Inter Press Service » Carey L. Biron http://www.ipsnews.net Journalism and Communication for Global Change Fri, 18 Apr 2014 01:52:43 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.3 Court Upholds Most of U.S. “Conflict Minerals” Law http://www.ipsnews.net/2014/04/court-upholds-u-s-conflict-minerals-law/?utm_source=rss&utm_medium=rss&utm_campaign=court-upholds-u-s-conflict-minerals-law http://www.ipsnews.net/2014/04/court-upholds-u-s-conflict-minerals-law/#comments Tue, 15 Apr 2014 21:14:21 +0000 Carey L. Biron http://www.ipsnews.net/?p=133691 The United States’ second-highest court has upheld most of a landmark U.S. law requiring companies to ascertain and publicly disclose whether proceeds from minerals used to manufacture their products may be funding conflict in central Africa. The ruling, released Monday, means that U.S.-listed companies will need to file their first such reports with federal regulators by […]

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National police arrive on a boat at Goma's port in DRC as U.N. peacekeepers look on. Credit: William Lloyd-George/IPS

National police arrive on a boat at Goma's port in DRC as U.N. peacekeepers look on. Credit: William Lloyd-George/IPS

By Carey L. Biron
WASHINGTON, Apr 15 2014 (IPS)

The United States’ second-highest court has upheld most of a landmark U.S. law requiring companies to ascertain and publicly disclose whether proceeds from minerals used to manufacture their products may be funding conflict in central Africa.

The ruling, released Monday, means that U.S.-listed companies will need to file their first such reports with federal regulators by the end of May. The statute, known as Section 1502 and covering what are referred to as “conflict minerals”, became law in 2010, but the details of its actual implementation have remained up in the air ever since.The ruling is “a major step backward for atrocity prevention in the Great Lakes region of Africa and corporate accountability in the United States.” -- Holly Dranginis

“There are very encouraging aspects of this ruling, and the bottom line is that the rule hasn’t been overturned and now companies will need to move forward,” Corinna Gilfillan, head of the Washington office of Global Witness, a watchdog group that supports Section 1502, told IPS.

“The heart of this statute is companies carrying out due diligence on their supply chains so they can figure out whether their minerals are coming from conflict areas. Due diligence is a process – first knowing the supply chain and then taking action to address any problems. This ruling has upheld the due diligence and reporting aspects.”

The U.S. Congress hoped Section 1502 would help quell the violence that has wracked Africa’s Great Lakes region, particularly in parts of the Democratic Republic of Congo (DRC), for the past decade and a half. Findings by the United Nations, rights groups and others have warned that rebels in these areas have funded their operations in part by mining and selling any of five minerals that have become particularly sought after by the international electronics industry.

The rule has come under attack by U.S. business groups who say the requirements would be onerous and infringe on their constitutionally guaranteed right to free speech, by forcing them to label their products “conflict free”. But agreeing with previous rulings, a three-judge bench on Monday dismissed most of these concerns.

The dismissal included business concerns that the Securities and Exchange Commission (SEC) had not adequately analysed costs and benefits of the regulation.

“The rule’s benefits would occur half-a-world away in the midst of an opaque conflict about which little reliable information exists, and concern a subject about which the [SEC] has no particular expertise,” the court stated in its decision.

“Even if one could estimate how many lives are saved or rapes prevented as a direct result of the final rule, doing so would be pointless because the costs of the rule – measured in dollars – would create an apples-to-bricks comparison.”

Compelled speech

Yet the court also offered a split decision in favour of the manufacturers on the free speech concern, allowing both proponents and critics of Section 1502 to claim victory.

U.S. law allows for certain “compelled” public disclosures, but generally only if those are recitations of straight fact. However, the court found the issue of conflict minerals to be far more complex.

“[I]t is far from clear that the description at issue – whether a product is ‘conflict free’ – is factual and nonideological. Products and minerals do not fight conflicts,” the court stated.

“The label ‘conflict free’ is a metaphor that conveys moral responsibility for the Congo war. It requires an issuer to tell consumers that its products are ethically tainted, even if they only indirectly finance armed groups … By compelling an issuer to confess blood on its hands, the statute interferes with that exercise of the freedom of speech.”

It is unclear whether the SEC will appeal this part of the decision to the U.S. Supreme Court (the agency says it’s reviewing the ruling). For now, the decision undermines a key strategy for groups hoping to use a labelling requirement to shame companies into compliance, though related information will still be publicly available.

The ruling is “a major step backward for atrocity prevention in the Great Lakes region of Africa and corporate accountability in the United States,” Holly Dranginis, a policy associate with the Enough Project, an advocacy group here, said Monday.

“The court’s proposal that a conflict-free determination is ideological is unfounded and undercuts the power of society’s growing awareness that global markets and security in fragile states are in fact linked.”

Meanwhile, a separate case before the same court could soon undermine the free speech finding. A smaller bench has already ruled in favour of requiring meat producers to include “country of origin” information on their products, and the case is now slated to be heard by the full court in mid-May.

A dissenting opinion in the conflict minerals ruling noted that the meat-labelling decision could have a significant impact on Monday’s ruling.

6,000 reports

The complexities of implementing Section 1502 remain highly problematic in central Africa, and some are warning that the law could soon collapse under its own weight. Yet others say the regulation is already having a noticeable impact, with the Enough Project suggesting that “over two-thirds of tin, tantalum and tungsten mines [are] now free of armed groups.”

Monday’s ruling should now allow the U.S. side of the statute’s implementation to proceed. This means that around 6,000 U.S. companies will need to file reports with the SEC, and post them to company websites, by the end of May.

The lawsuit against Section 1502 was brought by three of the United States’ largest business lobbies, the National Association of Manufacturers (NAM), the U.S. Chamber of Commerce and the Business Roundtable. In a joint statement sent to IPS, the three lauded the decision.

“[W]e are pleased with the D.C. Circuit’s decision … finding the statute and regulation are unconstitutional,” the groups stated. “We understand the seriousness of the humanitarian situation in the Democratic Republic of Congo (DRC) and abhor the violence in that country, but this rule was not the appropriate way to address this problem.”

Yet other businesses are already complying with the spirit of Section 1502. Perhaps the most significant of these companies, Intel, is actually a member of NAM.

In January, the company pledged to remove all conflict minerals from its microprocessors. It says it now has no plans to change course.

“Regardless of this decision, we will continue to do our part to achieve conflict-free supply chains and to report publicly on these efforts,” Lisa Malloy, an Intel spokesperson, told IPS.

“The challenge of responsible minerals sourcing requires a comprehensive solution that involves government agencies in the U.S. and internationally, non-profit groups and industry. We urge all partners to continue the momentum towards a solution.”

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IPCC Climate Report Calls for “Major Institutional Change” http://www.ipsnews.net/2014/04/ipcc-climate-report-calls-major-institutional-change/?utm_source=rss&utm_medium=rss&utm_campaign=ipcc-climate-report-calls-major-institutional-change http://www.ipsnews.net/2014/04/ipcc-climate-report-calls-major-institutional-change/#comments Mon, 14 Apr 2014 23:41:17 +0000 Carey L. Biron http://www.ipsnews.net/?p=133668 Greenhouse gas emissions rose more quickly between 2000 and 2010 than anytime during the previous three decades, the world’s top climate scientists say, despite a simultaneous strengthening of national legislation around the world aimed at reducing these emissions. The conclusions come in the third and final instalment in a series of updates by the Intergovernmental […]

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Mitigation goes most directly to the heart of what can make the UNFCCC negotiations contentious: how to pay for the expensive changes required to move into a new, low-carbon paradigm. Credit: Bigstock

Mitigation goes most directly to the heart of what can make the UNFCCC negotiations contentious: how to pay for the expensive changes required to move into a new, low-carbon paradigm. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Apr 14 2014 (IPS)

Greenhouse gas emissions rose more quickly between 2000 and 2010 than anytime during the previous three decades, the world’s top climate scientists say, despite a simultaneous strengthening of national legislation around the world aimed at reducing these emissions.

The conclusions come in the third and final instalment in a series of updates by the Intergovernmental Panel on Climate Change (IPCC), the U.N.-overseen body. The new update warns that “only major institutional and technological change will give a better than even chance that global warming will not exceed” two degrees Celsius by the end of the century, an internationally agreed upon threshold."The report makes clear that if we’re going to avoid catastrophic climate change, we need to get out of investing in fossil fuels." -- Oscar Reyes

The full report, which focuses on mitigation, is to be made public on Tuesday. But a widely watched summary for policymakers was released Sunday in Berlin, the site of a week of reportedly hectic negotiations between government representatives.

“We expect the full report to say that it is still possible to limit warming to two degrees Celsius, but that we’re not currently on a path to doing so,” Kelly Levin, a senior associate with the World Resources Institute (WRI), a think tank here, told IPS.

“Others have found that we’re not on that pathway even if countries were to deliver on past pledges, and some countries aren’t on track to do so. A key message is that we need substantially more effort on mitigation, and that this is a critical decade for action.”

The previous IPCC report, released last month, assessed the impacts of climate change, which it said were already being felt in nearly every country around the world. The new one looks at what to do about it.

“This is a strong call for international action, particularly around the notion that this is a problem of the global commons,” Levin says.

“Every individual country needs to participate in the solution to climate change, yet this is complicated by the fact that countries have very different capabilities to reduce emissions and adapt to climate change. We can now expect lots of conversation about the extent to which greater cooperation and collective action is perceived to be fair.”

Substantial investments

The full report, the work of 235 authors, represents the current scientific consensus around climate change and the potential response. Yet the policymakers’ summary is seen as a far more political document, mediating between the scientific findings and the varying constraints and motivations felt by national governments on the issue.

The latest report is likely to be particularly polarising. The three updates, constituting the IPCC’s fifth assessment, will be merged into a unified report in October, which in turn will form the basis for negotiations next year to agree on a new global response to climate change, under the auspices of the United Nations Framework Convention on Climate Change (UNFCCC).

While previous IPCC updates focused on the science behind climate change and its potential impacts, mitigation goes most directly to the heart of what can make the UNFCCC negotiations contentious: how to pay for the expensive changes required to move into a new, low-carbon paradigm.

In order to keep average global temperature rise within two degrees Celsius, the new report, examining some 1,200 potential scenarios, finds that global emissions will need to be brought down by anywhere from 40 to 70 percent within the next 35 years. Thereafter, they will need to be further reduced to near zero by the end of the century.

“Many different pathways lead to a future within the boundaries set by the two degrees Celsius goal,” Ottmar Edenhofer, one of the co-chairs of the working group that put out the new report, said Sunday. “All of these require substantial investments.”

The report does not put a specific number on those investments. It does, however, note that they would have a relatively minor impact on overall economic growth, with “ambitious mitigation” efforts reducing consumption growth by just 0.06 percent.

Yet they caution that “substantial reductions in emissions would require large changes in investment patterns.”

The IPCC estimates that investment in conventional fossil fuel technologies for the electricity sector – the most polluting – will likely decline by around 20 percent over the next two decades. At the same time, funding for “low cost” power supply – including renewables but also nuclear, natural gas and “carbon capture” technologies – will increase by 100 percent.

“The report makes clear that if we’re going to avoid catastrophic climate change, we need to get out of investing in fossil fuels. Yet the way the IPCC addresses this is problematic, and is a reflection of existing power dynamics,” Oscar Reyes, an associate fellow at the Institute for Policy Studies, a think tank here, told IPS.

“While it’s positive that they point out that renewables are achievable at scale, they also talk about gas as a potential transition fuel. Yet many models say that doing so actually discourages investment in renewables. There are also problems with the tremendous costs of many of the technological fixes they’re putting forward.”

Equity and income

The policymakers’ summary is a consensus document, meaning that all 195 member countries have signed off on its findings. Yet it appears that last week’s negotiations in Berlin were arduous, particularly as countries position themselves ahead of the final UNFCCC negotiations next year.

Debate over how the financial onus for mitigation and adaptation costs will be parcelled out has played out in particular between middle-income and rich countries. While the latter are primarily responsible for the high greenhouse gas emissions of the past, today this is no longer the case.

Even as previous IPCC reports have categorised countries as simply “developing” or “developed” (similar to the UNFCCC approach), some rich countries have wanted to more fully differentiate the middle-income countries and their responsibility for current emissions. Apparently in response, the new IPCC report now characterises country economies on a four-part scale.

Yet some influential developing countries have pushed back on this. In a formal note of “substantial reservation” seen by IPS, the Saudi Arabian delegation warns that using “income-based country groupings” is overly vague, given that countries can shift between groups “regardless of their actual per capita emissions”.

Nine other countries, including Egypt, India, Malaysia, Qatar, Venezuela and others, reportedly signed on to the Saudi note of dissent.

Bolivia wrote a separate dissent that likewise disputes income-based classification. But it also decries the IPCC’s lack of focus on “non-market-based approaches to address international cooperation in climate change through the provision of finance and transfer of technology from developed to developing countries.”

