In late July/early August 2022, there was an international gathering in Barbados of a significant number of eminent resource persons drawn from civil society and academia and equipped with deep insights into the deficiencies of the international economic and political order and the grave existential challenges facing humanity today.
These experts congregated in Barbados at the invitation of the Government of Barbados and engaged in several days of intense discussions about the way forward for the world community. And out of those discussions emerged THE BRIDGETOWN INITIATIVE – a concise plan of action for engineering a much needed revamp of the international economic and political order and its major institutions.
Barbados’ Prime Minister – Mia Amor Mottley – outlined the fundamental rationale for the BRIDGETOWN INITIATIVE during her recent address to the 77th session of the United Nations General Assembly as follows:
“We must ask ourselves whether the time has not come for a review of the settlement of the Bretton Woods institutions that no longer serve the purpose in the 21st century that they served in the 20th century; that they served when they were catering to a quarter of the nation states that are now members of this august institution.
We ask ourselves whether the time has not come for our voices to act collectively, to demand this through the boards of directors of the respective institutions. And why do I say so?
The International Bank for Reconstruction and Development is really what the World Bank is. And maybe if we referred to that continuously, we would remind ourselves that the purpose of reconstruction and development must be appropriate to the century in which we live. And the century in which we live does not only demand of us the eradication of poverty, which remains a noble goal, but it demands of us, equally, the protection of global public goods.”
But even though Prime Minister Mottley’s primary focus was on the Bretton Woods institutions – the International Monetary Fund (IMF) and the World Bank group of institutions – she also made it clear that the BRIDGETOWN Initiative extended to other less formal institutions of global power when she declaimed:-
“We also believe that the recognition of the G7 and the G20 countries as the informal subcommittee of governance of this world, if it is to be fair, must recognize that no longer can we accept that persons call (unsuccessfully) year after year after year for the people of Africa and African descent to be included in the G7 and G20. For how can a world have at its core a subcommittee that excludes more than 1.4 to 1.5 Billion people of the world and expect it to reflect fairness and transparency in its decision-making?
We ask that the determination be made by those countries, who must understand that if we are to move from possibilities to realities, we must embrace a transparent framework that allows our people who are losing faith in their institutions and in the governance of this world to understand that fairness means something - that fairness means the ability for all to have a voice.”
Having laid out the overarching perspective and framework of the BRIDGETOWN Initiative, Prime Minister Mottley then proceeded to delve into its specific components.
STEP ONE : PROVIDE EMERGENCY LIQUIDITY
First of all, the Prime Minister touched upon the very troubling issue of the debt crisis that is currently facing scores of developing countries as a result of the economic carnage caused by the COVID-19 pandemic, the disruption in global supply chains, and the inflation unleashed by the ongoing war in Ukraine:-
“I want to commend the International Monetary Fund (IMF) for their rapid financing mechanism at the beginning of the pandemic crisis. And soon, for the Resilience and Sustainability Trust (RST) that is about to be launched………But I ask the IMF to reflect on the fact that that Resilience and Sustainability Trust…. will depend on more countries ….. agreeing, perhaps, to allow their Special Drawing Rights (SDRs) to be used there, just as we asked them to allow those SDRs to be used to allow multilateral development banks to significantly increase the money that is available to countries, particularly at this time when we are on the verge of a debt crisis, where more than 45 countries are facing the heat of the moment because of the increased cost of capital…..”
And so, it should come as no surprise that “Step One” of the BRIDGETOWN Initiative consists of measures to provide developing countries with emergency ready access to financial resources in order to stop the burgeoning debt crisis in its tracks.
Indeed, Step One of the Bridgetown Initiative was premised on the recognition that, in August 2022, no less than one in five countries was experiencing fiscal and financial stress, and – given the strong US dollar and the increased interest rates that come with the “quantitative tightening” policies of Central Banks – that ratio has now increased to one in four.
Step One of the Bridgetown Initiative therefore consists of a demand that the IMF:
• immediately return access to its unconditional rapid credit and financing facilities to previous COVID-19 crisis levels;
• temporarily suspend its interest surcharges;
• re-channel at least US$100 Billion of unused Special Drawing Rights (SDRs) to those countries that desperately need them;
• operationalize its new Resilience and Sustainability Trust by the month of October 2022.
Step One of the Bridgetown Initiative also calls upon the G-20 developed countries to agree upon and institute a Debt Service Suspension Initiative that includes all Multilateral Development Bank (MDB) loans to the poorest countries, as well as all COVID-19 related loans to the middle-income countries.
