Transform The Global Financial System, Demands Barbados

Mia Mottley
Barbados Prime Minister Mia Mottley says rich nations must help developing countries pay for impacts of climate change

On Thursday, Barbados Prime Minister Mia Mottley called for a transformation of the global financial system that goes beyond reforming international financial institutions (IFIs) such as the World Bank (WB) and the International Monetary Fund (IMF).

A teleSUR report said:

“Global problems like the climate crisis show us that we simply cannot address modern issues with institutions, which were created for a very different world nearly 80 years ago. Change is needed. That is why I am in Paris for the Summit for a New Global Financing Pact,” she said.

“What are required of us now is an absolute transformation and not a reform of our institutions,” Mottley stressed at the high-level summit promoted by French President Emmanuel Macron.

“Do not leave Paris without understanding there must be transformation, not reform. Step up the pace and let’s get going,” she said addressing over 50 world leaders and IFIs delegates, who were participating in a summit that is supposed to recognize the relationship between human development, poverty, and climate change.

The Paris meeting was also expected to provide concrete mechanisms to finance sustainable development, clean energy investments, and climate change adaptation actions, especially in low- and middle-income countries.

The Summit for a New Global Financial Pact counts with the presence of Latin American leaders such as presidents Lula da Silva (Brazil), Gustavo Petro (Colombia), and Miguel Diaz-Canel (Cuba). Also present are United Nations Secretary Antonio Guterres, the IMF Director Kristalina Georgieva, and U.S. Treasury Secretary Yanet Yellen.

Ugandan activist Vanessa Nakate reminded participants that “broken promises cost lives” and called for overturning the fossil fuel economy, which yields notable profits for Western oil consortia but very little for resource-supplying countries.

A BBC report said:

Mia Mottley, Barbados’ first female PM, is leading the global fight for this money and tells BBC News that her tiny country urgently needs help.

Poorer nations want more money because they did little to cause climate change but face its worst effects.

They also struggle to afford expensive projects like renewable energy.

Climate finance, including funding for flood defences or solar plants, has long been one of the biggest sticking points in climate negotiations.

But Ms Mottley has built a global coalition to support her demand that the international financial system be fundamentally reformed.

“We are all in this together”, Ms Mottley told BBC News in Paris. “If we do not realize that, we will not act with the urgency that’s necessary to save the planet and save lives.”

The Barbadian prime minister is joint host of the Paris conference with President Emmanuel Macron of France.

Ms Mottley is determined the meeting deliver results.

She describes the threat of climate change as “a death sentence” on the world. “If it is a death sentence, then we need to move with urgency,” she explains.

Ms Mottley has an even bigger prize in her sights, a plan dubbed the “Bridgetown Agenda” after the Barbadian capital.

It wants to generate more finance for the countries that need it most through a wholesale modernization of the international monetary system.

The current institutions – including the World Bank and the International Monetary Fund (IMF) – were set up by the victorious nations towards the end of the Second World War at a conference in a ski resort called Bretton Woods in New Hampshire, US

The so-called “Bretton Woods system” will celebrate its 80th anniversary next year.

Ms Mottley says she wants to make it fit for the challenges of the modern world by moving the focus away from richer nations and towards delivering outcomes that benefit the entire world, like helping developing countries tackle climate change.

“The reason why these institutions exist is that they were created to help the world in the reconstruction effort after World War Two. We are in a moment that is equal to World War Two with respect to climate,” she said.

It is much more expensive to build flood defences in Barbados or Angola than it is in the Netherlands or the UK, Ms Mottley points out.

The same goes for erecting wind turbines or installing solar farms.

That is because low-income countries are charged high interest rates – often two or even three times the rates developed nations face.

Yet the risks of individual projects do not vary anywhere near as much as that.

We tell our children we shouldn’t put off to tomorrow what we need to do today, Ms Mottley says.

“I find myself actually repeating a lot of things that we would say to children, in order to inform global behaviour today,” she continues. “That tells us a lot.”

IEA’s Warning

The BBC report said:

This week the International Energy Agency warned annual investments in clean energy in developing nations will need to triple from $770bn in 2022 to as much as $2.8tn by the early 2030s if the world is to avoid the worst impacts of climate change.

One proposal is that institutions like the World Bank offer cheaper loans for climate action projects.

Another suggestion is that institutions like the World Bank should agree to guarantee loans for climate action in developing nations. That would encourage the private sector to lend at lower interest rates.

Experts say these initiatives could generate hundreds of billions of dollars’ worth of loans for climate projects in low-income countries.

Another proposal involves the creation of an auction in which developing nations would bid for cheap finance for climate projects.

This “Climate Mitigation Trust Fund” would be funded by tens of billions of dollars’ worth of SDRs and overseen by the IMF and the UN.

The winners would be the projects that reduce global warming fastest.

It is not expected that a final decision will be made on these proposals, but Ms Mottley is confident that progress will be made.


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