Episode 254 – IMPACT: Climate Reparations with Fadhel Kaboub

Macro N Cheese – Episode 254
IMPACT: Climate Reparations with Fadhel Kaboub
December 9, 2023

[00:00:00] Fadhel Kaboub [Intro/Music]: Reparations, meaning repairing the system. It’s not just about the money. It’s about the technology. It’s about also changing lifestyle and admitting that we have to sacrifice certain things in order to get an overall superior quality of life, both for people in the global south and in the global north.

Do we want public transportation systems that are efficient, affordable, and green, or do we want a Tesla style decarbonization of transportation with everyone, with their car and their battery and their toys.

[00:01:35] Geoff Ginter [Intro/Music]: Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43] Steven Grumbine: All right. This is Steve with Macro N Cheese. My guest today is none other than Fadhel Kaboub. And if you have followed us for some time, you know that we have repeatedly touched on the global south climate reparations and the realm of possibilities by which we can solve these major crises collaboratively and cooperatively.

So I have asked Fadhel Kaboub to come on and talk to me specifically about what climate reparations represent and why they matter, and how we can deliver them in a way that is both equitable and ensure it reaches the people most in need of help.

So without further ado, I bring on my guest, Fadhel Kaboub. Welcome to the show, sir.

[00:02:27] Fadhel Kaboub: Hi Steve. Thanks for having me back on the show.

[00:02:30] Grumbine: Absolutely. So this is exciting times. I am really happy to have you. Why don’t we just jump right in because we have talked about this so many times, and folks, please do go back through the Macro N Cheese rolodex of different interviews. They’re all I consider to be permanently relevant. You can always re-listen to them. They’re never out of season. Please do check out my previous interviews with Fadhel but let us just jump right in.

What exactly is the point of climate reparations at this time? It seems to me we are at a point in the history of the world where there is more division, more rage, more tearing apart than ever before, and these types of things seem to require cohesiveness and collaboration and cooperation to even consider reparations How does this come into play?

[00:03:23] Kaboub: Very good question. The urgency of the climate crisis is something that really forced, all of us to think very carefully about how do we address the crisis immediately and rapidly and on a very large scale, on a global scale. And the evidence that we have seen from scientific reports, from the IPCC reports and the last few years just make it crystal clear that we have a very serious problem that should have been addressed years ago in terms of decarbonizing the economy, decarbonizing the system, and that addressing this problem on a global scale today requires massive financial resources and technological resources on a scale that we have never experienced before.

That’s why many people think of the scale of intervention as a World War II type of intervention that is very short amount of time, very massive and rapid intervention. And when it comes to who is going to pay for it and who is actually able to marshal the resources to address this and coordinate this on a global scale, it becomes very clear that there’s some level of responsibility that is clearly to be assigned to the biggest polluters historically in terms of cumulative emissions since the industrial revolution.

And then it becomes very clear that the global north has been the most responsible set of countries when it comes to climate change, when it comes to CO2 emissions. The global south has been on the receiving end of the climate impact. There’s scientific studies that show that countries that reside 15 degrees north and 15 degrees south of the equator are experiencing and will continue to experience climate events and climate costs that are four times higher than the rest of the world.

So, we know which countries are struggling the most with the impact of climate change and will continue to struggle with the impact of climate change. And, for the most part, these are countries that have not contributed to climate change.

So, when we think of the term reparations in general, not just climate reparations, think of it linguistically. It’s repairing something that’s broken. So, how do you repair something? And then from the academic literature, the legal literature on the concept of reparations, it requires three things. One is telling the truth and acknowledging that something has been broken.

And number two, offering a public apology, recognizing that something was severely damaged, that somebody was hurt by colonialism or by climate change or by slavery. There’s different kinds of reparations. And, then, number three is the actual process of repairing the damage, which to me involves a number of things on the climate front.

Number one, it’s actual transfer of financial resources to countries that are struggling with the impact of climate change. But transfer of resources by itself is not sufficient. It’s necessary, but it’s not sufficient. You also need to transfer technology as opposed to selling technology or providing loans to buy technology.

And on this front, it’s renewable energy technology, so, transfer technology is very important. And number three. it’s repairing the global ecosystem that continues to produce the negative impacts that we are trying to repair. And here it gets even more complicated because it’s not just the energy system, it’s a whole other set of systems that have been in place for a long time that continue to put the global south in an economic position where it’s not able to marshal its own resources in order to address its own needs on the energy front, on the food front, on the industrial front. And that means, for the most part, restructuring the global financial system, international trade system. And you have heard me say this before, Steve, when you divide the world into two groups, the global north and global south, and you net out all global financial transactions, that is exports, imports, foreign direct investment, interest payments, debt payments, debt cancellation, foreign aid, all the transactions, you net the amount and you have something like $2 trillion moving from the poorest countries to the richest countries.

So that is a global financial and international trade architecture that is extractive of wealth and resources from the global south. That is actually the continuation of the colonial extraction of wealth from the global south. And it was reinforced in the post-colonial era. So, if we have a global financial architecture that’s actually sucking resources and financial wealth from the global south, and we are facing a climate crisis in which everyone needs to contribute, and the countries of the global south have a massive amount of investments that need to be put in place to build their resilience and to face the impact of climate change, then we have a problem that must be recognized.