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U.S. Urged to Push World Bank on Human Rights Safeguards http://www.ipsnews.net/2014/04/u-s-urged-push-world-bank-human-rights-safeguards/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-urged-push-world-bank-human-rights-safeguards http://www.ipsnews.net/2014/04/u-s-urged-push-world-bank-human-rights-safeguards/#comments Thu, 10 Apr 2014 23:25:27 +0000 Carey L. Biron http://www.ipsnews.net/?p=133578 Rights advocates and community leaders, together with some U.S. lawmakers, are urging the United States to take a more robust role in pushing the World Bank to explicitly incorporate human rights into policies that dictate how and when the bank can engage in project lending and technical assistance. The World Bank has been a pioneer […]

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Participants in Uganda’s second Gay Pride parade held in August 2013. World Bank President Jim Yong Kim recently received plaudits for halting a planned loan to Uganda after that country passed onerous anti-gay legislation. Credit: Faith Lokens/IPS

Participants in Uganda’s second Gay Pride parade held in August 2013. World Bank President Jim Yong Kim recently received plaudits for halting a planned loan to Uganda after that country passed onerous anti-gay legislation. Credit: Faith Lokens/IPS

By Carey L. Biron
WASHINGTON, Apr 10 2014 (IPS)

Rights advocates and community leaders, together with some U.S. lawmakers, are urging the United States to take a more robust role in pushing the World Bank to explicitly incorporate human rights into policies that dictate how and when the bank can engage in project lending and technical assistance.

The World Bank has been a pioneer in working to ensure that its assistance does not lead to or exacerbate certain forms of discrimination or environmental degradation.“No one at the bank was encouraged, rewarded or promoted for stopping a project because of human rights concerns.” -- Rep. James P. McGovern

Yet the Washington-based institution has long been criticised for refusing to institutionalise a specific focus on human rights, and is currently involved in a major review of these policies.

“I recognise that constructing sustainable relationships between development priorities and human rights can be a challenging endeavour for the World Bank, but it is a crucial endeavour to undertake,” James P. McGovern, a member of the U.S. House of Representatives, said Wednesday at a hearing he chaired on the subject.

“Human rights due diligence and assessments would ensure that each project is properly vetted and that possible violations of human rights are acknowledged beforehand and can be prevented. This not only protects the integrity of individuals but also ensures the sustainability of a project, which means more people will benefit from the World Bank’s investment long term.”

The World Bank and its sister institution, the International Monetary Fund, are currently meeting in Washington for a semi-annual summit.

McGovern warned that important bank policies on rights, the environment and indigenous peoples are often treated as “little more than one box that needed to be checked” by project managers. Further, he said, “No one at the bank was encouraged, rewarded or promoted for stopping a project because of human rights concerns.”

The World Bank has long been barred by its membership from engaging in overtly political issues. Yet many say rights issues need not be considered political, and World Bank President Jim Yong Kim recently received plaudits for halting a planned loan to Uganda after that country passed onerous anti-gay legislation.

Kim “responded very well” to the Uganda issue, Barney Frank, a former member of Congress, told the hearing Wednesday. But he warned that “it’s not good when things are done ad hoc.”

“Some of the countries can complain they weren’t warned,” Frank said.

“That’s why it’s important to have a framework in place, so any country contemplating brutal actions in the future will be on notice … I think it’s reasonable to say, ‘If we’re going to punish you, we should let you know in advance what the rules are.’”

Review opportunity

A two-year review of the bank’s safeguard policies is currently underway, and could be finished by the end of the year. Proponents of these reforms say the review offers an important opportunity for leverage, particularly by the United States.

“It’s really incumbent on the United States and the U.S. Congress, as large shareholders with strong influence, to take a very progressive and aggressive role on promoting human rights standards at the bank,” Arvind Ganesan, director for business and human rights at Human Rights Watch, a global watchdog group, told IPS.

“This is critically important because, increasingly, governments such as that of China have influence over the bank, and they’ve been very clear they don’t want human rights standards incorporated into the bank.”

Ganesan, who also testified Wednesday, says the bank needs to incorporate human rights-focused due diligence into its vetting of potential project funding, and to show that its projects are mitigating human rights concerns.

On questioning from lawmakers, Ganesan noted that several European countries on the World Bank’s board have offered strong support for such changes. But he warned that other governments have been “hostile” to the idea.

Certain parts of the bank’s staff are sympathetic to the idea of greater human rights focus in the institution’s lending, Ganesan says. But he cautions that “the staff in general needs to be far more motivated to include human rights.”

A bank spokesperson told IPS the safeguards review is “making good progress”, with a public update due Saturday.

“We are ramping up our standards to ensure the delivery of a strengthened policy framework which is more efficient and comprehensive; a system that will enable the Bank to assert its position as a force for good in sustainable development; a new policy framework that is clear to implement and to hold us accountable for,” the spokesperson said in a statement.

“[W]e are looking at how most appropriately to address the adverse impacts of discrimination and exclusion … along with how to cover vulnerable/disadvantaged issues such as sexual orientation.”

Lessons learned

Lawmakers on Wednesday also heard testimony about three past World Bank-supported projects: agricultural development initiatives in Uzbekistan, despite widespread findings of child and forced labour in that country’s important cotton industry; an oil pipeline between Chad and Cameroon that saw bank funds diverted by a corrupt and oppressive government in N’Djamena; and a series of palm oil plantations in Honduras that have led to the takeover of indigenous lands.

The Chad-Cameroon pipeline, worth some seven billion dollars “was meant to be transformational. Yet even an internal bank evaluation found the project had not contributed to poverty reduction but rather enriched the government of Chad – meaning more and more corruption and human rights violations,” Delphine Djiraibe, an attorney with the Chadian Association for the Promotion and Defence of Human Rights, told the hearing.

“We hope the U.S. Congress will put pressure on the World Bank Group to learn from the fiasco of this project and not keep repeating the same mistakes that lead to serious human rights violations and environmental degradation.”

On Thursday, over 180 global civil society groups accused the World Bank of directly facilitating a spate of large-scale land acquisitions through its annual publication of business-friendliness metrics known as the Doing Business index, as well as a new initiative called Benchmarking the Business of Agriculture. While such rankings measure how a country’s regulations impact on industry, critics say the widely watched indicators push governments to prioritise industry over poor and marginalised communities.

“The [Doing Business] framework is creating competition between nations to cut down economic regulations as well as environmental and social safeguards in order to score better in the ranking,” the Oakland Institute, a watchdog group, says in a new report on the issue.

“[T]he … ranking has the collateral effect of facilitating land grabbing by advocating for ‘protection of investors’ and property reforms that make land a marketable commodity and facilitate large-scale land acquisitions.”

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IFC-Negotiated Privately Run Hospital Sapping Lesotho Budget http://www.ipsnews.net/2014/04/ifc-negotiated-privately-run-hospital-sapping-lesotho-budget/?utm_source=rss&utm_medium=rss&utm_campaign=ifc-negotiated-privately-run-hospital-sapping-lesotho-budget http://www.ipsnews.net/2014/04/ifc-negotiated-privately-run-hospital-sapping-lesotho-budget/#comments Mon, 07 Apr 2014 23:12:48 +0000 Carey L. Biron http://www.ipsnews.net/?p=133498 The world’s first hospital to be built and run in a developing country under a public-private partnership is taking up more than half of the health budget in Lesotho, according to new estimates, diverting resources from populations outside of the capital. The unique funding arrangement for the Queen ‘Mamohato Memorial Hospital, which opened in 2011 […]

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By Carey L. Biron
WASHINGTON, Apr 7 2014 (IPS)

The world’s first hospital to be built and run in a developing country under a public-private partnership is taking up more than half of the health budget in Lesotho, according to new estimates, diverting resources from populations outside of the capital.

The unique funding arrangement for the Queen ‘Mamohato Memorial Hospital, which opened in 2011 in the capital city of Maseru, came about under a deal brokered by the International Finance Corporation (IFC), the World Bank’s private sector arm.“It’s very concerning that the deal was structured to give a 25 percent return to a private company – that’s a phenomenally high rate." -- Anna Marriott of Oxfam

Yet while the Washington-based IFC was negotiating on behalf of the Lesotho government, the final agreement will see returns of around 25 percent for the private company running the hospital.

Now, critics from civil society and within the Lesotho government are warning that the contract, which lasts for 18 years, is already forcing officials to cut back on health and other services, particularly for the country’s rural areas – where 75 percent of the Lesotho population lives.

“The big promise was that the new hospital would cost exactly the same as the old hospital and bring better results, but that’s clearly not the case. Even at the point the contract was signed [in 2009], costs had already escalated beyond what was agreed to be affordable,” Anna Marriott, a health policy advisor with Oxfam Great Britain, a humanitarian and advocacy group, told IPS.

“It’s very concerning that the deal was structured to give a 25 percent return to a private company – that’s a phenomenally high rate – and the idea that the World Bank would advise on a deal of that type is truly surprising. It feels as though the IFC was negotiating on behalf of the company rather than the government.”

In a report released Monday, Marriott writes that the new hospital is costing around 67 million dollars a year, three times more than the old hospital. Further, it’s currently accounting for some 51 percent of the country’s health budget, even while rural services are being cut, including for agriculture and education.

“The [new] hospital has had a bad impact on how we’ve allocated resources over the last two years,” the report quotes an anonymous senior Ministry of Health official as stating. “There are less and less resources for primary health care and district services.”

Non-competitive bidding

While the Lesotho government has proposed a significant increase in its health budget for coming years, a large majority – some 84 percent – of this will be earmarked for the new hospital. Yet most people in Lesotho can’t easily make use of these facilities.

“For many people, travelling to urban areas or the capital can take two days or more,” Lehlohonolo Chefa, director of the Lesotho Consumers Protection Association (CPA), which co-authored the new report, told IPS.

“For a long time, the government has been relying on the Christian Health Association of Lesotho to provide most of the primary health-care services in rural areas. But with the advent of this project, the majority of funding goes to financing the federal hospital while sacrificing that primary health care.”

Chefa is in Washington ahead of semi-annual meetings between the World Bank and International Monetary Fund (IMF), which are taking place later this week.

Lesotho is one of the poorest and most unequal countries in the world. The new Queen ‘Mamohato Hospital replaces the country’s previous central health service provider, a century-old institution that nearly everyone agreed needed to be renovated or overhauled entirely.

Yet when the government of Lesotho went to the World Bank to request funding to do so, Oxfam’s Marriot says the bank’s window had already closed for the concessional assistance that would typically be used in such a situation. Instead, officials were pointed towards the IFC, which took over the main technical advisory role for the deal.

That process resulted in a contract between the government of Lesotho and Tsepong, a consortium headed by Netcare, a South African company that has long experience in the private health-care business.

Critics point to a host of problems with the negotiating process and structure of the eventual contract, however, including that only two companies engaged in the bidding process. In addition, the contract significantly underestimated the number of patients the hospital would see, while requiring the government to pay Tsepong for visits over that number.

Further, Tsepong’s priorities are at times at odds with those of the government. Lesotho, for instance, has the world’s third-highest rate of HIV/AIDS, yet CPA’s Chefa says the new hospital has scaled back these services.

“Most of the HIV/AIDS treatments are not provided in the new federal hospital, so people have to look elsewhere,” he says. “For the private sector, HIV/AIDS is not profitable – we’re seeing the same problem with mental health services.”

Landmark model

The deal was quickly lauded by the IFC, which continues to embrace the project’s broader aims.

“The World Bank Group shares Oxfam’s concern that the health network in Lesotho is being overburdened as it attempts to fulfil greater than anticipated public demand for basic health services,” Geoffrey Keele, an IFC spokesperson, told IPS in a statement.

“The World Bank Group is supporting the Government of Lesotho in strengthening the country’s health system so that everyone in Lesotho, especially the poorest, can access the essential health services they need.”

Keele notes that the project has improved the quality of care for around a quarter of the country’s population, while the overall mortality rate at the new hospital has fallen by 41 percent.

Indeed, the IFC started making plans to replicate the project in other countries almost immediately.

“The landmark deal might serve as a model for aging and overburdened health care systems across Africa,” the IFC said in a statement at the time. “The real potential of the Lesotho project becomes apparent if it could be scaled up across populous countries such as Nigeria, where there could conceivably be scope for 20 or more such hospitals.”

Currently, the IFC is advising on similar projects in Nigeria and Benin.

Oxfam is now urging the World Bank to investigate the IFC’s role in the project. Meanwhile, CPA’s Chefa says the Lesotho government will need to renegotiate the contract, but warns that the contract details remain under wraps.

“Renegotiating the contract is the only way out of this mess, and whether that’s possible is based on the government’s and the IFC’s willingness to change,” he says.

“For the moment, there is incredible secrecy around the project. But if this is a flagship project, how can they not be open about what’s in the contract?”

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World Bank to Double Lending to Middle-Income Countries http://www.ipsnews.net/2014/04/world-bank-double-lending-middle-income-countries/?utm_source=rss&utm_medium=rss&utm_campaign=world-bank-double-lending-middle-income-countries http://www.ipsnews.net/2014/04/world-bank-double-lending-middle-income-countries/#comments Tue, 01 Apr 2014 23:27:43 +0000 Carey L. Biron http://www.ipsnews.net/?p=133363 The World Bank is aiming to double its lending to middle-income countries over the coming decade, in addition to expanding its overall commitments to some 70 billion dollars a year. As part of a broad reform agenda unveiled last year by World Bank President Jim Yong Kim, the world’s largest development lender now sees a […]

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World Bank Group President Jim Yong Kim speaks at the Council on Foreign Relations on Apr. 1, 2014. Credit: World Bank/cc by 2.0

World Bank Group President Jim Yong Kim speaks at the Council on Foreign Relations on Apr. 1, 2014. Credit: World Bank/cc by 2.0

By Carey L. Biron
WASHINGTON, Apr 1 2014 (IPS)

The World Bank is aiming to double its lending to middle-income countries over the coming decade, in addition to expanding its overall commitments to some 70 billion dollars a year.

