TWN Info Service on Climate Change (Oct14/05)
21 October 2014
Third World Network

Green Climate Fund Board adopts decisions after intense exchanges

Barbados, 21 Oct. (Indrajit Bose) — The eighth meeting of the Board of the Green Climate Fund (GCF) concluded in Bridgetown, Barbados, at around 4 am morning of Saturday, Oct.18, after a marathon session all night long, well after its scheduled ending on Oct. 17. (The GCF was set up under the United Nations Framework Convention on Climate Change- UNFCCC)

The meeting, held in a lovely beach resort on the island state began on Tuesday, 14 Oct. with a long agenda with 36 topics and sub topics lined up for discussion, which proved grueling and intense for both Board members and observers. Efforts at prioritizing the agenda items did not materialize with diverging views among developed and developing country Board members on what were key issues to be resolved at the meeting.

The meeting was Co-chaired by Ayman M Shasly (Saudi Arabia)and Manfred Manfred Konukiewitz (Germany). Shasly was appointed Co-chair after in place of Jose Salceda, of the Philippines who was unable to attend the meeting.

Among the major decisions adopted by the Board included matters related to policies for contributions linked to the initial resource mobilization (IRM), country ownership, accreditation, trustee arrangements, readiness and preparatory support, financial terms and conditions of grants and concessional loans, additional modalities that further enhance direct access, as well as issues connected to the initial results management framework of the Fund.

Many of these decisions did not come easy as there was a clear divide between developed and developing country Board members over several issues. Board members from developing countries appeared united and fought tooth and nail to ensure that they did not get the raw end of the deal. Many of the developing country Board members made strong and impassioned statements that drew much  appreciation from many observers who witnessed the powerful exchanges via a video screen from the overflow room next to the Board meeting room.

Among the topics that saw the most intense exchanges among developing and developed country Board members were policies for contributions under the IRM process that included a proposal on decision-making by the Board to allow for voting, linked to contributions in the event consensus could not be reached. Another related issue was whether the targeting or earmarking of contributions should be allowed. Developing country Board members were opposed to both these proposals.

In relation to the issue of targeting or earmarking of contributions, after much wrangling, the Board agreed that this approach would not be adopted. On the issue of decision-making, it was agreed that the Board will develop procedures for adopting decisions in the event that all efforts at reaching consensus have been exhausted and the Secretariat was tasked to develop options for the consideration of the Board at its first meeting in 2015.

Below are some highlights of the exchanges on the issue of the targeting of GCF Funds and that of decision-making.

Targeting of contributions

Targeting of contributions was a major bone of contention under the policies for contributions discussion. In the annex to the proposed decision for the Board’s consideration, it was mentioned that the aggregate volume of targeted contributions to the Fund would not exceed 20 per cent of the total confirmed contributions to the Fund. The GCF Secretariat would monitor and implement such targeting and this would not prejudice future replenishments, read the annex.

Shasly (Saudi Arabia)in his capacity as a representative from the Asia-Pacific region, said that he was not in a position to consent to the decision. He suggested removing the paragraphs that talk of earmarking 20 per cent of the funds received.

Leonardo Martinez-Diaz (United States) said these are key policies to make financing key and objected to removing the paragraphs corresponding to earmarking of funds. To this Shasly responded that the contributions to the Fund are not to be earmarked. He added that the Board decides where the funds go there is no way for a contributor to say where the contributions should go whether to a certain country to a certain project. He wanted the notion of earmarking removed.

Bernarditas Muller (Philippines) added that targeting of contributions do not conform to the decisions taken in the past. She received support from Gabriel Quijandria (Peru) who saidthat earmarking at this stage is not the best decision to have. Jorge Ferrer (Cuba) said that it was not acceptable to pre-assign 20 per cent of the money of the Fund (to specific targets).

To resolve the impasse, Zaheer Fakir (South Africa) proposed changing the targeting paragraph. His proposal read: “The individual and the aggregate volume of targeted contributions to the Fund would not exceed 20 per cent of the total volume of the confirmed targeted contributions; thus it will not prejudge, nor set a precedent for future replenishment. The monitoring and implementation of such targeted contribution will be done by the Secretariat, thus ensuring 50 per cent targeted contribution towards mitigation and adaptation.”

