War, money, politics: Discord among wealthy countries hampers landmark climate fund

Aid for victims of climate change is in danger of being delayed as wealthy countries brawl over who gets to sit on the board of a new global fund.

The fight includes a disagreement between the European Union and other high-income governments, including the United States, over whether the fund’s biggest donors should get extra seats on the board deciding how to dole out the cash.

Tensions over the war in Ukraine, a rift within the EU and Turkish demands for special treatment have also caused the countries to miss last month’s deadline for the board to begin work, according to multiple climate negotiators and government officials who were granted anonymity to discuss sensitive matters.

The upshot: The world’s governments have little to show so far for the historic deal they reached in November, which set the outlines of a fund that is supposed to aid communities devastated by climate disasters such as extreme storms and heat.

“There’s definitely not only one country to blame here,” said one senior negotiator from a European country. “Nobody's happy about the situation.”

Last year’s deal, reached at the start of the United Nations climate talks in Dubai, included an agreement to nominate representatives for the fund’s 26-member supervisory board “as soon as possible.” That would allow the U.N. to convene a first meeting “no later than 31 January 2024.”

Developing countries have named their representatives, but richer nations have not. Instead, they are still arguing over which countries can nominate members to sit on the board, the negotiators and officials told POLITICO and POLITICO’s E&E News.

Until developed countries sort out their disagreements, the board can’t meet — and that could ultimately delay when money starts flowing.

That “would be a negative message of the first year of work,” said Mohamed Nasr, the chief climate negotiator for Egypt, who has been nominated to the board. He worries that developing countries could consider the delay yet another failure to deliver on a commitment due to come at this year’s global climate talks in Azerbaijan, where the focus will be on finance.

Money matters

Countries agreed to split the board’s membership to ensure a roughly even representation of developing countries — the beneficiaries of the fund — and developed countries, the main financial contributors.

Yet as of mid-February, developed countries failed to submit nominations for their 12 seats.

Of the 14 seats allocated to developing countries, 13 are filled. The remaining seat — reserved for developing countries not represented in regional groups, a category that mostly concerns ex-Soviet nations — has become entangled in the wider dispute.

Developing countries’ seats were distributed among regional groups, with Africa receiving three seats, for example. Wealthy countries didn’t ask for a regional split, leaving them to negotiate among themselves.

To complicate the matter further, developed nations are represented in two blocs — the Eastern European group, and the Western European and Others group, which includes the United States, Australia, Canada and Japan — which have to find consensus both between themselves and among their members.

In the Western group, countries are squabbling over whether higher financial contributions should equal more seats on the board, two senior Western European government officials said.

The EU, the largest supporter of the new fund so far, argues its member states should hold the majority of developed country seats. Of the $660 million that governments have pledged so far for loss and damage — as support for climate disaster victims is known in U.N. jargon — nearly $450 million came from the EU or its member countries.

The United States’ relatively paltry contribution of $17.5 million was met with criticism in Dubai given the size of its economy and its status as the largest climate polluter in history.

One of the European officials said the EU had asked for eight seats but would likely settle for seven, with top contributors Germany, France and Italy each getting one seat.

The countries that compose the “Others” — and are negotiating as the so-called Umbrella Group — would likely accept a split where they can take the remaining five seats, but there is greater interest among them than there are seats remaining, according to a senior State Department official. The person said the number of seats the EU has put forward would “really limit” the other countries that are also interested.

The State Department official said the idea that seats would be allocated based on pledges to the fund seemed “kind of odd.” Some countries within the Umbrella Group have not made a pledge but are still arguing for a board seat, the person said.

“They've also argued that even though they haven't pledged now, [it] doesn't mean they wouldn't pledge, and being part of the board and helping to shape the policies is an important way,” the official added.

One possible reason for the high interest is that the board will help set policies around how the fund operates, such as which countries receive money and how.

Until this week, the EU was also split over whether the European Commission itself — the bloc’s executive arm — should get a seat. But two EU diplomats said the issue was resolved on Wednesday, with countries backing a separate Commission representative on the board.

The Commission declined to comment on internal negotiations.

'Everybody’s held hostage'

Even if the Western bloc resolves its issues soon, the developed country nominations face another obstacle — a stalemate among the Eastern Europeans.

Since shortly after Russia’s invasion of Ukraine, Moscow and its ally Belarus have prevented Ukraine and Eastern EU countries from nominating candidates to committees in the U.N.’s climate body — and vice versa — said the senior European negotiator, who is closely involved in talks among Eastern Europeans.

Those tensions blocked the group from agreeing on an Eastern European host country for this year’s COP29 summit, as Russia vetoed EU candidate Bulgaria. Left with no other option, the group eventually chose Azerbaijan.

The negotiator’s account was echoed by a Ukrainian negotiator, another European climate diplomat and a senior Eastern European government official.

“With our group, Russia is blocking all the appointments. We were unable to resolve it at COP28 in person, so everybody’s held hostage. This is still the case,” the Ukrainian negotiator said. Requests for comment to the Russian foreign ministry went unanswered.

Enter Ankara

And then there’s Turkey.

Ankara refused to ratify the 2015 Paris climate accord for years over one key detail: Under the U.N.’s overarching climate change treaty, it is listed as an industrialized country — a classification that means it cannot benefit from financial support intended for poorer countries and must contribute more to efforts to cut its planet-warming emissions.

Upon finally ratifying the Paris Agreement in 2021, the Turkish government declared it was doing so as a developing country. That statement was purely symbolic, as the accord does not allow countries to impose conditions.

But now, the senior European negotiator said, Ankara has suggested it could nominate itself for the non-aligned developing country seat — competing with smaller, poorer countries such as Armenia or Moldova. The State Department official confirmed Turkey’s position.

That could set a risky precedent, the European negotiator warned. “Nobody really wants to validate this self-nomination of any country, like developing or developed for the purpose of this or for the purpose of that.”

Turkey’s environment and foreign ministries did not respond to requests for comment.

The longer the delay drags on, the greater fears grow that developed countries’ squabbles over seats could derail the fund’s tight timeline for becoming operational.

Countries agreed last year to fold the fund into the World Bank, at least temporarily. The multinational lender and the 26-member board are meant to deliver an agreement on the terms for hosting the fund under the World Bank “no later than eight months” after COP28, meaning in mid-August.

At November’s summit in Azerbaijan, governments are meant to give their final approval for the fund’s design. Only then can the fund start disbursing financial support to countries and communities grappling with climate disasters.

“It’s going to be a really, really tight timeframe for the board to get things done,” said Liane Schalatek, associate director at the Heinrich Böll Foundation in Washington who has followed the fund process. “So if you read through the decision about what needs to be done … a delay puts that entire timetable at risk.”