Without debt relief, climate action will fail

Laurie van der Burg serves as the global public finance campaign manager at Oil Change International, while Mariana Paoli holds the position of global advocacy lead at Christian Aid, and Rebecca Thissen is the global advocacy lead at Climate Action Network International. As climate-related disasters worsen in the Global South, another crisis is emerging quietly but with deadly consequences. Countries are struggling with overwhelming debt burdens, diverting crucial funds away from clean energy and resilience efforts towards creditors in the Global North. The United States is exacerbating this debt and climate crisis by pressuring global institutions to prioritize private profits of American and multinational corporations, including investments in fossil fuels, rather than climate action.

Debt burdens are escalating for poor nations due to climate shocks and fluctuating currencies. As nations gather in New York for meetings leading up to the United Nations’ 4th Financing for Development conference in Seville, they are faced with a critical decision: resist these detrimental influences, particularly the US’s efforts to undermine the conference’s outcomes, or establish a new financing framework in Seville that ensures the most impoverished nations receive the necessary support to survive.

Numerous countries in the Global South are now spending significantly more on debt repayments than on climate initiatives. Some are unable to recover from natural disasters like floods and droughts because they are still repaying loans from decades ago, while others remain reliant on costly fossil fuel imports or are forced to export oil and gas to stay afloat. This vicious cycle is a deliberate outcome of a global financial system that benefits wealthy nations, which are now demanding loan repayments from those who had minimal contribution to the climate crisis.

Several Global South groups have proposed viable solutions to address these challenges, such as establishing a UN Tax Convention to combat tax evasion and significantly increasing grant-based climate finance. Calls for debt cancellation and a UN Sovereign Debt Convention have gained momentum, with the draft text for the FfD4 conference advocating for the establishment of such a Convention to address the debt crisis comprehensively.

While the Global North countries are hindering financial system reforms and prioritizing private sector involvement over public funding, the EU and UK should align with Global South nations to push for systemic change and enhance democratic governance of financial institutions. By taxing the ultra-wealthy, holding polluters accountable, eliminating fossil fuel subsidies, and canceling exploitative debts, substantial funds could be redirected towards a global Just Transition and creating a more equitable and sustainable world.

The upcoming Seville conference represents a critical juncture to demonstrate the effectiveness of international cooperation in addressing these interconnected crises. Governments must endorse solutions led by the Global South to shift the global economy towards justice, resilience, and sustainability. Establishing a UN Sovereign Debt Convention is crucial to rectify a system that has been rigged against the world’s most vulnerable populations. It is imperative for wealthy nations to prioritize public tools that serve the common good instead of resorting to financial tactics that exploit under the guise of climate action.