Last year, at the UN Climate Change Conference in Glasgow, Barbados Prime Minister Mia Mottley addressed an assembly of world leaders on the state of international climate action. Her message: “Try harder.” She condemned the failure of wealthier nations to deliver the resources that poorer, climate-vulnerable countries need to adapt to a warming world. “’Simply put,” she asked, “when will leaders lead?” The Biden administration has promised to restore the United States to its rightful role as a global leader on climate change, but charisma alone cannot make the White House look busy enough to distract from its actual track record. This year, at the IMF/World Bank Spring Meetings in D.C. currently underway, the US has the opportunity to reverse course. The Biden administration can show genuine commitment by putting debt cancellation for climate action on the agenda.
Beyond the fact that the United States has consistently failed to pass comprehensive domestic climate legislation, it regularly obstructs global efforts: failing to contribute its fair share of emissions reduction efforts, underfunding global climate finance, and blocking structural reforms to global institutions like the International Monetary Fund that might undermine its outsize control over global economic—and, increasingly, environmental—decision-making. These actions are all the more consequential amid calls from across the world, including from the Global South, for climate reparations: a package of finance and debt cancellation that starts to compensate countries for the incalculable social, economic, and environmental harms that rich countries have caused around the world, while offering fiscal space and resources to build a safer, more prosperous future.
At this point, no one can doubt the urgency of acting on climate, as the most recent IPCC analyses show the world far off course from a trajectory to 1.5 degrees Celsius—passing that point would greatly increase the likelihood of extreme heat waves and floods, while damaging coastlines and coral reefs. While wealthy nations like the US have largely driven this trend, the impact of climate change is being felt most acutely in countries that have contributed the least to global greenhouse gas emissions. This injustice follows a litany of historical—and ongoing—wrongs, from the centuries of colonial plunder and enslavement that enriched Europe, and then the US, at the expense of the Global South, to the austerity measures of the 1980s and ’90s in response to the Third World Debt Crisis, which stifled development and locked many countries into decades of debt dependency. The results of that dependency are, along with the pandemic’s economic impacts, congealing into a new debt crisis, with 58 of the 65 of lowest-income countries somewhere between moderate risk of debt distress to full-blown default.
Many of these debt-distressed countries are African or Small Island Developing States in the Pacific and Caribbean—regions that are disproportionately vulnerable to climate shocks. Climate-vulnerable countries already pay more to borrow money than their less vulnerable counterparts. That’s in addition to the well-documented “Africa premium” that sees African countries pay more to borrow money than comparably situated countries elsewhere. Climate reparations are a way to begin to redress the injustices of the past, the present, and even the future, given that greenhouse gasses emitted today will destabilize the climate for decades to come.
The rules of the global economic game are written to maintain “a level playing field”—but keeping the playing field “level” after the starting positions were shaped by centuries of exploitation simply locks in unequal economic relations. The imbalance drives low- and middle-income countries into unsustainable debt to pay for their everyday needs, which, increasingly, include urgent action on climate. In 2021, the Jubilee Debt Campaign found that 34 of the poorest countries are spending nearly six times as much on debt as they are on climate adaptation and mitigation. This is why organizations around the world, including the African Forum and Network on Debt and Development, the CARICOM Reparations Committee, and the Jubilee Debt Campaign, have called for debt cancellation and an overhauled global debt framework to create new possibilities for climate action. These growing voices build on resistance to the international debt regime led by governments like Bolivia’s and Cuba’s. Social movements in Latin America dating back to the 1980s have made similar calls, as did the 2010 People’s Agreement at Cochabamba, which called for developed countries to “guarantee an equitable distribution of atmospheric space, taking into account the climate debt of emissions by developed countries for developing countries.”
Debt justice for climate reparations would stand in stark contrast to the actions that the United States and other rich countries have taken since the start of the pandemic. In November 2020, Zambia defaulted on its sovereign debt as the effects of the pandemic met a cresting wave of debt payments that creditors, including the World Bank, refused to delay or restructure. With its state finances in tatters amid the biggest public health emergency in generations, Zambia was forced to go to the IMF for emergency funding. The country has been in negotiations with the fund ever since. Zambia has been forced to cut its public spending by 20 percent in the midst of an economic crisis to comply with IMF loan conditions, in addition to slashing mining royalties to attract new investors and putting important priorities—like climate change adaptation—on the back burner.
This scenario is playing out around the world. Argentina, Ecuador, and Lebanon all defaulted in 2020, and Sri Lanka is poised to enter default at any time. Eighty-five countries required emergency financial support from the IMF over the last two years, and Oxfam showed that 73 of those countries faced borrowing conditions redolent of 1980s-style Structural Adjustment, including mandatory austerity, despite the proven failure of this approach. Meanwhile, some countries eligible for the Debt Service Suspension Initiative—the flagship debt relief program wealthier nations turned to during the pandemic—chose not to participate, for fear it would show weakness to global investors and, in turn, raise future borrowing costs. Even those who did participate in DSSI found little relief. The program primarily delayed repayments instead of canceling debt, while private creditors continued to extract payments from vulnerable countries. The World Bank itself opted not to participate, forcing borrowers to continue payments.
If we are looking for a template to follow as the world heats up and debts grow ever less manageable, the current approach of ad hoc measures and colonial debt administration is not going to cut it. Meaningful debt justice for climate action is unlikely to take shape without US leadership—leadership of the kind shown in the early 2000s with the Heavily Indebted Poor Countries Initiative and follow-up programs. While far from perfect, these IMF-administered debt relief frameworks demonstrated that creditor countries, led by the United States, can come together on debt cancellation, and that when debts are canceled, countries can use that fiscal space to invest in public goods like health, education, and infrastructure. These building blocks of resilience will be needed as precipitation grows less predictable, temperatures rise, and storms grow stronger. Countries that had their debt canceled under HIPC and subsequent initiatives universally reported increased spending on poverty reduction measures, sometimes substantially. A modern debt justice program could open the doors to even more domestic spending while fixing problems with previous debt relief programs—especially the fact that private creditors often refuse to play ball.
But climate reparations must be more than just debt justice—it must move both sides of the ledger. The state of international climate finance is disgraceful. Rich countries have not met their climate financing goal of $100 billion per year, and the majority of what they have counted as climate finance has come in the form of either more debt, or private return-seeking investment that draws profit. The US and other rich countries must not only keep the promises they have already made but also provide radically scaled-up, minimal-strings-attached grants for climate-resilient development. Biden’s $11 billion climate finance request in the 2023 budget is an encouraging sign, but he must fight for its inclusion against the inevitable fossil-fueled backlash from some corners of congress.
In addition to international actions, passing comprehensive domestic climate legislation would not only make possible the litany of objectives a Green New Deal could accomplish; it is a matter of international solidarity. While countries across the South struggle with mounting financial debts, the United States continues to rack up what groups like Acción Ecológica and Pacto Ecosocial del Sur have called “ecological debt”: the massively unequal share of the earth’s productive and resilient capacity that the Global North in general—and the US in particular—consumes. The US must stop digging this hole, not only for the sake of vulnerable communities at home—who are disproportionately poorer communities of color—but for all communities around the world who are suffering as a result of its climate colonialism.