Some big debts are coming due. On paper, countries of the Global South owe trillions of US dollars to Northern governments, banks and financial institutions.

But a growing movement, led by Southern activists, is turning this story on its head. The majority of these debts are illegitimate, often taken out by past dictatorships and featuring eye-watering interest rates that make them impossible to ever repay. But more than this, campaigners are pointing out that the real – and far greater – debt is owed by the North to the South, for hundreds of years of colonialism, enslavement, and the impacts of the climate crisis.

Cancelling the debts of the Global South would not only be a first step towards reparations for these greater damages, it would also – crucially – reduce the pressure for countries to extract more fossil fuels to service their immediate debts, and free up money for a just and self-determined energy transition.

‘Debt is a key tool of colonialism,’ explains Esteban Servat, an Argentinian scientist and spokesperson for the Debt for Climate campaign. ‘The North imposes huge interest rates on the Global South, a knee on the neck that doesn’t let us breathe.’

This fuels the expansion of the fossil-fuel industry and extractivism: ‘When we have these individual anti-mining or anti-fracking struggles, we’re often not strong enough to fight them one by one. But debt is a common denominator, and by targeting it we can connect these struggles and bring these movements together – especially the worker unions of the South, who must be key to this.’

Despite successful campaigns in the early 2000s that wiped out some debt for the worst-hit countries, the Global South’s external debts rose from 90 per cent to 170 per cent of GDP between 1990 and 2019. In 2020, Southern countries spent $372 billion servicing debts, and Covid-19 has exacerbated the problem further.

Much of this debt has strings attached. In Argentina, the previous government took out multi-billion-dollar loans on the understanding that the fracking of the huge Vaca Muerta shale formation would be used to pay back the debt. Esteban Servat was involved in the struggle against that fracking, which saw mass protest and the criminalization of activists. He was eventually forced to leave the country following death threats against himself and his family.

Vaca Muerta is one of 425 ‘carbon bombs’: fossil-fuel projects with the potential to emit at least one gigatonne of CO2 over their lifetime.³ Over 60 per cent of these projects are in ‘critically indebted’ lower-income nations.

Esteban is keen to stress that debt cancellation is not the sole demand of the Debt For Climate campaign; they also call for climate reparations from North to South, and for governments to fulfill the climate finance commitments made in the Paris Agreement. ‘Cancelling the debt may not by itself be enough to fully fund the transition, but it’s an important first step, and one that has the potential to build the powerful movement we need to achieve these other goals,’ he explains.

Debt for Climate’s mobilization around the G7 Summit in July 2022 saw actions in 24 countries – with unions taking a leading role, particularly in Latin America. They are planning further action to target the UN COP27 climate summit this November in Egypt – another critically indebted country using fossil gas extraction to help service its debts, while also being hit hard by the climate crisis.

Learn more at debtforclimate.org, and follow the campaign on Facebook, Twitter and Instagram @DebtforClimate

Email [email protected] to find out how your group or trade union can support the campaign.