And when we say, oh, the global north will provide a green climate fund to assist the global south in decarbonizing the economy and we promised to put a hundred billion in that green climate fund, and we did it. Last time I checked it was about $10 billion total in that fund when it was supposed to have a hundred billion every year.

And, now, in this last COP 27 meeting, we managed to get an agreement to create a loss and damage fund, and it was created, but there is no agreement on who is going to put money in it and how the money will be dispersed or how much money will be put into it. So, we ended up with, basically, an empty bucket. But at least there’s the concept that there has to be a loss and damage fund to help the most vulnerable countries finance the transition.

it remains to be seen how the global community will come to an agreement as to who is going to pay into that fund and who is going to be the recipient of those funds under what conditions and what amounts. And that brings us to a whole set of questions, is how do you structure a climate reparations fund or a climate reparations framework?

So, I wanted to start with this because it allows us to touch on a lot of different points, but it gets us, hopefully, to understand that there’s clearly one side of the globe that’s been responsible and one side of the globe that’s been the victim of climate change and will continue to suffer. And, naturally, there has to be a compensation.

There has to be a global coordination to transition into a just an equitable and sustainable global economy. And that’s where the world is stuck right now on this green climate fund, on the loss and damage fund, on the transfer of financial resources, transfer of technology, and acknowledging that a group of countries have to take responsibility for financing, transferring technology, and restructuring the global economic architecture in order to build resilience throughout the world.

[00:11:50] Grumbine: This does not seem to be a moral question to me. This feels much more like there’s something broken, we must fix it. You already spoke to that to some degree. Within the United States, we have talks about just reparations for slavery. This is a much larger conversation. you have had colonialism, de facto slavery, exploitation extraction.

you have had a host of activities that have fed the north at the expense of the global south. Can you talk to me about what the linkages between climate reparations and colonialism and slavery are?

[00:12:36] Kaboub: Yeah, there are some important parallels there, and the solutions also present some important parallels. When you look at the global south today, the massive amount of external debt that we have, substantial amount of external debt means countries are being forced to prioritize external debt payment to the global north over investing in health, investing in education, investing in national priorities that matter for economic development.

So, the lack of fiscal policy space to invest in things that matter for development is directly linked to the external debt. So, when you think about where does this external debt come from and you trace it and you look very carefully that the majority of countries, and you realize that there’s three structural weaknesses

that almost all countries in the global south have. One is a massive amount of food imports, massive amount of energy imports. And this is true by the way, even for countries that are big energy producers like Nigeria, for example. And then the third one is the type of industrialization that the global south was assigned in the global economy, which is an industrialization that focuses almost exclusively either on extractive industries that is exporting raw materials like mining products or low value added manufacturing that is low cost of labor and obsolete technologies and simple assembly line type of manufacturing relative to the imports of the global south, which tend to be high value added manufacturing.

So, you take these three components together, lack of food sovereignty, lack of energy sovereignty, and low value added manufacturing. It translates into a structural trade deficit for each one of our countries in the global south. And a trade deficit systematically puts downward pressure on the value of your currency relative to the dollar, relative to the Euro.

So, you have a weak currency, a weak exchange rate, which means all the basic necessities that you have to import, you are importing them at a higher cost, which means you are importing inflation. And to prevent the social instability that comes with inflation, especially when inflation touches the most basic items like food and fuel and medicine, countries end up having to borrow dollars in order to stabilize the exchange rate, in order to minimize the inflationary impact on the most vulnerable people.

And that starts the vicious cycle of external debt. So, that external debt is driven by decisions that have been made in the global north too, especially on the food front.

The fact that the major food producers in the global north have systematically subsidized their agriculture and the global south was unable to compete on that front, you end up with destroying the agricultural base in the global south and creating a very severe food dependency in the global south. Today, Africa imports 85% of its food, partly because of the massive agricultural subsidies in Europe.

The common agricultural policy that started in the 1960s, but it’s not just Europe. The US did the same. Canada, Australia, Japan, and the former Soviet Union at the time, Russia and the Ukraine, which is why they’re important in the food system. So, the destruction of food sovereignty in the creation of the debt trap in the global south can be directly linked to agricultural policy in the global north.

We are going to win this battle and we are going to put you in a debt trap, and then you fast forward almost a century later and we have a severe problem. So, now the global south can’t feed itself and the global south is facing a severe food insecurity problem, a severe climate crisis, does not have the fiscal capacity to pay the debt, let alone to invest in developing its own resilience to climate change.

And that’s just on food front. Same thing on the technology front. The fact that we have very severe technological dependency, including in the energy system, by the way. And that’s why you have, even in the era of fossil fuels, you have the biggest fossil fuel producers in the global south who are unable to refine and use their own fossil fuels.

They have to export them as crude and then reimport them as gasoline and kerosene and other petrochemicals, which means you are always losing in their trade. So, that type of technological dependency is built into the global financial architecture, the global international trade system. And that’s unsustainable.

