‘New form of colonialism’ lures poor nations into fossil fuel reliance
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Campaigners oppose this "new form of colonialism," in which debt-ridden nations in the Global South are compelled to engage in fossil fuel projects.
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Homeless people sleeping under a bridge on a hot day in New Delhi, on May 20, 2022 (AP)
A new analysis accuses wealthy nations and corporate lenders of forcing deeply-indebted nations into dependence on fossil fuels.
According to a new analysis by the anti-debt campaigners Debt Justice and partners in affected countries, the pressure to repay debts is forcing poor nations to continue investing in fossil fuel projects to make their repayments on what are typically loans from richer nations and financial institutions.
The group is requesting that all debts owed by nations in crisis be scrapped, particularly those owed for fossil fuel-related projects.
"High debt levels are a major barrier to phasing out fossil fuels for many global south countries," said Tess Woolfenden, a senior policy officer at Debt Justice. "Many countries are trapped exploiting fossil fuels to generate revenue to repay debt while, at the same time, fossil fuel projects often do not generate the revenues expected and can leave countries further indebted than when they started. This toxic trap must end."
According to the report, 54 nations are experiencing a financial crisis and are spending five times as much on debt repayments as they do on addressing the climate catastrophe. The amount of debt owed by Global South countries has surged by 150% since 2011.
Read next: 52 nations in or near debt distress, risking default: UNDP chief
As a result of loans obtained from London-based banks without the consent of parliament in 2013 and based on estimates of revenue from the country's gas field discoveries, according to Daniel Ribeiro, program coordinator for the Mozambican environmental campaign Justiça Ambiental, the debt load of the nation has doubled.
According to Ribeiro, the decline in oil and gas prices in 2014-16 caused Mozambique to experience a financial crisis, but the country's rescue plans from international lenders have relied on the loans' ability to be serviced through future gas earnings.
"The debt caused by fossil fuels are being structured to be paid back by fossil fuels, solidifying a vicious cycle of having to move forward and having very severe consequences of not wanting to continue with fossil fuels," Ribeiro said.
After going into default on its debt, Suriname was in a similar scenario. Therefore, in 2020, it came to an agreement that would grant creditors the right to approximately 30% of Suriname's oil revenue until 2050.
Read more: Rich nations owe poor countries $192 tln for climate crisis: Study
However, according to Sharda Ganga, the director of the Surinamese civil society organization Projekta, the transaction should have stayed within the boundaries of the nation's climate commitments.
"As our debt has grown unsustainable, it dominates all policy decisions and impacts the lives of our citizens in every possible way. Earning money as quickly as possible in order to pay back the creditors is therefore priority number one. It means there is no more room for patience and such pesky things like sustainability or climate justice," Ganga said, adding that what is real "is that this is the new form of colonialism – we have exchanged one ruler for the rule of our creditors who basically already own what is ours. The difference is this time we signed the deal ourselves."
In order to transition away from fossil fuels, Leandro Gómez, a campaigner for investment and rights at the Environment and Natural Resources Foundation (Farn) in Argentina, claimed that the nation had lost its sovereignty and was now forced to subsidize fossil fuel companies, promote fracking, and abandon renewable energy projects.
According to the research, many countries impacted by climate change need increased access to funds in order to cover the costs of the effects because many are already in debt from having to pay for repairs following cyclones and floods.
After the floods of last year, Pakistan received the majority of the $10 billion (£7 billion) in financial aid in the form of loans, whilst Dominica's debt as a percentage of GDP increased from 68% to 78% as a result of Hurricane Maria in 2017.
"The climate and debt crises emerged from the same system that is based on the global north’s relentless extraction of human, economic and environmental resources to feed the drive for profit and greed," Mae Buenaventura, from the Asian People’s Movement on Debt and Development, said.
The least wealthy nations and lenders could do, according to her, was cancel the debt.
