UK's Climate Aid Plans 'undermine' Global Deal

A senior diplomat for the world's poorer countries today accused Britain of undermining a UN treaty on climate change by seeking to channel funds for developing countries through the World Bank.

Bernaditas Muller, the coordinator for the G77 and China group of countries in key climate change negotiations told the Guardian she was "surprised and concerned" that Britain was not pressing for billions of dollars of proposed climate aid funds to go through the United Nations Framework Convention on Climate Change (UNFCC), the legally binding global agreement signed by more than 180 countries.

It is expected that $5-10bn of aid will be pledged by G8 countries in July for poor countries to address climate change. Speaking in a personal capacity, Muller said she feared this would dwarf UN funds and divert money from the UNFCC.

Britain is currently trying to persuade other G8 countries to contribute to climate adaptation funds, which would be administered by the World Bank. It has pledged £800m and argues that the bank has consulted widely and amended its proposals to take account of developing countries' needs.

But Muller said that going through the World Bank would be divisive. "The bank has a very mixed reputation among developing countries. Why does Britain have to go through this channel, which will skim off some of the money," she asked.

She also said that limited resources available for climate change adaptation could be fragmented if the World Bank administered the funds, reducing focus and the size of funds available for projects. Lastly, she feared that the bank would favor some countries above others. "Is this going to be a way through which influence or pressure will be put on developing countries?" she asked.

Developing countries have also reacted angrily to revelations in the Guardian that Britain wants the majority of the money it has pledged to be in the form of loans and not grants. This, say environment and development groups, contradict internationally agreed principles on climate change.

"These state that as historical polluters, and due to their higher technological and economic capabilities, developed countries should shoulder the main burden for tackling climate change", said Martin Khor, director of the Third World Network of groups based in Malaysia.

It also emerged today that Britain was advised by its own international development committee of MPs not to set up new funds at the World Bank. The MPs on the committee expressed concerns in March at the proliferation of climate trust funds under the bank.

In a report, the committee writes: "We are concerned that any further proliferation of funds could distract World Bank shareholders from the key challenges ahead with regard to its main institutions. We recommend DfID [the Department for International Development] resist proposals to set up any further funds or where it supports such proposals â€" for example on climate change â€" provide us in advance with the rationale for its support."

The MPs added: "We are skeptical that creating a new trust fund, in addition to the dozen or so that already exist in the bank for such work, is the best way forward for the £800m of DfID climate change financing."