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EDITORIAL: Antonio Guterres, United Nations Chief, has urged developed countries to tax windfall profits of fossil fuel companies and use the money to help countries facing a climate crisis. No other country comes even close to Pakistan in the scale of devastation due to the floods in terms of fatalities, in terms of loss of residence, and in terms of loss of livelihood with the assessment placing the sum required for rescue and relief followed by rehabilitation at over 15 billion dollars.

Guterres further stated that “fossil fuel industry is feasting on hundreds of billions of dollars in subsidies and windfall profits while household budgets shrink and our planet burns” – a reference to the wildfires in Europe and the United States though in Pakistan climate change is held responsible for inundating one-third of the country today.

Relief and rescue operations are ongoing but the government of Pakistan has launched a plea internationally as well as nationally to provide assistance to not only those whom authorities have been unable to reach out yet due to the difficulties associated with accessing several areas, but also to assist the more than 33 million badly affected by the floods.

And to add to the woes of the victims flood-borne diseases have begun to take their toll – gastro, malaria, dengue, skin diseases, eye infections and snake bites – which the World Health Organisation maintains has the potential for a “second disaster.” Minister for Planning, Development and Reforms Ahsan Iqbal during a press conference acknowledged that “we fear it may get out of control.”

The US has emerged as the single largest bilateral donor with 55 million dollars; however, this amount, while welcomed, is an infinitesimal amount in comparison to the country’s needs today. International partners, multilaterals and bilaterals, have on Prime Minister Shehbaz Sharif’s appeal generated 500 million dollars so far.

The World Bank alone has mobilised 300 million dollars for immediate response from the existing portfolio to support the country’s relief efforts or, in other words, the money has been diverted from pledged projects and/or programme assistance for relief activities – projects that may have been overrun by flood waters in any case.

Asian Development Bank has extended grant assistance of 3 million dollars to be financed by Asia Pacific Disaster Response Fund, established in 2009 with Japan the major donor, for purchase of food supplies, tents and other relief goods in support of flood victims.

Disturbingly, the International Monetary Fund continues to insist on a tight monetary and fiscal policy for the ongoing Extended Fund Facility programme which would not only compromise the government’s capacity to create fiscal space to assist the flood victims but also raise input costs, thereby making our exports uncompetitive compared to other countries in the region with disastrous implications on the rupee- dollar parity as well as on domestic productivity.

One hopes that Guterres’ sound advice to tax profits of fossil fuel companies will generate the funds required for the Pakistani flood victims; however, while Britain has imposed a 25 percent windfall tax on oil and gas producers in the North Sea and the European Union plans to raise 140 billion euros; however, these resources are already earmarked to provide relief to their own consumers as Western countries struggle to reduce rising domestic inflation attributed largely to the ongoing Russia-Ukraine war (inclusive of Western sanctions against Russia and its retaliatory policy measures).

A solution to providing relief to countries facing a climate change-related catastrophe maybe for Guterres to try to convince the developed countries, largely responsible for climate change, to set up a fund in the UN for the purpose and allocate 5 to 10 percent of the money collected from taxing oil and gas companies to this fund. This would be the right humanitarian approach to take.

Copyright Business Recorder, 2022


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