So, as we transition, hopefully, to a decarbonized economy and sustainable economy, we can’t reproduce the same extractive mechanisms that create these hierarchies. And that’s why transfer of technology has to be part of the reparations framework and colonial reparations and climate reparations. But, then, as we transition, we can’t just assume that we can just use all the technology that’s available to us and invest in research and development and everything will be fine because we will have the decarbonized energy system and transportation system.

We have to think about the real resources that will actually get us there. And, as of right now, there is a set of minerals, call them critical minerals, that are, no pun intended, critical to this transition for renewable energy technology, for all the electronics, for the battery technology and the numbers simply don’t add up.

And what I mean by that is this, that if we allow the global north to continue to consume and grow at the same pace with the consumerism culture and so on, but transform the fossil fuel based energy system into a green energy system, we going to absorb all the critical minerals that we have on the planet just to keep the global north going at the current pace.

And it’s doable. You can decarbonize transportation and you can put all the batteries in everything, but that would automatically mean that there will be no critical minerals and no technology and no renewable energy infrastructure left for the global south to decarbonize or grow or develop. So, if we are going to do that, then we have to admit from the beginning that the concept of just transition is just a lie.

It’s just a transition for the global north and the global south will remain in the same or even worse position than what it is right now. But if we are serious about developing the global south, you can’t develop without energy and we want the development to be with renewable energy. Today, on this continent in Africa, there’s 600 million people who currently have no access to electricity.

So, if we are going to bring electricity, clean energy to those 600 million people and decarbonize the rest of the economy and grow the economy to meet the basic needs of people in the global south, then that would imply there would not be enough critical minerals for everybody in the global north to have their electric car and to have their consumer’s lifestyle continue at the same pace as today.

So, that means if we are serious about just transition for the global south and development in the global south, then we have to immediately rethink the way we design transportation systems in the global north. Do we want public transportation systems that are efficient, affordable, and green?

Or do we want a Tesla style decarbonization of transportation with everyone with their car and their battery and their toys? We have to rethink the way we design cities or the way we design buildings, and we have to rethink consumerism altogether in the global north. that’s the only way we are going to truly engage in conversations about just transition.

I will give you a quick example. When we hear all these reports about x number of cars have been removed from the streets and replaced with electric cars, everybody gets excited. That’s great. we are getting closer to our targets. we are decarbonizing transportation. But then they don’t tell you anything about where the other cars, the used cars went.

They get exported to the global south as if when the emissions are happening in the Netherlands or in Paris or in New York, that’s very different than those same cars spitting out the same emissions in some countries in the global south. We live in the same planet. The emissions are the emissions. So, this means that we are not really serious about decarbonizing transportation.

We are just shifting things around and shoving things under the rug and greenwashing the entire process because we are not addressing the serious questions that we have on the table. And because we are not serious about the concept of just transition, it just ends up as empty words that you hear from politicians, mostly in the global north. So reparations, meaning repairing the system, you can’t repair the system by shifting fossil fuel, CO2 emissions from the global north and ship it to the global south. And we say we are repairing anything. No, we are not repairing anything. we are continuing the same process and we are shifting the costs to the most vulnerable people.

So, it’s not just about the money, it’s about the technology. it’s about also changing lifestyle and admitting that we have to sacrifice certain things in order to get an overall superior quality of life, both for people in the global south and in the global north. So, that’s why, I think, the best way to engage in these conversations about climate finance, about climate change is to engage in these conversations from a climate reparations standpoint.

Otherwise, you start missing all of these blind spots and think that we are making progress in the conversation when in fact we are not. So, that’s why every time the conversation about climate change and climate finance is put on the table, I start to think of it, well, how do we repair this broken system?

What are the different pieces that are broken that are causing the damage, causing the pain that need to be replaced and that need to be modified or repaired? And that means technology, that means lifestyle, that means financial systems that extract wealth from one side of the planet to the other. And that means, obviously, part of the reparations is stopping the mechanisms that cause the pain.

And it’s been made very clear scientifically that fossil fuels have to be phased out rapidly. And when we say phased out rapidly, it means not building new infrastructure. And even as the evidences become very clear about the importance of phasing out fossil fuels as we speak, we have the biggest oil and gas companies on the planet spending new money on capital expenditure.

CapEx expenditure for the biggest companies is close to a trillion dollars a year worth of new infrastructure that’s supposed to be extracting and burning fossil fuels for the next 30 to 50 years. And as everybody knows, with the conflict between Russia and the Ukraine and the energy crisis that Western Europe in particular faced, immediately triggered even more investments in natural gas in the global south, in Africa in particular, to come to the rescue to provide natural gas to Europe.

And all of those investments are going to be stranded assets. All of those investments are going to contribute even more to the climate crisis. So, we are talking about climate change. When I say we meaning governments, when it comes to action, it’s a lot of confusion and a lot of lack of focus when it comes to what really matters to address this crisis.

[00:25:54] Grumbine: I am glad you brought that up because it brings up a very important point. A large part of all forms of reparations that I have read about or studied always start with something as simple as an admission of guilt. And with the US having hegemonic powers, we are watching that change with the rise of BRICS and watching as China ascends.

