America makes first move to allow independent fund for poor countries

US breaks deadlock on organisations such as World Bank deciding how to allocate money for clean tech and adaptation
John Vidal in Bangkok
guardian.co.uk, Tuesday 6 October 2009 13.10 BST
The US has made the first move to bridge the yawning gulf separating rich and developing countries on the money needed to secure a successful climate change deal at crucial UN talks in Copenhagen this December.
Although US negotiators have not made any specific promises on finance at talks currently under way in Bangkok, the US has accepted the principle of a single independent fund to be administered at least in part by the UN.
This is a long way from what developing countries want - firm pledges of large sums of money to allow poor countries to buy technologies to help them develop cleanly and to adapt to climate change. But because talks have been frozen on the issue for months, the movement in the US position is being seen as a positive step.
Until now, America, backed by Britain, has proposed that any money paid should be channelled through existing organisations like the World Bank. In addition it has insisted that contributions by rich countries should be voluntary.
This has been flatly rejected in the past by G77 countries (an umbrella group of 130 developing nations) who have long mistrusted the bank, saying it is institutionally biased against poor countries. They have said they want the UN to administer a separate fund which would be guided, controlled and managed by all countries. In addition they do not want promises of cash, but guaranteed, predictable flows of money.
Under the new US proposal, countries would be allowed to choose how much they paid and to direct it to specific areas, such as forestry or technology. Rich countries would come together every few years for what have been called "pledge parties", where they would indicate how much they intended to pay. In addition, they want businesses and other groups including NGOs to have access to the funds.
The proposal will almost certainly be rejected by G77 countries and insiders do not expect it to form part of the final Copenhagen deal, but the US move is considered significant because it represents some movement in the negotiating positions. The talks have been deadlocked on finance for months.
"The positions are becoming clearer. The US has opened the door to a single fund. The worrying sign is that it assumes that the developing countries will take what they can get and will not walk out of the talks. That's a dangerous assumption," said Oxfam analyst Antonio Hill.
"We still have a deadlock on finance. The key to unlocking it is with the Annex 1 [rich] countries. At the moment no money has been put forward," said Raman Metha of Action Aid who suggested that the US proposal was a negotiating tactic to force the G77 to compromise.
Countries have made no progress in Bangkok on how much money they are prepared to put up, or what proportion would be new rather than come from carbon markets or existing aid. Discussions are expected to go to the wire at Copenhagen in December.
At present the leading contender is still Gordon Brown's suggestion of $100bn a year (£61bn) which has been endorsed by the EU's environment minister Stavros Dimas.