Climate sabotage: Bank undermines direct access to UN Adaptation Fund

30 September 2010 | Guest comment

The World Bank is actively undermining the ability of the Philippines to directly access urgently needed climate adaptation finance without involving intermediaries. Documents acquired by Philippine NGO, the Institute for Climate and Sustainable Cities (iCSC), and testimonies of government officials exposed plans by the Bank that would deny the Philippine government the option of directly accessing resources from the UN’s Adaptation Fund (AF) and potentially impose more climate loans.

The AF has two funding modalities – the multilateral modality where a country accesses AF resources through intermediary institutions such as the Bank, and the direct access modality which offers developing countries the option to directly access funds.

Long championed by the Philippines, the direct access modality in the AF was crafted and agreed in the UN as an alternative to conditionality-spiked, inefficient, and bureaucratic intermediary institutions. Among global climate funds, the AF today represents the benchmark for democratic governance (it is governed by a board mandated to maintain a developing country majority) and financing mechanisms that do not replicate the donor-driven models of the aid system.

The document acquired by iCSC shows the Bank inserting itself as the funding conduit to the AF. It demonstrates the Bank colluding with unwitting officials from the Department of Public Works and Highways (DPWH) and the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAG-ASA) in relation to a prospective $15 million AF grant.

The scheme was exposed in a mid August speech by Philippine Senate president Juan Ponce Enrile, based on analysis provided by iCSC, which revealed the Bank’s plan to charge excessive management fees for serving as the intermediary institution that would access the AF.

The Bank responded to Enrile’s charges the next day in a letter that admitted knowledge of the proposal. The Bank denied, however, that it had tried to insert itself as an intermediary institution, saying that it was actually approached by DPWH and PAG-ASA and that it was supportive of Philippine direct access to the AF.

The Bank’s letter admitted that it was aware that another agency, the Department of Environment and Natural Resources (DENR), had already applied to the AF board for accreditation as the Philippine agency that would directly access AF funds. However, the Bank said the DENR was also the authority that would endorse Philippine proposals to the AF. AF rules show that the entity that intends to directly access AF funds cannot be the same authority that endorses proposals to the AF board. The Bank delivered another letter to the Senate in early September which said the Bank was still "the fastest way for the country to mobilise resources from the AF." However, Enrile retorted that the issue is not about speed but the country’s ability to submit proposals based on country-crafted plans in a process that is free from Bank meddling.

Enrile’s speech prompted the Senate Climate Change Committee to hold a hearing on 25 August, where officials from the DPWH and PAG-ASA testified that they were in fact approached by the Bank in relation to the proposal. Philippine climate change network Aksyon Klima Pilipinas (AKP) said “The Bank’s hand has been caught again in the climate cookie jar. It is part of the problem and has no business peddling itself as a conduit for climate finance for the Philippines or abroad.”

Instead of concrete adaptation projects, the Bank’s proposal would have funded feasibility studies costing $2 million and allocated $1.5 million to rehabilitate failed projects. It also allocated $1 million to "consultancy services" provided by teams  that would likely follow Bank-designed plans instead of nationally crafted action plans.  Finally, the $15 million proposal allocates almost $2 million – 13 per cent – for Bank management costs; even the most corrupt official would smile at the prospect of taking such a large share.

The controversial Bank proposal deliberately contradicts the long-held Philippine position in international climate finance talks, which champions adaptation finance options free of multilateral development bank intermediaries. The proposal was not based on the country’s adaptation action plan and would have squandered urgently needed financial resources from the AF.

Red Constantino, redcosmo[at]gmail.com
Institute for Climate and Sustainable Cities, http://www.ejeepney.org