World Bank Vice Axel van Trotsenburg is a veteran of his organization. The 62-year-old Managing Director already led negotiations on debt relief for the poorest countries (HIPC initiative) for the World Bank in the 1990s. In an interview with Handelsblatt, van Trotsenberg takes the rich industrial nations into court: They would have to help poorer countries fight climate change if the world wanted to meet the Paris climate targets.
The World Bank manager points to the enormous costs of phasing out coal, which he estimates at up to $ 13 trillion in Asia alone over the next 20 years. Van Trotzenberg also warns of the collateral damage caused by climate change, which, according to World Bank forecasts, threatens the political stability of many developing countries and could plunge an additional 100 million people into poverty.
According to the trained economist, the corona crisis has further exacerbated global economic inequality. In order to prevent a new debt crisis, a follow-up regulation must be found for the debt moratorium that the G20 countries have granted the poorest countries so far.
Read the full interview here:
Mr van Trotsenburg, the heads of state and government of the 20 most important industrialized and emerging countries (G20) will meet in Rome at the weekend. You will be there too. One of the most important questions in Rome and then at the climate summit in Glasgow is how quickly we can get out of coal-fired power generation. Who should lead the way?
About a fifth of global CO2 emissions come from coal processing. Most of it from Asia. Countries like China, India and Indonesia get almost 60 percent of their electricity from coal. The World Bank has calculated that in Asia alone, phasing out coal would cost between nine and 13 trillion dollars. China would account for nearly ten trillion of that.
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And the rest?
Even the remaining $ 3 trillion would cost $ 150 billion a year over 20 years. In addition, you would have to shut down a coal-fired power plant every day – for 20 years. But that doesn’t happen. On the contrary: there are plans to build another 300 coal-fired power plants in the next few years.
Here in Germany, too, many are pointing to China in order to slow down a faster coal phase-out. Right?
This argument does not get you any further. All countries must make efforts, especially as the developing countries point out that the industrialized nations have massively used coal as an energy source in the course of their industrialization.
What could a global compromise for phasing out coal look like?
Together with governments, we need to shape the transition so that alternative energy sources can replace coal. This takes a lot of money, and developing countries in particular depend on international aid.
The rich countries have promised the poorer $ 100 billion a year in financial aid to help them fight climate change. The sum will probably not be reached in Glasgow. Why is that?
We ask ourselves that too. The World Bank made $ 26 billion available for this last year. A quarter comes from an international organization. Where is the rest of the world? More has to be done collectively and not always looking at the others. Too much is promised and too little is delivered.
Climate change also exacerbates other problems: poverty, political conflicts, migration. What do we know about these connections?
There are more and more politically and economically fragile states. The World Bank has increased its aid to these countries by 40 percent from ten to 14 billion dollars – most of it is grants. Climate change is further exacerbating the situation there. We estimate that negative climate effects could plunge an additional 100 million people into poverty in the next ten years. Africa is particularly hard hit, although the continent only contributes around four percent to greenhouse gases.
People queue to get a dose of a corona vaccine at Kiswa Health Center III in Kampala.
(Photo: dpa)
What else is on your “to-do list” for the G20 meeting?
The corona pandemic is still not over and we must not underestimate the risks. When it comes to vaccination, there is still a blatant inequality between the poorest countries and the industrialized nations. In Africa, less than four percent of people are fully vaccinated. The pandemic has shown that you cannot protect yourself alone. The World Bank will do its part and provide $ 20 billion for the purchase and administration of vaccines. We must also talk in Rome about the recovery of the world economy, because here too there is very uneven development between rich and poor countries. The economies in the industrialized nations are growing by an average of around five percent, in the poorest countries it is just 0.5 percent.
In Europe and the USA there is now intense discussion about further improving protection against the virus with a third, so-called “booster” vaccination. Does that make sense, or should we better give the vaccines to poorer countries to prevent new variants of the virus from developing there, which we then have to fight here with boosters?
Many industrialized countries have quantities of vaccines that are several times their population. Some of these stocks could be left to poorer regions like Africa. A total of twelve billion vaccine doses will be produced worldwide this year, and there will be 25 billion doses in 2022. You have to ask yourself why you don’t give more vaccines to poorer countries. Apparently there is no political will to do this.
According to the trained economist, the corona crisis has further exacerbated global economic inequality.
(Photo: PR)
Why is that?
The behavior is incomprehensible to me, especially because there is no longer a shortage of vaccines in the industrialized nations.
How do we manage to build up more production capacities for vaccines in poorer countries – does this also require a relaxation of patent law?
It’s a long-term process that can take years. All aspects, including patent protection and trade restrictions, must be put on the table. There must be no monopoly prices.
Another problem for many poorer countries is their enormous debt from government aid during the pandemic and the burdens from high energy prices. Are we heading for a new debt crisis?
The debt structure of poorer countries has changed significantly in recent years. In the past, the members of the Paris Club were the main creditors, i.e. above all rich OECD countries. Today, non-Paris Club countries are the biggest lenders. That makes rescheduling more difficult. There are also private buyers of government bonds from poorer countries. First of all, we need greater transparency as to who owes whom and how much. At the moment, the poorest debtors are being deferred their interest and principal payments. After that we have to talk about restructuring.
Does the G20 have to extend its debt moratorium (DSSI) for poorer countries yet again?
We definitely need follow-up regulations in the next two months. It is very difficult for many countries to meet their repayment obligations in the face of the corona crisis and a weak economic recovery.
Mr van Trotsenburg, thank you very much for the interview.
More: China is not getting away from coal