No sovereign risk for Adani

It's time to get over this myth that Labor can't or shouldn't stop Adani because of 'sovereign risk'.

Labor's refusal to stop this project (and those that would surely follow it) on the basis of "protecting" Australia from paying compensation to Adani isn't based in fact. It's a fib and a distraction.

There is no contract between the Commonwealth and Adani, or between the Qld Gov and Adani. The term "sovereign risk" has a specific meaning - it refers to the risk that a government will default on its debt. Yet politicians from Labor and the LNP have been abusing and misusing it to confuse and mislead communities.

I've heard plenty of people discuss sovereign risk in the context of a potential lawsuit brought by Adani under international trade agreements, and the dodgy Investor-State Disputes Settlement (ISDS) provisions previous governments have signed Australia up to. But this kind of claim for compensation is incredibly uncertain, expensive and complex, AND our treaty with India was cancelled by India in March 2017, which creates even more barriers for Adani.

Allowing the exploitation of an entirely new coal basin is completely at odds with our international climate commitments, climate science, and the detailed, risk-based decisions of each international financial institution that has refused to fund Adani. The cost of climate change impacts will eclipse all other consideration if we don't keep this coal in the ground.

In reality, this blinkered, foolhardy support for Adani is the kind of decision-making that will turn away sensible investors.

 

Michael Berkman, 6 February 2019

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