As part of a broad reform agenda unveiled last year by World Bank President Jim Yong Kim, the world’s largest development lender now sees a niche for itself, in part, in responding to the massive infrastructural needs in rising middle-income economies. On Tuesday, Kim lauded this expanded financing “firepower”.“More lending by the bank should not further entrench a culture that measures staff performance on the basis of money out of the door.” -- Nicolas Mombrial

“We now have the capacity to nearly double our annual lending to middle-income countries, from 15 billion dollars to as much as 28 billion dollars a year,” Kim said in a speech to the Council on Foreign Relations, a think tank here.

“This means that the World Bank’s lending capacity, or the amount of loans we can carry on our balance sheet, will increase by 100 billion dollars in the next decade, to roughly 300 billion dollars.”

Kim characterises the prospects as “unprecedented growth” for the bank, based in Washington. The announcements came just ahead of semi-annual meetings between the bank and its sister organisation, the International Monetary Fund (IMF), slated to take place next week here in Washington.

While middle-income countries are expected to require less development assistance, Kim suggests that they will still be interested in accessing the bank’s low-rate loan options, particularly for infrastructure. Kim said infrastructure-related costs for the so-called BRICS middle-income countries alone are around a trillion dollars a year, whereas total global foreign assistance stands at just over a tenth of that figure

This gap, coupled with a new pledge to eliminate extreme poverty by 2030, will now lead the bank to focus in particular on 10 countries. These will include Bangladesh, China, Congo, India and Nigeria, where some two-thirds of the world’s extreme poor are located.

This focus will also take in an additional five countries – Ethiopia, Kenya, Indonesia, Pakistan and Tanzania. Together, these 10 nations house some 80 percent of the world’s poorest people.

“The bank is making use of existing resources more effectively to do not just a little more but a lot more. It’s hard to look at this and not be impressed with what they’re trying to pull off here,” Scott Morris, a senior associate at the Center for Global Development (CDG), a think tank here, told IPS.

“I give them credit both for having some degree of creativity and for navigating the politics with shareholders to pull these elements off. The issue of loan pricing is always very sensitive with borrowers.”

Questionable rejiggering

The new capacity comes on top of a record top-up for the World Bank’s fund for the world’s poorest countries, known as the International Development Association (IDA), which last year took in close to 52 billion dollars from its membership.

Yet unlike the IDA replenishment, the newly announced boosts will come largely from rejiggering the bank’s own lending rules, as well as from strengthening efficiency within its operations. “We are not getting a capital increase … we’re stretching our balance sheet as much as we possibly can,” Kim said Tuesday.

For instance, the bank will raise the limit imposed on the size of loans that each middle-income country is able to take out, by another 2.5 billion dollars. It will also be slightly increasing the interest rate imposed on those loans, as well as certain other fees.

Alongside these changes, Kim on Tuesday reiterated a new goal of saving 400 million dollars over three years through increased efficiency within the organisation, details of which are to be publicised in coming days.

CGD’s Morris, who previously oversaw engagement between the U.S. Treasury and the World Bank, says this plan is impressively inventive but could also be dangerous in the longer term.

“The bank is now sending a clear signal that they don’t feel the need to ask for more money from their shareholders, particularly from the United States and Europe,” he says.

“But this is an institution owned by country shareholders, and an important measure of their engagement with and attachment to the institution is its financial flows. If, for instance, U.S. financing continues on a steady decline, I think the relationship itself could also be on that kind of trajectory – and that would be unfortunate.”

The changes to the borrower limit and the new surcharge for large countries raise questions about how some of the smaller countries will fare, Morris worries. He also notes that much will depend on how the new budget cuts take place.

“If they’re pursuing budget cuts first and foremost to address the problem of budget bloat, then that’s absolutely necessary,” he says. “But if the starting point is to figure out how to find 400 million dollars to put towards increased lending, then you have to worry that they’re going to be cutting in areas that they shouldn’t be.”

Added responsibility

Others, too, are calling for the World Bank to use the new reforms and goals as an opportunity to strengthen the criteria by which it rates the effectiveness of its own lending. The bank has long been criticised for focusing too much on the size of its lending rather than on the ultimate impact of that spending on reducing poverty.

“More lending by the bank should not further entrench a culture that measures staff performance on the basis of money out of the door,” Nicolas Mombrial, head of the Washington office of Oxfam International, an anti-poverty group, said Tuesday. “Development impact should be front and centre for the bank.”

Mombrial also notes that expanded development lending will require a strengthening of guidelines covering World Bank lending, in order to ensure that those programmes do not negatively impact on local communities and the environment.

“More money for development is good but the quality of World Bank lending needs to improve. This will be bad news for poor people if World Bank social and environmental standards are not improved,” he says.

“The bank’s private sector arm, the IFC, must be reformed if it wants to spend more and increase its development impact. More resources must be tied to better consultation and protection of communities affected by IFC investments.”

Worrying for some in this regard will be strongly positive comments Kim made Tuesday regarding new World Bank funding for a controversial hydroelectric dam on the Congo River, known as Inga III. Civil society groups have fiercely opposed the megaproject, but Kim lauded it as a prime example of the bank’s “bold” future plans.

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IPCC Climate Report Warns of “Growing Adaptation Deficit” http://www.ipsnews.net/2014/03/ipcc-climate-report-warns-growing-adaptation-deficit/?utm_source=rss&utm_medium=rss&utm_campaign=ipcc-climate-report-warns-growing-adaptation-deficit http://www.ipsnews.net/2014/03/ipcc-climate-report-warns-growing-adaptation-deficit/#comments Mon, 31 Mar 2014 22:53:56 +0000 Carey L. Biron http://www.ipsnews.net/?p=133328 The latest update of the world’s scientific consensus on climate change finds not only that impacts are already being felt on every continent, but also that adaptation investments are dangerously lagging. These investments constitute both a key demand by developing countries and a key pledge by the West. Nonetheless, the latest report by the Intergovernmental […]

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Workmen clear a road blocked by a landslide in Trinidad. Compensation for loss and damage from climate change has become a major demand of developing countries. Credit: Desmond Brown/IPS

Workmen clear a road blocked by a landslide in Trinidad. Compensation for loss and damage from climate change has become a major demand of developing countries. Credit: Desmond Brown/IPS

By Carey L. Biron
WASHINGTON, Mar 31 2014 (IPS)

The latest update of the world’s scientific consensus on climate change finds not only that impacts are already being felt on every continent, but also that adaptation investments are dangerously lagging.

These investments constitute both a key demand by developing countries and a key pledge by the West. Nonetheless, the latest report by the Intergovernmental Panel on Climate Change (IPCC), released on Monday in Japan, warns that these shortfalls are growing.

“Global adaptation cost estimates are substantially greater than current adaptation funding and investment, particularly in developing countries, suggesting a funding gap and a growing adaptation deficit,” the report states."We’re taking far too long to discuss these issues, and meanwhile a lot of poor people are becoming more and more vulnerable.” -- Pramod Aggarwal

“Comparison of the global cost estimates with the current level of adaptation funding shows the projected global needs to be orders of magnitude greater than current investment levels particularly in developing countries.”

Further, the report underscores that adaptation shortfalls, as with the broader impacts of climate change, would most significantly affect communities that are discriminated against, particularly in developing economies.

“The report makes very clear what a large adaptation deficit there is while also recognising that, though there’s been a lot of progress on vulnerability, people who are marginalised tend to be the most vulnerable,” Heather McGray, director of vulnerability and adaptation at the World Resources Institute, a think tank here, told IPS.

“This plays out in the debate between developing and developed countries, covering the livelihoods of indigenous peoples and fisherfolk, small farmers dependent on climate-sensitive environments, as well as children and the elderly, those with constrained mobility or higher health risks. More thorough and nuanced treatment of these issues is certainly a step forward.”

Medium agreement

The IPCC, which is overseen by the United Nations, has been publishing climate-related assessments since the early 1990s. The new report is the work of nearly 2,500 authors and reviewers, and constitutes part of the IPCC’s fifth such assessment.

The report is actually made of three sections, with the one released Monday, the second, focusing on impacts and adaptation. It differs from previous iterations in its far robust understanding of the current state of climate change, describing its ramifications as widespread and consequential.

Yet it also warns the world is “ill-prepared” for these changes, and places far more focus than in the past on adaptation. In part, this is because global mitigation efforts have thus far been relatively ineffectual, thus requiring planning for significant impact at least in the near term.

Risk evaluation is a first step towards a climate change adaptation plan. Credit: Jorge Luis Baños/IPS

Risk evaluation is a first step towards a climate change adaptation plan. Credit: Jorge Luis Baños/IPS

“The global community seems to be spending a lot of time on issues around mitigation issues, whereas many developing countries need significant investment in adaptation. We’re taking far too long to discuss these issues, and meanwhile a lot of poor people are becoming more and more vulnerable,” Pramod Aggarwal, an IPCC author and reviewer, told IPS.

“Governments [in developing countries] have been sensitised on this for some time, and where possible most are already taking action. But it’s been clear for some time that significant international support is also needed.”

For the moment, however, the IPCC report suggests little agreement on that assistance.

IPCC reports are consensus documents, and hence require meticulousness over both scientific evidence and concurrence around that evidence. For this reason, important points in the report include reference to a corresponding strength of agreement.

Yet such concord appears to have broken down over the amount of funding required for comprehensive global adaptation initiatives. The quoted material at the beginning of this story, on the adaptation-related “funding gap”, comes with the onerous warnings “limited evidence” and “medium agreement”.

Putting actual dollar figures on the issue of adaptation appears to have been particularly contentious. “The most recent global adaptation cost estimates suggest a range from $70 billion to $100 billion per year globally by 2050,” the report notes, “but there is little confidence in these numbers.”

Source: CCFAS

Source: CCFAS

Further, even these estimates and their caveats were removed completely from the widely read summary for global policymakers. This is almost certain to strengthen a fight at the next global climate summit, in September.

In 2009, leaders of developed countries pledged to make available 100 billion dollars a year for adaptation and mitigation efforts in developing countries by 2020. The United Nations flagship programme to facilitate this pledge, the Green Climate Fund, recently opened its new headquarters in South Korea.

Yet by all accounts, the initiative remains painfully slow in getting off the ground, and some analysts worry that momentum could soon wane. A series of procedural hurdles remains in coming months, including agreement on the particularly contentious role of private versus public funding.

Early warning

The new report suggests that agriculture and food security-related issues will likely see some of the most immediate and monumental impacts of a changing climate. Technical interventions thus hold out the opportunity to help the farmers that constitute the backbone of rural societies across the globe, as well as the societies that depend on them for food production.

“We really need to speed up our adaptation at the local scale, particularly with increased investments in climate monitoring,” Aggarwal, the agriculture expert who reviewed the IPCC report’s chapter on food security, told IPS.

“The IPCC emphasises that climate extremes will be the order of the day, so early-warning systems are critical so that entire farming communities can know what to expect and take action. That, however, requires a lot of infrastructure and capital investment.”

Aggarwal says that while certain governments have begun to start taking significant action on issues of adaptation, poorer countries have not been able to do so. (He contributed to a related analysis that will be released on Thursday by CGIAR, a global agriculture consortium.)

Yet echoing the debate over the type of funding that will fuel the Green Climate Fund, some groups are increasingly worried about the approach that will be adopted in reacting to the needs of agriculture in a changing climate.

The IPCC report “is a wake up call for governments to invest in agricultural systems that are effective and sustainable far into the future,” Emilie Johann, a policy officer with CIDSE, a global Catholic anti-poverty network, said Monday.

“So far, solutions pushed at the international level … will do more to increase company profits than provide lasting and achievable solutions for the small-scale farmers and their communities who produce the vast majority of the world’s food.”

The third part of the IPCC’s Fifth Assessment Report is to be released next month, focusing on pollution. A final synthesis of each of these three sections will be released in October.

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Drugmakers Agree to U.S. Ban on Livestock Antibiotics http://www.ipsnews.net/2014/03/drugmakers-agree-u-s-ban-livestock-antibiotics/?utm_source=rss&utm_medium=rss&utm_campaign=drugmakers-agree-u-s-ban-livestock-antibiotics http://www.ipsnews.net/2014/03/drugmakers-agree-u-s-ban-livestock-antibiotics/#comments Thu, 27 Mar 2014 22:19:59 +0000 Carey L. Biron http://www.ipsnews.net/?p=133267 Pharmaceutical companies have overwhelmingly agreed to new U.S. government guidelines aimed at decreasing the use of antibiotics in the raising of livestock, new data shows. In December, the U.S. Food and Drug Administration (FDA), the federal government’s main regulator for these sectors, unveiled a new, voluntary programme to reduce the use of “medically important” antibiotics, […]

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Livestock production has long been suspected as a key incubator of antibiotic resistance in the United States. Credit: Bigstock

Livestock production has long been suspected as a key incubator of antibiotic resistance in the United States. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Mar 27 2014 (IPS)

Pharmaceutical companies have overwhelmingly agreed to new U.S. government guidelines aimed at decreasing the use of antibiotics in the raising of livestock, new data shows.