And so, Step One of the Bridgetown Initiative is designed to deal with the current emergency debt crisis. But as Prime Minister Mottley explained in her speech to the UN General Assembly, the multifaceted crisis that is facing the world today goes way beyond the COVID-19 induced debt crisis and is in fact systemic and structural in nature, and therefore requires some significant re-thinking and massive new investment to solve it!
STEP TWO : EXPAND MULTILATERAL LENDING TO GOVERNMENTS
Prime Minister Mottley used the concept of “global public goods” to elucidate the profound developmental needs of the world community in general, and of developing countries in particular. There must be a commitment to establish a Global Public Commons if we are not to unleash major challenges on all countries and the global population. This is how she outlined it in her speech to the UN General Assembly:-
“We believe, today, that the most appropriate place to deal with (and fund) “global public goods” is, in fact, the World Bank Group.…and that…multinational companies that have contributed to the global public risks or benefit from the solutions for global public goods (must also play a role) in…. funding the needs of countries –
Whether it is in the issue of climate – stability, resilience and adaptation; whether it is for the protection of biodiversity both on land and in our waters; whether it is for the protection of public health against the next pandemic; or the provision of education for each of our citizens (because to remain on this earth without the benefit of education is to be sentenced to life imprisonment from a young age); or access to electricity - as 600 million people in Africa do without it; or, the equivalent to the right to knowledge and prosperity in our age - access to broadband; and…..believe it or not, the right to a bank account.
because countries across the world are being denied the right to access correspondent banking, thereby leaving their citizens and their economies to function as financial pariahs in a world that is supposed to be globally interdependent for the movement of capital. My friends, the provision of that Fund to promote public goods at a global level is critical if we are to make a difference going forward, and to achieve the peace, the love and the prosperity to which I referred.”
Furthermore, the Barbadian Prime Minister made it abundantly clear that the Bridgetown Initiative makes a strong conceptual linkage between the notion of “Global Public Goods” and the United Nations’ “Sustainable Development Goals” (SDGs) that are supposed to be realized by the year 2030. This is how she put it:-
“We want to thank those countries that have come together to help us continue financing of the Sustainable Development Goals. And we link those goals to the global public goods. Why? Because they are, fundamentally, the right to development.
They are, fundamentally, the right to give each person the ability to live a good life. And we cannot be lost in the Ukraine conflict, and lost in the climate crisis, and lost in the pandemic, and forget, fundamentally, what our mission is. I commend those who continue to remember that.”
It is against this background therefore that Step Two of the Bridgetown Initiative demands as follows:-
“Multilateral Development Bank shareholders must implement the recommendations of the independent G-20 Capital Adequacy Frameworks Review, and the World Bank and other Multilateral Development Banks must use remaining headroom, increased risk appetite, new guarantees, and the holding of SDRs to expand lending to governments by US$1 Trillion. Furthermore, new concessional lending should prioritize attaining the Sustainable Development Goals (SDGs) everywhere and the building of climate resilience in climate-vulnerable countries.”
Thus, the Bridgetown Initiative is demanding recognition of the fact that the Bretton Woods institutions and the Multilateral Development Banks are no longer existing in the world of 1945 or contending with the development challenges that were relevant to that era, and that they must now come into the 21st century and adjust their sights to dealing with the massive existential and developmental challenges that are currently facing the close to 200 nations that now exist in the world, and on the massively increased scale that is now required! Indeed, Prime Minister Mottley dealt with a very critical component of the new modus operandi that is required when she declared:-
“But I ask for us to reach a global compact: namely, that financing for development cannot be short-term financing, and that it needs to be at least 30-year money. The world recognized that when it allowed Britain to be able to participate in the refinancing of its World War 1 bonds, which were only paid off eight years ago, 100 years after World War 1 started. Or when it allowed Germany to cap its debt service at the equivalent of 3% of its exports, conscious that the cataclysmic experience of war would not have allowed Germany to finance reconstruction while repaying debts incurred for war.
My friends, we are no different today! We have incurred debts for COVID. We have incurred debts for climate. And we have incurred debts, now, in order to fight this difficult moment with the inflationary crisis and with the absence of certainty of supply of goods. Why, therefore, must the developing world now seek to find money within 7 to 10 years when others had the benefit of longer tenures to repay their money?”
