The time has come for Canada and other rich nations to pony-up and pay for the devastation they have caused countries in the Global South. That means, for a start, providing far greater climate adaptation financing to low-income countries and plugging the holes that siphon their limited fiscal resources to tax havens.
Two Canadians have prominent roles at the COP26 climate meeting in Glasgow, Scotland. United Nations Ambassador Bob Rae, is co-chair of the COP26 finance panel, and Mark Carney is the UN special envoy for COP26, responsible for getting financial institutions to join the new Glasgow Financial Alliance for Net-Zero. They are experienced and highly respected individuals with solid reputations as mediators.
Canada has contributed less than 20 percent of its fair share. Even with the Trudeau government's promise to double climate financing to US$4.2 billion over five years, US$840 million per year, this is still only 24 percent of its fair share. The Group of 78, of which I am a member of the executive, has called for a quadrupling of Canada's financing commitment as a bare minimum.
Moreover 80 percent of rich country financing is in the form of loans, increasing the stress on countries already struggling to manage their debt burdens.
International Monetary Fund-created money, or special drawing rights, which is allocated to countries based on their economic size, is largely unused by rich countries. Although discussions are ongoing, there has been no commitment to recycle these funds into zero-interest loans to low-income countries.
More than 130 countries, including Canada, have reached an agreement, co-ordinated by the OECD, that would establish a minimum of 15 percent corporate tax to restrict tax avoidance and evasion. However, it has been sharply criticized as being rife with loopholes and carveouts. Oxfam accused it of pandering to corporations, having "practically no teeth" and offering no revenue for the world's poorest countries.
Tax havens are enabled by an infrastructure of lawyers, accountants and bankers, including some from Canada. Rich countries' efforts to restrict and bring greater transparency to international tax rules have largely fallen short.
Even by that standard Canada has been a laggard. The Liberal government recently increased the investigative resources of the Canada Revenue Agency and promised in its most recent budget to address cross-border tax avoidance and evasion schemes. How effective these will be in reining in these actions by wealthy individuals and corporations; past inaction does not bode well going forward. Carney will have his work cut out for him if, or when, he addresses these issues at COP26.
No more blah, blah, blah
To its credit, Canada, along with several other developed countries, is a member of the High Ambition Coalition, a group at the UN talks comprising many of the poorest and most vulnerable developing countries. But good intentions and empty promises will not pass muster. We don't need more "blah blah blah," to quote Greta Thunberg.
Hopefully, this will put additional pressure on rich countries to get serious about climate financing, debt restructuring and development funding for poor nations. Inaction is a luxury we can no longer afford.
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Four ways rich nations can keep promises to curb emissions and fund climate adaptation (2021, October 25)
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