However, we also know inherently that the United States does not typically play well with others on the global stage, and so as the world split partially as a result of Ukraine and Russia, Joe Biden had stated that China was the number one problem for the United States, and with that in mind, we have witnessed this overt effort to create a hot war.

So this world is splitting apart. How in the world do you manage climate crisis and climate reparations? When you have the rise of BRICS and you have the United States, no admission really of guilt in a multipolar world, how does that impact the pursuit for reparations?

[00:27:09] Kaboub: Oh, it’s a huge distraction from the things that really matter on a planetary scale. And it’s challenging when the countries that can do the most to actually repair the damage. And when I say do the most, not just financially but technologically, also. Countries that are distracting everybody with perceived problems instead of coordinating all efforts to address the climate crisis.

And it’s not just the united States, it’s everybody else, and this supposedly emerging multi-polar world, We want to get to a point where it’s not a unipolar or bipolar or multipolar. We live in a world of nations, but fundamentally of peoples. And when we say nations And countries, countries are supposed to be equally sovereign.

That’s the theory. But in practice, we know that sovereignty is a multi-layered concept. We often talk about economic and monetary sovereignty, but, really, most people understand sovereignty as a country has a flag and borders and manage its affairs internally. But you can’t really manage your affairs internally and deliver to the needs and aspirations of your people if you don’t have food sovereignty, if you don’t have energy sovereignty, if you don’t have technological sovereignty, if you don’t have economic and monetary sovereignty.

So if we are serious about a world that’s truly fair and equitable, then we have to at least in principle, agree that all countries. Need to restore or at least have some degree of sovereignty. And when we achieve that, and if we are serious about that, we would have solved quite a bit of climate challenge that we currently have, quite a bit of the external debt challenge, a lot of challenges that we currently face. So that’s the way I see it. I see these things as distractions from the things that really matter. There’s nothing more fundamental today than the climate crisis because it cuts across so many other issues on food, on energy, on security, refugee crisis, people’s displacement. All of these are very destabilizing to everybody and are so costly, and that’s why we often talk about this as a matter of life and death for humanity.

Not to create a rhetoric of fear about this, but science is science. Numbers are very clear that we have to focus all of our attention to this urgent problem. And the thing that bothers me the most, as I have said before, is that solutions are within reach. We are not doomed yet. So, when I say solutions are within reach, which means we do have the technological capabilities, the human capabilities, we do have a little bit of time left to reorient our thinking and our priorities to meet the challenge.

And as I said earlier, one of the countries that can do this and lead on this front and has done substantial things in the past is the US and Western Europe. Why? Because number one, it’s a country that has the resources, financial resources, technological resources, human resources, to really marshal resources on a scale similar to World War II, to address the climate crisis and to lead the rest of the world in addressing the climate crisis. But it’s also a country that’s been historically captured by the oil and gas interest, and that creates a problem of democracy in the United States to begin with, but also puts everybody else at risk on the planet. Western Europe has the capability to lead, but it has created an institutional mechanism for itself to force the entire western European economic block to sit on its hands and say, we don’t have financial resources to invest in all of this because of the way the Euro was designed to forbid, essentially, fiscal spending and to remove the monetary sovereignty, the fiscal sovereignty of individual nations. That design was by choice and that design can be modified, it can be changed, and can unleash a huge potential for climate finance in Europe.

We have international institutions that, by design, because they were designed during the colonial times, like the IMF in 1945 when most of the global south were still colonies, has an existing mechanism called SDR’s, special drawing rights that can unleash substantial amount of resources up to $650 billion that can be allocated to climate finance and can be allocated, you can even call it climate reparations, transfer of financial resources, to the global south. But we have old habits of thoughts and routines that say, no, that will be inflationary. No, that will not be fair because the current system of allocation of SDRs, the allocations that the IMF creates go by percentage to the shareholders of the IMF, which means the largest share will go to the US as the biggest shareholder.

But, then, the US can say, okay, we are going to take our share and put it into loss and damage fund. And Western Europe can do the same. And all the countries that have been responsible for CO2 emissions in terms of historical emissions, can take their annual allocations and put them in that fund to give countries in the global south, the technological resources to actually decarbonize our system and build the resilient food system and energy system and start to mitigate the impact of climate change. We will have to transfer technology. So, some countries in the global north can contribute directly in financial resources. Others can contribute in kind as in transferring technology.

Others can contribute in technical collaboration. it’s a combination of all of this transfer of resources, financial, technological, intellectual capabilities to help us mitigate the impact of climate change in the global south. So, all of these are possibilities, but, then, you have countries on the global north saying, well, if we do this, we are going to have a big deficit and that will bankrupt the country.

And then we are not going to be able to meet the climate challenge if we are bankrupt or it’s going to cause hyperinflation. And that’s the responsibility of professional economist, unfortunately, for the last several decades who created this myth, the deficit myth that leads to this fear of fiscal spending.

And MMT, Modern Monetary Theory has made it very clear that, yes, we need to prevent inflation pressure points and mitigate inflation pressure points because inflation is a dangerous phenomenon. And that’s really the focal point of MMT. But, also, MMT tells us that one of the most effective ways of minimizing the risk of inflation is doing two things.

