Climate Crisis Costs: Caribbean Nations Demand Global Financial System Reforms – Pulitzer Center on Crisis Reporting

In August of 2019, Hurricane Dorian made landfall on the narrow Bahamian island of Abaco. It broke the scale for hurricane categories; its tornados, waterspouts, winds, and water surges left buildings and power systems tangled and destroyed. Jeremey Sweeting, the chief councilor of Abacos Hope Town District Council, witnessed the infrastructural devastation that had befallen his community.

Debris was everywhere, covering the roads, beaches, and overwhelmed marinas. In an interview in January 2024, five years after Dorian, Sweeting reflected on how residents had to clear an entire baseball field themselves so that planes and helicopters could land for immediate evacuations.

As a nonprofit journalism organization, we depend on your support to fund more than 170 reporting projects every year on critical global and local issues.Donate any amounttoday to become a Pulitzer Center Champion and receive exclusive benefits!

The severe velocity of the hurricane is not uniqueMarjahn Finlayson, a Bahamian climate scientist and educator, explained how the scale of Dorian was a result of increasing global temperatures. In the upcoming decades, the region will have to brace for higher-category hurricanes, intense summer heats, droughts, and flooding. Finlayson believes that many people still have a misunderstanding of the severity of the situation.

Small island nations are faced with a twofold issue: increasingly extreme weather-related disasters and problems followed by slow or failing economic recovery. Economic development is directly stagnated by the climate crisis in the Caribbean.

Every climate crisis was an economic crisis; but going forward ... every economic crisis would effectively be a climate crisis, said Barbados Prime Minister Mia Mottley in an interview with ProPublica and The New York Times Magazine, published in July 2022, discussing how economic projects that Caribbean countries are already struggling to afford could be laid to waste in a moment by a powerful hurricane charged by warming temperatures.

Mottley has been at the forefront of the Bridgetown Initiative, one of many Caribbean-led proposals that aim to combat financial stress associated with climate-induced issues.

The climate crisis is forcing a re-evaluation of the global financial system, with vulnerable Caribbean countries spearheading the movement. A growing number of regional leaders are highlighting how the antiquated international financial system, designed by the Global North, does not consider contemporary problems of the Global South, such as the specific economic burdens of an increasingly extreme climate.

From reimagining financial restrictions to exploring alternative streams of private and inter-governmental investment aid, many strategies will need to be utilized to hasten economic recovery and build climate resilience. The shift pushed today by the Caribbean is a preview of the changes that will be increasingly necessary as the world grapples with how to economically adjust to a changing climate.

Stephan Flynn, the founding project director of Advancing Community Climate Resilience Planning in the Caribbean Region, at Northeastern University, argues that the Caribbean is a microcosm of the interrelated elements of economic development and battles against climate change. Small island nations hold fragile economies that have made them structurally more vulnerable to developing climate extremes. Some common features of their economies include tourism as the largest income sector and high costs for transporting materials to, around, and from the region.

When a hurricane comes through, tourism ceases while the nation recovers. Similarly, when flooding occurs from rising sea levels, infrastructure is severely damaged, and materials needed for recovery are expensive to import. For these reasons, climate disasters translate into more consequential effects for small island nations, says Flynn.

The dilemma was demonstrated in Abaco after Hurricane Dorian. As the second-largest island in the Bahamas and a significant contributor to the tourist industry, the loss of this income stream was felt at a national level. Bringing in resources for reconstruction was also a logistical nightmare as materials had to be shipped or flown in at high economic costs.

Additionally, Abacos Hope Town District Council stressed that the tax breaks and passport stamps, methods used by the national government to ease recovery, were both insufficient and unsustainable as they did not take into consideration how much each individual had lost.

Samaritans Purse and World Central Kitchen were two NGOs that residents remembered as being helpful for immediate recovery, but many left the following year when the COVID pandemic consumed international aid.

Marsh Harbour, Abacos commercial center, suffered a tidal wave during the storm and, five years into recovery, is still littered with the skeletons of destroyed buildings that have been abandoned by residents that do not have the liquidity to rebuild. However, even considering the lack of governmental support and setbacks caused by the pandemic, Marsh Harbour has come a long way in its recovery.

Brand-new houses, hotels, restaurants, and commercial buildings are slowly emerging. On a visit in January 2024, the harbor was filled to the brim with fishing boats and vacationers from the U.S. and beyond. However, recovery to pre-Dorian conditions has not yet been achieved.

