By Kate Abnett and Shadia Nasralla
SHARM EL-SHEIKH, Egypt (Reuters) -The United Nations climate agency on Saturday published a draft proposal for a deal to tackle the issue of "loss and damage" that said the COP27 summit would agree to launch a new fund to help countries cope with the cost of climate damage.
The draft - which the nearly 200 countries at the COP27 summit in Egypt will now consider, and potentially change, before deciding whether to approve - would agree to "establish a fund for responding to loss and damage".
Calls by developing countries for such a fund has dominated the U.N. negotiations over the last two weeks, pushing the summit past its scheduled Friday finish as countries struggle to strike a deal.
The draft proposal would kick many of the most controversial decisions on the fund into next year, when a "transitional committee" would make recommendations for countries to then adopt at the COP28 climate summit in November 2023.
Those recommendations would cover "identifying and expanding sources of funding" - referring to the vexed question of which countries should pay into the new fund.
"Everybody was flexible for the cause of loss and damage and the disasters and people dying and the economy being lost. I thank all the parties ... who were not flexible initially but who were flexible now," Kunal Satyarthi, India's negotiator on loss and damage, told Reuters.
After years of rich countries resisting climate-vulnerable countries' calls for loss and damage funding, the European Union said on Thursday it would back a new fund if high-emitting emerging economies like China also paid into it - rather than just large historical emitters like the EU and United States.
Yamide Dagnet, director of climate justice at Open Society Foundations and a former negotiator at U.N. climate talks, said the latest draft text was "better" than previous versions since it would clearly establish a fund, alongside other sources of financial support.
"It punts on critical definitional issues around who pays and who exactly benefits, but provides the roadmap," she said.
(Reporting by William James and Kate Abnett; Editing by Janet Lawrence)