The latest UN Climate Change Conference held in Baku (COP29) resulted in an agreement to commit US$300 billion per year in “climate finance” from developed to developing nations by 2035. Developing countries organised under the rubric of the G-77 had asked for $1.3 trillion per year in climate finance, and this is included in the COP29 agreement as an “aspirational” target. That agreed $300 billion goal, however, is not expected to come from developed country governments but “a wide variety of sources, public and private, bilateral and multilateral”. In other words, governments in the Global North are tasked with ”mobilising” or “catalysing” private sector investment, a process which often entails “de-risking” private investment in climate adaptation or mitigation initiatives by providing various forms of guarantee, such as subsidising returns to private investors via the public purse. In addition, as G-77 members noted at Baku, including multilateral development bank spending and guarantees within the $300 billion total means that Global South nations are themselves paying for putative transfers from the North, via their subscriptions to multilaterals like the World Bank.
Through Prime Minister Mia Amor Mottley, her adviser Avinash Persaud, and their Bridgetown Initiative, Barbados has become central to articulating and broadening a Global South narrative on climate finance since 2022. The Bridgetown Initiative has unfolded through three iterations in three years (termed Bridgetown 1.0, 2.0 and 3.0). While much has changed across the three generations, Persaud has been consistent in articulating the dual injustice of countries in the Global South requiring far greater financial resources to deal with climate vulnerability yet being forced to borrow the capital they seem to need at far higher interest rates than less vulnerable countries of the North. Outlining a framework that was not yet termed the “Bridgetown Initiative” in August 2022, Persaud highlights the devastating vulnerability of the Caribbean to extreme climatic events: “When thousands die tragically in scorching European summer, five million die from extreme temperatures elsewhere. The worst floods in living memory in Germany and Belgium knocked off 0.1% of GDP. When Category 5 hurricanes Maria and Irma slammed into the Caribbean a few years ago, it wiped off 200% of GDP.” Why, asked Persaud in 2023, should those rich countries borrow for ten years at 1.4% interest rates, while developing nations pay 11% to 20% for borrowing the same amount, for which the need is far greater?
This is indeed a staggering injustice, and Point 4 in Bridgetown 3.0 calls on Credit Rating Agencies, which determine how much countries pay to borrow, to “increase the transparency and consistency of their methodologies in order to make ratings outcomes more predictable for both market participants and issuers”. But this does not seem to adequately address the inequity Persaud highlights: Why should poorer states, more in need of finance to address a greater climate vulnerability, be charged more? And we could be forgiven for wondering if it is a lack of predictability that is wrong here—it is precisely the predictable inequity that Persaud himself points out. A number of anthropologists and political economists have explored why countries in the Global South seem to be subjected to punitive borrowing costs even when their “economic fundamentals” do not seem to justify such high interest rates. After the end of apartheid in 1994, European and American investors’ judgements that a Black African government would fail—sanitised as the “market’s assessment of risk” —resulted in a devaluation of the rand that caused a self-fulfilling economic downturn. More recently, Ilias Alami has interviewed Treasury officials in South Africa who are aware of the constant need to “demonstrate to the world…that an African country is capable of running its own macroeconomic policy”, and that higher borrowing costs that they face reflect the fact that “[c]apital is pretty racist in the way it deals with a Black government”.
The higher borrowing costs demanded of African, Caribbean and Latin American countries are not just a problem of transparency or inconsistent methodology. To the contrary, the methodology is perfectly consistent. North American and Western European states’ government borrowing is treated as effectively “risk free” in modern finance theory (regardless of attempted coups and economic crises), whereas government borrowing in former colonies is treated as politically risky and a justifiable source of investor anxiety. The narratives, imaginaries and methodologies through which climate vulnerable states are lumbered with high borrowing costs comprise what Jemima Pierre might call a racial vernacular of development that locates economic “stability” in Europe and North America, and troubling uncertainty and ineffective “governance” in Black Africa—and the Caribbean.
