Much to Bishkek’s consternation, the global creditor class is refusing to return Sadyr Zhaparov’s phone calls.
Addressing the UN General Assembly last month, the Kyrgyz president lamented that no developed country had taken him up on his offer to negotiate a so-called debt-for-nature “swap:” “I have already addressed our partners with a request to exchange external debt for environmental projects. Unfortunately, we have received no reaction.”
Astonishingly, the global community appears to have given Zhaparov the cold shoulder despite the climate lobby’s advocacy of debt-for-nature “swaps,” which are intended to roll back the threats to biodiversity and the ill effects of climate change on the environment.
UN Secretary-General António Guterres has said: “The climate emergency is a race we are losing, but it is a race we can win.”
One of the ways to turn the tide is debt-for-nature swaps. To ignore the efforts of countries like Kyrgyzstan to engage in such “swaps” is to fail to live up to solemn commitments to reverse the detrimental effects of climate change.
For the past 20 years, Bishkek has been holding regular, if intermittent, working group discussions with its creditors on the possibility of debt-for-nature swaps and other hybrid arrangements. In his recent speech before the UN General Assembly, Zhaparov raised the stakes, calling on his creditors to abide by their commitments.
Debt-for-nature swaps – what are they?
Debt-for-nature swaps are financial transactions whereby creditor nations forgive an agreed-upon portion of a nation’s foreign debt in exchange for local investments in the debtor nation’s environmental protection and conservation measures.
I had the privilege of working closely in this field with the late high priest of debt swaps, Dr Thomas Lovejoy, during his tenure as assistant secretary for environmental and external affairs at the Smithsonian Institution. (See his October 1984 op-ed on debt swaps in The New York Times and his 1991 testimony before the US Senate.)
We executed a swap to protect the habitat of Swainson’s warbler, a threatened migratory bird that breeds in the United States and winters in Jamaica, supported biodiversity initiatives in the Amazon and marine habitats in Pacific waters and concluded a hybrid debt-for-biodiversity transaction with the Royal Bank of Canada to build the Center for the Study of Biological Diversity in Guyana.
Our biggest hurdle at the time was to reassure countries that debt-for-nature swaps had nothing to do with the transfer of land ownership (loss of sovereignty) to foreign interests.
Kyrgyzstan is persistent
At this year’s opening of the UN General Assembly, the heads of state of Kazakhstan, Tajikistan, Turkmenistan and Uzbekistan highlighted the urgent need to address issues around natural resource and water management, desertification, glacial melt, and the irreversible loss of biodiversity.
But Zhaparov went further than the other Central Asian leaders in stressing Kyrgyzstan’s support for “calls made at the Summit for a New Global Financial Pact in Paris [2023] to mobilize necessary financing [for environmental initiatives] and [carry out] structural reforms of the international financial architecture.”
To drive the point home, Zhaparov challenged Bishkek’s multilateral and bilateral creditors: “If we don’t start [to reform the system] now, then injustice in the world will grow. Rich countries will continue getting richer, and poor countries will continue getting poorer.”
He believes that the current global monetary system with its asymmetries between rich and poor, difficult eligibility criteria and onerous compliance requirements has nearly run its course and no longer serves the interests of low-income countries, a view held by a growing number of countries.
With an external debt of a not-insignificant US$9.85 billion and possessed of important ecosystems and natural resources, Kyrgyzstan is a prime candidate for mutually beneficial debt-for-nature swaps.
The impressive natural-resource projects the country is interested in carrying out include: long-term management of the Western Tien-Shan mountains, which are on UNESCO’s World Heritage list; protection of endangered and/or vulnerable species such as the snow leopard; integrated management of glacier and water resources; and conservation of the large number of indigenous tree species that are critically endangered.
From all appearances, Zhaparov is open to negotiations on creative debt-for-nature or other environmental financing arrangements such as, for example, the $20 million transaction executed this past September between Peru and the United States to support conservation in the Amazon.
In view of the importance of Kyrgyzstan’s natural resources and the scale of its needs in biodiversity management, multilateral and bilateral lenders in Europe and Asia could do worse than to get on the horn and give President Zhaparov a shout. They would be doing world biodiversity a favor and the president will surely pick up the phone.