We are carrying the brunt of the climate crisis, we see it on our doorstep, says Raevyn Bootle, an Abaco resident who works at a local insurance company in Marsh Harbour. She emphasized that locals are reckoning with this changing climate and the conversation is driven by young people who recognize that the crisis is inequitable for small island nations without the systems or resources in place to tackle the issue effectively. At this point, around 10 tropical storms develop in the region each year, with an average of six developing into hurricanes with increasing intensity, reports the U.S. National Weather Service.

Sweeting said that if a hurricane of Dorians scale were to happen again, a national economic depression could ensue. This statement is becoming less of a fear and more a prediction each year.

Countries like the Bahamas, which are considered high-income economies based on mass tourism, receive limited loans and development aid to pay for natural disasters. Therefore, while the Bahamas has been developing economically and infrastructurally, the nation is restricted by the consistent economic burden of climate change and keeps it from catching up with the rest of the world.

The Bahamas ambassador to the United Nations, Stan Smith, predicts that around 40% of the Bahamas national debt is caused by natural disasters and more than 1 billion people in the Global South are not receiving the adequate financial support for the costs of climate change.

Smith effectively lays out the dilemma that the Caribbean is facing: The climate crisis is not merely an economic crisis; it is a civilizational challenge.

Black listings are an example of the structural limitations of the international financial system; blacklisted countries are categorized by the international community as nations that do not meet international financial standards, such as not having adequate protections against economic crimes of funding terrorist groups or money laundering.

This categorization deters a substantial amount of foreign investment. In January 2024, the Bahamas announced that it would potentially involve the International Court of Justice (ICJ) in disputing its recharacterization as a blacklisted country. The Bahamas is claiming that black listings are breaching its human rights because it directly prevents the country from accessing international financial markets and international insurers that support the Caribbean in recovery financing after natural disasters and climate change-induced drawbacks.

The international community has responded, and the Bahamas was removed from the EUs financial blacklist on February 20, 2024, just one month after the nation threatened to involve the ICJ.

The Bahamas next advocacy project is requesting a change of its regulatory tax supervisor from the EU and OECD to the United Nations, claiming at a U.N. ad hoc committee in February earlier this year that the OECD international tax policies do not account for differences in development dynamics faced by the Global South and that U.N. supervision would provide a more equitable framework as the Bahamas grapples with climate change and development.

These conversations demonstrate that Caribbean activism on this issue is working, and the international community is open to adjustments.

Regardless of initial steps to emphasize the interrelationship between economics and the climate crisis, Caribbean officials still need to compensate for failures of the global financial system by exploring alternative streams of aid and investment. The Bridgetown Initiative highlights this necessity for increasing international investments in climate resilience and reconstruction aid following climate disasters as one of its reform suggestions is to implement a global mechanism for raising reconstruction grants.

Scott MacDonald, the chief economist at Smiths Research & Gradings, a financial and credit research company based in Virginia, calls particular attention to the increased amount of Chinese investment since the 2008 financial crisis, when investment from Europe to the Caribbean was cut. For example, the U.S. Congress Committee on Foreign Affairs reported that between 2005 and 2022, China has invested more than $10 billion in the main economic sectors of 10 Caribbean countries.

MacDonald points out that the energy transition from fossil fuels to renewables is one of the ways that the Caribbean is struggling to build sustainable climate resilience. The Bahamas itself is around 80% dependent on fossil fuels and oil and renewable energy is expensive and needs a lot of equipment; China can offer lower interest rates and they dominate global solar and wind industries, he notes.

MacDonalds argument is that as these types of investments grow and China builds a presence in the region, it could become a strategic poke at the policy of the U.S.the U.S. is involved in the South China Sea, so China is involved in the Caribbean.

As the Bahamas ambassador to the United Nations, Smith posits that the concern of political influence due to debt and investments is misconceived and building economic relationships with a multitude of countries is, in part, a response to the inadequacy of the international financial architecture for addressing the climate crisis.

The Caribbean is still within the U.S.-controlled SWIFT banking/finance system and has a deep cultural synthesis with the U.S. in which, Smith believes, China is unable to penetrate.

In the upcoming decade, the economic growth of the Caribbean will be reliant upon whether the global financial system is successfully reconstructed in a manner that addresses the fast-paced and economically devastating nature of the climate crisis. For the Caribbean, MacDonald concludes, the energy transition and the climate crisis will be the determinants of foreign policy in the future.

Original post:

Climate Crisis Costs: Caribbean Nations Demand Global Financial System Reforms - Pulitzer Center on Crisis Reporting