One is investing in productive capacity. In other words, strengthening the capacity of the economy to produce in strategic areas such as food and energy and technology. And you do that by spending more, not by spending less. And number two, To minimize the risk of inflation, you need to democratize the economy, democratize the market, which means you tax and regulate abusive market power out of existence.

You go after cartels, you go after price setters, and you make those markets more competitive. So, we end up with the framework that tells us we can actually spend more to build productive capacity, both in the global north and the global south. And that creates millions of jobs, by the way, and we make the system more democratic, not more monopolistic.

And that means going after cartels and multinational corporations that control and abuse the global system, especially on the food front. We have five mega companies that control the global food system, essentially. We are not going to decarbonize the global economy unless we decolonize the global economy. So, these are very serious points of transformation, points of reparations that need to be addressed head on. you always hear me say this, Steve. I say, you can’t democratize a system that has not been decolonized. You can’t decarbonize a system that has not been decolonized yet. And that means repairing the colonial damage that’s been made to institutional structures in the global south, and institutional structures in the global economy, and redesigning the global financial architecture, the role of the IMF the role of the World Bank and subsequent institutions that continued on the same path, including the wto and lots of international trade agreements, intellectual property rights agreements, all of those things.

Continue to build on the same colonial and neo-colonial system. So we are not going to decarbonize anything unless we decolonize the design of these institutions to begin the process of repairing the damage.

[00:37:36] Intermission: You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a non profit organization dedicated to teaching the masses about MMT, or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on TikTok, Twitter, Twitch, Rokfin, and Instagram.

[00:38:27] Grumbine: Corruption is a huge issue. Everywhere across the globe, we have money elites that have an interest of their own to serve, and the interests of those who have been impacted by their behavior is rarely the chief concern. But if you drill down to the local level, even at the nation state level, some of these communities are ruled by corrupt leaders.

A lot of hand greasing goes on. How do we ensure that reparations, make it to the people that really need it many times a great program comes out without the proper oversight. The wealthy elite and the corrupt politician’s pocket that money.

[00:39:11] Kaboub: Mm-hmm.

[00:39:11] Grumbine: And it never makes it where it really needs to go. The second part to that would be how do we ensure the continuity of that system in perpetuity to ensure that we don’t regress?

[00:39:27] Kaboub: Mm-hmm. Yeah, very good question. So, as I discussed before, not on this particular episode, when I think of reparations, whether it’s for slavery or climate or neocolonial it starts with the process of telling the truth. And telling the truth means that we have to establish on a global scale, on a regional scale, on a national scale, a network of truth and reconciliation commissions, where communities at the local level, at the national level, come forward with their grievances that they associate with climate or slavery or colonialism or any other form of abuse.

So that we allow people to bring their grievances forward, be heard, and that will enrich our design for an actual reparations framework. And when you do that, you actually begin the healing. You begin the reparations. We have seen this in conflict areas where after the conflict or a genocide, people come forward during these Truth and Reconciliation commissions. And it’s not because you can bring their loved ones back or undo the past, but it’s because part of the healing is being heard. Part of the healing is hearing the truth.

Part of the healing is acknowledging that the harm was done and that there was somebody responsible for it, or an entire nation, sometimes responsible for it. And a lot of the victims who come forward during these truth and reconciliation commissions, they almost always say, I am not here to ask for money. you are not going to be able to change the past. You are not going to be able to undo the pain. I just want the truth and I want the perpetrators to tell the truth.

So, we have to start with a process of truth and reconciliation, telling the truth, stopping the lies, essentially, stopping the denial. And that will allow us to identify particular individuals who really need direct compensation, particular communities who need the process of reparations to repair the ecosystem in which they live at the micro level.

But, then, clearly, there will be more structural, natural reparations that need to be done. And the most obvious component of reparations is stopping the mechanism that continues to produce the harm, which is fossil fuels and CO2 emissions. So, that’s why that decarbonization process can’t be shoving emissions from one part of the planet to the other part of the planet because you have not repaired anything.

You are just greenwashing things and pretending like you are fixing something. When it comes to addressing the issues of corruption and transparency, the more of a decentralized system of telling the truth and acknowledging the damage, the better we can design transparent systems that allow us to implement reparations without people siphoning those reparations, whether it’s financial like building empires out of a reparation system.

So, the more of the reparations we can do on the structural level, the least amount of corruption and theft we will find. So, for example, if repairing the damage means transferring technology to produce renewable energy capabilities, you focus on the real resources and you create jobs in the local community so that the beneficiaries of the reparations and transfer of technology are local communities in terms of jobs, in terms of clean energy, in terms of decarbonized transportation and so on.

But, also, some of the anti-corruption work has to be done in the global north. I will give you a couple of examples that illustrate how the current, presumably, corruption system that we have in the global south is, actually, directly linked to beneficiaries in the global north.

