20 nations at high risk from global warming might halt debt payments

Twenty countries most vulnerable to climate change are considering halting their repayment of $685 billion in collective debt, loans that they say are an “injustice,” Mohamad Nasheed, the former president of the Maldives, said Friday.

When the World Bank and the International Monetary Fund conclude their annual meetings in Washington on Sunday, Nasheed said he would tell officials that the nations were weighing whether to stop payments on their debts. The finance ministers are calling instead for a debt-for-nature swap, in which part of a nation’s debt is forgiven and invested in conservation.

“We are living not just on borrowed money but on borrowed time,” said Nasheed, who brought global attention to his sinking archipelago nation in the Indian Ocean by holding an underwater Cabinet meeting in 2009. “We are under threat, and we should collectively find a way out of it.”

Nasheed said poor nations were locked in a Sisyphean trap: They must borrow money to ward off rising seas and storms — only to see disasters made worse by climate change destroy the improvements they make. But the debt remains, and often countries are left to borrow once again.

David Theis, a spokesperson for the World Bank Group, which includes the IMF, said in a statement the banks recognized that climate change is having a disproportionate effect on poor and small-island developing nations. He said the banks were “committed to comprehensive debt solutions that bring real benefits to people in poor countries, particularly countries with high debt vulnerabilities that lack the financial resources to deal with the challenges they face.”

The debt discussions at the IMF and World Bank meetings come as diplomats from nearly 200 countries prepared for global climate change negotiations in November. That United Nations conference, which will take place in Sharm el-Sheikh, Egypt, will focus heavily on whether wealthy nations most responsible for the carbon dioxide emissions driving climate change should compensate poor countries that are suffering the worst effects.

Many developing countries and low-lying island nations are pressing for the creation of an international fund that would compensate them for losses and damage caused by climate change. The United States, Europe and other wealthy countries that have historically emitted the bulk of greenhouse gases have opposed the creation of such a fund, in part because they fear being held legally liable for skyrocketing disaster costs.

“In all honesty, the most important thing that we can do is stop, mitigate enough that we prevent loss and damage,” John Kerry, the U.S. special envoy for climate change, said at a New York Times event last month. “The next most important thing we can do is help people adapt to the damage that’s already there. And we have a limited, you know, we’re not — you tell me the government in the world that has trillions of dollars, cause that’s what it costs.”

Nasheed said he believed focusing on a debt swap could bypass contentious debates over creating a new international fund for reparations. He also noted that many funds that have been created have gone unfilled, he said.

If debts owed by countries were shaved by 30% and that money was instead invested in projects such as improving water systems or preserving mangrove forests that protect shorelines from hurricanes, “it would have a huge impact,” Nasheed said.

A spokesperson for the V20, a coalition of finance ministers representing vulnerable nations, declined to comment but acknowledged that the countries were discussing stopping debt repayments until the banks addressed climate change.

Kristalina Georgieva, head of the IMF, said last year that such debt swaps could help developing countries address climate change and pledged to work with the World Bank to “advance that option” at the U.N. climate meeting in Egypt.

According to the World Bank, 58% of the world’s poorest countries are at risk or are in “debt distress.” At the same time, the loss and damage needs for vulnerable countries are projected in one study at $290 billion to $580 billion annually by 2030.