Climate Fault-line: North vs South on the Loss and Damages Fund

A debate over the Loss and Damages Fund (the Fund) is heating up as COP28 approaches. Unsurprising and familiar divisions between so-called developing and developed nations are rearing their ugly heads. On one side, the US and other wealthy Western nations including Australia and Canada are arguing to limit the scope of the Fund and its eligibility criteria, emphasising existing development programs while simultaneously vying to constrain the Fund to addressing ‘slow-onset’ climate impacts. On the other side, Global South nations like Barbados, Chile and Pakistan are demanding that the Fund be grants-based, broad in terms of eligibility and responsive to the principle of Common But Differentiated Responsibilities and Respective Capabilities.

Although Loss and Damages gained international attention at last year’s COP in Egypt, the idea has a long history, being championed in the early 1990s by Vanuatu, then chair of the Associate of Small Island States. Over the intervening decades, the concept of Loss and Damages simmered in the background of Bali’s COP13 in 2007, found unsteady footing at Warsaw’s COP19 in the Warsaw International Mechanism, was ‘recognised’ but not acted on at the notorious Paris COP21, became partially rendered into the Santiago Network at COP25 in Madrid and was sidelined at Glasgow’s COP26 before finally breaking ground at Egypt’s COP27, where a Transition Committee convened to operationalise the Fund and make recommendations for its adoption at COP28 in the United Arab Emirates later this year.

What is a Loss and Damages Fund and who is saying what?

At its core, Loss and Damages recognises that as the climate changes, communities are experiencing and will continue to experience devastating impacts which they cannot avoid and to which they cannot adapt. Overlay this with the fact that many of these nations have contributed the least to global emissions historically and add a system that prioritises the interests of polluting and Western states, and what emerges is a broken and profoundly unequal status quo. A Loss and Damages Fund might provide a mechanism for addressing some of these injustices, but few are holding their breath.

The precise details of the Fund are yet to be decided, but many countries have vied for a seat at the table to put forward their cases. Controversially, some are even accused of attempting to rig the game in their favour, Trojan Horsing more voting power to their sides.

As ever, leading the cause for Western nations, the United States has been a tough negotiator, its principal concern the perceived risk that the Loss and Damages Fund might be construed as climate reparations and suggest a legal responsibility to pay countries affected by the climate crisis, with Special Climate Envoy John Kerry saying, ‘the U.S. and many other countries will not establish some sort of a legal structure that is tied to compensation or liability. That’s just not happening’.

Responding to this anxiety of Western nations, COP27 President Sameh Shoukry tried to blunt the potential impasse by stating that the agenda item did ‘not involve liability or compensation’. However, for the US negotiation team, the risk of climate reparations is one concern among many.

Of the small advances on Loss and Damages at COP26, one notable exception was the Glasgow Climate Pact statement that ‘climate change has already caused and will increasingly cause Loss and Damage and that, as temperatures rise, impacts from climate and weather extremes, as well as slow onset events, will pose an ever-greater social, economic and environmental threat’ (emphasis added). However, in successive meetings of the Transition Committee, held in the lead-up to COP28, the United States, led by Christina Chan, has been spearheading an effort to position the Fund to address only one half of the unfolding crisis: slow-onset effects like sea-level rise, groundwater salinisation and desertification. The United States and other Western nations are arguing for the omission of weather extremes such as storms, heatwaves, droughts and floods from the Fund’s scope, saying that these events are already covered by other funding mechanisms such as World Bank programs and humanitarian aid, and that therefore the Fund should ‘avoid duplication’ and focus on ‘gaps’ in the system as it currently exists. Seemingly, the gaps in the current programs designed to address weather extremes are being consciously ignored.

This argument presents somewhat of a double blow to the interests of Global South nations. One sentiment voiced by the then chair of the G77+China Group and Pakistan’s ambassador to the United Nations, Munir Akram, bears repeating: ‘Loss and Damage is not charity—it is climate justice’.

Let’s be clear, Global South nations are demanding to speak for themselves, but even this is being railroaded by wealthy Western nations. Relying on multilateral development banks like the World Bank does very little to address the inequality at the decision-making table, where Western nations’ voices often speak loudest. It is well documented that the World Bank is deeply infused with the interests of its principal donors, mainly the United States. So carving out a larger role for the World Bank in Loss and Damages will likely carve out a greater negotiating position for the United States.

Emphasising the role of multilateral development banks will likely also increase the debt burdens of already highly indebted nations as they struggle to respond to weather extremes. Barbados’s president Mia Motely and France’s president Emmanuel Macron are discussing reforms to the World Bank, some conclusions on which we anticipate at this year’s COP. However, it is clear that the current proposals to couple the Loss and Damages to the multilateral development banks will only diminish the voting power of Global South nations.

The focus on slow-onset impacts of the climate crisis is an important development, and one which will improve the livelihoods of frontline communities, especially in countries in the Pacific, Caribbean and Sahel regions. However, narrowly focusing on these impacts misses out on the vital assistance needed to address weather extremes. The ‘gaps’ are not just limited to the slow-onset impacts; there are profound injustices baked into how the world responds to weather extremes such as the flooding that devastated Pakistan in the lead-up to last year’s COP in Egypt and the current humanitarian crisis in Libya that has so far taken 11,300 lives.

To approach any semblance of climate justice, the Fund must operate within a framework of justice that includes the redistribution of resources and the fair distribution of the power of decision-making. However, it appears this is a point on which Western nations will not negotiate.

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About the author

Sacha Shaw

Sacha is a freelance journalist and writer with a keen interest in climate and international affairs. Publications include The Diplomat, ABC Religion and Ethics Report and Pearls and Irritations.

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