Foreign aid, for example, from the United States, is declared and given to a particular country, but, then, that country recipient can’t actually get the real resources unless they ship it with the US company and pay them. So, quite a bit of the foreign aid dollars are actually going to a US shipping company. And, very frequently, the majority of the foreign aid stays in the US with the consultants, with the auditors, with the monitoring and evaluation teams, with the shipping companies, with the actual suppliers of foreign aid is wheat. Who is getting paid for shipping the wheat? that’s the US producers. So, we have to rethink what we mean by foreign aid and how those resources are transferred to the most vulnerable people. Sometimes foreign aid creates a system of dependency because if I am a country struggling with food shortage, say wheat or rice or whatever, one of the ways to repair that weakness, structurally, in the long term, is to invest in my productive capacity.

And one of the worst things that can happen to farmers that are struggling during a drought or during a food crisis is to deliver to them free wheat from the United States or from Europe. Because it’s delivered as a humanitarian assistance, which makes perfect sense when people are starving. But those farmers who are struggling to sell the little output they have and rebuild their capacity, you have just destroyed their market because you have neglected to address the long-term need for that country.

And when those farmers go bankrupt and sell the land and move to urban areas, now the country is even more dependent on food imports. So, the first batch comes in as food aid, and the second batch comes in as product to be purchased. And, conveniently enough, there will be loans provided for that country to buy the imported food. So, we have to be very serious about what we mean by foreign aid. Is it aid to set up a trap to further destroy productive capacity? Or is it truly aid in the sense that you intervene with the humanitarian aspect during the crisis as you should, but then you also supplement that with a strategic plan that helps countries, actually, build productive capacity, whether it’s technologically or financially with real resources.

that’s the part that’s often missing. I will give you a second example related directly to corruption and the concept of corruption in the global south. Let us say you are in of importing all the medical equipment for hospitals in a country in the global south, and this is real examples of illicit transactions and corruption and so on.

I am not going to name a particular country because there’s so many different countries. Well, I work as an official in the Ministry of Health. I am in charge of the imports of medical equipment, and let us say we set up a bidding system and different companies submit bids. And it lands on Company X and that company X and Y and Z, and all the other companies that submitted for the most part are more or less owned by the same people submitting supposedly competing bids.

And those are actually shell companies based in Luxembourg or some tax haven companies that submitted a bid that says, yes, we can deliver this equipment for all of your hospitals for 10 million. And they go and buy the equipment from an actual company, say in Germany or in France, or in the US or Japan.

They buy the medical equipment and it actually cost only seven. So they have billed you for 10 million. They bought the equipment from the actual manufacturer through a series of shell companies for only $7 million, and they have pocketed $3 million. Now, where do they keep those $3 million? In a Swiss bank account or in Luxembourg or whatever.

So yes, that is corruption. That is theft. That is abuse. But are you going to tell me that Switzerland does not know about this, that the German companies that actually sell the medical equipment don’t know about this? That nobody in the global North has figured this out as just me and you, Steve have discovered this today?

Of course not. So we have to be Very serious when we talk about corruption in the global south. there’s a flip side of it,

[00:48:38] Grumbine: Yeah

[00:48:38] Kaboub: And that’s why all the corrupt money is actually held in tax havens and held in the global north in Swiss bank accounts and so on. So yeah, it’s abuse in plain sight in broad daylight, and we just put the blame on corrupt people in the global south.

So when we design a system of climate reparations, we are not going to do actual reparations if we continue to have shell companies in the global North buying solar panels and billing for a different amount. We have to be serious about repairing all of these issues simultaneously.

[00:49:15] Grumbine: I want to take you into a realm that I feel is not talked about nearly enough. Russia has recently forgiven sovereign debts to. African nations and that’s serious. That buys you some love with China’s ascendancy. would prevent someone like China from say, purchasing the African debt and forgiving it?

Just using their US dollar holdings to pay the IMF debts off and encourage a spirit of cooperation that would allow them to be free of that kind of debt. Is that a real thing? Because the concept of debt cancellation, I think of Thomas Senara. He made the case, I either pay you or I feed my people, which is it? This seems to me like a real opportunity to make a huge impact. What are your thoughts on that?

[00:50:15] Kaboub: Very good question, Steve. When we talk about debt cancellation for the global south, there’s different kinds of debt. So there’s debt that is owed bilaterally to. countries debt that is owed to multilateral institutions like the World Bank, the IMF and so on, and debt that is owed to private investors. Those are sovereign bonds, denominated in dollars or euros that are essentially issued and sold to investors, pension funds and hedge funds and investment banks and so on. So when a country like the US, or China, or Russia or France cancels debt to a particular country, it’s just that bilateral debt.

There’s a big chunk of the global south debt that’s owed to the imf, the World bank, and that means the IMF, as an institution, its board of directors. The biggest shareholders, meaning the US and the UK and so on. Those are the countries that need to tell their employees that the IMF to do the debt cancellation. We have a mechanism called the Paris Club, the big nation creditors. They can get together and cancel debt for developing countries. Bilateral debt. When it comes to private bond holders, that is a tricky thing because these are not sovereign entities, pension funds, individual bond holders, and so on.

But at the end of the day, we can sit down and say, you know what? We are canceling the entire debt from countries, from government. Countries can default or you can just cancel the debt if the creditors agree. But have we repaired anything by just canceling the debt if we still have in place the mechanisms that force countries to import their food, import their fuel, import their technology, and so on?

