The GEF's warped priorities

IN THEIR eagerness to assume global environmental leadership, representatives of the Indian government committed a faux pas recently by trying to grab the chairpersonship of the World Bank-controlled Global Environmental Facility (GEF). Though the GEF is seen by some as a controlling financial mechanism for the biodiversity and climate change conventions, it has been under severe attack by none other than India's own ministry of environment.

And the ministry is not alone in criticising it. All the member-countries of the Group of 77 maintain that a donor-controlled GEF will not support the priorities of developing countries. South Asian NGOs that met in New Delhi last year also rejected the GEF in its present form, calling it an immoral and illegal institution.

The GEF was formed by the industrialised countries when late Prime Minister Rajiv Gandhi, supported by G-77, asked for a Green Fund to pay for the damage that the rich have caused to the global environment, which in turn perpetuates the suffering of the world's poor. It was generally regarded that in an increasingly globalised economy, the time-tested principles of "polluter pays" and "liability" would be accepted in the international arena. A Green Fund based on these principles would have helped to address the causes of global environmental degradation -- not just its symptoms. When the market externalises ecological costs, leaving society at large and future generations to deal with the damage to the environment, national and international policies must internalise these costs within the market.

However, the GEF, which was set up without any participation from the South in the conceptual stages, sees itself as a donor agency for developing countries with a begging bowl. And, ironically, GEF is controlled by the very nations that have contributed the most to environmental destruction. The GEF has converted the internationally accepted "polluter pays" principle into a policy of aid, charity and preferential technology transfer simply to avoid making liability payments across national borders. This makes GEF a part of a larger and equally flawed framework of global environment management.

Such a system has emerged mainly because of the North's negotiating tactics: it refuses to discuss or negotiate the damage it has caused in the past; it insists that if it pays anything at all, it will be based on capability and not liability -- a principle accepted in the climate change convention. Besides, the North points out that what it pays as aid to the South will be mainly to deal with global problems and for global benefits. For example, under the climate change convention, GEFwill assess projects like a donor agency would before sanctioning money to a developing country. Though this may be a fair way of controlling control climate change, the best way would be to assess a nation's entitlement to the sustainable benefits of the atmosphere. Nations exceeding their emission quotas should automatically pay those who are not and accumulations in the atmosphere must be penalised.

By not doing this, the North shortchanges the South. The World Bank itself has calculated that if carbon emission rights were sold at $25 per tonne of carbon, the industrialised world would have to pay developing countries about $70 billion for 1 year's emissions at 1988 levels. Several Northern studies suggest these rights should be pegged at much higher costs if they are to break the fuel-use habits of the rich.

But, what does GEF offer? Only 2 billion dollars in 3 years for the ozone, climate change and biodiversity conventions and international water management projects. The immorality is blatant: the North cannot be assessed for environmental liability and the South must beg for alms.

Instead of trying to take over the chairpersonship of GEF, which would only legitimise this flawed institution, India should keep pushing for a fundamental restructuring based on the principle of mandatory and compensatory payments for damage to the global environment. Anything less would be bartering away our environment and future.