| A financial official from an island that’s among the world’s most vulnerable to global warming has a plan to quickly increase the amount spent on climate solutions in developing nations. And his plan requires little additional spending by rich countries.
“If you focus only on grants, only on people transferring money to you, you’re never gonna get the scale we need to save the planet,” says Avinash Persaud, a Barbados-born, UK-raised development economist who was previously a banker in the City of London. His target for spending on emissions-reducing projects alone by developing countries is about $1.5 trillion per year — or seven times the sum rich countries currently give in overseas development aid for all causes, including health and poverty reduction.
In a recent interview with Bloomberg Green, the impatient 56-year-old who serves as the financial adviser to Barbados Prime Minister Mia Mottley explained that the obstacle is better understood not as the lack of money but how to adjust the rules of global capitalism to end the prevailing climate-finance deadlock.
“The problem is that everyone believes someone else should be doing more. Why? Because it’s a cost to them to do it,” Persaud says. “So if we can reduce the cost for them, they won’t spend their time pointing their finger at someone else — they will get it done.”
His proposals — under the Bridgetown 2.0 agenda — face enormous challenges that could prevent implementation. But they’re being taken seriously. A summit in Paris this week will bring together the heads of government from more than 100 countries to grapple with financial scarcity as the single-biggest impediment to climate action. Bridgetown solutions — devised by Persaud’s team and championed by Mottley, who is co-hosting the event alongside French President Emmanuel Macron — will take the spotlight across two days of meetings about how to reform the World Bank, the International Monetary Fund and other multilateral lenders.
How did political players from a small-island nation end up at the center of a longshot push to rewire global finance for the climate era? It helps that Mottley’s star-turn speeches at United Nations podiums tend to get far more views on YouTube than the population of Barbados. Her speech at COP26, for example, has been watched more than every other speech by every world leader that year — combined.
But Mottley hasn’t been relying on her speechmaking prowess or her moral stature as the face of an island with extraordinary vulnerability to rising seas and violent storms. She’s also been pulling political levers by fronting practical solutions that are designed to unlock trillions of dollars in private spending for dealing with climate change. That program has been assembled by Persaud, whom she first met while studying at the London School of Economics.
Mia Mottley delivers a speech at COP26 in Glasgow on Nov. 2021. Photographer: Yves Herman/WPA Pool/Getty Images
Under the original Bridgetown Initiative, named after the capital of Barbados, Persaud first pitched an ambitious set of solutions to the climate-finance deadlock last year. Those proposals, aimed chiefly at reforming the IMF and World Bank, failed to gain the backing needed for policy changes within giant institutions mostly controlled by a small group of wealthy nations. But his ideas — helped by Mottley’s speeches and diplomatic acumen — succeeded in capturing outsized attention.
Now Persaud is back with Bridgetown 2.0, a brief policy document that has been circulating in its current form among climate diplomats since April but hasn’t been previously reported in full. He hopes to bring to his cause some of the leaders gathering in Paris for this week’s meeting, known as the New Global Financing Pact. The summit is expected to draw the likes of German Chancellor Olaf Scholz, Chinese Prime Minister Li Qiang, Brazilian President Luiz Inacio Lula da Silva and the leaders of the IMF and World Bank. (Bloomberg Philanthropies is one of the summit’s official sponsors.)
Persaud’s ideas are specific and pragmatic, even if their political feasibility remains largely untested. The new Bridgetown plan is “comprehensive and very ambitious,” said Frank Schroeder, senior policy advisor on global finance and economics at E3G, an environmental think tank.
Bridgetown 2.0 aims to create currency exchange guarantees, add disaster clauses to debt deals and tweak the rules to enable much greater lending from multilateral lenders. Another proposal would enact a levy on emissions from the shipping industry or impose a fee on oil exports. Doing these things would be difficult, Persaud admits, but can unleash trillions of dollars in finance without simply relying on calls for increased aid from wealthy nations.
Those calls, no matter how righteous, have a way of going unfulfilled — particularly when the rationale is global warming. Developed nations first agreed to muster $100 billion per year in climate finance payments to developing countries back in 2009 and have yet to fulfill that goal. Unmet financial promises often lead to breakdowns in climate talks, such as the preliminary UN meeting last week in Germany that concluded last week without significant progress. Finance will also play a prominent role in the year-end COP28 climate summit that will be held in Dubai. |
