Dismantling Bretton Woods To Pay the Climate Bill

Portside Date:
Author: Tina Gerhardt
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The Nation

When Mia Mottley, the prime minister of Barbados, spoke at the opening ceremony of last year’s UN climate negotiations, or COP26, she made global headlines with her fiery criticism of rich nations. “The world stands at a fork in the road,” she told the audience, “one no less significant than when the United Nations was first created in 1945. Will we act in the interest of our people, who are depending on us, or will we allow the path of greed and selfishness to sow the seeds of our common destruction?”

This year, at COP27 in Egypt, Mottley followed up her viral speech with a proposal that she believes would help ensure social, economic, and environmental justice. She put forward the Bridgetown Agenda, which is named after Barbados’s capital and calls for an overhaul of the World Bank and the International Monetary Fund (IMF).

Citing a debt crisis exacerbated by the pandemic, rising living costs, and climate change, the Bridgetown Agenda would suspend IMF debt payments for the poorest countries, defer interest surcharges, and make $100 billion immediately available to those nations that need it. Additionally, the proposal demands a new global mechanism to cover the loss and damage caused by climate change, which was a successful outcome at COP27. This, according to Mottley, would lay the groundwork for “a new financial system that drives financial resources towards climate action.”

The Bridgetown Agenda states: “Most climate-vulnerable countries do not have the fiscal space to adopt new debt. We must move beyond country-by-country responses that have become bogged down by issues of who should do more.” It advocates a new multilateral institution for “raising reconstruction grants for any country just imperiled by a climate disaster.” It calls for $650 billion in emergency liquidity and for development banks to issue $1 trillion in low-interest loans for climate spending in poorer countries.

Mottley has also pushed back against some of the traditional IMF stipulations to qualify for loans, questioning the need to privatize national assets, fire civil servants, liberalize trade, and deregulate domestic economic activity. Confronting the climate crisis will require a lot of spending and investment, especially in frontline communities in the Global South. Wealthy countries typically get interest rates between 1 and 4 percent, while developing countries are forced to borrow at rates of between 12 and 14 percent. The Bridgetown Agenda asks that nations in the Global South be offered better financial terms, closer to what countries in the Global North already receive.

This new approach would effectively dismantle the financial framework that has been in place since 1944, when 44 nations met in Bretton Woods, N.H. The Bretton Woods conference established the IMF and the International Bank for Reconstruction and Development, which today is part of the World Bank.

Addressing COP27 on November 11, former vice president Al Gore said, “We need to reconvene Bretton Woods and completely revamp and reform the World Bank system.” He said it could be accomplished within a year. Gore also called for David Malpass, the Donald Trump–appointed World Bank president, to be removed from his post.

In September, when Malpass appeared alongside the head of the IMF and Bahamian leaders on a New York Times climate panel, he was asked if he agreed that the “man-made burning of fossil fuels is rapidly and dangerously warming the planet.” He refused to answer the question three times before he finally replied, “I don’t even know—I’m not a scientist.”

In response, Joe Thwaites of the Natural Resources Defense Council wrote, “We know climate change is not a priority for Malpass, not just from his words but from his deeds.” Thwaites went on to outline how, since Malpass’s appointment in 2019, the World Bank “has been dragging its feet on taking the climate crisis seriously, at a time when we need it to sprint,” namely by “lagging behind its peers” in funding climate-focused projects, hampering other multi-development banks from doing so, and providing over $14 billion in funding for fossil fuels.

The UN climate negotiations are the world’s largest gathering of nations and NGOs (and, yes, a growing number of fossil fuel lobbyists). Crucially, these talks bring participating nations together on a level playing field. Critics point out that even though 27 annual UN climate negotiations have taken place, the climate crisis has only grown worse during that time. But Mottley’s actions offer hope. While the Bridgetown Agenda is a long way from implementation, it has widespread support among countries in both the Global South and the G7.

Mottley has used the unwieldy and unlikely vehicle of the UN climate conference to have this discussion about the global financial architecture. And her plan just might undo the Bretton Woods system, which was decided on by a minority of nations, less than 80 years ago, with disastrous results. Overhauling Bretton Woods would be one of the most radical economic and political shifts of the past century. And it can’t happen soon enough.

[Tina Gerhardt is an environmental journalist who covers international climate change negotiations, domestic energy policy and sea level rise. She is author of Sea Change: An Atlas of Islands in a Rising Ocean (University of California Press, 2023). Her writing has been published in Grist, The Nation, The Progressive, Sierra Magazine, and Washington Monthly. You can follow her on Twitter @TinaGerhardtEJ.]

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Source URL: https://portside.org/2022-12-01/dismantling-bretton-woods-pay-climate-bill