uncertainty about the framework conditions of the project”. Activists claimed the decision as a victory.

Nancy Pelosi, the Speaker of the United States House, arrived in Sharm el-Sheikh with fanfare as Democrats did better than expected in the midterm elections and warned that some Republicans still saw the climate crisis as a hoax. US President Joe Biden is expected to join the conference on Friday and deliver a major intervention.

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