Kamau Brathwaite, who began publishing in the pages of this journal, expresses this putative relation in his own vernacular. His “Metaphors of Underdevelopment: A Proem for Hernan Cortez” outlines the centrality of catastrophe to his understanding of Caribbean history and seeks a “literature of catastrophe to hold a broken mirror up to broken nature”. In the segment “mont blanc”, Brathwaite writes:
mont blanc is, to me, the centre of europe. it is their holy mountain: this hub of white around which european history revolves…
now, as long as mt. blanc is “passive”, “static”, a white glacial statue, resting in its own state of equilibrium, everything else around the mountain, naturally, remains in place…
but these are the miners of empire
they burn, they eat the land
they vomit it up
they leave lakes of desolation; plantations of dark and dead
plankton
Europe is stability; and it is the home of the avaricious miners of empire who leave in their wake depleted plantations. The seat of stability is also the home of the catastrophe that Brathwaite saw unfolding through the “enormity of slavery”, the Middle Passage, and through extreme climatic and oceanic disasters in the present. Persaud, too, is concerned with catastrophe in his own way, and with a certain relation between stability in Europe and vulnerability in the Caribbean. Writing just after COP29 in Al Jazeera, Persaud states that “if vulnerable countries are not to sink under oceans of debt, they also need new international levies to cover loss and damage”, and asks: “What are we waiting for? A category 5 hurricane in the English Channel?” Or , as Brathwaite might put it, for mont blanc to crumble? Persaud’s piece is in effect a response to Keston K. Perry’s salvo against Persaud and the Bridgetown agenda published a few weeks prior. Perry takes aim at the Bridgetown Initiative’s emphasis on disaster clauses in debt agreements. Persaud has been clear that climatic disasters are uninsurable: but catastrophes still occur and take an enormous toll on the indebted nations, particularly those in the Caribbean, which may have to mobilise in response to a disaster that causes 200% of GDP worth of damage—while still making payments on their outstanding loans.
Persaud has celebrated the development of “disaster clauses” in Barbados’ debt renegotiations as a way to allow governments to respond to disasters without defaulting: to free up “fiscal space” and mobilise funds that would otherwise be going to debt repayments. Perry quite rightly points out that such schemes do more to ensure continued repayment for lenders than they do to provide relief for catastrophe-blighted Caribbean nations. The lawyers who were involved in advising Barbados on their 2018-2019 debt restructuring, through which the disaster clause was introduced, describe how this clause was modelled on Grenada’s initial natural disaster clause several years before. Grenada was devastated by Hurricane Ivan in 2004, and restructured their debt in 2005 before restructuring once more in 2015 and adopting a disaster clause on the debt instruments they had to repay by 2030. This clause allowed them to defer the principal and interest of their debt if a cyclone caused a certain amount of damage—but they could only defer three times (regardless of how many disasters was inflicted upon them by a warming and volatile earth), and the deferred interest and principal sum had to be “capitalized” into the principal. As Persaud is at pains to highlight, such deals are “net present value neutral”. The creditor is repaid the same amount, at the same interest rate, that they could have expected if there was no disaster-based restructuring. The Barbados version developed in 2018-2019 included earthquakes, excess rainfall, and a lower threshold of damage to trigger the policy—but also provided “blocking mechanisms” for lenders to veto “abusive triggering”. As Perry points out, this is hard to view as anything other than expanded “debt bondage imposed on climate-devastated countries in the Caribbean and elsewhere”. And while Persaud and other Bridgetown advocates herald the disaster clauses as a vital climate financing tool, it is unclear how truly novel or powerful all of this is.
