TWN Info Service on Finance and Development (Apr08/05)
12 April 2008
Third World Network

Dear friends and colleagues,

The World Bank will be holding a key two-day meeting in Washington DC next week (14-15 April 2008) to move forward plans to establish its proposed portfolio of climate investment funds (CIFs). The Washington meeting is expected to be followed by another session  in May, with approval for establishment of the new funds by the World Bank’s Board of Executive Directors expected in early July in time for the G8 summit in Japan in July.

Please find links to the following documents:

Link 1 is the latest critique of the World Bank’s proposals dated 3 April 2008.

Link 2 is a detailed analysis and critique of the World Bank’s proposed initiatives, based on earlier drafts of the Bank’s proposals.

Link 3 is a report of criticisms of the World Bank’s proposed initiatives by developing country Parties to the UN Framework Convention on Climate Change (UNFCCC) at last week’s Climate Change Talks in Bangkok.

Link 4 is an NGO letter to Governments and the World Bank, endorsed by 31 NGOs at last week’s Climate Change Talks in Bangkok.

The World Bank’s proposal threatens to undermine the current work under the UNFCCC on long-term cooperative action that was launched in Bali last year. Under the “Bali Action Plan’, enhanced action on the provision of financial resources and investment to support action on mitigation, adaptation and technology cooperation is one of the main elements in the process leading up to the expected agreement in 2009. The World Bank’s proposed initiatives threaten to divert funds away from the UNFCCC process, and undermine efforts there. Specifically, the World Bank’s proposed Climate Resilience Pilot Programme is running parallel to and is in direct competition with the UNFCCC’s newly approved Adaptation Fund.

Many developing countries in the UNFCCC are calling for urgent implementation of developed countries’ existing commitments on finance and technology transfer. They would like to have the funds channelled through the multilateral UNFCCC process, where the design and governance of the funds can be fairly and representatively decided upon by all the Parties. An example of such an alternative is the Multilateral Fund for the Implementation of the Montreal Protocol which has already handled over $2bn successfully (see page 11-12 of Attachment 2). At the very least, financing mechanisms outside of the UNFCCC process should come under the guidance of the Parties to the UNFCCC.

The World Bank’s proposed initiatives will be providing loans as well as grants. This means that developing countries will have to pay for dealing with a problem that has been caused by developed countries. Developed countries have obligations under the UNFCCC to provide “new and additional” funding, and this must be in addition to ODA. There is also the potential for conditionalities to be imposed which would run counter to the decision under the UNFCCC that this “should not impose new forms of conditionalities”.

We hope you find this information and documents useful. Developed country governments should be urged not to channel their funds through the World Bank, but instead, through the UNFCCC. Putting financial resources under the World Bank could be seen as yet another indication of the lack of political will by developed countries to implement their commitments on the provision on financial resources under the UNFCCC.

With best regards,
Martin Khor
Director
Third World Network