Developing countries could have used CDM to great advantage. After all, they are the ‘host’ countries. Projects depend on them. Instead, they seem to have ended up depending on these projects. Indeed, they are turning quite parasitic, fighting among themselves to attract the cheapest possible cdm projects. Driven by business biases, they have gone off the sustainable development track. "The developing countries are not united. These countries are bringing down their carbon prices so that they can attract all or any kind of cdm project," says Jyoti Parikh of Mumbai-based Indira Gandhi Institute of Development Research (igidr).

Experts warn that the cdm market, as it now stands, might well flow the way of the foreign direct investment (fdi) market. Certainly the scrap-all attitude that has turned the latter into an investment dogfight threatens to whallop the former out of shape. It is already difficult to distinguish between the two.

Nobody’s complaining. Not investors in CDM, for the market remains a buyer’s one. Certainly not developing countries, who have forgotten that CDM is an instrument that could thrive in a seller’s market. What is most painful here is that, instead of relying on multilateralism, they are even prepared to go bilateral.

In 1998 Andrew T Guzman of the US-based University of California, Berkeley, carried out a study, Why ldcs sign treaties that hurt them: explaining the popularity of bilateral investment treaties. The man wanted to know why developing countries like to inflict severe economic wounds upon themselves. Bilateral investment treaties (bits) compromised the sovereignty of these countries, forced them to compete with each other for inward foreign investment. Why do it? bits improve the efficiency of foreign investment, but the gain is outweighed by the loss these developing countries suffer as they out-bid each other.

This could precisely be how CDM turns out. "cdm projects are largely fdi through construction. They thus hold the risks for developing countries similar to those associated with fdi, including shift of capital ownership from domestic to foreign and high transfers of surplus away from host countries associated with private sector investment," write Yin Shao Long and Ben Pearson in a recent Third World Network briefing paper published from Malaysia.

Consider the evidence. There are no endorsement rules; thanks to self-flagellation, when these rules are put in place they might be so flexible that any and every project would get the cdm stamp. "We are keeping very flexible guidelines for cdm as complex rules would serve no purpose and scare away investors," admits A K Mehta, under-secretary with the Union ministry of environment and forests (mef), government of India. Other countries are also vying for their share in the carbon market pie. In a cop-8 side-event, Egypt delegate Amin Umar told the World Bank that Egypt wants to "take a share in international greenhouse gas (ghg) abatement market" and that it will offer attractive and competitive carbon prices.