Building Bridges

The Bridgetown Initiative deserves financial support.

Launched by Barbados Prime Minister Mia Mottley in 2022, the Bridgetown Initiative aimed to amend the global financial system to provide more funding for developing countries to participate in the green transition. Despite minor progress, such as the COP-27 agreement to create a UN “loss and damage” fund and calls from UN Secretary-General Antonio Guterres for rechanneling USD 100 billion from The International Monetary Fund (“IMF”) to these nations, the initiative has largely been met with praise and rhetoric rather than substantial actions and funding. 

International cooperation has given way to competition as the world enters a more contentious era geopolitically. Wars rage in Europe and the Middle East and diplomatic relations between China and the US are strained. In this climate, the Bridgetown Initiative faces slim prospects for receiving the attention and global cooperation it requires in the short-term. “We do need more financing,” commented an international trade lawyer. “I know we recently created a loss and damage fund with a commitment of USD 700 million, but that’s just a drop in the bucket; so much more is needed regarding substantive progress on the Bridgetown agenda and financing under it.”

“we recently created a loss and damage fund with a commitment of USD 700 million, but that’s just a drop in the bucket.”

International trade lawyer, Caribbean

The key battle for Caribbean nations regarding the Bridgetown Initiative lies in successfully convincing major global players, such as the US, EU and international financial institutions, that the initiative deserves financial support. This is a challenging task, as the trade specialist highlighted, “We operate in a global system with trade rules that were created to benefit everyone, but they are still not fully inclusive. Due to their vulnerability to climate change, Caribbean nations are desperate for such support.  

An alternative to relying on the international community could be to step up regional integration and collaboration through the Caribbean Community (“CARICOM”). However, given the low amount of total liquidity in CARICOM, this would pale compared to the lofty ambitions of the Bridgetown Initiative. “If we look at the Caribbean, we have natural assets like the sun and sea, so we’re looking at solar energy and wind energy, wave energy.” The trader continued, “Being able to mobilise, I think we figured that USD 1 trillion annually is the investment that brings transformation.” 

One notable achievement under the Bridgetown Initiative includes climate and natural disaster suspension of payment clauses in financial instruments. These clauses, included in instruments from institutions like the IADB and the World Bank, allow for the suspension of debt repayments in the event of natural disasters, providing crucial financial relief to affected countries. “Not having to worry about repaying loans back, and having the interest compounded will give us the flexibility to recover immediately and serve immediate needs following the disaster in terms of the rebuilding, then give the protection necessary for fledgling industries to re-develop,” cited the trade specialist. However, more needs to be done on other fronts, such as trade and resilience in global supply chains, where progress has been lacking. 

“Not having to worry about repaying loans back, and having the interest compounded will give us the flexibility to recover immediately and serve immediate needs.”

International trade specialist, Caribbean

There is also a lack of clarity on whether the funds will be redirected from existing commitments or sourced from new funds. “One of the things that must be clarified is whether you’re going to redirect monies that are committed elsewhere into this loss and damage fund and the Bridgetown Initiative,” explained the trade lawyer. The Caribbean is still underwhelmed by the financing promised, and there is a need for better coordination and integration among various initiatives to avoid fragmentation and inefficiency.  

The success of the Bridgetown Initiative hinges on the ability to garner international support and cooperation. This requires not only recognising the urgent need for climate financing but also understanding the interconnectedness of global economies and the shared responsibility in addressing climate change. “When discussing the Bridgetown Initiative, we must ensure that these groups, such as the Indigenous communities, women and youth, are well-represented in the new proposals and policies.” The trader expanded, “We’re kind of at the mercy of the external community. So, I think that’s the biggest challenge.”  

The international community must rise to the challenge and support initiatives like Bridgetown to ensure a sustainable and equitable future for all. “We need to streamline these initiatives; ECLAC has a fund, CDB is going in another direction, and Bridgetown is going in another.” The international trade lawyer concluded,I think it would be much better if the Caribbean would sit together and try to develop one approach.” 

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