#BTColumn – The Bridgetown Initiative explained (Part 2)

Disclaimer: The views and opinions expressed by the author(s) do not represent the official position of Barbados TODAY.

By David Comissiong

Furthermore, the Barbadian Prime Minister made it abundantly clear that the Bridgetown Initiative makes a strong conceptual linkage between the notion of “Global Public Goods” and the United Nations’ “Sustainable Development Goals” (SDGs) that are supposed to be realized by the year 2030.  This is how she put it:-

“We want to thank those countries that have
come together to help us continue financing of the Sustainable Development Goals.  And we link those goals to the
global public goods. Why? Because they are, fundamentally, the right to development.  They are, fundamentally, the right
to give each person the ability to live a good life.  And we cannot be lost in the Ukraine conflict, and lost in the climate crisis, and lost in the pandemic, and forget, fundamentally, what our mission is. I commend those who continue to remember that.” 

It is against this background therefore that Step Two of the Bridgetown Initiative demands as follows:-

“Multilateral Development Bank shareholders must implement the recommendations of the independent G-20 Capital Adequacy Frameworks Review, and the World Bank and other Multilateral Development Banks must use remaining headroom, increased risk appetite, new guarantees, and the holding of SDRs to expand lending to governments by US$1 Trillion. Furthermore, new concessional lending should prioritize attaining the Sustainable Development Goals (SDGs) everywhere and the building of climate resilience in climate-vulnerable countries.”

Thus, the Bridgetown Initiative is demanding recognition of the fact that the Bretton Woods institutions and the Multilateral Development Banks are no longer existing in the world of 1945 or contending with the development challenges that were relevant to that era, and that they must now come into the 21st century and adjust their sights to dealing with the massive existential and developmental challenges that are
currently facing the close to 200 nations that now exist in the world, and on the massively increased scale that is now required! Indeed, Prime Minister Mottley dealt with a very critical component of the new modus operandi that is required when she declared:-

“But I ask for us to reach a global compact: namely, that financing for development cannot be short-term financing, and that it needs to be at least 30-year money. The world recognized that when it allowed Britain to be able to participate in the refinancing of its World War 1 bonds, which were only paid off eight years ago, 100 years after World War 1 started. Or when it allowed Germany to cap its debt service at the equivalent of 3% of its exports, conscious that the cataclysmic experience of war would not have allowed Germany to finance reconstruction while repaying debts incurred for war. 

My friends, we are no different today! We have incurred debts for COVID. We have incurred debts for climate.  And we have incurred debts, now, in order to fight this difficult moment with the inflationary crisis and with the absence of certainty of supply of goods.  Why, therefore, must the developing world now seek to find money within 7 to 10 years when others had the benefit of longer tenures to repay their money?”

STEP THREE: ENGINEER A MASSIVE GLOBAL ASSAULT ON THE CLIMATE CRISIS

The final step of the Bridgetown Initiative – Step Three – is based on the recognition that humankind has to act urgently, expeditiously and on a vastly expanded scale if it is to do what is necessary to prevent the world’s temperature from rising above 1.5 degrees and thereby threatening the world with cataclysmic negative effects. Step Three is therefore devoted to creating a new multilateral mechanism to activate private sector savings on a massive scale for climate mitigation and adaptation, and also to provide reconstruction concessional and grant funding to climate-vulnerable countries, particularly after they experience a climate disaster.

Indeed, Step Three is based on the understanding that most climate-vulnerable countries do not have the fiscal space to take on new debt.  In other words, if you want to facilitate developing countries to develop climate mitigation and adaptation measures designed to limit global warming it will be futile to offer them access to loans – even to enormous loans – because they are already so indebted that they simply cannot take on any new debt.

The Bridgetown Initiative therefore proposes the following three pronged approach to solving the problem of global financing for climate mitigation and adaptation measures at a scale capable of solving this massive existential problem:-

We must move beyond country-by-country responses that have become bogged down by issues of who is responsible and who should do more.

We must establish a global mechanism for raising “reconstruction grants” for any country imperilled or impacted by a climate disaster.

We must issue a new round of at least 500 Billion in SDRs (the equivalent of US$650 Billion) or other low-interest, long-term instruments to back a new multilateral agency that will leverage those resources to radically accelerate global private sector investments in low carbon transitions all over the world.

In essence, the Bridgetown Initiative is pushing for the establishment of a new “Global Climate Mitigation Trust” that will:-

Drive global private sector investment in Climate mitigation and low carbon transition projects and programmes on an unprecedented scale;

Provide climate-vulnerable developing countries with concessionary and grant financing for climate mitigation and adaptation projects and programmes; and

Provide a “global balance sheet”  from which already debt-burdened developing countries can spend in order to mitigate and adapt to the Climate Crisis.

And let us be very clear here: by “a global balance sheet” we are referring to a “balance sheet” that is not linked to any particular country nor backed by any one particular government or national currency.  Rather this new “global balance sheet” would be backed by “international money” – IMF Special Drawing Rights (SDRs) – which are a claim on all IMF member nations to lend their reserves of hard currency at the lowest available overnight interest rates. 

Thus, such a “global balance sheet” would provide our already heavily indebted developing nations with the opportunity to access the concessionary funds that we need to build resilience against a Climate Crisis that was caused by others – that was caused by the wealthy industrialized countries of the world – without increasing the level of debt recorded on our national balance sheets.

Climate justice demands this approach, given that countries which did not cause this crisis are crowding out their public spending with expenditure on the climate crisis  rather than on the SDG 2030 agenda which benefits the people of our nations. 

CONCLUSION

The Bridgetown Initiative does, indeed, constitute a revolutionary programme to transform the world’s existing International Economic and Political Order. But it is a revolution that is desperately needed if humanity is to survive the grave existential challenge of the Climate Crisis, and if our 21st century world is going to preserve the notion of a human(e) and civilized existence for the billions of people who inhabit our planet.

The Bridgetown Initiative concludes with the following “Call for Collective Action”:

“We aim to mobilize and co-ordinate broad support and help from a coalition of like-minded leaders who are aligned on this critical agenda and who will support its implementation.

“We do not anticipate complete agreement on the detail and sequencing of the solutions, but rather aim to support progress on this agenda through greater understanding, focus, priority, co-ordination and unity of effort”.

This is indeed a magnificent and appropriate mission and resolve.  But it was perhaps, even better expressed by Prime Minister Mia Amor Mottley when she concluded her speech to the 77th United Nations General Assembly with the following words:-

“Many of the things that I’ve put before us today don’t require money, but they require a commitment, and they require political will.  And with the power of the pen we can impose natural disaster and pandemic clauses in our debt instruments.  With the power of the pen, we can change the capital that is available to multilateral development banks, and that will remove the barriers that currently exist for us to fight poverty. 

With those commitments, we can make a difference in today’s world. And let us do so, recognizing that a world that reflects an imperialistic order and hypocrisy and lack of transparency will not achieve that mission : but one that gives us freedom, transparency and a level playing field can make that definable difference.” 

Let us all now put our hands to the plough and push this Bridgetown Initiative to an urgently needed speedy and successful implementation!

My friends, the provision of that Fund to promote public goods at a global level is critical if we are to make a difference going forward, and to achieve the peace, the love and the prosperity to which I referred.”

David Comissiong is Barbados’ Ambassador to CARICOM.