Within a matter of 10 years, we will set up another debt site. So, reparations can start with debt cancellation, with debt relief, with an audit of the existing debt to see which part of the debt is legitimate in which part is illegitimate, and we should do that. I am a big fan of debt audits in the global south, but in addition to the debt audit and the debt relief and debt cancellation, we have to undo the mechanisms that will reproduce the debt traps on a global scale.

Now, you said, can a country like China step in and purchase some of the sovereign debts of developing countries? Absolutely. Yeah. Any country can do that. You can buy it and cancel it, but what is the purpose of doing that? There’s, obviously, a long track record for creditor nations using this as a leverage for economic diplomacy, for economic gain. And everybody who is been in a position to exert this kind of influence has done it. The US, western Europe, whether it’s Russia or China, any country in that position will be able to do it. So, we have to ask ourselves, is this part of reparations or is this just a matter of escaping one trap and going to another trap?

So, that’s where multilateral negotiations and agreements about how do we repair the damage and undo it without creating new mechanisms of entrapment and shoving things under the rug and perpetuating the same cycles. So, these are things that need to be addressed head on.

[00:54:01] Grumbine: Frequently when we look at panaceas, one thing fixes all problems. Is climate reparations that, or is it just the start of something bigger and more expansive?

[00:54:15] Kaboub: Well, if we are truly thinking of this as repairing damage, repairing damage does not mean we stay at the status quo. It actually means getting somewhere better. it’s not repairing as in going to the past and going to something inferior. it’s repairing mechanisms that constantly cause harm and set us back and set the most vulnerable people back. Once we succeed in repairing the way we produce food, repairing the way we design and build cities, repairing the way we design transportation systems, repairing the damage to the soil, to the air, to the environment, all of that leads us to higher quality of life.

But we have to design these systems of reparations, physical reparations, institutional reparations ecological reparations in a way that allows us to transition to an economic system that is of high quality in terms of quality of life. An economic system that does not exacerbate inequalities, it does not exacerbate damage to the ecosystem, but rather design and ecosystem that is sustainable, that is equitable, that is fair, that actually produces jobs, higher quality jobs, not just make work type of economic system that’s designed to fuel consumerism because everybody has to consume. Everybody has to work. everybody has to work, overtime and miserable conditions. So, I see this as transitioning to a better world that’s, actually, within reach, but it can’t be an unequal, unjust world.

All of the thought process that goes into climate reparations is clearly geared towards higher quality of life, not more consumerism. And that is something that’s, actually, a win-win for everybody in the global south and the global north. But we are not going to transition to that world with the same colonial thought process.

I will give you an example. We need to transition, other words, in a much more collaborative, multilateral way of transitioning to this sustainable and equitable economic system. The example I would give, again, relates to a critical piece of the puzzle, which is renewable energy and the technology. So if you think about the critical minerals that are, actually, needed for this green transition to a sustainable equitable economy and, as I said earlier, the numbers don’t add up. There’s a limited amount of critical minerals. We can use them to decarbonize the global economy, but that means de-growth and the global north, that means giving up consumerism and all of that.

So, who controls the critical minerals? The majority of the critical minerals are, actually, located in the global south very clearly. So, we have all the critical minerals in the global south. We have human capabilities in the global south, but we actually lack the manufacturing and the technological capabilities to marshal those resources and human capabilities to industrialize and build the renewable energy capabilities that we need to deploy, say, in Africa, to provide electricity for the 600 million people who don’t have it right now.

So, where will that technology come from? That comes in as part of climate reparations, as in transfer of technology, as in partnering with Germany, with the US, with countries that have the technological capabilities today, they’re available.

They can transfer them, not sell them, transfer them and say, this is part of our reparations. We are going to repair the damage by ending the need for fossil fuel extraction in the African continent. And this way we will give you the technology. You have the resources, you have the capabilities, build all the renewable energy infrastructure you need so that we don’t perpetuate the damage.

But that has to come with actual transfer of technology. And now you have the African continent, in this scenario, industrializing not by building assembly line manufacturing units, but by actually building high-tech industries to deploy renewable energy for the entire continent and maybe export some of it to the rest of the world.

We just happen to have lots of potential for renewable energy production, not just for the continent, but also for export. So, that is one way to begin the reparation process, and, now, all of the sudden, you have put together a reparations component that’s actually addressing one of the key vulnerabilities, economic vulnerabilities that we have in the global south, which is now we have a different kind of industrialization that’s actually focused on high value added content, not low value added content.

And you have just killed two birds with one stone. You are producing high value added content, and you are producing the renewable energy, which you don’t have to import anymore. So, now there’s a third piece that’s missing, which is food sovereignty. Well, guess what? You can’t invest in food sovereignty without energy and without technical capabilities.

So, now the next step in your industrialization process in this continent, after you have built industrial capacity for renewable energy manufacturing, now you can focus on the next item of priority, which is manufacturing all the tools and equipment and infrastructure that you need for food sovereignty, starting with irrigation systems and water and sanitation systems that you need to put in place.

