My Take | Just who’s conducting debt-trap diplomacy?

Let’s just say everything I thought I knew about the debt-trap issue is either incomplete or simply false. A friend kindly sent me an analysis by Oxfam on the supposed financial assistance offered by member states of the Organization for Economic Cooperation and Development (OECD) to poor countries and territories to counter climate change, the so-called green financing. It’s eye-opening, to say the least; well, actually an outright scandal, a cruel con trick played by Western nations on the most vulnerable and poorest countries that can least afford such loans.

“The excessive use of loans in the name of climate assistance is an overlooked scandal,” said Tracy Carty, senior policy adviser on climate change at Oxfam and co-author of the report. “The world’s poorest countries, many of whom are already grappling with unsustainable debts, should not be forced to take out loans to respond to a climate crisis not of their making.”

The report is titled “Climate Finance Shadow Report 2020: Assessing progress towards the $100 billion commitment”. You should really read it, available at Oxfam.org.

Western donors reported that US$59.5 billion per year on average in 2017 and 2018 – the latest years for which figures are available – had been handed to developing countries. But the true value may be as little as US$19 billion-US$22.5 billion per year once loan repayments, interest and other forms of over-reporting have been accounted for.

A whopping 80 per cent (US$47 billion) of all reported public climate finance was not in the form of grants but loans offered at market or non-concessional terms to many of the world’s poorest and least developed nations.

“Oxfam calculated that the ‘grant equivalent’ – the true value of the loans once repayments and interest are deducted – was less than half of the amount reported,” the report said.