In December, the U.S. Food and Drug Administration (FDA), the federal government’s main regulator for these sectors, unveiled a new, voluntary programme to reduce the use of “medically important” antibiotics, the hundreds of drugs considered important for human health."Any time antibiotics are used for routine disease prevention, that’s a sign that something else is wrong with the livestock system.” -- Sarah Borron

The agency targeted 26 of the world’s largest manufacturers of livestock antibiotics, requesting their compliance. On Wednesday, the FDA announced that all but one of those companies, accounting for more than 99 percent of the supply, had agreed to the new guidelines.

“As of March 26, [25 companies] have agreed in writing that they intend to engage in the judicious use strategy by seeking withdrawal of approvals relating to any production uses and changing the marketing status of their products from over-the-counter to use by [veterinary] prescription,” the FDA stated Wednesday.

“FDA is encouraged by the response thus far and will continue to monitor ongoing participation and provide public updates on a periodic basis.”

The only targeted company not to agree to the new guidance is PharmaqAS, a Norwegian manufacturer of drugs used on farmed fish. A spokesperson for the company told IPS that its products are only used to treat diseased fish rather than to promote growth in livestock, and Pharmaq “interpreted the proposed voluntary program not to be relevant for our products.” However, it is currently reviewing the FDA request.

The U.S. meat industry has come under increased criticism in recent years over the widespread practice of feeding low levels of antibiotics to healthy livestock over an extended period, as a way of forcing animals to put on weight more quickly. Motivated by surging reports of antibiotic-resistant “superbugs” around the world, public health officials have increasingly looked for ways to decrease this practice.

At base, the new guidance offers a simple tweak to labelling requirements for antimicrobial drugs intended for livestock. These 25 companies will no longer include reference to their drugs’ growth-enhancing potential on their labels, in effect outlawing the practice by farmers.

The use of antibiotics for truly sick animals will still be allowed, but only with a prescription from a registered veterinarian.

While public interest groups are supportive of the fact that U.S. regulators are finally taking action over growing antibiotic resistance, many are concerned that the FDA’s guidelines are too weak.

“We did some analysis of the drugs being affected by the guidance and found that of the drugs that will stop being used for growth promotion, 63 percent can still be used for disease prevention,” Sarah Borron, a researcher with Food and Water Watch (FWW), a watchdog group, told IPS.

“The problem is, that’s a very similar type of use. Farmers still give low doses of antibiotics to entire herds for long periods, and that still promotes the development of antibiotic resistance. Any time antibiotics are used for routine disease prevention, that’s a sign that something else is wrong with the livestock system.”

Concerns over the possibility of antibiotic resistance have been around almost since the discovery of antibiotics themselves. Credit: Bigstock

Concerns over the possibility of antibiotic resistance have been around almost since the discovery of antibiotics themselves. Credit: Bigstock

Some U.S. lawmakers are expressing similar concerns.

“This voluntary pro-industry approach is a step in the wrong direction,” Rosa DeLauro, a member of the House of Representatives, said when the plan was announced in December.

“Companies will either disregard the plan altogether or simply switch from using antibiotics for routine growth promotion to using the same antibiotics for routine disease prevention. For the good of public health, FDA should step up and implement tighter restrictions on antibiotic usage.”

DeLauro said that 80 percent of the antibiotics sold in the United States are given to healthy animals, often to “overcompensate for crowded and unsanitary conditions”.

23,000 deaths annually

Concerns over the possibility of antibiotic resistance have been around almost since the discovery of antibiotics themselves, a breakthrough that many say is among the most important of the modern age. Yet such reports have spiked in recent years.

While this resistance is a growing problem in countries on every continent, governments outside of the United States have taken more proactive steps. The European Union, for instance, has banned the use of antibiotics to fatten livestock since at least 2006.

Data from E.U. countries suggest that overall antibiotics use for livestock can be reduced fairly easily, through simple yet often cost-ineffective changes to farming practice.

The United States, meanwhile, has seen major outbreaks of food-borne illness with resistance in recent years.

In 2011, for instance, the U.S. company Cargill was forced to recall 36 million pounds of ground turkey, over concerns that it may have been contaminated with an antibiotic-resistant form of salmonella. Hundreds more became sick from similar infections this past October, reportedly traced to a chicken farm in California.

Also last fall, the Centers for Disease Control and Prevention (CDC), a federal agency, estimated that some two million people in the United States are getting sick from antibiotic-resistant infections every year, causing some 23,000 deaths. Further, the agency cautioned that those numbers were minimum estimates based on conservative assumptions.

In April, CDC director Dr. Tom Friedman told the U.S. House of Representatives that antibiotic resistance constitutes one of the country’s “most serious health threats”.

Livestock production has long been suspected as a key incubator of antibiotic resistance in the United States. Yet the FDA ultimately decided to make its new programme voluntary rather than mandatory.

The agency says it took this decision in order to speed up what would otherwise have been a long and likely contentious regulatory process. But analysts like FWW’s Borron say this is cause for concern.

“Whenever there’s voluntary guidance, we worry about whether companies will follow,” she notes. “In this instance, there’s the sense that the FDA has been working on something that the industry can accept.”

In this approach, the FDA appears to have been successful. Both the animal pharmaceuticals manufacturers and the meat industry appear to be backing the new guidelines, though some express some reservations.

“The response to FDA reflects the shared commitment of those who raise poultry and livestock to the judicious use of medicines for the care and well being of healthy animals,” Keith Williams, a spokesperson for the National Turkey Federation, a trade group, told IPS.

The pork industry, meanwhile, is warning that the new guidelines will mean “real changes” for producers. Liz Wagstrom, the chief veterinarian at the National Pork Producers Council, told IPS that “farmers will need to work with their veterinarians to come up with alternative strategies to keep their animals healthy.”

Pharmaceutical manufacturers will now have three years to phase in the new labelling requirements.

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U.S. Joins Global Transparency Tide in Extractives Sector http://www.ipsnews.net/2014/03/u-s-joins-global-transparency-tide-extractives-sector/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-joins-global-transparency-tide-extractives-sector http://www.ipsnews.net/2014/03/u-s-joins-global-transparency-tide-extractives-sector/#comments Mon, 24 Mar 2014 23:57:05 +0000 Carey L. Biron http://www.ipsnews.net/?p=133189 An unusual combination of industry, government, investors and civil society here is celebrating the United States’ initial acceptance into a prominent global initiative aimed at strengthening transparency and accountability in the extractives industry. Last week, the Extractives Industry Transparency Initiative (EITI) board accepted the U.S. application to become a candidate country in the grouping. The […]

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Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. So-called ‘blood diamonds’ helped fund civil wars in Sierra Leone and Liberia, but now provide much-needed jobs as well as revenue for the government. Credit: Tommy Trenchard/IPS

Artisanal diamond miners at work in the alluvial diamond mines around the eastern town of Koidu, Sierra Leone. So-called ‘blood diamonds’ helped fund civil wars in Sierra Leone and Liberia, but now provide much-needed jobs as well as revenue for the government. Credit: Tommy Trenchard/IPS

By Carey L. Biron
WASHINGTON, Mar 24 2014 (IPS)

An unusual combination of industry, government, investors and civil society here is celebrating the United States’ initial acceptance into a prominent global initiative aimed at strengthening transparency and accountability in the extractives industry.

Last week, the Extractives Industry Transparency Initiative (EITI) board accepted the U.S. application to become a candidate country in the grouping. The United States thus became the first Group of Eight (G8) wealthy nation to formally become part of EITI, and joins around 41 other countries that have already done so.“We’re at the end of the era of easy access to resources, where operators have to go further afield and at greater risk." -- Paul Bugala

EITI, based for the past decade in Oslo, promotes a set of global standards for the oil, gas and mining sector that works to reduce corruption and promote good governance. Proponents say the United States’ participation underlines a strengthening global trend towards transparency, particularly in the extractives sector.

“This is just another part of the wave of transparency – recognition that this information is important not only to investors but also to countries in which industry operates and to the communities that share their environment with mines and drilling,” Paul Bugala, a member of the panel that drew up the U.S. EITI application and an analyst at Calvert Investments, a socially responsible firm, told IPS.

“We’re at the end of the era of easy access to resources, where operators have to go further afield and at greater risk. If investors don’t have project-level payment information, we’re flying blind in many ways.”

The EITI process offers equal voice to government, industry and civil society representatives, and the United States’ application was jointly fashioned – and approved – by broad representation from each of these sectors.

“The oil and gas industry has worked with civil society groups and governments for over a decade through EITI to promote payment transparency in various countries,” Stephen Comstock, an official with the American Petroleum Institute (API), a central industry lobby group, told a trade journal last week.

“Expanding this effort to the United States will hopefully provide U.S. citizens with a new perspective of the significant revenue and economic impact generated from U.S. exploration and production.”

Project-level information

At its base, the EITI standard mandates that governments and companies provide regular disclosure of royalties and revenues from natural resource extraction. The idea is that these parallel reports will allow for easy understanding of money local communities may be owed – and where any discrepancies may be coming from.

The U.S. application will go beyond the standard, to include renewable energy sources and additional minerals. In 2013, the U.S. federal government collected some 14 billion dollars from companies involved in natural resource extraction, typically the country’s second largest source of revenue.

Yet critics say domestic accountability mechanisms are too opaque.

“The kind of information that’s available for the public is aggregated, searchable only by year and state and some commodities,” Mia Steinle, the U.S. EITI civil society coordinator and an investigator at the Project on Government Oversight (POGO), a watchdog group here, told IPS.

“Coal mining communities, for instance, can’t really tell whether they’re getting the money due to them by the federal government. If industry wanted to work in a community that had project-level information, however, its members could make a decision based on whether a previous project had been worthwhile or not.”

Empowering the public with such data is, of course, of particular importance in developing countries, where extractives contracts have often been struck between powerful companies and governments that can be oblivious to local benefit. EITI currently lists 26 countries as compliant with its standards, and another 18 countries as candidates.

The initiative is being bolstered by landmark though pending legislation in the United States and the European Union. Due the E.U. moves, Tullow Oil, a British company, on Tuesday became the first drilling company to offer project-level payments reporting in every country in which it’s operating.

“Tullow’s move shows that global oil companies can disclose such information at little cost and without fear of competitive harm,” Ian Gary, a senior policy manager at Oxfam America, an anti-poverty campaigner, said Tuesday. “The disclosures … show that some oil and mining companies are embracing – rather than fighting – the global transparency tide.”

1504 pending

Yet even as the E.U. moves towards implementation of its new transparency requirements, known as the Accounting Directive, by next year, a similar proposal in the United States remains stuck in litigation. The provision, known as Section 1504, became law back in 2010, but its implementation has since been held up by regulators and industry pressure.

Last year, a proposed Section 1504 rule, which would require disclosure of all payments made by U.S.-listed extractives companies to foreign governments, was struck down in the courts. Campaigners are now pointing to the United States’ EITI candidacy as added impetus for the main regulator, the Securities and Exchange Commission (SEC), to speed up its work rewriting the rule.

“The new EITI standard … calls for fully public reporting, by company and by project. This is what the SEC proposed in its 2012 rule,” Jana Morgan, coordinator of Publish What You Pay USA, a pro-transparency group, told IPS.

“The EITI board’s decision puts additional pressure on the SEC to prioritise scheduling a rulemaking for Section 1504. U.S. government support for the Section 1504 rule released in 2012, coupled with its advocacy for U.S. candidacy in the EITI, makes clear that the [Obama] administration views these initiatives as complementary.”

Interestingly, the legal challenge to Section 1504 was spearheaded by the American Petroleum Institute, the group that helped fashion the U.S. EITI application and which has welcomed the country’s new candidature. POGO’s Steinle says that, given the recent court decision, EITI-related project-level reporting for the United States remains unresolved and will be discussed this year.

Nonetheless, she stresses that the EITI discussions between civil society, industry and government representatives were surprisingly fruitful.

“It’s so useful and powerful for those three sectors to be face to face for these types of discussions. We’ve broken down a lot of walls, simply having people get together who would normally never talk to one another,” she says.

“As other countries are committing to EITI or similar initiatives, it’s very important that the United States is now following these good international examples. Hopefully this will help to set an example for those countries that aren’t yet on board.”

The United States will now have three years to bring its reporting into alignment with the EITI standard. U.S. officials say they plan to file their first report in 2015.

