“As we speak, my country is under water. My mother, my sister have both lost their homes. And this has happened although my country has played almost no part in causing this crisis.”
This is what Hindou Oumarou Ibrahim, an activist from Chad, said to me when I was on a panel at the Climate Change Conference in autumn last year. She was right to be so insistent because back then we had talked a lot about the flooding in Pakistan, but the disaster in Chad has passed us by.
And – just like so many people in the world who are experiencing the daily impact of the climate crisis – she is speaking for millions of people on our planet. Even today, three times as many people are being displaced by the climate crisis as by wars, making the climate crisis the greatest security threat of our time.
And the words uttered by Hindou Oumarou Ibrahim draw attention to an appalling injustice. After all, the countries suffering most from the climate crisis are those which have contributed least to it.
That is why we introduced new financing options for loss and damage for particularly vulnerable countries at the Climate Change Conference in Sharm el-Sheikh. That is why we, the industrialised nations, are working on ambitious climate targets. Particularly in the European Union. We do of course know that it costs money to reduce CO2, to adopt ambitious climate targets. Experts estimate that the financing requirements to bring global warming down to 1.5 degrees will be 2.4 trillion US dollars a year in developing countries and emerging economies alone.
Yet at the same time we know, and have known for a long time, at the latest since the Stern Review, that every tenth of a degree of global warming that we fail to deal with will cost two or three times as much. And above all else, as the last few years have shown in sharp relief, it will cost human lives, what is more, hundreds and thousands of human lives.
We are seeing a further global crisis exacerbating parallel to the climate crisis. 60% of low-income countries have a high debt risk or are even today embroiled in a debt crisis. Global inflation, growing interest rates and a strong dollar are fuelling this problem. And now we have to add the Russian war to the list.
If we take look at the island state of Dominica, we can see the true danger of this vicious circle of debt and the climate crisis. When the devastating Hurricane Maria struck Dominica in 2017, it caused loss and damage to the tune of 226% of Dominica’s GDP. 226% of GDP! This means that to repair the damage, Dominica had to take up new debt, what is more at a much higher interest rate than industrialised countries. So not only did its level of debt increase considerably, there was also far too little money left over to prepare for the next storm. That means, the vicious circle accelerates further.
This is the reality for an incredible number of countries in our world. They do not have the money to adapt to the climate crisis. That means when the climate crisis hits home, the damage will be even greater. However, they also lack the money to set up a low-emission economic system. They lack the money for key social investment in education and health. They quite literally lack the air to breathe.
We are here today – and at many other international conferences, especially under the auspices of the IMF – to talk about how we can break this vicious circle together. Right at the start, I want to make two concrete points.
Firstly, we want to reform the World Bank together to gear its business model more to climate finance as the climate crisis poses the greatest security threat and thus also the greatest danger to our global economy. Part of this is that the World Bank needs to do more to mobilise private climate investment. After all, if it were to lead the way, others, in particular development banks, could follow.
However, it also means that we need to enable countries which are less financially strong to invest more in green energy and sustainability. If interest rates for developing countries are up to four times higher on the capital market than those paid by industrialised countries, many green investments no longer pay off. And let’s be honest, it’s not exactly what you could call fair competition. Multilateral development banks can play an important role here to limit investment risks and thus cut the costs.
Secondly and I believe this is part of what being honest means, we should explore all avenues, none of which are easy, to reduce the debt burden of indebted countries. After all, as we are discussing at the Munich Security Conference and as we saw at the Climate Change Conference, when it comes to the question of debt and the climate crisis, geopolitical debates are not just background music, they in fact also impact the interests of various actors. Nevertheless, we must not refuse to conduct this debate just because it is so difficult.
The good thing is that there are already many innovative ideas and models on the table. As mentioned, Ms Mottley is one of the pioneers. For example a debt moratorium for countries affected by natural disasters, or debt-for-climate swaps that can be used to cancel debts and open the way to climate investment.
I look forward to talking to you about that in just a moment. You are perhaps wondering what the German Foreign Minister has got to do with this debate. After all, we are talking about interest rates and investment risks. The reason is that we are talking about an integrated security risk. When we talk about the climate crisis, we are also talking about security for all of us in this world. And we are also quite clearly talking about justice. For me, or for us the Federal Government who are in the process of penning an integrated Security Strategy, this means we cannot say: “Here we have climate protection, the Interior Ministry does that, here foreign policy with geostrategic repercussions, here we have the Economics Ministry with export policy, and here is the Finance Ministry”. That is the very opposite of integrated security. And it is also the very opposite of an interconnected world. We are therefore convinced that if we want to tackle this crisis effectively, then we have to do so comprehensively as national governments but also comprehensively as the international community.
It will be crucial here that the international community does not just include state actors. We also need private and public interest and thus also private and public funding for climate-friendly investments. That means we need politics, the financial sector, private businesses, international financial institutions but also a strong civil society. After all, that is who it is all about. When we talk about debt relief, we are talking first and foremost about the prospects for the people in the affected regions and countries. It is a debate about how we can give highly indebted countries air so they can breathe again. After all, only those who can breathe and are not permanently gasping for air are able to prepare themselves for the future: for the next flood although we do not know when it will happen, for the next hurricane, for every tenth of a degree of global warming. For the climate crisis. The greatest security threat of this century.