STEP THREE: ENGINEER A MASSIVE GLOBAL ASSAULT ON THE CLIMATE CRISIS
The final step of the Bridgetown Initiative – Step Three – is based on the recognition that humankind has to act urgently, expeditiously and on a vastly expanded scale if it is to do what is necessary to prevent the world’s temperature from rising above 1.5 degrees and thereby threatening the world with cataclysmic negative effects. Step Three is therefore devoted to creating a new multilateral mechanism to activate private sector savings on a massive scale for climate mitigation and adaptation, and also to provide reconstruction concessional and grant funding to climate-vulnerable countries, particularly after they experience a climate disaster.
Indeed, Step Three is based on the understanding that most climate-vulnerable countries do not have the fiscal space to take on new debt. In other words, if you want to facilitate developing countries to develop climate mitigation and adaptation measures designed to limit global warming it will be futile to offer them access to loans – even to enormous loans – because they are already so indebted that they simply cannot take on any new debt.
The Bridgetown Initiative therefore proposes the following three pronged approach to solving the problem of global financing for climate mitigation and adaptation measures at a scale capable of solving this massive existential problem:-
(1) We must move beyond country-by-country responses that have become bogged down by issues of who is responsible and who should do more.
(2) We must establish a global mechanism for raising “reconstruction grants” for any country imperilled or impacted by a climate disaster.
(3) We must issue a new round of at least 500 Billion in SDRs (the equivalent of US$650 Billion) or other low-interest, long-term instruments to back a new multilateral agency that will leverage those resources to radically accelerate global private sector investments in low carbon transitions all over the world.
In essence, the Bridgetown Initiative is pushing for the establishment of a new “Global Climate Mitigation Trust” that will:-
• Drive global private sector investment in Climate mitigation and low carbon transition projects and programmes on an unprecedented scale;
• Provide climate-vulnerable developing countries with concessionary and grant financing for climate mitigation and adaptation projects and programmes; and
• Provide a “global balance sheet” from which already debt-burdened developing countries can spend in order to mitigate and adapt to the Climate Crisis.
And let us be very clear here: by “a global balance sheet” we are referring to a “balance sheet” that is not linked to any particular country nor backed by any one particular government or national currency. Rather this new “global balance sheet” would be backed by “international money” – IMF Special Drawing Rights (SDRs) – which are a claim on all IMF member nations to lend their reserves of hard currency at the lowest available overnight interest rates.
Thus, such a “global balance sheet” would provide our already heavily indebted developing nations with the opportunity to access the concessionary funds that we need to build resilience against a Climate Crisis that was caused by others – that was caused by the wealthy industrialized countries of the world - without increasing the level of debt recorded on our national balance sheets.
Climate justice demands this approach, given that countries which did not cause this crisis are crowding out their public spending with expenditure on the climate crisis rather than on the SDG 2030 agenda which benefits the people of our nations.
The Bridgetown Initiative does, indeed, constitute a revolutionary programme to transform the world’s existing International Economic and Political Order. But it is a revolution that is desperately needed if humanity is to survive the grave existential challenge of the Climate Crisis, and if our 21st century world is going to preserve the notion of a human(e) and civilized existence for the billions of people who inhabit our planet.
The Bridgetown Initiative concludes with the following “Call for Collective Action”:
“We aim to mobilize and co-ordinate broad support and help from a coalition of like-minded leaders who are aligned on this critical agenda and who will support its implementation.
“We do not anticipate complete agreement on the detail and sequencing of the solutions, but rather aim to support progress on this agenda through greater understanding, focus, priority, co-ordination and unity of effort”.
This is indeed a magnificent and appropriate mission and resolve. But it was perhaps, even better expressed by Prime Minister Mia Amor Mottley when she concluded her speech to the 77th United Nations General Assembly with the following words:-
“Many of the things that I’ve put before us today don’t require money, but they require a commitment, and they require political will. And with the power of the pen we can impose natural disaster and pandemic clauses in our debt instruments. With the power of the pen, we can change the capital that is available to multilateral development banks, and that will remove the barriers that currently exist for us to fight poverty.
With those commitments, we can make a difference in today’s world. And let us do so, recognizing that a world that reflects an imperialistic order and hypocrisy and lack of transparency will not achieve that mission : but one that gives us freedom, transparency and a level playing field can make that definable difference.”
Let us all now put our hands to the plough and push this Bridgetown Initiative to an urgently needed speedy and successful implementation!
DAVID A. COMISSIONG
Barbados’ Ambassador to CARICOM