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In Accepting Ethiopia, Transparency Group “Sacrifices Credibility” http://www.ipsnews.net/2014/03/accepting-ethiopia-transparency-group-sacrifices-credibility/?utm_source=rss&utm_medium=rss&utm_campaign=accepting-ethiopia-transparency-group-sacrifices-credibility http://www.ipsnews.net/2014/03/accepting-ethiopia-transparency-group-sacrifices-credibility/#comments Thu, 20 Mar 2014 22:43:40 +0000 Carey L. Biron http://www.ipsnews.net/?p=133130 A major international initiative aimed at promoting transparency in the extractives industry is coming under harsh criticism for accepting an application from Ethiopia, despite significant ongoing legal restrictions on the country’s civil society. The Extractive Industries Transparency Initiative (EITI), a standards programme based in Oslo, had declined a previous application for candidature from Ethiopia, in […]

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By Carey L. Biron
WASHINGTON, Mar 20 2014 (IPS)

A major international initiative aimed at promoting transparency in the extractives industry is coming under harsh criticism for accepting an application from Ethiopia, despite significant ongoing legal restrictions on the country’s civil society.

The Extractive Industries Transparency Initiative (EITI), a standards programme based in Oslo, had declined a previous application for candidature from Ethiopia, in 2010. The previous year, the Ethiopian government had passed a law widely seen as repressive, and the EITI board stipulated that the country’s application would be deferred until that law was struck down."The simple fact is that the EITI process won’t be able to advance any improvements unless civil society is at the table and has a voice." -- Lisa Misol

Yet despite the fact that the law remains in place, on Wednesday the EITI board voted to accept Ethiopia’s application to become a candidate for full membership in the organisation. Some say the group has now violated its own rules.

“We’re very disappointed by this. If these people don’t follow the criteria, what’s the point of having criteria?” Obang Metho, executive director of the Solidarity Movement for a New Ethiopia, a Washington-based advocacy group, told IPS.

“Today it is impossible for civil society to function in Ethiopia, because of this bill. We can wait for years for changes, but as long as the current government is there I can’t foresee any tangible change. This decision [by EITI] is not going to be productive.”

The law in question is known as the Charities and Societies Proclamation (CSP). Ethiopia’s first comprehensive legislation to regulate the registration of civil society groups, the law places onerous restrictions on groups that receive more than 10 percent of their funding from foreign sources.

It also forbids organisations from engaging in a range of activities central to ensuring public oversight over the government and its officials. The United Nations has warned that the law has “devastating” ramifications for the ability of Ethiopians to effectively form and operate civil society organisations.

Such concerns are particularly relevant for EITI, which, since its founding in 2003, has offered a unique platform for cooperation between the extractives industry, government and civil society. Importantly, each of these elements is to receive equal voice within the EITI system, with the immediate aim of sector-specific transparency meant to translate into broader strengthening of good governance.

Thus, if the civil society component isn’t able to function effectively, the entire process would cease to function. That, anyway, was EITI’s own concern in 2010, when it rejected Ethiopia’s application – the first time the board had ever taken such an action.

The EITI “board concluded that Ethiopia’s [CSP] would prevent civil society groups from being sufficiently independent and meaningfully participate in the process,” Anthony Richter, a member of the EITI board, stated in 2010. “The board decided, in effect, not to admit Ethiopia ‘until the [CSP] is no longer in place’.”

The EITI board made another high-visibility decision on Wednesday, voting to accept the candidature application of the United States (as well as that of Papua New Guinea). Yet if EITI has gone back on its own rules, critics say, the standard’s important overall potential will have been weakened.

“Before this decision, EITI was a prominent global initiative, considered to be one of the leading efforts to increase transparency and give citizens a chance to have a voice in important matters in their countries,” Lisa Misol, a senior business and human rights researcher at Human Rights Watch (HRW), a watchdog group, told IPS.

“Now I think all governments need to ask themselves what’s the value of being part of an initiative that allows in a country that doesn’t allow its citizens to make any use of this transparency. Unfortunately, EITI has sacrificed its credibility and irreparably harmed its own reputation.”

Neutered criteria

EITI currently lists 26 countries as compliant with its standards, and another 18 countries, including Ethiopia and the United States, as candidates. In total, 35 countries have produced formal EITI reports over the past decade.

Yet the decision to move forward with and approve Ethiopia’s application during this week’s EITI meeting reportedly led to deep divisions in the group’s board. While the EITI secretariat did not respond to a query from IPS, it has been quick to note that acceptance of Ethiopia’s application to become a candidate country means that the Ethiopian government now has three years to come into full compliance with EITI’s standards.

“Some opposed this decision, but it should be remembered that becoming a candidate does not mean that any country has met the EITI Standard,” Clare Short, the EITI chair, said in a statement after the board’s meeting.

“In the case of Ethiopia, the decision shows that the Board was convinced by the government’s commitment to the EITI’s principles. Membership of the EITI will mean that all stakeholders, including civil society, will have a better platform to hold the government and the companies to account and ensure the better management of the burgeoning sector.”

For its part, the Ethiopian government states that it has already set up a national steering committee made up of government, industry and civil society representatives, and has begun a series of trainings on the EITI standards. Its most recent application, from October, also deals directly with concerns over the CSP.

“In our view, the proclamation is not meant to restrict the operation of the civil society,” an introductory letter, presumably written by Minister of Mines Sinknesh Ejigu, states, “rather to create conducive environment for their activities as well as ensure transparency and accountability, establish a legal framework for their operation.”

Yet critics are pushing back strongly against the suggestion that EITI will now have more leverage to effect positive change in Ethiopia.

“The simple fact is that the EITI process won’t be able to advance any improvements unless civil society is at the table and has a voice,” HRW’s Misol says.

“It’s shocking to me that the board of an initiative that values civic participation has just endorsed Ethiopia as a candidate when there is no ability to have a functioning civil society in that country. The moment of leverage was before joining Ethiopia to join the club – not once it’s in. In effect, EITI has now neutered its own civil society criteria.”

Ethiopia will now be required to submit its first formal report to EITI by March 2016.

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Pepsi Pledge Signals Momentum on Land Rights http://www.ipsnews.net/2014/03/pepsi-pledge-signals-momentum-land-rights/?utm_source=rss&utm_medium=rss&utm_campaign=pepsi-pledge-signals-momentum-land-rights http://www.ipsnews.net/2014/03/pepsi-pledge-signals-momentum-land-rights/#comments Tue, 18 Mar 2014 21:09:37 +0000 Carey L. Biron http://www.ipsnews.net/?p=133065 PepsiCo, the world’s second largest food and beverage manufacturer, has agreed to overhaul its longstanding policies around land rights, instituting a series of new safeguards and transparency pledges throughout its global supply chains. Anti-poverty and development advocates are lauding the announcement, made Tuesday at the company’s New York headquarters. Coming on the heels of a […]

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Sugar cane being sold at a market on the edge of Phnom Penh. The global soft drinks market alone is thought to use some 176 million tonnes of sugar each year. Credit: Michelle Tolson/IPS

Sugar cane being sold at a market on the edge of Phnom Penh. The global soft drinks market alone is thought to use some 176 million tonnes of sugar each year. Credit: Michelle Tolson/IPS

By Carey L. Biron
WASHINGTON, Mar 18 2014 (IPS)

PepsiCo, the world’s second largest food and beverage manufacturer, has agreed to overhaul its longstanding policies around land rights, instituting a series of new safeguards and transparency pledges throughout its global supply chains.

Anti-poverty and development advocates are lauding the announcement, made Tuesday at the company’s New York headquarters."These companies are very competitive, and it turns out that a simple index, aimed at encouraging a ‘race to the top’, is an effective tool." -- Chris Jochnick

Coming on the heels of a similar pledge made late last year by Coca-Cola, the move appears to strengthen a new trend in corporate recognition of land rights, while also offering clear recognition of the growing power of consumer demand.

PepsiCo’s new pledge includes a “zero tolerance” policy for agriculture-related “land-grabbing”, or large-scale land acquisitions, among all of its commodity suppliers, only the second such company to do so.

In addition to its namesake sugared soft drink, PepsiCo owns a vast empire of well-known consumer brands, including Gatorade, Tropicana, Quaker and Frito-Lay.

“Agriculture is an integral part of PepsiCo’s supply chain,” Paul Boykas, vice president for public policy at PepsiCo, said Tuesday.

“Regardless of the source of the commodity – whether from suppliers, directly or indirectly, a farm or processor – this land policy defines our intentions and the actions we as a company will take to recognise land rights throughout our supply chain.”

With annual sales of some 65 billion dollars, PepsiCo is the world’s second-largest producer of soft drinks, producing global brands including Mountain Dew, Miranda and others. The global soft drinks market alone is thought to use some 176 million tonnes of sugar each year, while PepsiCo’s commodity usage spans hundreds of ingredients.

In its new land policy, PepsiCo notes that it sources its raw materials from a “wide range” of land tenure set-ups, both formal and informal. As an initial step, the company says it will “comprehensively map”, and then implement a “presumption of transparency” throughout, its supply chains.

It has also pledged to implement free, prior and informed consent (FPIC) principles when either the company or its suppliers are acquiring land, with the aim of ensuring a substantive conversation and negotiating process with local communities.

Further, when the company or its suppliers are operating in a country that does not have “adequate land rights protections”, PepsiCo says it will lobby the national government of that country to put in place and implement specific FPIC principles.

This land in Liberia has been leased by the government to Equatorial Palm Oil for 50 years. PepsiCo’s new pledge includes a “zero tolerance” policy for agriculture-related “land-grabbing”, or large-scale land acquisitions, among all of its commodity suppliers. Credit: Wade C.L. Williams/IPS

This land in Liberia has been leased by the government to Equatorial Palm Oil for 50 years. PepsiCo’s new pledge includes a “zero tolerance” policy for agriculture-related “land-grabbing”, or large-scale land acquisitions, among all of its commodity suppliers. Credit: Wade C.L. Williams/IPS

This unusual step is part of a broader commitment to be public and vocal about its new land policies, an agreement reportedly won through discussions with the anti-poverty group Oxfam International.

“This commitment to be a public advocate – towards others in the industry, towards governments and suppliers – is new terrain, both for campaigners and certainly for the companies themselves,” Chris Jochnick, the director of the private sector department at Oxfam America, told IPS.

“It’s very helpful to have major companies advocating on these issues at both the global and national level, among their industry peers and vis-à-vis the direct suppliers. For local communities and NGOs, it’s also useful to be able to point to these major companies and say that they’re insisting on FPIC standards.”

Race to the top

Both the recent Coca-Cola and now the PepsiCo pledges came about in part due to negotiations with and public pressure organised over the past year by Oxfam, and Jochnick says the new commitments are significant. He particularly points to the zero tolerance for land grabbing as “very ambitious”.

A year ago, Oxfam began a new initiative aimed at highlighting the land policies adopted by 10 of the world’s largest consumer brands, including PepsiCo and Coca-Cola. In November, Oxfam and others filed a shareholder resolution calling on PepsiCo to file an annual report “focused on the issue of land rights along the company’s supply chains”.

“PepsiCo’s sources of sugar include suppliers that have been linked to land grabs, which poses risk to the company and shareholder value,” the resolution stated. “PepsiCo must urgently recognize this problem and take steps to ensure that land rights violations are not part of its supply chain.”

In November, Coca-Cola announced that it would institute a “zero tolerance” policy for land-grabbing. Since then, almost 275,000 people have signed petitions calling on PepsiCo to follow suit.

“We’ve been surprised ourselves with how much pressure consumers have been able to exert, and how sensitive the brands are to that kind of engagement,” Jochnick says.

“These companies are very competitive, and it turns out that a simple index, aimed at encouraging a ‘race to the top’, is an effective tool. These companies would choose to be a leader rather than be perceived as a laggard.”

A year ago, just two of the companies on Oxfam’s list of 10 had even begun talking about land rights. According to an updated scorecard released last month, seven companies are now making specific commitments on the issue (the scores don’t include the new pledges by PepsiCo).

“We feel there’s real momentum around land rights right now,” Jochnick says. “So the next step will be to use that action to push the suppliers – Cargill, Bunge – to focus more broadly on land.”

Weak standards

As part of its new commitments on Tuesday, PepsiCo noted its ongoing participation in at least two multi-stakeholder groupings, aimed at creating voluntary social and environmental standards around the production of palm oil and sugarcane. Global demand for these products is currently surging, constituting the majority of the recent increase in land-grabbing.

Yet activists have increasingly panned these industry-led certification initiatives, including the Roundtable on Sustainable Palm Oil (RSPO) and Bonsucro, which focuses on the global sugar supply. Nonetheless, for the moment PepsiCo says it will continue its participation in both groupings.

“PepsiCo’s new land policy is a positive step. But instead of taking responsibility for eliminating land grabbing from its palm oil supply chain, PepsiCo is relying solely on the inadequate standards of the RSPO,” Gemma Tillack, a senior forest campaigner at the Rainforest Action Network (RAN), a watchdog group, told IPS.

“The RSPO continues to certify companies that destroy rainforests and cause massive climate pollution and human rights violations. To fully address these serious problems, PepsiCo must join other leading consumer companies and adopt a truly responsible palm oil sourcing policy.”

Last week, RAN and other advocacy groups formally opened to applications a new standards initiative, the Palm Oil Innovation Group (POIG), which aims to “build on” the RSPO process. In a joint statement released last week, POIG’s membership said it will “prove that palm oil production does not need to be linked to forest destruction, social conflict or worsen climate change.”

