Converging Crises in Nicaragua: The Fallout of a Green Climate Fund Project Over Human Rights Concerns

The interconnection between a healthy environment and the enjoyment of human rights had been legally recognized by most member states before the global recognition by the United Nations Human Rights Council in October 2021 and the General Assembly in July 2022. Countries face the double challenge of financing the 2030 Agenda for Sustainable Development, which includes goals on climate action and conservation of natural resources, and mobilizing the billions of dollars needed to meet the goals of the Paris Agreement. Climate finance can undermine both procedural and substantive human rights, such as the rights to life, housing, food, health, self-determination, information, participation, and the right to redress. In light of this, the unprecedented decision of the United Nation’s Green Climate Fund (GCF) to suspend a project in Nicaragua over human rights concerns is a noteworthy development. However, the lengthy process has revealed the lack of transparency and the heavy reliance on the information submitted by the project proponents. The process took over two years, starting with the submission of the complaint to the GCF’s Independent Redress Mechanism (IRM) in June 2021 and culminating with the Board’s final decision in July 2023. The GCF Secretariat released a summary of the final Board decision, stopping short on canceling the project as local activists requested. Nevertheless, the summary does not specify if all the issues raised in the complaint will need to be addressed. 

On 13 November 2020, the UN’s GCF, the world’s largest climate fund, approved the Bio-CLIMA project in the Unesco-designated BOSAWÁS and Rio San Juan Biosphere Reserves. Bio-CLIMA is a USD 116.6 million project in Nicaragua that aims to restore degraded forest landscapes in the country’s most biodiverse region. The GCF board suspended this project on 13 July 2023 after it reviewed the compliance report submitted by the IRM. The complaint alleged that the project “would harm indigenous and Afro-descendant communities due to 1) alleged failure to conduct proper consultation, including FPIC [free prior informed consent]; 2) a likelihood of increased environmental degradation and attacks by armed non-indigenous settlers; 3) likely non-compliance or inability of the Accredited Entity and Executing Entity to comply with GCF Policies and Procedures and the Conditions placed by the Board of the GCF during approval of this project.” The Central American Bank for Economic Integration (CABEI), an international multilateral development financial institution and the Government of the Republic of Nicaragua are the Accredited Entity (AE) and the Executing Entity (EE) of the Bio-CLIMA project, respectively. The AE’s role relates to the management and oversight of the project implementation, including performing the “primary due diligence”, while the EE is responsible for the operational implementation and execution of the project. 

The Ortega-Murillo regime’s relentless attack on human rights and democracy includes attacks against indigenous communities, arbitrary arrests and killings, torture, arbitrary deprivation of nationality, restrictions on free expression and the rights of freedom of assembly and association, and lack of independence between the executive, legislative, judicial and electoral functions. The Group of Experts on Nicaragua, established by the Human Rights Council in 2022, observes that the seriousness of human rights violations in Nicaragua constitutes crimes against humanity for political reasons. Despite the human rights crisis in Nicaragua, the Ortega-Murillo regime has secured steady support and large inflows of funding from CABEI. For instance, Nicaragua has received disproportionate financing compared to other Central American countries. For the 2016-2020 period, CABEI approved USD 2.6 billion for Nicaragua, USD 2.2 billion for El Salvador, USD 1.6 billion for Honduras, and USD 977.4 million for Guatemala. All these countries, except for El Salvador, have a larger population than Nicaragua. With the end of the tenure of Dante Mossi, the chief of CABEI, the Ortega-Murillo regime might lose its main financier. 

The IRM concluded that the concerns raised by the complainants regarding the potential for the project to cause or worsen conflicts and violence in certain areas were justified. It also found that the violent conflict situation was not adequately detailed in the funding proposal and other project documents. For example, the raiding of an indigenous community by approximately 80 armed settlers in January 2020, which resulted in the death of 4 indigenous people and 13 burned houses, was not communicated to the GCF prior to the approval of the funding proposal. The Inter-American Human Rights Commission has also documented violent attacks against indigenous people and granted precautionary measures. Moreover, the IRM’s Compliance Review Report noted that “documentation examined by the IRM of the related World Bank funded project shows that the seriousness of such human rights issues and concerns were much more openly and transparently highlighted than those highlighted by the AE for the Bio-CLIMA project.” Given these findings, it is worth mentioning that former officials, academics, and civil society organizations have accused CABEI of questionable decision-making and contributing to regimes that weaken democracy.

The IRM believed that the safeguards triggered the need for a human rights due diligence report, but no such report was prepared for the project. Hence, the IRM found the project non-compliant with the GCF’s environmental and social safeguards. Similarly, the IRM found the project not in compliance with the requirements for the informed consultation and participation (ICP) process, which lays the foundation for a robust FPIC process. The IRM notes that the absence of human rights due diligence or a conflict sensitivity analysis could impact the disclosure of limitations on the exercise of freedom of expression and assembly in the country. Restricted civil society space, fears of retaliation, and violent conflict in the project areas can pose challenges to the ICP and FPIC processes. CABEI, the AE, has the primary responsibility of conducting both human rights due diligence and ICP.

Image Credits: Ed Hawkins — Edited by GorStra Team