Pity the climate finance campaigner. It’s even harder than it looks.
As climate finance negotiations rage on in Sharm El Sheikh, it’s not just how much money that matters, but who decides how it’s spent.
Jonathan Glennie, November 2022
Scour as you might the endless reports of the climate finance discussions at COP 27 and you would do well to find something, anything, mentioning one of the most important issues on the table in Sharm El Sheikh.
Quantity is covered. There’s report after report on how much is needed. Journalists like big numbers – it anchors it all in some apparent fact even though the numbers are too huge to really mean anything to most readers and too arbitrary to mean anything anyway.
Reasons are given. There is plenty of information on why all this money is urgently needed, now including the elusive Loss & Damage area to join Mitigation and Adaptation.
Blame is assigned. Commentators are adept at discussing whose fault all this (mostly) is, and this is probably what captures most column inches. We all love a fight.
Fair enough. Those things are important. But if there is one thing we have learnt from the history of climate finance, and indeed of international aid overall, it is that who is sat at the table making decisions is just as important as the amount of money available.
From reports of the exciting Bridgetown Agenda, which sets out how billions more could be made available for climate finance, to reporting progress on a new Loss & Damage Financing Facility, we hear dollars, reasons and blame – but little to nothing on who will actually govern this money.
This is not because campaigners and negotiators are not working hard on this most difficult of areas. Civil society campaigners understand better than anyone that who and how matter. That is why they are generally to be found outside the main conference centre shouting “Polluters out, people in” at the top of their voices. And proposals for renewed climate finance facilities, including for Loss & Damage, are clear on the need for better governance.
But there is a danger that if it is not in the main talking points for comms and journos, then the pressure for better representativity in decision-making processes may be reduced. And that would be a mistake.
The focus on quantity of input rather than quality of output is one of the classic development finance traps. This is most heinously true of traditional cooperation, where most campaigning has focused on whether the arbitrary 0.7% target is being hit, rather than how money is actually being spent.
Since the dawn of international development time in the mid-20th century, the perennial challenge, from community committees to global summits, has always been some version of this question: who decides? Everyone likes big numbers, but there is no point in putting billions of dollars on the table if it is not spent wisely. Or, worse, if it is used to shore up the interests of the already-powerful.
It’s not just the size of the cake, it’s who holds the cake-knife.
Money doesn’t magically get spent in the interests of those that need it the most. Major global organisations like the World Bank and IMF have historically been villains at least as often as heroes when it comes to the conditions they have attached to their lending and spending. They were, for instance, at the heart of the self-serving neoliberal revolution since the 1970s.
Even the push to issue hundreds of billions of new SDRs (special drawing rights, essentially a kind of global printing of money) is a double-edged sword. Sure, it’s money. But people often gloss over the fact that for most countries of the world, because of the weird SDR process, it will arrive in loans from one of the most criticised and Northern-dominated institutions in the world – the IMF.
Most countries are already heavily indebted after the travails of Covid-19; there is now a real possibility that debt owed to Western or Chinese institutions will be used to push for policies that are not in debtor countries’ interests (see my first book The Trouble with Aid if you need more on this).
Because, of course, climate finance is only one of the battlegrounds. On global health financing as well we see calls for more money but precious little clarity about who will decide how that money gets spent. A recent campaign on the new Financial Intermediary Fund for Pandemic Preparedness & Response managed to seek out a serious discussion about governance, but still has a lot of heavy lifting to do to get to a half-way acceptable arrangement.
More voice doesn’t just mean more dignity, it also means more impact. Spending money internationally is actually just really hard to get right. But there is one thing all the best research shows: the most important way to boost the chances of spending international finance well is not mega-detailed audits or even, amazingly, perfect theories of change developed by expensive management consultants, but ensuring that intended beneficiaries have as much ownership as possible.
It is no coincidence that one of the most successful funds in history – the Global Fund for AIDS, TB & Malaria – has a relatively progressive governance arrangement, where poorer countries have a seat at the table, along with civil society.
By contrast, just look at how we did on that USD100 billion climate finance pledge made ten years ago in Cancun. With no clear definition, let alone agreed mechanism, the next ten years were spent wrangling about additionality and criteria.
Progress is not linear. Attempts to give more voice and ownership to aid-recipient countries at the beginning of this millennium lasted right up till the moment the economy crashed in 2008 and the incipient wellspring of power-sharing generosity dried up, being replaced by an exaggerated value-for-money culture and a re-centring of decision-making in rich-country capitals. Attempts now to localize and even decolonize aid are moves in the right direction, but fundamentally we need to #shiftthepower in a far more transformative way. This battle, like every moral battle, needs to be refought and rewon again and again as relationships reposition in the shifting sands of global power.
The first lesson of history is this: Don’t leave voice, governance and mechanism till last. These issues need to be resolved up front. So pity the climate finance campaigner. And pity the Southern government negotiator. If you thought their case for more money was already crazily difficult, it’s even harder than that.
Logically, the more money pledged, the more control the contributor will want over it. Particularly in today’s global context. Powerful countries face troubling economic times and are not in the mood to stump up tonnes of cash, let alone release control over it. The great power games will make it harder to persuade countries to use their dollars in anything other than their own narrow national interest.
How on earth then can we hope to win more money and more control, quite the opposite of what political reality would predict? Will it be possible to persuade powerful countries that it is in their interests to take this plunge, that better, modern, representative governance mechanisms benefit them as well as less powerful ones?
Honestly, I don’t know. No-one does. I stopped trying to predict stuff in 2016, after I mispredicted Brexit, Trump and “No” to the Colombian Peace Deal.
What I do know is that we can’t talk about transforming the global financial architecture and not mention the reforms that matter most of all: reforms to make decisions more representative and legitimate.
And there is a second lesson from history – keep going. Not just because it is right. And not just because (as all campaigners know) even if we don’t get everything we want, we might at least help avert an even worse outcome! But because you never know how the cards will fall, and the only guarantee of failure is to not even try. As we move beyond the 1.5 degrees target to a scarier world in which every fraction of a degree counts, every effort we make matters, even when the odds seem stacked against us.