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IMF Urges Redistribution to Tackle Growing Inequality http://www.ipsnews.net/2014/03/imf-urges-redistribution-tackle-growing-inequality/?utm_source=rss&utm_medium=rss&utm_campaign=imf-urges-redistribution-tackle-growing-inequality http://www.ipsnews.net/2014/03/imf-urges-redistribution-tackle-growing-inequality/#comments Thu, 13 Mar 2014 22:14:48 +0000 Carey L. Biron http://www.ipsnews.net/?p=132841 The International Monetary Fund (IMF) is wading strongly into the global debate over the impact of growing income inequality, offering a series of controversial findings that push back on long-held economic orthodoxy – of which the fund itself has long been a key proponent. The IMF, arguably the world’s premiere financial institution, is stating unequivocally […]

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Biomass is the basic source of fuel for many in the southern Mexican state of Chiapas. Credit: Mauricio Ramos/IPS

Biomass is the basic source of fuel for many in the southern Mexican state of Chiapas. Credit: Mauricio Ramos/IPS

By Carey L. Biron
WASHINGTON, Mar 13 2014 (IPS)

The International Monetary Fund (IMF) is wading strongly into the global debate over the impact of growing income inequality, offering a series of controversial findings that push back on long-held economic orthodoxy – of which the fund itself has long been a key proponent.

The IMF, arguably the world’s premiere financial institution, is stating unequivocally that income inequality “tends to reduce the pace and durability” of economic growth. In a paper released Thursday, the fund also suggests that a spectrum of approaches to “progressive” redistribution – national tax and spending policies that are purposefully tilted in favour of the poor – would decrease inequality and hence “is overall pro-growth”.“This is the final judgment on inequality being bad for growth.” -- Nicolas Mombrial

“This is the final judgment on inequality being bad for growth,” Nicolas Mombrial, a spokesperson for Oxfam, a humanitarian group, told IPS in a statement.

“The IMF’s evidence is clear: The solutions to fighting inequality are investing in health care and education, and progressive taxation. Austerity policies do the opposite, they worsen inequality … We hope this signals a long-term change in IMF policy advice to countries – to invest in health and education and more progressive fiscal policies.”

For the past half-century, the Washington-based IMF has operated as the world’s “lender of last resort” for failing economies. In return for offering short-term loans to governments in economic crisis, the fund typically demands the imposition of a range of often stringent austerity measures aimed at solidifying the country’s finances.

After years of frustration over these conditions by anti-poverty campaigners, the IMF has recently engaged in a broad reappraisal of this approach. In November, the fund proposed an overhaul of its debt-restructuring guidance, though formal introduction of this proposal has now been pushed back to June, following pushback.

“Although the main points are not new, the IMF paper is nonetheless significant because the organisation has typically been at the more conservative end in its policy advice – from being seen to restrict measures that would ameliorate the worst impacts of crises on those in deepest poverty, for example, to promoting quite damagingly regressive changes to tax systems in their country advice,” Alex Cobham, a research fellow with the London office of the Center for Global Development (CGD), a think tank based here, told IPS.

“Nonetheless, we should not expect massive or immediate changes in IMF policy. The situation of tax policy demonstrates very well how the organisation can continue to promote in-country the same approaches that their own research has discredited.”

Hot subject

The new advice on income inequality will likely be received sceptically in many corners, though the fund is giving the findings its full backing. While Thursday’s release came in the form of a staff paper, the report was given a high-profile rollout here, including an introduction from the fund’s second-highest official, David Lipton.

“Some may be surprised that the fund is engaging in this debate on the design of redistributive policies … [but] one reason why we are discussing this issue today is it’s becoming a hot subject,” Lipton, the fund’s first deputy managing director, said Thursday at the report’s unveiling.

“The interest in redistribution, as reflected in public surveys and our discussions with our members, shows that interest is higher than in the past. Our members want to explore with us how they can pursue distributive policies in an efficient manner.”

The IMF is quick to note that the new paper, which builds on a research note released last month, constitutes not recommendations but rather advice to its 188-country membership, while country-specific design for any redistributive mechanism remains of paramount importance. Nonetheless, the “efficient” options it is offering to both developing and developed governments consider are striking.

These include placing higher taxes on the rich than on other segments of society, as well as strengthening property taxes, potential for which the fund says is particularly significant in developing countries. It also suggests considering increasing the age at which citizens become eligible for pensions and other state old-age programmes.

Many of these suggestions have long been pushed by development advocates as well as global labour-rights activists.

“We’re pleased that the IMF has finally caught up with what the global union movement has been saying for years – that inequality is the number one threat to the economic recovery,” Philip Jennings, the general secretary of UNI Global Union, said in a statement. “The only way out of this crisis is inclusive, sustainable economic growth with a living wage for all.”

CGD’s Cobham says the paper will give support to policymakers who want to tackle inequality, and could serve as the basis for a broader global agreement on the issue.

“It may in fact mark an important moment in establishing the breadth of the consensus that reducing income inequality should be one of the targets of the post-2015 framework that will succeed the Millennium Development Goals,” he says.

Greatest risk

A half-decade since the start of the global economic crisis, inequality has risen to the top of global agendas.

In January, the World Economic Forum warned that the growing gap between rich and poor, brought about by globalisation, constituted “the most likely risk to cause an impact on a global scale in the next decade”. The previous month, President Barack Obama likewise stated that income inequality is “the defining challenge of our time”.

Much of this new focus is because the global concentration of wealth that has taken place over the past three decades has increased in recent years, and today stands at modern record levels. According to analysis by Credit Suisse, just one percent of the global population owns around half of the world’s wealth.

According to the new IMF paper, this trend is particularly pronounced in the West, especially in the United States. In developing countries, income inequality has been growing in the Middle East and North Africa, though recently it has begun to decrease in sub-Saharan Africa and, particularly, in Latin America.

Despite this recent downward trend, however, Latin America retains one of the highest levels of inequality of any region.

While the fund points to a variety of social spending as a key way to reduce these levels, the IMF’s Lipton warns that such spending needs to be better designed or risk increasing inequality.

“Fiscal policy has played a major role in reducing inequality in the past and is the primary tool available for governments to affect income distribution,” he said Thursday. “Whether these policies help, or hurt growth, is all a matter of design.”

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Mars Latest to Announce “No Deforestation” Palm Oil Pledge http://www.ipsnews.net/2014/03/mars-latest-announce-deforestation-palm-oil-pledge/?utm_source=rss&utm_medium=rss&utm_campaign=mars-latest-announce-deforestation-palm-oil-pledge http://www.ipsnews.net/2014/03/mars-latest-announce-deforestation-palm-oil-pledge/#comments Mon, 10 Mar 2014 23:01:43 +0000 Carey L. Biron http://www.ipsnews.net/?p=132637 The multinational food giant Mars, Inc. unveiled Monday a new set of guidelines aimed at ensuring that its palm oil supply lines are completely traceable and sustainable by next year. Global demand for palm oil has increased substantially in recent years, for use in both foods and household goods. Yet the industry, overwhelmingly centred in […]

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By Carey L. Biron
WASHINGTON, Mar 10 2014 (IPS)

The multinational food giant Mars, Inc. unveiled Monday a new set of guidelines aimed at ensuring that its palm oil supply lines are completely traceable and sustainable by next year.

Global demand for palm oil has increased substantially in recent years, for use in both foods and household goods. Yet the industry, overwhelmingly centred in Malaysia and Indonesia, has been rife with environmental and labour problems."This isn’t an activist-led commitment. They’re doing it because they want to do it." -- Bastien Sachet

Recent months, however, have seen a cascade of major reform commitments from both palm oil suppliers and well-known consumer brands such as Mars.

“Rapid expansion of palm oil plantations continues to threaten environmentally sensitive areas of tropical rainforest and carbon-rich peatlands, as well as the rights of communities that depend on them for their livelihoods,” Barry Parkin, chief sustainability officer at Mars, best known as the maker of M&Ms and other candies, said Monday.

“We believe that these additional measures will not only help build a genuinely sustainable pipeline for Mars, but will also help accelerate change across the industry by encouraging our suppliers to only source from companies whose plantations and farms are responsibly run.”

Under the new guidelines, Mars will require that all of its suppliers have in place sourcing plans that are both fully sustainable and fully traceable by the end of this year, to be implemented by the end of 2015. The company, headquartered just outside of Washington, is also instituting a “no deforestation” pledge for its palm oil supply as well as its sourcing of paper pulp, soy and beef.

“Four years ago, Nestle decided to go for full traceability and no deforestation, but at the time that decision was seen as very niche because it was being pushed by environmental activists,” Bastien Sachet, director of the Forest Trust, a global watchdog group that focuses on responsible products and whose newest member is Mars, told IPS.

“The great thing about Mars, particularly in their push against deforestation across commodities, is that this isn’t an activist-led commitment. They’re doing it because they want to do it, which means that they see what’s happening.”

Workers on Bugala Island work to clear the rainforest to make way for an expanding palm tree plantation. Palm oil production is one of Uganda's rising industries. Credit: Will Boase/IPS

Workers on Bugala Island work to clear the rainforest to make way for an expanding palm tree plantation. Palm oil production is one of Uganda’s rising industries. Credit: Will Boase/IPS

In this, Sachet refers to a growing trend from both palm oil supply companies and major consumer brands to recognise that previous industry certification efforts to clean up palm oil supply lines have been relatively ineffective. Ensuring the traceability of palm oil, on the other hand, turns this certification model upside-down.

“Over the last four years, the general public, industry and the brands have struggled to make progress on sustainability with the tool of certification. Meanwhile, we saw forests being trashed in Malaysia and Indonesia, a process that’s also beginning in Africa,” Sachet says.

“But now they’re realising that certification is not the only way to go. Instead, we can get traceability first, figure out where it’s coming from and then figure out what’s happening around its production. Eventually we can incentivise those guys who are doing well with more market share – and penalise those that aren’t.”

While much of the industry is currently based in Southeast Asia, many observers point to looming problems in Africa, where land is starting to be snapped up by speculators. Yet Sachet says the new policies being put in place by the global food industry could be laying the grounds for finding a balance between development and conservation throughout the palm oil industry.

Half the supply

A voluntary certification process for responsible palm oil production, known as the Roundtable on Sustainable Palm Oil (RSPO), has been in effect for a decade, and most of the major users of palm products do abide by its guidelines. Yet it’s become increasingly clear that RSPO certification has been unable to halt the industry’s mass deforestation and destruction of endangered habitat.

Mars’s Parkin notes that his company “recognised that even though we have already implemented a 100% certified supply of palm oil, this is not enough.”

Other major brands have made similar realisations in recent months, including Unilever, Hershey, Kellogg and L’Oreal. Perhaps more critically, this trend has now included some of the largest global palm oil suppliers, including Wilmar (in December) and Golden Agri Resources (GAR, just last week).

Wilmar alone accounts for more than 40 percent of the global palm oil supply. Altogether, companies controlling a bit more than half of that supply have now committed to having their products be deforestation free by 2015.

As recently as the middle of last year, that figure was zero.

“There has been progress and I definitely think we’re on the right track, though there’s still a long way to go,” Calen May-Tobin, lead analyst for the TropicalForest and Climate Initiative at the Union of Concerned Scientists (USC), a watchdog group here, told IPS.

“It’s also important to remember that these are still just public commitments. The action happens when these commitments get turned into policies and are actually implemented.

Last week, UCS released a scorecard that rated palm oil-related sustainability progress by the packaged food, fast food and personal care industries. May-Tobin, who was a co-author on the new report, notes that much of the new public pressure has been aimed at the packaged-food companies.

“On the one hand, it’s clear that when consumers speak up, these companies listen. On the other hand, I think the report’s major finding was how poorly the fast-food sector did,” May-Tobin says.

“Further, there are still a number of other large traders that now need to follow Wilmar and GAR’s example. We think the consumer companies are equally key in helping drive the traders, as the average consumer doesn’t necessarily know who Bungee or Cargill is, but they know Hershey and Mars.”

Advocacy groups are using the recent momentum to urge holdout companies to unveil their own commitments. Greenpeace, the group widely credited with pushing Nestle to make its landmark pledges in 2010, is currently focusing on the U.S. consumer-goods giant Procter & Gamble (P&G).

“Mars joins a growing list of companies … that are finally promising forest-friendly products to their consumers. It shows that global public pressure is working, and is leaving P&G, which refuses to clean up their supply chains, increasingly isolated,” Areeba Hamid, forest campaigner at Greenpeace International, said Monday.

“P&G is relying on a certification scheme that has failed to prevent rainforest destruction in the habitat of endangered orangutans, or help reduce man-made fires like the ones that covered Singapore in smog last summer. It’s time P&G finally becomes proud sponsors of rainforests and commits to No Deforestation.”

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U.S. Plans to Speed Poultry Slaughtering, Cut Inspections http://www.ipsnews.net/2014/03/u-s-planning-speed-poultry-slaughtering-cut-inspections/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-planning-speed-poultry-slaughtering-cut-inspections http://www.ipsnews.net/2014/03/u-s-planning-speed-poultry-slaughtering-cut-inspections/#comments Fri, 07 Mar 2014 00:42:12 +0000 Carey L. Biron http://www.ipsnews.net/?p=132537 The U.S. government is in the final stages of weighing approval for an overhaul of regulations governing the country’s poultry industry that would see processing speeds increase substantially even while responsibility for oversight would be largely given over to plant employees. The plan, which was originally floated by the U.S. Department of Agriculture (USDA) two […]

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By Carey L. Biron
WASHINGTON, Mar 7 2014 (IPS)

The U.S. government is in the final stages of weighing approval for an overhaul of regulations governing the country’s poultry industry that would see processing speeds increase substantially even while responsibility for oversight would be largely given over to plant employees.

