According to the report presented by the campaigners, the debt of countries in the global south has risen by 150% since 2011. Fifty-four countries are in serious debt crisis, having to spend five times more on repayments than they can (or should) spend on tackling the climate crisis.
‘High levels of debt are a serious obstacle to the phase-out of fossil fuels for many countries in the global south’, explains Tess Woolfenden, senior policy manager at Debt Justice.
‘Many countries’, Woolfenden continues, ‘are trapped in exploiting fossil fuels to generate revenue in order to repay debt. At the same time, fossil fuel projects often fail to generate the expected revenue and leave countries even deeper in debt than when they started’.
Debt Justice speaks, using an effective image, of a ‘toxic trap’.
So how can they escape?
For the campaigners there is only one way: cancel all the debts of the countries facing the most serious crises – and in particular those linked to fossil fuel projects.
Local organisations in underdeveloped countries also agree with this accusation.
Daniel Ribeiro, programme coordinator for the Mozambican environmental campaign Justiça Ambiental, confirms that ‘the country’s debt burden was doubled by loans taken out, without parliament’s authorisation, from London-based banks in 2013, on the basis of projected earnings from the discovery of new gas fields’.
Mozambique plunged into a debt crisis just when oil and gas prices collapsed, that is, in 2014-2016. The solutions proposed by international investors to save the country were very simple: the loans were to be repaid through future gas revenues.
‘Debt caused by fossil fuels is being structured to be repaid by fossil fuels, entrenching a vicious circle that can have very serious consequences’, said Ribeiro, who stresses that ‘Mozambique’s debt crisis could be the first sign of a global financial shockwave’.
The situation is not dissimilar in Suriname, which, having defaulted on its debt, agreed a deal in 2020 that would give creditors the right to almost 30% of the country’s oil revenues until 2050.
Sharda Ganga, director of the Surinamese civil society organisation Projekta, explained to international journalists the downward spiral her country has entered: ‘Because our debt has become unsustainable, it dominates all political decisions and affects the lives of our citizens in every possible way. Making money as quickly as possible to repay creditors is therefore priority number one. It means there is no longer room for annoying things like sustainability or climate justice’.
Even more alarming, in some respects, is the fact that this mechanism also affects a nation like Argentina. Leandro Gómez, an activist at the Foundation for the Environment and Natural Resources (Farn) in Argentina, said that his country is in effect stripped of sovereignty over decisions on fossil fuels and finds itself having to subsidise oil companies, encourage fracking projects and cancel renewable energy projects.
A concise and effective summary of the situation can be found in the words of Mae Buenaventura, of the Asian Peoples’ Movement on Debt and Development. ‘The climate crisis and the debt crisis were born of the same system’, she said, ‘based on the relentless extraction of human, economic and environmental resources by the global north to feed the drive for profit and greed’.
