Climate injustice?

Nepal, Jan. 28 -- For activists advocating climate justice, it's a dirty word. But loans to fight climate change have become a no-go for other quarters in Nepal as well. From development workers to technocrats to civil societies, their verdict, rightly or wrongly is: No loan for any climate project.

You may not have seen them on the streets with banners. But they have made themselves loud and clear on the internet.

Sample some of their opinions:

"Nepal could implement these climate projects without taking loans; it should be able to say no to loans because we did not create climate change," wrote Keshab Thapa of Local Initiatives on Biodiversity Research and Development in a non-government organisations' network.

Climate expert Ngamindra Dahal's take was: "Asking questions such as why Nepal is accepting any climate funds (whether loans or grants) on what conditions, and how these funds will be mobilised to achieve what goals and objectives would help us understand the reality."

Jagdish Baral, a Forest Ministry joint secretary, who is on leave now wrote, "Using loan money for mending something which others are responsible for is naturally unfair and incompatible."

The comments have been triggered by a loan being provided by a group of donors including the World Bank, the Asian Development Bank and the International Finance Corporation.

They are funding the Strategic Programme on Climate Resilience (SPCR) that follows the piloting of a climate project in several Least Developed Countries.

Of the US $110 million assistance for the SPCR, US $60 million is in the form of a loan and the remaining is in the form of a grant. But even some government officials have been vocal against the loan component.

"If there is any loan in the assistance we will be getting, we will reject it," Forest Minister Deepak Bohara told the BBC. "We have enough grants to implement our projects, so we don't need a loan."

Environment Ministry's Joint Secretary Purushottam Ghimire, however, says there is nothing wrong with the loan component as it is a concessional one to be paid over 40 years without any interest.

"And critics are wrong to say that the loan is going for climate adaptation projects. It will be used for climate resilience like building bridges or embankments that are long-term projects."

That may well be the understanding of the Environment Ministry officials.

But the aide-memoire submitted by the donors makes it clear that the money will go for adaptation projects as well. After all, the line between adaptation and climate resilience can be easily blurred.

What is remarkable here is that the Environment Ministry too was once against the loan component. This was when the pilot project before the SPCR was dogged by controversy after an internal report by a donor accused the World Bank of high-handedness, making Nepal a bad example among the recipient countries.

Then when it did not get support from the Environment Ministry, the World Bank began to make direct contacts with the Finance Ministry.

"We knew that something was wrong with the dealing between the bank and the Environment Ministry then, but even on our part we did not wholeheartedly support the concept of a loan at first," said a source with the Finance Ministry. "But later on when other ministries supported the loan component, we too had to be supportive, but that does not mean it's a deal yet."

While the Finance Ministry does not have the SPCR in the checklist of its ready projects, the Environment Ministry says the next meeting with the donors in February will set the ball rolling.

Meanwhile, Forest Ministry officials say they have been outraged because they were not kept in the loop. "It was only at a much later phase of the negotiations that we were invited, so, naturally we are not happy about it," said Bohara.

While the ministries have such varied positions, the aide-memoire paints a totally different picture. "The government of Nepal advised the mission of its plans to submit an SPCR proposal in the amount of US $110 million, requesting US $50 million in grants and US $60 million in concessional loans..." it reads.

For several days, no one from the lead donor agency, the World Bank was available to comment for my BBC report.

The flip-flop on the part of government ministries and their conflicting approach can easily play into the hands of any donor, particularly the international financial that are ever willing to lend their money on their terms.

What's more, multilateral banks like the ones lending money for the SPCR have US $6.4 billion in a Climate Investment Fund which they need to invest on one or the other climate projects.

And if the recipient countries fall for the loan component, so much the better.

Things would not have been so murky if only there were an independent body to channelise climate funds under the United Nations Climate Convention.

Years have passed since developing and Least Developed Countries demanded such a body so that they can have direct and easy access to climate funds to be provided by the developed world. Those that already exist like the Least Developed Country Fund or Adaptation Fund are severely underfunded.

And Western donors' favourite treasurers like the Global Environment Facility or the World Bank, developing countries say, have always been a pain to get money from.

In the UN-led climate negotiations, developed and developing worlds spend much of their time and energy arm-twisting to secure control over the funds.

So far, the developed countries have had their way.

Immediately after the UN climate summit in Cancun last December, the same city held a follow up meet on climate financing. In the meeting, when developing countries argued that their capacity needed to be built up to utilise climate funds on their own, representatives from Western countries simply said the idea was "premature."

As long as the donor countries resist the idea, their blue-eyed boys, the multilateral banks, will thrive.

And poor and climatically vulnerable countries like Nepal will end up with loans-justly or not.

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