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As far as international economic law (IEL) is concerned, the ‘Washington Consensus’ generally refers to the World Bank and the International Monetary Fund (IMF)’s development finance policies and tools. It covers their application to their clients and borrowers with the support of Western governments. This acceptation is of particular interest to IEL scholars and practitioners alike for its recurrence questions the idea of a paradigm standing the test of time in offering multiple (re)incarnations of the same concept. Whilst there is not much binding law in development finance but rather various sets of voluntary guidelines and soft law principles, this form of regulation together with the study of institutional engagement and interactions between donors and receivers is of prime importance. Their evolutions on a recomposing global scene leaving more space for the Global South both as receiver and donor of aid and finance are of particular importance. In this regard, another incarnation of the ‘Washington Consensus’, largely initiated and guided by the same institutions and their regional counterparts, is appearing today with the concept of ‘Blue Finance’ as a new derivative of ‘Sustainable Finance’ or ‘Green finance’ designed to support the Blue Economy transition. In addressing the question of Blue Finance as a new iteration of the ‘Washington Consensus’, this article interrogates Blue Finance as Sustainable Finance (1) while later questioning the actors, rules, and beneficiaries of ‘financialisation’ (2) and reflecting upon the risk of sovereign debt spiralling (3). It concludes on the challenges posed by Blue Finance for the Global South notably considering its current approach to and practice of international economic law.
Policy implications
- For states and multilateral donors alike, there is a pressing need to critically evaluate Blue Finance as yet another debt mechanism for the Global South.
- For multilateral donors, there is also a need to provide tailor made solutions for sustainability policies conceived holistically (social, environmental and economic pillars).
- In doing so, the products of Blue Finance (Loans, Blue Bonds, Debt Swap, etc.) must be assessed against their suitability for a particular sustainable Blue Economy project: a positive environmental, economic and social impact (1), the likelihood to produce more debt (2).
- Blue Finance principles and Guidelines issued by multinational donors and/or States should follow a bottom-up approach putting public interest first. In doing so, definitions of Blue Economy and Blue Finance sectors must be precise enough to streamline flows of capital towards sustainable projects for the Blue Economy.
- In addition, the role of private actors and investors of Blue Finance, either individually or in partnership with the State and/or multilateral donors, must be clearly defined and possibly limited against principles of public interest nationally and locally.
- The State, in partnership with donors and investors, must put in place evaluation and accountability mechanisms to regularly monitor the impact of Blue Finance, assess risk and mitigate possible damage to environment and populations.
- Lastly, local actors from local government to local communities and businesses, must not only be consulted at each stage of the Blue Finance project but also directly benefit from this initiative.
Photo by maitree rimthong