“Workers are repeating the exact same motion between 22,000 and 100,000 times per shift, and can develop some permanent disabilities from these repetitive motions. One study out of South Carolina found that 42 percent of workers had carpal tunnel syndrome – that’s astronomically high, and far higher than the industry ever likes to quote.” U.S. Department of Agriculture (USDA), Food Safety Inspection Service (FSIS) inspector at a poultry processing facility in Accomac, Virginia checking for cleanliness and testing poultry for the Avian Influenza (AI) virus. Credit: USDA/public domain

U.S. Department of Agriculture (USDA), Food Safety Inspection Service (FSIS) inspector at a poultry processing facility in Accomac, Virginia checking for cleanliness and testing poultry for the Avian Influenza (AI) virus. Credit: USDA/public domain

The plan, which was originally floated by the U.S. Department of Agriculture (USDA) two years ago, is currently slated to be finalised by regulators next month. Yet opposition has been heating up from lawmakers as well as labour, public health and consumer advocacy groups.

On Thursday, over 100 such groups and businesses delivered a letter, along with nearly 220,000 petitions, to President Barack Obama, asking that the proposal be withdrawn.

“The proposed rule puts company employees in the role of protecting consumer safety, but does not require them to receive any training before performing duties normally performed by government inspectors,” the letter states.

“And lack of training is not the only impact this rule will have on workers. Increased [production] speeds will put worker safety in jeopardy … This proposed rule would let the fox guard the hen house, at the expense of worker safety and consumer protection.”

The proposed rule would see top chicken-processing speeds increased from the current 140 per minute to as high as 175. The rule would also decrease the number of federal inspectors assigned to processing plants by 75 percent, leaving the slack to be picked up by company employees.

The poultry industry has reportedly been pushing for these changes for decades. In return, the government would require that processors bathe each chicken carcass in chlorine and other chemicals, aimed at killing any pathogens that remain on the bird.

Last week, Bennie G. Thompson, a member of Congress, warned that the USDA is “unnecessarily endangering the lives of millions of Americans”.

Weak data

Federal pilot projects have been testing the new approach since the late 1990s. Yet critics warn that the results have been far less clear-cut than either the government or the industry has suggested.

“We did a snapshot analysis of how many defects employees were missing at these pilot plants, and found there was no consistency,” Tony Corbo, a senior lobbyist Food & Water Watch, an advocacy group, told IPS.

“In one turkey plant, for instance, there was a 99 percent error rate for one inspection category. We became concerned that the USDA was moving forward too fast with this change.”

The federal government’s official watchdog agency has formally corroborated this conclusion.“The industry says there’s no safety problem, but they’re in denial." -- Tom Fritzsche

The USDA “has not thoroughly evaluated the performance of each of the pilot projects over time,” the Government Accountability Office (GAO) warned in a report published in August, the second time it had come out with such findings.

“GAO identified weaknesses including that training of plant personnel assuming sorting responsibilities on the slaughter line is not required or standardized and that faster line speeds allowed under the pilot projects raise concerns about food safety and worker safety.”

In response to the report, the poultry industry noted that the USDA had already updated its analyses in support of the new rule, and that the sector’s safety record is not linked to processing speeds.

“Over the past 14 years of this pilot program there has been no evidence to substantiate the assertion that increased line speeds will increase injuries,” Ashley Peterson, a vice-president with the National Chicken Council (NCC), a trade group, said in a statement.

“It is not in a poultry company’s best interests to operate at speeds that would harm its workers, and common sense tells you it is not in a company’s best interest to operate at speeds that cannot produce safe and high quality poultry products.”

(The NCC has published responses to criticisms of the proposed regulatory changes here.)

For the moment, the Obama administration appears set on pushing through the new rule, characterising it as a cost-cutting measure.

Under the president’s new budget proposal, released earlier this week, the USDA’s inspections funding would be cut by nearly 10 million dollars, despite the fact that no rule has yet been finalised. Earlier, the federal savings have been estimated even higher – some 90 million dollars over three years.

“The 2015 budget recognises fiscal realities,” Agriculture Secretary Tom Vilsack said Tuesday. “Our leaner workforce continues to find ways to implement increasingly complex programs with fewer resources.”

For major poultry companies, meanwhile, speeding up processing speeds would save more than 250 million dollars a year.

“Most vulnerable” workers

Beyond public health, there are significant civil rights concerns surrounding the new poultry regulations proposal, as well. Last week, a national coalition of groups representing minority and poor workers briefed lawmakers here on concerns that the new rules would exacerbate existing labour problems.

“This proposal has us very concerned, as there are already pending requests with the regulators to require a reduction in these work speeds,” Tom Fritzsche, a staff attorney with the Southern Poverty Law Center, a watchdog group, told IPS.

“The health consequences for workers are already very severe, and the concern is that those injury rates are going to go way up. We’re joining other groups in asking whether the same hazards would be so prevalent if the poultry workforce were not made up mostly of women of colour.”

Last year, Fritzsche authored a study on poultry workers in the state of Alabama, three-fourths of whom said they had experienced injury or illness due to their work. Three-quarters also said that the speed of the processing line made their job more dangerous, in addition to broader allegations of egregious safeguards.

Workers “describe what one called a climate of fear within these plants,” the report states. “[E]mployees are fired for work-related injuries or even for seeking medical treatment from someone other than the company nurse or doctor … they describe being discouraged from reporting work-related injuries.”

The report calls poultry workers “among the most vulnerable” in the United States.

“The industry says there’s no safety problem, but they’re in denial. There is a huge and well-documented undercounting in employer-reported data,” Fritzsche says.

“Workers are repeating the exact same motion between 22,000 and 100,000 times per shift, and can develop some permanent disabilities from these repetitive motions. One study out of South Carolina found that 42 percent of workers had carpal tunnel syndrome – that’s astronomically high, and far higher than the industry ever likes to quote.”

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U.S. Farmers Report Widespread GM Crop Contamination http://www.ipsnews.net/2014/03/farmers-address-u-s-data-gap-gm-crop-contamination/?utm_source=rss&utm_medium=rss&utm_campaign=farmers-address-u-s-data-gap-gm-crop-contamination http://www.ipsnews.net/2014/03/farmers-address-u-s-data-gap-gm-crop-contamination/#comments Mon, 03 Mar 2014 22:50:46 +0000 Carey L. Biron http://www.ipsnews.net/?p=132399 A third of U.S. organic farmers have experienced problems in their fields due to the nearby use of genetically modified crops, and over half of those growers have had loads of grain rejected because of unwitting GMO contamination. Of U.S. farmers that took part in a new survey, the results of which were released on […]

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The past year has seen multiple state-level legislative attempts to label or ban GM products. Credit: Bigstock

The past year has seen multiple state-level legislative attempts to label or ban GM products. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Mar 3 2014 (IPS)

A third of U.S. organic farmers have experienced problems in their fields due to the nearby use of genetically modified crops, and over half of those growers have had loads of grain rejected because of unwitting GMO contamination.

Of U.S. farmers that took part in a new survey, the results of which were released on Monday, more than 80 percent reported being concerned over the impact of genetically modified (GM) crops on their farms, with some 60 percent saying they’re “very concerned”."USDA has been extremely lax and, in our opinion, that’s due to the excessive influence of the biotech industry in political circles.” -- Organic farmer Oren Holle

The findings come as the U.S. Department of Agriculture (USDA) has taken the unusual step of extending the public comment period for a controversial study on how GM and non-GM crops can “coexist”. During a major review in 2011-12, the USDA Advisory Committee on Biotechnology and 21st Century Agriculture (AC21) concluded that it lacked sufficient data to decide on the extent to which GM contamination was happening in the United States, or to estimate the related costs incurred by organic and other non-GM farmers.

The AC21 recommendations came out in November 2012 and were criticised for being weighted in favour of industry. Critics have subsequently seized on the USDA’s decision to revisit those conclusions, and the new study, produced by an association of organic farmers and Food & Water Watch, a Washington advocacy group, aims to fill the committee’s professed gaps.

“The USDA said they didn’t have this data, but all they had to do was ask,” Oren Holle, a farmer in the midwestern state of Kansas and president of the Organic Farmers’ Agency for Relationship Marketing (OFARM), which assisted in the new study’s production, told IPS.

“Our very strong feeling is that the introduction and propagation of the genetically modified products that are coming out under patent at this point have not had the regulatory oversight that they should have, and need to involve a far broader section of stakeholders. USDA has been extremely lax and, in our opinion, that’s due to the excessive influence of the biotech industry in political circles.”

Misplaced responsibility

While GM crop use has expanded exponentially across the globe over the past two decades, nowhere has this growth been more significant than in the United States. While just one percent of corn and seven percent of soybeans grown in the U.S. came from GM seeds during the mid-1990s, by last year both of those numbers had risen to above 90 percent.

In the new study, nearly half of the farmers polled said they did not believe that GM and non-GM crops could ever “coexist”, while more than two-thirds said that “good stewardship” is insufficient to address contamination.

“The USDA’s focus on coexistence and crop insurance is misplaced,” Wenonah Hauter, executive director of Food & Water Watch, said Monday, referring to an AC21 recommendation that GM contamination problems be dealt with through a federal insurance scheme set up to lessen the impact of natural disasters.

“The department must recognise the harm that is already being done to organic and non-GMO farmers and put the responsibility squarely where it belongs – with the biotech companies … Now USDA can no longer claim ignorance about this problem.”

Even as contamination reports continue to grow, the U.S. government’s most recent response, drawn from the AC21 recommendations, has been to encourage “good stewardship” practices and communication between neighbouring farmers. Yet non-GM farmers say that, in practice, this has meant substantial outlays of both time and money in order to safeguard their crops – and virtually no corresponding responsibility on the part of farmers using genetically modified crops.

Beyond regular testing and certification requirements, U.S. farmers are required to set aside a substantial buffer zone around their fields to guard against GM contamination. Averaging around five acres, this buffer zone alone costs farmers anywhere from 2,500 to 20,000 dollars a year in lost income, according to the new survey.

Other farmers resort to waiting to plant their crops until after their neighbours’ GM crops have pollinated. Yet this delay, too, imposes a financial burden of several thousand dollars per year.

“I’m getting tired of maintaining these miles of buffers,” one farmer wrote in response to the new survey, complaining about the heavy use of herbicides typically associated with GM crops. “How about the guy that sprays up to the fence be liable for the damage that is done?”

Old playbook

OFARM’s Holle says the findings on just how much farmers are paying to avoid GM contamination took him by surprise. Of this imbalance, he says U.S. regulators are continuing to play out of an “old playbook”.

“There’s been a lot of new technology introduced in agriculture over the past 50 years. But there’s always been a point of law that, whatever happens on my side of the fence, I’m still responsible for how it might affect my neighbour,” Holle notes.

“GMOs take away that neighbour-to-neighbour relationship, however, as the ways in which unintended presence occurs is a completely different set of concerns from other new technologies. For that reason, they need a completely different set of rules.”

While Holle says the USDA has been slow in recognising this new reality, he’s guardedly optimistic that a regulatory rethink is now taking place.

“This additional comment period, I think, points out that they were paying some attention to the initial comments that came in,” he says.

“It does appear that they’re taking a step back. It’s our hope that our efforts have at least gained some traction in recognition that all is not well and that they, perhaps, need to do some re-evaluation.”

Against what he says is an onslaught of lobbying by the biotech industry, Holle says the voice of non-GM farmers has strengthened largely through newfound consumer demand. The past year alone has seen multiple state-level legislative attempts to label or ban GM products, while stores have acted unilaterally.

On Monday, the United States’ two largest grocery chains indicated that they would not sell genetically modified salmon, a product currently being weighed by regulators here. Some 9,000 stores countrywide have reportedly made similar pledges.

“At least 35 other species of genetically engineered fish are currently under development,” Friends of the Earth, an advocacy group, stated Monday. The “decision on this genetically engineered salmon application will set a precedent for other genetically engineered fish and animals … to enter the global food market.”

According to a 2013 poll, 93 percent of U.S. respondents want GE ingredients or products to be labelled, despite strident pushback by industry.

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Global Study Finds “Impressive” Wave of Climate Legislation http://www.ipsnews.net/2014/02/global-study-finds-impressive-wave-climate-legislation/?utm_source=rss&utm_medium=rss&utm_campaign=global-study-finds-impressive-wave-climate-legislation http://www.ipsnews.net/2014/02/global-study-finds-impressive-wave-climate-legislation/#comments Thu, 27 Feb 2014 22:28:37 +0000 Carey L. Biron http://www.ipsnews.net/?p=132230 National governments across the globe have taken surprisingly robust action to reduce greenhouse gas emissions, putting in place policies that researchers say collectively offer a strong foundation for ongoing international climate negotiations. Developing countries, particularly China and Mexico, led much of this progress over the past year, according to the first comprehensive review of country-by-country […]

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Climate change effects, such as extreme weather events, drive up environmental remediation costs. Credit: Jorge Luis Baños/IPS

Climate change effects, such as extreme weather events, drive up environmental remediation costs. Credit: Jorge Luis Baños/IPS

By Carey L. Biron
WASHINGTON, Feb 27 2014 (IPS)

National governments across the globe have taken surprisingly robust action to reduce greenhouse gas emissions, putting in place policies that researchers say collectively offer a strong foundation for ongoing international climate negotiations.

