South being denied "compensation" funds

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THE SOUTH came back from Rio with a promise of extra international aid as reparations for the environmental damage caused by the North. But so far, the only funds available for environment have largely been taken out of one budget and added to another. The South has not got any "additional" funds -- and the North pleads helplessness because of recession and economic decline.

At Rio, it was agreed developed countries would aim, but not promise, to increase their aid budgets to make additional green funds available. IDA 10 -- the World Bank's soft-loan -- would also be replenished in real terms, making roughly US$ 18 billion available for development projects. In addition, there would be a so-called Earth Increment of about US$ 5 billion to pay for environmental programmes.

There is little indication of the agreements being implemented. And, with just two months to go for finalisation of IDA 10, there is little hope of a replenishment in real terms, let alone an Earth Increment.

Of equal concern to the South is how the funding will be administered. At Rio, the South considered the Global Environmental Facility (GEF) -- set up to transfer funds to the South for global environmental programmes and administered by the World Bank -- as undemocratic and insular. But the North was unwilling to modify control to take care of Southern concerns.

The latest proposal on restructuring the GEF, which was to be discussed in Abidjan in early December, is for a convoluted "double majority" voting system, based on a division into donor and participant groups, with decisions requiring a simple majority in each. However, on key issues, the majority decision of the donor group would prevail -- in effect, becoming a veto. Indian officials point out also yet at issue is whether GEF will remain under the World Bank or become an independent agency with a secretariat.

What has been sidetracked is automaticity, which makes reparation paid by the developed world mandatory and automatic -- and not as aid or charity. The World Bank has calculated if rights to the atmosphere were sold by the South to the North, "the developing countries would be paid about US$ 70 billion for just one year's emissions." This amount is roughly equal to the entire annual quantum of development aid. Shortchanging the South could not be more evident.