Byron Blake | Matter of life and death

Daniel Titelman and Jwala Rambarran in the article ‘How IMF can show up on climate for LatAm and the Caribbean’ published in The Sunday Gleaner on October 13, shone a light on the Washington-based International Monetary Fund (IMF) ahead of the 29th Meeting of the Conference of the Parties (COP29) in Baku, Azerbaijan.

Their article is based on a report by a task force, Climate, Development, and the IMF, undertaken under the auspices of the Economic Commission for Latin America and the Caribbean. They did not make the link, but COP29 in Baku may be the last opportunity for the IMF or any other institution, country, or global community to show up for the planet and Small Islands and low-lying coastal states and communities.

The authors called

• out the IMF for not using the data available for its debt-sustainability analyses to highlight “the risks posed by climate change or the opportunities of green investments”.

• for “reforms across three key areas of the IMF: surveillance, lending, and global leadership”.

• on the IMF to move with urgency to help “climate-vulnerable member countries mobilise climate financing in a fiscally sound and financially stable manner”.

These are important and brave calls. But the authors went into full-throated commendations of IMF Managing Director Kristalina Georgieva and her brainchild, the Resilience and Sustainability Trust (RST). There is an obvious contradiction here. The RST is a debt-creating instrument, and its 20-year loans can hardly be considered long term. More importantly, for those old enough, it reminds of how the IMF and its twin across H Street, the World Bank, successfully diverted widespread criticism in the late 1980s when confronted with the disastrous consequences of their Structural Adjustment Programmes (SAPs), the centrepiece of the Washington Consensus.

Please indulge in a bit of history. In June 1988, the European Commission and the African, Caribbean, and Pacific group convened a seminar in Dakar, Senegal, to strategise for the negotiation of the successor to the Third Lomé Convention. The Lomé Convention, a non-reciprocal arrangement, was hailed by the international community as a model cooperation agreement between developed and developing countries in 1975. Now approaching its fourth iteration, the shared, but unexpressed, concern was how to structure a successor arrangement that would avoid challenge by the supporters of the Washington Consensus. That consensus, developed and championed by the Washington-based Multilateral Financial Institutions (MFIs) in support of the Regan/Thatcher philosophy, focused on reciprocity and policy change, including structural adjustment by developing countries. The European Economic Community did not subscribe to that doctrine.

In the seminar, to the surprise of all, the young IMF representative was as critical of structural adjustment policies as the CARICOM Director of Economics and Industry. Confused, I went to him at the first break and asked what had happened between January and June. He answered, “The book, Adjustment with A Human Face.” That book, authored by Richard Jolly, deputy director of UNICEF, and published by UNICEF in January 1988, highlighted with detailed statistics from many countries the devastating impact SAPs were having on the lives of the poor, particularly women and children.

By coincidence, that January, at a meeting of the Caribbean Group for Cooperation in Economic Development at the World Bank Headquarters, pressure on Caribbean countries to implement structural adjustment programmes was so intense that in the middle of my CARICOM presentation, I asked whether the proponents were expecting to walk down H Street and meet a structurally adjusted economy.

That was the backdrop to my question. Faced with the incontestable truth made public by a highly respected UN institution, the proponents of the Washington Consensus had to confront the fallout from their brainchild.

The strategists in the two institutions soon devised a brilliant solution that left their structural adjustment policies and programmes firmly in place. They proposed that henceforth, structural adjustment programmes would include a social safety net (SSN) component. The name sounded impressive. The developing countries that needed external financing were relieved. The consciences of the multilateral institutions and the countries that directed their policies were assuaged. Criticisms were muted.

Thirty years later, in 2018, more than 79 countries with a population of some 2.5 billion were covered by SSNs. Thirty six per cent of their population had escaped extreme poverty. But 64 per cent or two out of every three members were still living and dying in extreme poverty.

Decide whether that was a success. It seems a success in deception.

The IMF’s RST may reap the same success. But with projections of a 2.6 to 3.1 degree rise in global temperatures, the result will be the disappearance of many innocent small islands and low-lying coastal states and their populations.

SIDS, this shall be your fate if you allow COP29 to end with the “do little” outcomes of COPS26, 27, and 28.

THE IMF AND CLIMATE JUSTICE

The IMF emerged as the global debt collector in the 1980s. It has been very effective. There have been few defaulters among developing debtor countries.

The IMF was a prominent adviser at the 1992 RIO Conference, where, among other things, it was agreed that

• there was both a historical and an increasing current environmental debt arising from pollution in the atmosphere.

• the polluter would pay the environmental debt (the Polluter Pays Principle)

• the industrialised countries as the major polluters would begin (a) the payment by moving towards the long-agreed target of 0.7 per cent of their gross national income (GNI) as a contribution to Official Development Assistance (ODA); (b) to stabilise their green house gas emissions; and (c) to begin to reduce emissions by 1999.

The IMF was at the 1997 and 2002 reviews of the Rio Consensus when it was revealed that the percentage contribution of the industrialised countries to ODA fell every year between 1992 and 2000 while emissions increased yearly. The IMF was in Copenhagen in 2009, where in exchange for SIDS acceding to their pressure not to insist on the ceiling below 1.5 degrees Celsius, the industrialised countries agreed to contribute US$100 billion per year to a fund. That target was never reached up to 2018. Yet the global debt collector has never sought to collect the environmental debt.

The analysts proposed that the IMF align its lending with climate goals. Realistically, no debt-creating lending can be aligned with climate goals with the confirmed increase in ambient temperatures of 1.55 degrees Celsius. On the other hand, if the IMF collects the outstanding environmental debt, there would be fiscally sound and financially stable resources to address climate-related issues.

THE IMF IN BAKU

COP26 in Scotland, COP27 in Egypt, and CO 28 in the United Arab Emirates began with disarming promises by the host countries and major polluters.

Yet all three COPs ended in dismal failures: no agreement to phase out fossil fuels; no decision on mandated financing; and no new or creative process to seek solutions.

With the AR6 Report of 2023, the 1.55 Degrees Celsius in 2024, the acknowledgement by the UN secretary general that the breach of the 1.5 might be permanent and projections for increases above 2.6 by 2050, SIDS can have only two objectives going into COP29, namely:

1. An agreed, detailed programme to get increases in mean global temperatures back below 1.5 Degrees Celsius in the shortest feasible time;

2. A secure level of financial resources to permit SIDS and low-lying coastal developing states to adapt, mitigate, and compensate for loss and damage arising from catastrophic climatic events.

The IMF has two ways to assist SIDS in Baku. One, set a time to collect the outstanding environmental debt and provide a mechanism for collecting such debts in the future.

Two, contribute technically to the most effective decision to phase out fossil fuels.

SIDS leaders, you do yourselves and your population a great disservice if you subscribe to any decision at the end of COP29 that does not include these two outcomes.

Ambassador Byron Blake is former deputy permanent representative of Jamaica to the United Nations and former assistant secretary general of CARICOM. Send feedback to columns@gleanerjm.com