South wangles funds, with strings attached

The Beijing conference saw discussions on the second phase of the Global Environment Facility, which is expected to finance implementation of the climate and biodiversity conventions.

By Sunita Narain
Published: Wednesday 30 June 1993

-- (Credit: Rustam Vania)THE FIFTH meeting of the members of the Global Environment Facility, held in Beijing in May, ended with the South getting some assurance on additional finance, and many conditions on how the money would be spent. Also under discussion were the governance structures of the GEF.

With the "pilot" phase of the GEF scheduled to be over in mid-1994, the Beijing meet participants began discussions on the next phase. Finance negotiations for the GEF will continue till the end of 1993, but the government representatives made broad indicative pledges of support.

The GEF was set up in 1991 as a three-year experimental fund to finance global environmental projects under four main heads: global warming, ozone depletion, biodiversity and oceans. Administered by the World Bank, the United Nations Development Programme and the United Nations Environment Programme under the chairpersonship of Mohammed T El-Ashry, the GEF initially had $1 billion, which amount it was supposed to administer over three years. According to a recent review by World Bank president Louis Preston, 70 per cent of this amount has been utilised so far.

In the next phase, which encompasses a period of three to five years, it is expected the GEF will receive between $2.8 billion and $4.2 billion from its Northern donors. This "additional" money would also meet the financial obligations imposed by the two conventions on climate change and biodiversity, which are expected to come into force in the next two years. However, some governments, notably the US, pointed out that "this replenishment amount seems large, given the donors' budgetary realities".

Representatives of the donor countries made it clear they would not give any money without their conditions being met, most of which concern how the money will be spent. The Northern countries, caught between recession on the one hand and increasing NGO pressure on environmentally destructive projects on the other, have made it clear that project quality is an important consideration. Southern countries, on the other hand, have been demanding transparency in the collection and utilisation of money.

In keeping with the Northern purpose, a US non-paper (UN jargon for a non-official paper), which was later withdrawn for lack of support from other countries belonging to the Organisation for Economic Cooperation and Development, states that "project approval must require a special majority of votes to ensure that GEF funds are given only to sustainable, high-quality projects."

According to the US delegates, this meant a project could be rejected if even a minority of about 40 per cent voted against it. As a reason for the clause, they cited the US government's experience with the Narmada project, which was passed by the World Bank executive board in spite of opposition from other donors "simply because the majority supported it".

Environment Defence Fund representative Korinna Horta quoted a US NGO and said, "Washington must be careful not to waste US tax-payers' money on ill-conceived projects." To which a Swedish diplomat remarked cryptically, "The more democracy in the NGO room, the less money in the GEF kitty."

The most contentious debate about governance of GEF funds got a new twist in Beijing because the Southern countries, who had so far been arguing for restructuring so that they can play a bigger role in decision-making, came to the meeting in a conciliatory mood. Though in earlier discussions, the G-77 -- a group of Southern nations -- had rejected the North's proposal to turn the GEF into another World Bank in which donors would use their dollar votes to take decisions, at Beijing, their own proposals were quite similar to those of the donor countries. As El-Ashry aptly pointed out, "There was a new tone of cooperation" at the meeting.

Subscribe to Daily Newsletter :

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.