And, now, all of the sudden, now we are talking, now we are talking about a reparations framework with the direct transfer of technology and know-how that triggers a complete transformation on the manufacturing, on the energy, on the agriculture. And once we have those three, the next thing is health. The next thing is transportation.

So, if we are serious about reparations, we have the resources and capabilities, but do we have the political will to say all the critical minerals are in Africa, the human capabilities are available. Let us put together an industrialization process for the entire continent to manufacture the renewable energy capabilities with direct transfer of technology and know-how from China, from Germany, from the US, from every responsible country that contributed to climate change and, now, trigger an entire process of economic development that’s built on the recognition that we, in the global north, caused this damage through colonialism, through climate change and CO2 emissions.

And we are going to be part of the solution and it’s going to be a win-win for everybody.

[01:01:42] Grumbine: Speaking of win-win, you mentioned some very important things in that statement. I want to talk about them to close us out. You said de-growth keyword there.

[01:01:53] Kaboub: Mm-hmm.

[01:01:53] Grumbine: You talked about fair and sustainable and equitable and more equal. Each of these things are aspects of what I would consider to be a system, not called capitalism.

I would be looking similarly to what Jason Hickle speaks of, which is eco socialism. How do we ensure that the sins of the global north do not become the sins of the global south as we are building capacity, providing good jobs, and providing this additional value added infrastructure, how do we make sure that that becomes a part of the shared value for all of Africa and the global south versus just in the hands of the few.

[01:02:40] Kaboub: Very good question. If I have not uttered the word de-growth, I think the majority of listeners would agree with the logic of everything I have presented, but as soon as people hear de-growth, they think recession, which is part of the problem. De-growth does not mean recession. De-growth does not mean going backwards and going to an inferior quality of life, anything like that. De-growth means giving up consumerism, giving up excessive use of energy and waste of materials for the sake of generating profits and creating jobs that we think are inevitable.

That’s the obsession with GDP and growth. We can actually have a de-growth type of economy with higher quality of life, with better paying jobs, better quality jobs, even full employment actually. And have less of this thing we call GDP, gross Domestic Product, that we have higher quality of life indicators and production of things that are not monetized in measuring GDP, but are actually extremely important for our quality of life.

So de-growth does not mean stopping economic activity, it’s transforming economic activity, rethinking the purpose of economic activity. We got to a point where almost everybody thinks the purpose of economic activity is to create jobs. No, the purpose of economic activity is the provisioning process of the things that we actually need. But we have corrupted that process by saying, we need to create artificial needs and consumption habits that are unsustainable, so we can generate enough economic activity to employ people as if the employment in production and consumption does not actually exhaust resources or drain resources or destroy resources or destroy the environment or quality of life. So, this is the thought process that the de-growth community invites us to think about. But the kneejerk reaction is, oh, de-growth is recession, oh, de-growth is going to destroy the economy.

Absolutely not. De-growth will strengthen the economy and de-growth will substantially improve quality of life in the global north, not just in the global south. So, as we engage in this thought process about what a de-growth sustainable economy means, we are not just doing this for the global north so that we convince the global north to do de-growth, but it’s about rethinking what we are doing in the global south.

We are producing all this renewable energy for what purpose? So that we waste it and consume more and waste more? Absolutely not. So that we improve quality of life, deliver better services on education, on health but, as we do that, we design transportation systems that are sustainable. We design housing systems that are sustainable and we design lifestyles and economic systems that don’t rely on waste and abuse in order to create jobs. So that’s really why this synthesis of de-growth ideas with MMT ideas provides the perfect combination to unleash the great potential we have globally for a fair and just, and equitable and sustainable and prosperous economic system.

[01:06:22] Grumbine: Fadhel, thank you so much for your time. This was absolutely fantastic. Is there anything else you would like to leave us with as a parting shot?

[01:06:31] Kaboub: Well, thank you again, Steve for this opportunity. I just would like to invite listeners to keep digging, to keep researching, to keep engaging with these ideas, because we are not going to get to a reparations framework with a handful of academic and intellectuals and activists left and rights pushing for an idea.

We need to engage with those who don’t agree with this idea, never thought of this idea, or think of reparations as pie in the sky, expensive, unreasonable. But when you dig into the nuances and the different aspects of climate reparations, you realize hopefully after this conversation that is just inevitable, that that is actually the only truly transformative set of tools that we have, and that everything else that avoids the concept of climate reparations and avoids discussions about reparations. best I can say about it is incomplete, and at worst it will be just greenwashing and shoving problems under the rug and pretending like we are moving forward. So talk to your friends and engage in these conversations and engage and challenge policy makers to face this problem head on and to start a truly comprehensive and honest set of conversations around this theme.

[01:07:59] Grumbine: Very good. Alright, Fadhel thank you so much. My name’s Steve Grumbine I am the host of Macro N Cheese, my guest Fadhel Kaboub We thank you for your time. Please consider becoming a supporter of the program. Go out to patreon.com/realprogressives also come to our website, www.realprogressives.org. Go to our media area.

You can find all of our past Macro N Cheese episodes there or wherever you find your podcasts And also consider becoming a volunteer in our get involved area. And with that, we are outta here.

[01:08:47] End Credits: Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.