UNITED NATIONS (CMC) – Antigua and Barbuda on Saturday joined its Caribbean Community (Caricom) member state, Jamaica, in raising the issue of debt for climate change swap while also lamenting moves by financial institutions in developed countries to stifle the socio-economic growth of small islands.
The call came a day after Jamaica’s Prime Minister Andrew Holness told the 71st United Nations General Assembly (UNGA) that the mechanism has the potential to provide bilateral and multilateral relief for climate change and mitigation initiatives.
On Saturday, Prime Minister of Antigua and Barbuda Gaston Browne told the UNGA that, at a rise of 1.5 degrees Celsius, many of the small island developing states, including those in the Caribbean, will be washed away.
“Temperatures continue to rise, as the bell is tolling. The bell may be tolling for small islands, but in the words of the poet, John Donne, “it also tolls for thee’,” Browne remarked.
“Its refugees; its displaced people; the misery of its effects will wash up on the shores of those who dismiss or neglect the issue today. Mr President, our small countries endure the problem of climate change not because we created it, but because we are the victims of the polluting profligacy of others. But, we are not content simply to wring our hands in anguish, or throw up our arms in despair. We are keen to help provide solutions. That is why my government has repeatedly proposed debt swaps, for climate change adaptation and mitigation,” Browne reasoned.
Browne said that many of the small-island states are burdened by high debt because they are denied access to concessional financing and are forced to borrow at high commercial rates to rebuild after disasters, and to mitigate against them.
“High debt is not only a drag on our economic growth; it constrains our ability to achieve the sustainable development goals. We are caught in a very vicious cycle. We have proposed that we be provided with soft loans, to stop further high debt accumulation, while we build resilience to global warming and sea-level rise. However, to qualify for soft loans, requires the International Financial Institutions and donor governments, to stop using per capita income as a criterion. So far, our pleas have fallen on deaf ears,” he stressed.
Prime Minister Browne told the international community that, beyond the facade of high income per capita are increasing levels of poverty, high levels of household and individual vulnerability, acute issues in health and education, and worrying rates of unemployment especially amongst the young.
He said high income per capita distorts the reality that, because of the openness of small economies and the dependence on foreign investment, a minority of the population earn the largest percentage of income, leaving the majority at subsistence level and below.
“These are facts that are known to international financial institutions and those who govern them, yet, they are ignored. The more appropriate criteria for allowing access to concessionary financing should be, our very well-known vulnerability to shocks that are generated from outside our shores, and over which we have no control,” Browne said.
The Antiguan prime minister said that the cost to institutions such as the World Bank of refining their criteria would not be very expensive, but that would be a significant measure to allow small countries to improve their economic performance.
“Mr President, I have to admit a deep sense of frustration and disappointment that, year after year, other heads of government of small states, and I, have come to this Assembly and explained the challenges that confront us, to no avail,” he argued.
“We remain trapped in the reality of a narrow tax base, high debt, large trade deficits, small underdeveloped domestic financial markets, small private sectors and fragile banking systems. I remind this Assembly of the observation of Albert Einstein that: “In matters of truth and justice, there is no difference between large and small problems; for issues concerning the treatment of people are all the same,” he added.
Prime Minister Browne said that the truth of small states is obvious to all so too should be the need for justice as he raised again the need for the United States to settle its World Trade Organisation (WTO) dispute with Antigua and Barbuda over Internet gaming as quickly as possible.
But Browne said that the decision by banks in the developed countries to seek to end banking relationships with small islands, including those in the Caribbean, constitutes “an urgent and existential threat of considerable relevance to our survival”.
“The latest challenge our countries face is the withdrawal by global banks of correspondent banking relations to our financial institutions. In the international campaign against money-laundering and terrorist-financing, very strict penalties have been imposed on banks by regulatory bodies in North America and Europe, for any infringement of stringent regulations.
“In this environment, where even the slightest infraction could expose a bank to a fee of hundreds of millions of dollars, many banks have chosen to withdraw essential correspondent banking relations from financial institutions in the Caribbean, Central America and Africa,” Browne said.
According to Browne, they refer to that process as ‘de-risking’.
“I call it economic destruction. It is now prevalent in the Caribbean, but it also exists in parts of Africa and Central America. It will spread with global consequences unless, it is checked by collective action. All these countries, including mine, are now at the point of losing vital correspondent banking relationships. The consequences would be calamitous,” Browne said..
“We would be severed from the world’s trading system, unable to pay for basic goods and services we purchase, or to receive payments for goods and services we sell to other countries. Remittances from our diaspora would be cut off, causing more of the population to depend on social welfare, at a time when our economies are already under great stress.
“In other words, it is a growing cancer that is eating away at development; threatening the stability of our region; and denying us the right to participate in the international economy. But that is not all. Since the consequence of being cut off from the world trading system, would be economic collapse, not only would poverty and crime dramatically increase, so too would the very global scourges that every nation fears – increase in refugees and human trafficking,” he added.
He said the consequences would not be limited to just Caribbean countries, adding worse yet, financial transactions that are now regulated and monitored by law enforcement agencies, would be forced underground, creating huge opportunities for money laundering and terrorism financing.
“This would undermine the very global, multi-lateral cooperation that is required to fight these scourges. And, it is important to know that, in all the money laundering and financing of terrorism cases that have been prosecuted in the world, not one of them involved a Caribbean financial institution.
“This matter of’ de-risking’ is a substantial matter; its consequences are far reaching. The threat we face in the Caribbean is real; the danger is imminent. But, make no mistake; no country will be immune from its consequences, if it is left unchecked.”
He said that Caricom leaders had mandated him to convene, a high-level conference on the matter and that invitations have already been sent to key global-stakeholders to attend the conference that will be held in Antigua from October 27-28
“Our objective at this conference will be to work collectively to end this huge threat, to the immediate well-being of our region. We are acting responsibly. And, I call on this General Assembly of nations to recognize the substantial and dangerous nature of this issue, and to join us in addressing it constructively,” Browne said.