LONDON/DUBAI (Reuters/Web Desk) – Countries moved a step closer on Saturday to getting a fund off the ground to help poor states damaged by climate disasters, despite reservations from developing nations and the United States.
The deal to create a "Loss and Damage Fund” was hailed as a breakthrough for developing countries’ negotiators at United Nations climate talks in Egypt last year, overcoming years of resistance from wealthy nations.
It was Pakistan, being the co-host of the COP27 held last year at Sharm el Sheikh in Egypt, that had led the successful efforts for creating the fund amid the resistance and objections raised by the rich countries.
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The member nations of the United Nations Framework Convention on Climate Change (UNFCCC) decided “to establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change, in responding to loss and damage”.
Pakistan was selected as the COP27 co-host after it faced unprecedented devastation caused by the floods earlier that year during the monsoon season, as the country along with others in the region are experiencing climate change-induced extreme weather events at an alarming rate.
But in the past 11 months, governments have struggled to reach consensus on the details of the fund, such as who will pay and where the fund will be located.
A special UN committee tasked with implementing the fund met for a fifth time in Abu Dhabi this week – following a deadlock in Egypt last month – to finalise recommendations that will be put to governments when they meet for the annual climate summit COP28 in Dubai in less than four weeks' time. The goal is to get the fund up and running by 2024.
The committee, representing a geographically diverse group of countries, resolved to recommend the World Bank serve as trustee and host of the fund – a tension point that has fuelled divisions between developed and developing nations.
Housing a fund at the World Bank, whose presidents are appointed by the US, would give donor countries outsized influence over the fund and result in high fees for recipient countries, developing countries have argued.
To get all countries on board, it was agreed the World Bank would serve as interim trustee and host of the fund for a four-year period.
Jennifer Morgan, Germany's special climate envoy, said in a post on X that Berlin "stands ready to fulfil its responsibility - we're actively working towards contributing to the new fund and assessing options for more structural sources of financing".
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Others were less optimistic.
“It is a sombre day for climate justice, as rich countries turn their backs on vulnerable communities," said Harjeet Singh, head of global political strategy at non-profit Climate Action Network International.
"Rich countries ... have not only coerced developing nations into accepting the World Bank as the host of the Loss and Damage Fund but have also evaded their duty to lead in providing financial assistance to those communities and countries."
The committee also recommended that developed countries be urged to continue to provide support to the fund, but failed to resolve whether wealthy nations would be under strict financial obligation to do chip in.
"We regret that the text does not reflect consensus concerning the need for clarity on the voluntary nature of contributions," a US State Department official told Reuters.
The US attempted to include a footnote clarifying that any contributions to the fund would be voluntary, but the committee chair did not allow it. The US objected to that denial.
Sultan al-Jaber, who will preside over the COP28 talks, said he welcomed the committee's recommendations and that they would pave the way for an agreement at COP28.
WILL PAKISTAN BE AMONG THE BENEFICIARIES?
It’s not clear yet whether developing nations like Pakistan will receive money through fund despite the fact that they have been facing the brunt of the global warming effects.
Why? Because the rich countries have been arguing that the “countries vulnerable to climate change” does not extend to all developing countries.
And with the World Bank set to host the Loss and Damage Fund, they can maneuverer the Washington-based institution how and to whom disburse the money.