Climate loans threaten rerun of Copenhagen

UK loans to low income countries will make the poor pay twice for climate change

On Thursday, International Development Secretary Andrew Mitchell promised to stump up funds to ensure developing countries are better heard in climate negotiations. But it is difficult to see how those countries could be any clearer than they were last year at the disastrous Copenhagen climate summit - the problem is that the British government isn't listening.

At the end of next week, delegates from across the world will start arriving in Cancun for the follow-up to Copenhagen. They do so in the shadow of the World Bank's announcement of $270 million for three countries - Bangladesh, Niger and Tajikistan - to help them cope with the effects of climate change, for instance by protecting coastlines and planting crops more resilient to flooding.

These funds will be enhanced by others and ultimately the money comes from developed country governments like that of the UK. The problem is that much of the money will come not in the form of grants but low-interest loans. The total package given to Bangladesh, for instance, is $624 million, of which 92% comes in the form of loans. $60 million of these loans have come from the UK Government.

Why is this a problem? Because it contradicts the main principle which developing countries are fighting for in climate negotiations - that rich countries must not only reduce their emissions substantially but they must pay for poorer countries to clean up the devastation caused by climate change, not to mention helping those countries to develop in a more sustainable manner now they are denied the 'cheap development' which has fuelled wealth in the West.

Instead, offering loans attempts to make developing countries pay twice - first because they are suffering the worst consequences of climate change, but second because they now have to pick up the tab for that chaos when they repay their loans. That's why developing countries and campaign groups are united that these loans are completely unacceptable.

The developing countries involved in this first tranche of funding cannot be regarded as anything other than very poor. All are defined as low income. Bangladesh already has a high debt - $23.6 billion and rising, despite the country paying over $1billion a year servicing that debt.

Niger owes much less - but only because it received over $1 billion of debt relief in 2004 after struggling with unjust debts for over a decade. Meanwhile Tajikistan is already at high risk of a debt crisis according to the International Monetary Fund.

Forcing these countries to pay for their own clean-up is rather like breaking into your neighbour's house, causing devastation, and lending them money to get the cleaners in.

UK funds are all channelled through the World Bank, rather than a special United Nations fund which has been created through international agreement. This too is contentious. The UN Fund has a unique bottom-up approach to finance - any country can apply to it, and that country retains a good deal of control over how the project is implemented.

The World Bank, on the other hand, is top-down - selecting which countries should receive climate financing - and hypocritically remains one of the world's largest supporters of fossil fuel projects. In fact the UK has made the World Bank's funding even worse than it otherwise would have been; the Bank says that the only reason it is giving loans is because the UK has provided its money as capital rather than a grant.

None of this sits well with the pre-election commitments of the governing parties. Liberal Democrat party policy is to "support the UN Adaptation Fund" and to provide "grants for communities vulnerable to the impact of climate change without increasing the burden on indebted countries". Conservative party policy is to "continue, as far as possible, to give aid as grants not loans" and to "encourage other donors" to do the same.

Perhaps it's little wonder that expectations are being vigorously managed ahead of Cancun. But let's not pretend it's because developing countries can't be heard. Any progress towards a just climate solution depends on rich countries starting to listen pretty quickly.

Nick Dearden is the director of Jubilee Debt Campaign

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Lord Sainsbury pulls funding from Progress and other political causes

The longstanding Labour donor will no longer fund party political causes. 

Centrist Labour MPs face a funding gap for their ideas after the longstanding Labour donor Lord Sainsbury announced he will stop financing party political causes.

Sainsbury, who served as a New Labour minister and also donated to the Liberal Democrats, is instead concentrating on charitable causes. 

Lord Sainsbury funded the centrist organisation Progress, dubbed the “original Blairite pressure group”, which was founded in mid Nineties and provided the intellectual underpinnings of New Labour.

The former supermarket boss is understood to still fund Policy Network, an international thinktank headed by New Labour veteran Peter Mandelson.

He has also funded the Remain campaign group Britain Stronger in Europe. The latter reinvented itself as Open Britain after the Leave vote, and has campaigned for a softer Brexit. Its supporters include former Lib Dem leader Nick Clegg and Labour's Chuka Umunna, and it now relies on grassroots funding.

Sainsbury said he wished to “hand the baton on to a new generation of donors” who supported progressive politics. 

Progress director Richard Angell said: “Progress is extremely grateful to Lord Sainsbury for the funding he has provided for over two decades. We always knew it would not last forever.”

The organisation has raised a third of its funding target from other donors, but is now appealing for financial support from Labour supporters. Its aims include “stopping a hard-left take over” of the Labour party and “renewing the ideas of the centre-left”. 

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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