No Phase-Out Without Debt Cancellation

A Historical Moment Worth Defending

Governments are meeting in Colombia to do something movements have demanded for decades: coordinate a phase-out of fossil fuel extraction. A united fossil fuel phase-out front interrupts the story in which oil, gas and coal expansion passed as development policy and as the only path forward. That interruption is hard-won and vulnerable.

The united phase-out front steps into an architecture built to keep fossil fuel extraction going. Debt and its enforcement machinery sit at the centre of that architecture. Protecting this political breakthrough means facing how that machinery works.

The Debt-Fossil Fuel Trap

Colonial administrations took out loans and channelled public spending into extractive infrastructure projects such as ports, railways, and pipelines, serving fossil fuel export. At formal independence, many states inherited both this infrastructure and the liabilities attached to it. In the following decades, structural adjustment programmes (SAPs) steered economies toward trade liberalisation, privatisation and commodity export, including oil, gas and coal, while expenditure on services and low-carbon infrastructure collapsed under austerity.

Each major crisis since then has deepened the pattern. Currency crashes and balance-of-payments shocks came with new lending packages that demanded further opening of fossil fuel sectors. Climate disasters destroyed roads, grids, wells and farmland; reconstruction depended on fresh borrowing from bond markets, multilateral institutions and creditor governments. Lenders evaluated fossil fuel reserves, pipelines and long-term offtake contracts as collateral.

Governments signed take-or-pay agreements and production-sharing contracts that shifted price and volume risk from investors to public budgets. Sunk costs in fossil infrastructure, tied to repayment schedules, turned exit into a fiscal detonator.

External public debt in the Global South now stands at around 6.2 trillion USD, around twice the level recorded in 2010. This burden compresses fiscal space and defines the perimeter of what counts as “responsible” policy in the eyes of bond markets, multilateral lenders and creditor states.

When a large share of export revenue is earmarked for debt service, ministries of finance build macroeconomic frameworks around that obligation. Fossil fuel extraction appears as a central pillar of state solvency. Oil, gas and coal licensing rounds, new united fronts, production growth and export volumes enter models as core sources of foreign exchange. Refinancing conditions and rating assumptions treat these flows as given. Debt binds fiscal stability to the continuation of fossil fuel extraction.

How Phase-Out Will be Punished

Moves to restrict fossil fuel extraction trigger a layered enforcement system. Credit rating agencies hit governments with downgrades when projected fossil revenues fall. Downgrades raise borrowing costs, trigger outflows, and signal to domestic elites that phase-out decisions carry immediate fiscal risk. Investor–state dispute settlement under bilateral investment treaties and the Energy Charter Treaty gives fossil fuel corporations direct channels to sue governments over cancelled licences, moratoria or stricter regulations. Arbitral tribunals issue awards on a scale that can wipe out annual health or education budgets. IMF and World Bank programmes tie disbursements to “reforms” that secure investor confidence and export growth, with fossil fuel flows treated as core to that agenda.

Governments that push against fossil fuel interests also face hard power: coups, sanctions, covert operations and backing for local elites who promise to reopen oilfields or mines. Military bases, arms deals and defence agreements cluster around key extraction zones and shipping routes. The message is clear to any government considering a decisive break with fossil fuel extraction.

A fossil fuel phase-out united front will trigger this enforcement machinery whenever members move to cap or close production, revise fiscal terms, or cancel projects. Bond spreads, loan conditions, arbitration rulings and even direct military pressure function as tools to discipline governments back into line. Without common protections and clear retaliation thresholds of its own, the united front’s commitments will sit inside an environment designed to roll them back.

The same architecture drives the rush for transition minerals. Most lithium, cobalt, nickel, copper and rare earth deposits used for solar, wind and storage lie in Global South territories. Under debt pressure, governments are pushed to expand mining to service old liabilities and attract new credit. Refineries, technology and profit margins concentrate in wealthier economies. Territories that hosted oilfields and gas terminals are relabelled as strategic mineral corridors. Communities live through continuous dispossession for fossil fuel extraction and then for transition minerals, under the same creditors, corporations and security arrangements.

What the Treaty Must Contain

Fossil fuel phase-out gains teeth when the treaty builds organised counter-power against the systems that lock states into oil, gas and coal and punish any attempt to exit. A Fossil Fuel Non-Proliferation Treaty that delinks public budgets, territory and security from fossil revenue circuits needs hard commitments, not signalling. The united front can carve that space out through the following provisions:

Collective recognition and repudiation of fossil fuel debt

Member states establish that public debts raised for coal, oil and gas infrastructure, or contracted under programmes that enforced fossil expansion, have no standing as legitimate claims. On this basis, the united front organises coordinated repudiation and cancellation campaigns across bilateral, multilateral and private creditors, anchored in shared political commitments and timelines.

Mutual defence against financial and military retaliation

The united front treats retaliation against phase-out policies as an attack on all members. When a government faces downgrades, investor–state lawsuits, hostile conditionality, sanctions, coups or military pressure linked to fossil phase-out, the treaty triggers collective response: joint diplomatic action, common legal teams, shared intelligence on coercive moves, emergency financial shielding and security guarantees rooted in South–South alliances.

Refusal to enforce fossil asset arbitration awards

Member states refuse recognition and enforcement of investor–state arbitration awards arising from fossil phase-out measures, including awards under bilateral investment treaties, free trade deals and the Energy Charter Treaty. Courts, central banks and finance ministries inside the united front treat stranded fossil assets as a one-way transition cost for corporations, not a claim on public budgets.

Debt Audit and Repudiation Council under Global South leadership

The treaty creates a permanent council mandated to audit debt portfolios, map fossil-linked and illegitimate claims, track financial and military coercion, and issue binding political recommendations for repudiation and counter-measures. Delegates come from debtor governments, affected communities, workers’ organisations and Indigenous peoples, with no veto for creditor states, multilateral banks or private finance.

Just transition grants inside the united front The treaty sets up a common just transition fund capitalised by members and supportive allies, disbursing grants to phase-out states for public systems, community-controlled energy, worker-led just transitions and territorial repair. Financing mechanisms strictly exclude loan instruments. Each grant reduces exposure to external creditors and widens the room to close fossil projects and resist new fossil or transition-mineral mega-deals imposed through debt.

Holding the Line When Pressure Comes

Every well that closes and every licence that is withdrawn will collide with creditors, courts and command structures built to keep fossil fuel extraction in place. A Fossil Fuel Non-Proliferation Treaty that names the debt–fossil trap, arms its members with collective repudiation, mutual defence and just transition grants, and channels resources through solidarity rather than loans. This can turn the conference from a fleeting gesture into a durable front line. Governments that join such a united front send a clear signal to bond markets, fossil capital and military planners: budgets and battle plans no longer dictate who must dig, drill and burn. Communities that have carried the costs of oil, gas and coal extraction gain a different horizon – fewer rigs and pits, more power in their hands, and a treaty that stands with them when the pressure comes.