The conversation around climate change has spiked up. COP27 is the practical manifestation. The pledges around it never catapulted into practice. The narrative of climate change has incorporated historical injustices such as colonial history and white imperialism. The rise of neo-liberal capitalism and its merciless exploitation of earth resources without any regard for environmental upgradation. Resultantly the earth is bought near to point of irreversible climate change. However, the most affected by climate change are the least responsible for it. To truly decolonize the practice around climate change, we need to focus on two things: debt restructuring and loss and damage reparations.
Debt restructuring is an essential point raised by Pakistan. Pakistan has to pay $15 billion as an external debt service in FY22. IMF and WB are the country’s major creditors. This amount is close to the current account deficit of $17.4 billion. Insufficient monetary space coupled with high public debt service has shrunk the climate change response mechanism of developing countries like Pakistan. A country whose global carbon emission is less than 1%. The advanced economies implemented expansionary monetary policies to respond covid crisis and inflation. Global south didn’t have this luxury.
IMF and WB are financial global architectures designed by neoliberal ideology reflective of post-WWII realities rather than climate change realities. There is a dire need to rethink these structures as they are impeding much-needed investment in climate resilience. Governments in the global south need to climate-proof their economies or get stuck in a perpetual spiral of unsustainable debt burden and climate vulnerabilities. There is a higher risk that vulnerable developing countries like Pakistan will get bogged down in a vicious circle of increasing cost of debt and reduced fiscal space for investment in climate resilience.
One study recommends the creation of a “new guarantee facility for green and inclusive recovery”. This facility can entice private creditors to engage in debt restructuring. It could back the payments of newly established sovereign bonds swapped with “old, unsustainable and privately held debt”. Private creditors would benefit from the partial guarantee of principal as well as 18 monthly guarantees of interest payment.
Delaying the debt distress resolution can be costly for debtor countries.
Pakistan suffered $30 billion amount of flood damages in recent floods. It’s voicing for Loss and Damage Reparation is deeply rooted in climate vulnerabilities. Rich countries pledged $100 billion for loss and damage reparations as runner-up to the COP26 conference. However, it proved to be empty words.
These sound narratives need to be translated into practice. Transnational linkages are already formed. But a new form of empathy and solidarity is required. One that can transcend our imaginary political and geographic boundaries without collapsing into sweeping abstract planetary universalism and delivering on pledges.