EU Wants Climate Aid To Poor Nations As Loans, Not Grants; Discussions "Complete Mess" - Guardian

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Europe was accused of taking unfair advantage of poor countries last night when senior officials said that it was better to make them pay for loans to reduce climate emissions rather than give them grants. Aid campaigners and developing nations have also condemned as a "complete mess" the differences between rich countries in how they account for aid pledges. They say donors are double-counting climate aid and using "creative accounting" to make climate pledges look more impressive.

Artur Runge-Metzger, the EU's chief climate negotiator, made the case for loans rather than grants at the lunch of an EU climate finance progress report at the UN climate summit in Cancún. "It's a win-win situation," he said.

"When it comes to mitigation actions you find that … consumers can repay loans, in other words, finance can be used like a revolving fund. In that way funds can be repaid and used by others. You don't need grants. It would be a waste of money because the individual pays for itself. You have to make best use of peoples' money."

But developing countries and aid agencies countered that loans were not acceptable on principle. "Climate money for developing countries must come from grants, not loans – will simply shackle developing countries with more debt," said Asad Rehman, Friends of the Earth's International climate campaigner.

EDIT

http://www.guardian.co.uk/environment/2010/dec/01/cancun-climate-change-conference-loans