US President Joe Biden has announced a joint fund with the Inter-American Development Bank (IDB) to invest in debt-for-climate action swaps. President Biden stated that his government is working to “channel billions of dollars toward sustainable infrastructure construction in the hemisphere.”
This represents an endorsement of the proposal by Colombian President Gustavo Petro to exchange external debt for climate action, an offer that the Colombian president has advocated for in various international forums for months. The European Union, through the French President, has already expressed a willingness to consider Gustavo Petro’s proposal.
However, the United States has become the first major economy to solidify its support for the formula. With this decision, Biden takes another step toward finding a mechanism that facilitates climate action for countries that, while being less polluting, still have a responsibility on the international agenda to reduce greenhouse gas emissions and protect natural areas.
Petro and the ecological connection with Biden
Since taking office in August 2022, President Petro has sought to maintain the traditional good relations between Colombia and the United States. Although some analysts expressed concerns, as Petro represents the first left-wing government in Colombia, the messages coming from the U.S. administration so far have been supportive of the Colombian government. This has been the case both in the climate action issue and in matters such as Total Peace, which is currently facing its most challenging moments.
In the meeting held by both presidents in the White House in April, Petro raised the flag of his commitment to the environmental cause, knowing that it is one of Joe Biden’s key priorities. The connection between the two presidents is complete in this regard, which is why the Colombian head of state presented his proposal to exchange external debt for climate action, with the idea of extracting a concrete commitment from the world’s leading economic power. The U.S. President picked up the challenge back then, and he is now shaping the first guidelines for their collaboration.
“We want to make sure our closest neighbors know that they have a real choice between debt trap diplomacy and high-quality transparent approaches to infrastructure and development,” Biden stated at the official inauguration of the first edition of the Summit for Economic Prosperity in the Americas (APEP) on Friday in Washington.
Biden’s commitment to the proposal
“The United States is also working with the Inter-American Development Bank (IDB) to establish a nature fund to generate more investments in nature-based climate solutions, such as nation debt swaps and blue and green bonds. I supported these nation debt swaps when I was in the Senate,” the U.S. President said, recalling his long-standing commitment to concrete environmental actions.
This is a point on which the two presidents fully agree. In his address at the Climate Ambition Summit on September 20 during the 78th United Nations General Assembly, President Petro emphasized that his proposal for a large Marshall Plan for Life involves allocating “over 100 billion dollars” to adapt and restructure the economies of southern countries, and that “these large funds must be public, they don’t emerge from a non-existent box, they must come from our own countries.”
Agreements from April in focus
In this way, the U.S. President is finalizing the agreement that both countries already reached in the meeting with his Colombian counterpart in April. President Petro revealed that in the fight against the climate crisis, the United States announced that it would contribute $500 million to the Green Fund, proposed by Colombia to save the Amazon rainforest.
At that time, the Colombian head of state mentioned that “the United States government and even President Joe Biden himself felt compelled by the proposal; he had already made it regarding another problem many decades ago, and they said they were very interested in taking the proposal to the International Monetary Fund (IMF) and making it a reality, which would be a very significant transformation of the world: the exchange of public debt for climate action.”