High debt, climate impacts and financial needs are drawing Latin American countries closer together at Cop27 in Sharm el-Sheikh, with a few calling for some pot negotiating bloc at climate talks.
Historically, in climate talks, Latin America has been split into two negotiating groups: the right-leaning Ailac countries and also the left-wing Alba bloc. Brazil, the region's biggest country, negotiates by itself. In other international talks, the region sticks together.
The Community of Latin American and Caribbean States (Celac) – which excludes Brazil – issued a joint statement at Cop27 calling for, among other things, the requirement for “a greater mobilization of monetary resources from developed countries”, sovereign bonds and debt swaps.
The joint move at Cop27 is really a sign of greater coordination among Latin American states, analysts told Climate Home News.
Latin America was the earth's most indebted region in 2023, according to a UN report.
The International Monetary Fund warned that, following the Covid-19 pandemic and Russia's war in Ukraine, the region is poised to suffer a “third shock” from the global hike in interest rates.
More climate finance is “essential” to relieve the region's woes, said Colombia's environment minister, Susana Muhamad.
The joint declaration requires “innovative financial instruments” such as sovereign bonds, guarantee funds and debt-for-climate swaps. The last mechanism, particularly, is definitely an idea that Colombia, Argentina and Ecuador have publicly supported.
A united front?
Colombia, which shifted leftwards in recent elections, is a key voice for unity. A member of the Ailac bloc, its government made approaches to neighboring Venezuela, which is in Alba.
“I need to see a united Latin America negotiating climate decisions in a common bloc like the African continent has done,” Colombia’s vice-president, Francia Marquéz, told Climate Home during an event at Cop27.
Chile's chief climate negotiator, Julio Cordano, said the declaration is really a “very important starting point” and added that “for the region, use of resources is essential and that clearly unites us”.
Cordano noted the region finds mutual understanding in the past in specific issues, which has allowed it to play a more decisive role.
While negotiating the Paris Agreement, for example, “we released a number of declarations that represented the entire region” on adaptation and indigenous people, said Cordano.
With its right-wing background and a leftist president, Colombia includes a “moral authority” to experience a mediating role between Ailac and Alba, said Sandra Guzmán, general coordinator from the Climate Finance Group for Latin America and the Caribbean (GFLAC).
“They come with an chance to build bridges and make alliances,” Guzmán added.
It helps that the number of other Latin American countries swung to the left within their latest presidential elections: Mexico, Argentina, Peru and most recently Brazil.
Adrián Martínez, director of NGO La Ruta del Clima, said unity in the region could help advance negotiations on loss and damage, as developed countries have often exploited divisions within the global south.
Financial needs
Debt in Latin America continues to be increasing since 2010. The Covid-19 pandemic and inflation triggered by Russia’s invasion of Ukraine accelerated the trend. Now, high rates of interest and extreme weather are going to add much more pressure.
The region closed 2023 using its highest weight of foreign debt in a decade, at around 56% of GDP, the UN regional report shows.
Climate disasters add sporadic financial shocks. This year, for instance, hurricane Fiona left a lot more than $375 million in losses in the Dominican Republic and around $100 of agricultural losses in Puerto Rico.
Debt-for nature swaps could be a method to ease the burden, Muhamad said.
“It's time for us to operate together in political decisions but also in keeping work programmes,” Muhamad said throughout a public event hosted through the Ny Times.
But the 2 negotiating blocs are unlikely to merge for the short term, said Chilean negotiator Cordano. “It's complex to arrive at political agreements in one day to the other in such a complex agenda. I favor to succeed in key specific topics.”