Martinez-Diaz (US) responded by saying the financial terms for contributions were crafted by contributors “with great care to leverage funds” and he could not go along with the proposal.

To this Ferrer (Cuba) made an appeal that Fakir’s proposal was a compromise. “It is a great departure from our part… but this is as far as we can go,” he said firmly. Fakir (South Africa) added that developing countries are showing the flexibility to pilot something new and he was looking for flexibility from the others.

Norbert Gorissen (Germany) responded that Fakir’s proposal could not be accepted since the document (on policies for contributions) had been prepared “not by a sub-group of the Board, but by a much larger group of people” (referring to the potential contributors to the Fund) and it is not possible to change the document “without consulting with the others”.

At this point, close to midnight of Thursday, Oct. 16, the meeting on this agenda item was suspended. It was taken up the next day with the General Counsel of the GCF saying that the policies for contributions have legal implications and if the Board did not decide on the policies, contributors would not be able to enter into contribution agreements.

David Kaluba (Zambia) said that it was not right to use pressure to get this and the members should try and reach consensus on the issue. Omar El Arini (Egypt) disagreed with the interpretation of the General Counsel and said that the policies for contributions are crafted by the Board and would be in response to the recommendations that come from the IRM process. This had nothing to do with the authority to sign contribution agreements and there are no legal implications. Ziqian Liang (China) supported Arini and added that not taking a decision would not impact on contribution agreements.

Fakir (South Africa) added his voice to the debate and said, “It seems what we are being told is, as a Board, some other group of people are sending you something and telling you that you will accept it and if you don’t accept it you wont get any funds.” Referring to the contributors, he said that a body that is not formally mandated was effectively rendering them with no choice and they were wielding the power just because they have a “cheque book”. “If that’s the case, why bring a decision to us. We have shown flexibility. We are not prepared for this situation.  When the commitment of USD 100 billion (referring to a decision of the UNFCCC where Parties agreed to mobilise this amount by 2020), there was nothing on earmarking,” said Fakir.

Muller (Philippines) said that these recommendations proposed “in effect are take it or leave it.” “This is totally against the guidance provided by the Conference of Parties (COP) to the UNFCCC,” she added. She stressed that developing countries were not talking about charity or aid. “What about the 50-50 allocation to mitigation and adaptation? How will you do this if you target 20 per cent to give to whatever you like. These recommendations are forcing the Board to be incoherent with its own decision on allocations, she added further.

At this point, about 1 am on Saturday, Oct.18, the Board took a break to try and resolve the impasse informally, out of the plenary setting, but to no avail. Developed country Board members continued to express concerns about agreements with contributors and about the impact of a lack of a decision on policies for contributions on the forthcoming formal pledging conference for the GCF to be held in November in Berlin, Germany.

Kaluba (Zambia) made an impassioned plea about resolving the issue. “Climate change affects all of us. We have a responsibility to do something to serve this planet before it disintegrates and collapses. We are insisting on an element that is not significant towards helping us resolve the problem. It is about politics; about the rich versus poor. It is about me against you and about what I can do with my money. This is very sad. Take out targeting,” said Kaluba, as the mood in the room began to change. “I was there when we were hit by disasters,” Kaluba continued, “We will tell the world we never resolved the problem because some people insisted on the targeting of their funds. We cannot continue like this.”

In response, Martinez-Diaz (US) repeated the argument about the document on policies for contributions being “carefully crafted” by contributors and suggested the matter should be suspended. Muller of Philippines added that this discussion should be reflected in the COP as it happened.

Martinez-Diaz (US) thencame up with another proposal to resolve the issue that said that there be a 50 per cent cap for individual contributors. This proposal further incensed the Board members and Arini (Egypt) referred to the discussions as “horse-trading”. He said that “50 per cent or 20 per cent or 10 per cent…the idea is to have no earmarking.”