Returning to the Grenada case, Jurgen Kaiser notes that the “hurricane clause” inserted into Grenada’s 2015 agreement with Global North states “only allows Grenada to negotiate” with bilateral creditors “in the case of a hurricane of an unspecified magnitude. This, however, is something the authorities would have been free to do anyway." It was only the clause with private lenders that was novel. We have seen from the holdouts by private investors following post-COVID debt defaults in Zambia and Sri Lanka that forcing private lenders to write off their debt or take a “haircut” can be impossible without the right legal frameworks in place. The bigger question, though, is this: Why do we accept that private lenders should be allowed to charge Global South governments those higher interest rates or “risk premiums” that Persaud quite rightly rails against (11-20% for climate vulnerable states in the Caribbean and elsewhere, against 1.4% for Global North states) and still demand pathways to ensuring repayment when there is a crisis that triggers default? The logic through which charging higher interest rates is justified is that those states are a “riskier bet"? Lenders want more paid back faster, because every day that goes by brings the borrower closer to an imagined political or climatic disaster. Not being paid back is the hit you must take for charging a high interest rate in the meantime.
Yet this is not how the international financial architecture works—including when it comes to climate finance. The guarantees agreed at COP29 to “catalyse” and “mobilise” private investment in the Global South exist to reduce the risk of non-repayment to Global North creditors and investors. Yet they are also likely to increase the debt load for Global South nations which must borrow in order to fund various guarantees, subsidies and “derisking” initiatives. So, we might ask, where does debt relief figure in the Bridgetown Initiative? It was mentioned as part of Bridgetown 2.0. in 2023, when Persaud wrote about “cancelling official bilateral debt”, stating that “We are not against these…but their scope for moving the needle on fiscal sustainability is so far limited.” By Bridgetown 3.0, the language of debt cancellation is gone; there is instead an emphasis on robust debt relief to ensure countries can finance their development and climate goals in the case of default.
It is hard to see, however, what scope there is for ensuring countries can finance their development and climate goals without debt cancellation. Jamaica’s recent halving of its debt stock was celebrated in the European press, with calls in Le Monde for French treasury officials to go and learn from Jamaica about how its debt was cut, and much made of a paper arguing that Jamaica’s success was down to cross-party cooperation and tight fiscal rules. But, as less celebratory analyses have pointed out, this reduction in debt comes at the expense of a decade of austerity and under-investment, the consequences of which for Jamaica’s economic and social future are likely to be overwhelming. If countries of the Caribbean—and the Global South more widely are forced to choose between debt default, debt clauses that keep borrowing expensive but provide potential breaks for some climatic disasters, or debt reduction at the expense of social spending and public investment, it is little wonder that critical Caribbean political economists like Perry call outright for the abolition of the IMF and the World Bank. Perry’s arguments emerge in dialogue with scholars of the Caribbean Dependency or Plantation school, and the New World Group. The circum-Caribbean exchange of ideas between Caribbean and African dependency theorists has, Michael Witter argues, “receded in the face of the economic power of the IMF and the World Bank…and the generation of economists that succeeded the New World thinkers”.
As much as he was concerned with catastrophe, Kamau Brathwaite was concerned with tidalectics, the ebb and flow of circum-Caribbean exchanges; of bodies, labour, knowledge and resources across space and time. Tidal dynamics from Europe, rolling onto African shores and transporting enslaved people to the Caribbean, emerged as central to Brathwaite’s tidalectic writing. These dynamics of colonial dislocation and violence have given rise to calls for reparation in the Caribbean and Africa. Reparation is absent from the formal Bridgetown Initiative proposals, but it needn’t be—and shouldn’t be—absent from climate finance discussions. Persaud and the Bridgetown Initiative have at various times promoted the channelling of Special Drawing Rights (SDRs, the IMF’s reserve currency) to expand lending for climate action. But more lending means more debt. Other proposals have recently promoted using SDRs to fund a new “Bank of International Reparation” rather than promote more lending (and more debt). But debt cancellation should be our starting point. Persaud gets some of the way to recognising that the outlandish interest rates charged on sovereign borrowing for Global South states are an injustice, and it is only a few more steps to recognise that the accumulated borrowing by those in the South must be written off completely if we are to approach “the other end of the maelstrom” with any kind of end to the history that Brathwaite saw unfolding as a long, interconnected series of disasters.
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