A proposal from the US and EU to establish the fund within the World Bank was rejected by member countries.
According to sources familiar with the discussions, the fund’s intended beneficiaries have rejected a US- and EU-backed proposal to house it within the World Bank and have threatened to end all negotiations before next month’s COP28 climate summit if Washington does not budge on the issue.
Regarding who will oversee the fund, which is intended to compensate for “loss and damage” sustained by countries considered “particularly vulnerable” to climate change, the G77 countries plus China are “deadlocked” with the US.
G77+ leaders have cautioned that the World Bank’s structure may make it difficult for the fund to raise money on the capital markets or through philanthropic donations, and that the fund’s emphasis on loans and other revenue-generating activities is another problem. Developing countries, who frequently struggle with debt loads placed on them by international agencies under the pretence of helping them escape poverty, desire subsidies rather than additional financial commitments.
Cuban G77+ head Luis Pedroso Cuesta indicated that although the group initially desired an autonomous fund, they would settle for hosting by an international organisation such as a UN agency or another multilateral development bank.
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However, the World Bank was not a choice since, according to the G77+, it has a “climate culture” and takes too long to make crucial decisions, rendering it unfit for dealing with critical climate concerns. When it encouraged the bank to support more sustainable energy projects last week, the US itself acknowledged as much.
“The US is the proverbial elephant in the room, and it has been brought to our attention. Cuesta lamented, “We have been given a very binary choice: either [the World Bank] or nothing.
Some G77+ country analysts contend that the US is concealing itself behind the World Bank in order to divert attention away from its own incapacity to keep its climate funding commitments. “People like [US climate czar John] Kerry will say, well, public funds are limited, so you’ve got to look at all these other measures,” Moroccan think tank director Iskander Erzini Vernoit said to Politico on Thursday.
Senior Kerry aide Christina Chan rejected the criticisms as “irresponsible,” denying that the US was being “obstructionist.”
Disputes between the parties also include financing. The G77+ requires that wealthy countries, particularly the US, make payments. But as of Friday, Washington had made no contributions to the fund despite being the highest historical emitter of greenhouse gases in the world, relying instead on China to make a contribution.
200 nations decided to create a loss and damage fund at the COP27 climate summit last year in order to aid developing countries in recovering from the effects of climate change they had previously experienced. The US, a longtime opponent of such plans, agreed on the condition that it would not conflate payment with legal responsibility.