Kaluba (Zambia) retorted and supported Arini and Fakir (South Africa) came up with a fresh proposal. He said that the Board members had agreed on most of the contents of the document. “We could completely move away from earmarking or we could haggle with percentages. We suggest we stick to 90 per cent of the document that we agree on and delete any other language on what we don’t agree on,” he added.

Dipak Dasgupta (India) added his voice, lending support to Fakir. In a last ditch attempt Co-chair Manfred Konukiewitz (Germany) said that Fakir’s proposal seemed promising and that he wanted the Board to take a decision. He refused to entertain any further deliberation on the subject.

With no further protest from the developed country Board members, the reference to targeting or earmarking of contributions to the Fund was deleted from the policies document.

Decision-making

The document on policies for contributions referred stated that in the event decision-making by consensus had been exhausted, the Board could resort to voting linked to contributions. The developed countries wanted voting to be linked to contributions for more “discipline” according to Andrea Ledward (UK) and Martinez-Diaz (US); for mobilizing more “finance” said Shuichi Hosoda (Japan) and to serve as an “incentive” said Irene Jansen (Netherlands).

Developing country Board members were against any reference to voting or link with contributions, as this would mean a departure from the established practice of consensus.

Ferrer (Cuba) said that voting linked to contributions would be an unfair process. Arini (Egypt) added that it is a red line for developing countries to link voting to pledging or contribution. Liang (China) reminded that the Fund is not a company, nor a bank. “It is a public good and we should not link the decision-making process with contributions,” said Liang. Muller (Philippines) reminded the Board that the GCF is an operating entity of the financial mechanism of the Convention and consensus is the way. She added that the rules of procedure of the GCF do not lay down voting as a principle and it is for the Board to decide what to do when all efforts in achieving consensus fails. Arini and Muller suggested putting this issue on the agenda of the Board meeting next year.

To developed countries arguments that this was important for contributors to pledge resources to the Fund, Muller asked ifadditional conditions were being placed on developing countries in order to moblise resources for the Fund. (At The 8th meeting of the Board in Songdo, South Korea, eight essential requirements had been agreed to as a pre-requisite to mobilise resources for the Fund).

Fakir (South Africa) said that for any institution to be effective, decision-making has to be the cornerstone. He said he took grave offence to the reference that decision-making is for more contributions. “It sets a very, very bad precedent. All countries must be valued equally and be treated equally whether they pay or not. We don’t want a headline in the media saying: GCF votes for sale,” said Fakir.

Dipak Dasgupta (India) said that the world had rejected plutocracy a long time ago. “Vast numbers of societies and organisations are ruled by consensus and there are multiple ways in which consensus can be reached. I don’t see how in this day and age we are seeking to ask the Board, a public organization, to depart from a system of consensus which is an established, democratic form of governance,” said Dasgupta.

Kaluba (Zambia) asked why decision-making was not being linked to the vulnerability of countries. “If you want to kick out the voice of the small countries, go by voting and link it to contributions. Then we are out of the process and we will say the most vulnerable are not part of decision-making process of the Board. On the other hand, let’s put it that the most vulnerable countries must have specialized voting rights. If you put it in there, we shall accept it,” said Kaluba.

Patrick McCaskie (Barbados) said an organization such as the GCF should be an ethical organization. “I cannot go home to my wife and say that I contribute the most and hence I have a certain share in decision-making. I will be thrown own. Similarly, it cannot be that as developed countries contribute more, they have more say in the process. If this decision sails through, it will be quite unfortunate,” said McCaskie.

After several hours of discussion on this, it was decided that that the decision of the Board would be taken by consensus and that the “Board will develop procedures for adopting decisions in the event that all efforts at reaching consensus have been exhausted”. The Board also requested the GCF “Secretariat to develop options for procedures for adopting decisions in the event all efforts at reaching consensus have been exhausted for consideration by the Board at its first meeting in 2015 taking into consideration …(the previous) Co-chairs’ non-paper on voting procedures.” (This non-paper provides options based on double-weighted decision making systems).

(Further articles on other issues will follow).