Show us the money: Cancun negotiators talk cash

Duncan McLaren updates on the climate summit.

Finance continues to dominate discussions inside and outside the talks in Cancun. The arbitary numbers being bandied around – both for so-called ‘Fast Start Finance’ (FSF), and over the medium term – have been criticised from all sides.

Even the highest numbers promised – $30bn in fast-start funding, and $100bn by 2020 – are dwarfed by military expenditure and the costs of war. Estimates of the total cost of the Iraq and Afghanistan conflicts range from around $1,000bn to $3,000bn. Annual global military spending totals around $1,500bn.

Private sector spending is even greater. A global transactions tax on financial trades (the Robin Hood Tax) could raise $400bn a year (at a rate of just 0.05% – that’s 5p in £1,000).

But even the amounts suggested so far are being disputed by rich countries implying that the recession makes it impossible to provide serious financial support. Many have tried to redefine existing aid or climate finance as additional contributions to the fast-start funds. And now the EU’s lead negotiator has even suggested that support should only be provided as loans, rather than grants.

It appears he was assuming that because rich European households and businesses can save so much through energy efficiency that they can repay loans, then poor countries could do the same.

But even in rich Europe households in fuel poverty need grants to improve their homes, and even where loans might work, they need low interest rates and long terms.

Even if poor Southern countries were like rich Northern households, the logic would still be unethical. Southern countries rightly note that financial payments are merely a repayment of the climate debt owed to them by the rich world.

The mechanisms for support are controversial for other reasons too. Rich countries want to use the World Bank – with a continuing record of financing fossil fuel development, and controlled by the donor nations – to channel money. Southern countries prefer the idea of an independent fund under the UN

Climate Convention, with a structure that gives the recipients in the developing world the balance of influence.

These issues aren’t insoluble, but a fair resolution will be difficult without developing countries conceding ground in other key areas, such as tough targets in a second commitment period under the Kyoto protocol.

Yet again, sadly, we see climate negotiations being used to play out geo-politics on a grand scale, sidelining the real reasons for the summit.