Why small islands need their own Marshall Plan

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By Matt Bishop, Tumasie Blair, Simona Marinescu, and Emily Wilkinson

On May 27, the governments of the small island developing states known collectively as SIDS and their international partners will meet in Antigua and Barbuda. The goal of the meeting is to agree on the fourth decennial UN programme of action dedicated to their “special case for sustainable development,” under the tagline “charting the course toward resilient prosperity.”

Known as “SIDS4” to insiders, the summit communiqué will agree on a framework for the Antigua and Barbuda Agenda for SIDS, 2024–34 (ABAS). This builds on earlier accords struck in Barbados (1994), Mauritius (2005) and Samoa (2014) which have steadily expanded in scope and complexity, with sometimes patchy implementation amid inauspicious circumstances.

The predecessor SAMOA Pathway was bookended by two cataclysms — the global financial crisis and COVID-19 — that hit SIDS harder than any other group of states. During the pandemic, small island states contracted by more than double the global average, reflecting overdependence on one or two highly volatile sectors — usually tourism — that ground to a halt overnight, instantly decimating often fragile fiscal positions.

Yet these financial constraints are not of these states’ own making, nor the result of profligacy. Their small size, insularity, and remoteness expose them to devastating exogenous shocks of a relative scale unthinkable in larger states. In September 2017, Hurricane Irma destroyed everything on one of Antigua and Barbuda’s constituent islands. A week later, Hurricane Maria caused damage worth a staggering 226 per cent of the GDP in Dominica.

Acute vulnerability defines the development experience of SIDS but confers no entitlement to Official Development Assistance (ODA) or concessional financing. Many are locked out of affordable flows of public finance and pushed towards exorbitant commercial borrowing to bankroll investments entailing disproportionate sunk costs (an airport can exceed 100 percent of GDP).

When disaster strikes, as it does with increasing regularity — driven by historically accumulated large-state emissions — expensively acquired infrastructure must be repaired, even rebuilt, just to return to the status quo ante. This necessitates yet more costly borrowing alongside punishing downgrades in creditworthiness, which exacerbate already insupportable debt burdens. SIDS carry an average debt-to-GDP ratio of 69 percent (the developing country average is 29 percent), with some facing debt distress at well over 100 percent. Dominica is unsurprisingly the most heavily indebted, at almost 160 percent of GDP, denoting a vicious, difficult-to-escape cycle.

Moreover, during 2024–34, the lifetime of the ABAS, we are likely to breach a series of key climatic tipping points, most notably the central demand of SIDS to limit global warming to 1.5 degrees Celsius over pre-industrial levels. This externally imposed catastrophe threatens their way of life and even their very existence, particularly for those low-lying states at most immediate risk from sea-level rise. This, in turn, transgresses island states’ legitimate rights to development and non-interference as sovereign equals in the international community of states.

In short, too many island societies enjoy neither enduring resilience nor secure prosperity. Some spend around half their revenue simply servicing debt, drastically crowding out public investment and social spending. The world owes it to them to provide an unprecedented financing package: a “Marshall Plan for SIDS.” The moment demands nothing less.

First, it would symbolise a major global solidarity effort to overcome a uniquely challenging context unresolvable via conventional development cooperation. SIDS embark on the ABAS with many indicators — growth, diversification, unemployment, poverty, social conflict, youth disempowerment, gender-based violence — flashing red. These are aggravated by intensifying climate-related hazards that place severe pressure on delicate island ecosystems: degradation of natural capital further erodes human capital as people leave, in turn undermining productive capacity, reinforcing negative developmental multipliers and inhibiting positive ones.

Second, a business-as-usual approach — mere tinkering around the edges — is insufficient. SIDS deserve a collective commitment that signals the requisite sense of urgency: one attentive to the historic nature of the challenge and underpinned by the necessary scale of ambition to foster genuinely positive disruption. There is no time to waste: the impending climate catastrophe will be difficult to avoid, but it will strike SIDS earlier and harder. They need immediate support for adaptation, which has not been forthcoming.

Third, the original Marshall Plan that supported the recovery of Western European countries after World War II was underpinned by a coherent, well-coordinated recovery vision embodying a deeply rooted logic of transformation. In retrospect, it was cheap: just USD 150 billion in today’s money. But its enduring indirect effects — stability, infrastructural development, social progress — have far outstripped and long outlived its direct impact in putting the continent back on its feet. It was a “stimulus that set off a chain of events leading to a range of accomplishments.” The ABAS encapsulates a similar vision, with the scale of immediate action determining the extent of its broader long-term success.

Fourth, the geopolitical threats facing SIDS are accumulating. We live in an increasingly unstable global order; if island states cannot quickly strengthen their productive capacity to absorb shocks and generate resilient prosperity, they become vulnerable to power games. For ODA recipients, accentuated dependence is explicit: the Pacific is the most aid-dependent region globally, with donor funding comprising over half and as much as four-fifths of gross national income in some cases. For borrowers, regardless of their creditor profiles — western states, the multilateral development banks, China, commercial lenders — debt service ratios remain daunting. The Marshall Plan helped western Europe avoid communism by mitigating poverty, unemployment and indebtedness. SIDS need similar investments to help navigate difficult choices that could end in effective suzerainty as relations between powerful countries fracture and fragment.

So, only a new Marshall Plan can give meaningful effect to the still unrealised “special case” of SIDS by rapidly expanding their fiscal space. This implies a sustained commitment on a scale not yet envisaged by donors. But it is the minimum needed to catalyse a 10-year agenda that must be transformational, not incremental. Small islands, as the Nobel Prize-winning St. Lucian economist Arthur Lewis pointed out nearly a century ago, require capital on a scale that is huge relative to their economies, but tiny compared to global reservoirs of money. For comparatively little cost, SIDS4 should herald an enormous investment in sustaining the survival of the most vibrant and diverse societies that enrich our global community.

Matt Bishop is Senior Lecturer in International Politics at the University of Sheffield, UK, and Co-Director of the Resilient and Sustainable Islands Initiative (RESI) at ODI, a global affairs think tank.

Tumasie Blair is Deputy Permanent Representative of Antigua and Barbuda to the United Nations.

Simona Marinescu is Senior Advisor, Small Island Developing States, at the United Nations Office of Project Services (UNOPS).

Emily Wilkinson is Principal Research Fellow, Global Risks and Resilience, at ODI, and Director of RESI.

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