Developing countries, particularly China and Mexico, led much of this progress over the past year, according to the first comprehensive review of country-by-country climate-related legislation, released at the U.S. Senate on Thursday. Overall the report finds that 66 countries, accounting for almost 90 percent of global emissions, have nearly 500 national climate laws on their books."This report confirms what many have suspected: that international climate negotiations are the realm of the lowest common denominator." -- Daphne Wysham

The findings “inject positive momentum to the U.N. climate change negotiations. The study shows that countries across the world – from Africa to the Americas and from Asia to Europe – are legislating to tackle climate change and strengthen resilience to its impacts,” Terry Townshend, a co-author of the new report and deputy secretary-general for policy development with the Global Legislators Organisation (GLOBE), told IPS.

“This legislative activity is putting in place the national mechanisms and institutional structures to measure, report and manage greenhouse gas emissions, which is a fundamental pre-requisite to an effective international agreement.”

Townshend calls the findings “impressive”. But he hastens to note that the laws that have been passed are not enough to meet the overarching goal agreed upon by the international community: to keep the rise in global average temperature to within two degrees Celsius above pre-industrial levels.

“So much more needs to be done, and governments and international institutions must prioritise the support of national legislation between now and 2015,” Townshend says. “No international agreement would be effective, or credible, without commensurate legislation at the national level.”

Arzu Begum testifies at the climate hearings for women in the deltaic village of Char Nongolia in Bangladesh. Credit: Naimul Haq/IPS

Arzu Begum testifies at the climate hearings for women in the deltaic village of Char Nongolia in Bangladesh. Credit: Naimul Haq/IPS

The 700-page report was jointly produced by GLOBE International, the world’s largest organisation of sitting legislators, and the Grantham Research Institute at the London School of Economics (LSE). Although the study is the fourth in a series, the new edition covers far more ground, having doubled the number of countries studied in the previous version.

Of the 66 countries reviewed, 64 have put in place “significant” legislation climate or energy legislation, or are in the process of doing so. In addition, 61 have laws to promote clean energy sources within their borders, while 54 have mandated strengthened efficiency standards.

“More countries than ever before are passing credible and significant national climate change laws,” John Gummer, GLOBE’s president, said Thursday at the U.S. Senate.

“This is changing the dynamics of the international response to climate change and poses a serious question to the international community about how we can recognise credible commitments made by governments within their national legislature. It is by implementing national legislation and regulations that the political conditions for a global agreement in 2015 will be created.”

2013’s transition

Final negotiations for a new international agreement on collective action on climate change are currently slated to take place in Paris in 2015, to come into effect after 2020.

Floods devastated the Mauritian capital, Port-Louis, but locals can expect the island to be affected by more floods, landslides and cyclones in the coming years because of climate change. Credit: Nasseem Ackbarally/IPS

Floods devastated the Mauritian capital, Port-Louis, but locals can expect the island to be affected by more floods, landslides and cyclones in the coming years because of climate change. Credit: Nasseem Ackbarally/IPS

Against this backdrop, the GLOBE and LSE researchers dub the past year a “period of transition” in international diplomacy on the issue. During that time, substantive legislative progress was seen in 8 of the 66 countries and additional “positive advances” in another 19.

The researchers highlight President Barack Obama’s unveiling of a national climate plan for the United States, as well as his strengthened attempts to tackle the issue through regulation rather than legislation. They also note that the European Union, having slowly begun to stabilise in the aftermath of the 2008 economic downturn, has been increasingly able to turn its focus to climate-related policy steps.

Australia and Japan, meanwhile, are called out as exceptions, having been two of the few countries to have backtracked on climate action over the past year (Canada and others are also reprimanded for as yet having no “flagship” climate legislation). Australia’s new government has pledged to repeal a landmark clean energy law, while Japan, in the aftermath of the 2011 nuclear disaster, has revised its emissions targets downwards.

Yet the other end of this transition is marked by a flurry of action by developing countries.

“[T]he momentum in climate change legislation [is] shifting from industrialised countries to developing countries and emerging markets,” the report states.

“This has gone hand in hand with a rise in legislation covering adaptation. The stock of climate laws in developing countries is still lower than in industrialised nations, but many have started to close the gap by passing sophisticated new legislation.”

Sub-Saharan Africa and Latin America have seen particularly movement in this regard.

Over the past year alone, nearly all countries in sub-Saharan Africa saw some sort of progress, particularly the passage of national climate strategies that set the grounds for future legislation. This process is even further along in many countries in Latin America, led by Mexico, Bolivia and Costa Rica.

“This report confirms what many have suspected: that international climate negotiations are the realm of the lowest common denominator, where powerful countries compete to lower, not raise, the bar for climate action,” Daphne Wysham, a fellow at the Institute for Policy Studies, a Washington think tank, told IPS.

“The impetus for aggressive climate action is strong at the national level, and even stronger at the subnational – or state – level. This suggests that the principle of subsidiarity” – whereby action should be taken at the lowest level – “ought to apply to this urgent problem, and, in some ways, that international climate negotiations may have outlived their usefulness.”

Domestic advantages

Building on this national-level focus, GLOBE, the United Nations and the World Bank on Thursday announced a new initiative that will work with legislators in each of the 66 countries covered by the new study. The Partnership for Climate Legislation will help policymakers create and implement climate legislation, while also examining federal budgets and social policies to offer assessments of their climate impact.

“During this critical year of 2014, nations have determined that they will assess the contributions they will make to a new universal climate agreement slated for 2015,” Christiana Figueres, the executive secretary of the United Nations Framework Convention on Climate Change, told 115 senior policymakers from 50 countries here for a two-day summit.

“…None of these countries are doing this to ‘save the planet’. They are doing it because they see specific social and economic advantages from these policies. And, each of these countries strengthens their position in climate talks with concrete targets and demonstrated openness to policy solutions.”

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G20 Urges U.S. Action on IMF Reforms by April http://www.ipsnews.net/2014/02/g20-urges-u-s-action-imf-reforms-april/?utm_source=rss&utm_medium=rss&utm_campaign=g20-urges-u-s-action-imf-reforms-april http://www.ipsnews.net/2014/02/g20-urges-u-s-action-imf-reforms-april/#comments Tue, 25 Feb 2014 00:58:50 +0000 Carey L. Biron http://www.ipsnews.net/?p=132005 The Group of 20 (G20) industrialised and emerging economies on Sunday formally expressed frustration with the ongoing inability of the United States to approve a major reform package that would see governance at the International Monetary Fund (IMF) shift more towards developing countries. The reforms were approved by the IMF in 2010 and have since […]

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By Carey L. Biron
WASHINGTON, Feb 25 2014 (IPS)

The Group of 20 (G20) industrialised and emerging economies on Sunday formally expressed frustration with the ongoing inability of the United States to approve a major reform package that would see governance at the International Monetary Fund (IMF) shift more towards developing countries.

The reforms were approved by the IMF in 2010 and have since been ratified by more than three-quarters of the fund’s member governments. Yet while the administration of President Barack Obama has been a key proponent of the reforms, the U.S. Congress has thus far been unwilling to approve the changes."The BRICS are wondering why they put up their money when nothing is happening." -- Jo Marie Griesgraber

Because the United States, with around 17 percent of voting rights (or “quota” shares) has an effective veto within the IMF, the reforms cannot go forward without the U.S. vote. The process has now missed a January deadline, while a second deadline for a subsequent round of changes is looming.

“Given that the U.S. is a big part of the G20, it is no small victory that emerging market and developing countries were able to get IMF reform so formally prioritised,” Kevin P. Gallagher, co-director of the Global Economic Governance Initiative at Boston University, told IPS. “Such pressure is basically the US administration and the rest of the world against the U.S. Congress.”

On Sunday, the G20, which has been a key organiser of the international financial response in recent years, strongly criticised the deadlocked reforms process. It also offered a new deadline for U.S. action.

“We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective,” the G20 stated in a communiqué on Sunday, following a ministerial meeting in Australia, which is hosting the grouping this year.

IMF chief Christine Lagarde. The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. Credit: World Economic Forum/cc by 2.0

IMF chief Christine Lagarde. The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. Credit: World Economic Forum/cc by 2.0

“Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April. In April, we will take stock of progress towards meeting this priority.”

IMF Managing Director Christine Lagarde echoed this concern, saying Sunday that the fund “share[s] this view and urge[s] rapid progress on implementation.” The Washington-based institution is considered the world’s “lender of last resort”.

The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. It would do so largely by decreasing the cumulative share of European members, considered outsized in terms of gross domestic product.

The Netherlands and Spain, for instance, both have voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of the Brazilian. Given the problems in the eurozone, the European countries have also been prime beneficiaries of IMF support in recent years.

Under the quota reforms, the so-called BRICS countries – middle-income countries including Brazil, India and China – would see their vote shares expand the most significantly. The 2010 reforms would shift around nine percent of these shares towards developing countries, while also doubling the size of the fund’s overall lending capacity.

“The Europeans love it – they’re gloating. They have excessive power, are significantly overrepresented, and they love that [the United States] is not moving the reforms process forward,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“On the other hand, the BRICS are wondering why they put up their money when nothing is happening. They’re most unhappy. In the long term, the BRICS countries could say this doesn’t work for them and move more seriously away from the IMF.”

On Sunday, a top Indian finance official warned that the failure to move forward on quota reform was threatening to undermine both IMF and G20 legitimacy.

“This is perhaps the first visible failure of G20. This has reduced the credibility of G20,” India’s economic affairs secretary, Arvind Mayaram, said in Sydney, calling implementation of the 2010 reforms “vital for the credibility, legitimacy and effectiveness of the IMF”.

Alternative institutions

Although an esoteric topic, the IMF governance reforms have received widespread approval from important constituencies in the United States, including major business and financial lobby groups as well as a long list of Republican luminaries.

In fact, President Obama bears some blame for the current situation, having decided in 2012 for political reasons not to request approval from the U.S. Congress. Yet since then, his administration has tried to do so repeatedly.

Each time, however, the Republican-controlled House of Representatives has rebuffed these requests, though apparently less for ideological than for political reasons. The last such attempt took place last month, when Republicans agreed to include the IMF reforms proposal in a major appropriations bill – but only if the Democrats would agree to stop the U.S. Treasury from imposing proposed restrictions on political “dark money”.

President Obama reportedly refused the trade, and there are few legislative options left for moving related legislation through Congress in coming months, particularly as national elections loom at the end of the year. (On Sunday, U.S. Treasury Secretary Jacob Lew told the G20 his office “will continue to work with Congress to pass legislation as soon as possible to secure the 2010 reforms, which are vital to our economic and national security interests.”)

Some observers say that such a situation should only strengthen an ongoing process under which developing countries are building multilateral structures outside the IMF.

“Upcoming Congressional elections may lead to further entrenchment by the U.S. on this issue. Thus it is imperative that the developing world continue to build alternative institutions such as the BRICS bank and the BRICS exchange reserve pool,” BostonUniversity’s Gallagher says.

“Just as important is for these bodies to have more equitable and transparent processes, so they can be held up as models against the arcane structures in the international financial institutions.”

The BRICS countries announced their intention to create a new multilateral development bank last year. Yet since then, progress has reportedly been slow, particularly as ongoing economic roiling is being felt particularly strongly in emerging economies.

“There is good talk about these projects, but most countries remain very reluctant to walk away from the [IMF]. Nonetheless, we are already seeing a gradual erosion in the use of the institution,” New Rules’s Griesgraber says.

“From our perspective, we need to get through this current reform process so we can move on to the larger governance issues that need to be addressed at the fund. Let’s equalise the power, introduce greater transparency around the board, and ensure that likely consequences for poor people are assessed before the IMF acts.”

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U.S. Backing First Nuclear Reactors in 30 Years http://www.ipsnews.net/2014/02/u-s-backing-first-nuclear-reactors-30-years/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-backing-first-nuclear-reactors-30-years http://www.ipsnews.net/2014/02/u-s-backing-first-nuclear-reactors-30-years/#comments Thu, 20 Feb 2014 22:06:38 +0000 Carey L. Biron http://www.ipsnews.net/?p=131858 The U.S. government has announced that it will be offering substantial loan guarantees for two new nuclear reactors, giving a major boost to what would be the first such projects to go forward in the United States in more than three decades. The move was immediately hailed by the nuclear industry, which has faced mounting […]

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Nuclear energy accounts for about a fifth of U.S. electricity, although the last construction cycle for U.S. nuclear power plants ended abruptly in 1979. Credit: Bigstock

Nuclear energy accounts for about a fifth of U.S. electricity, although the last construction cycle for U.S. nuclear power plants ended abruptly in 1979. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Feb 20 2014 (IPS)

The U.S. government has announced that it will be offering substantial loan guarantees for two new nuclear reactors, giving a major boost to what would be the first such projects to go forward in the United States in more than three decades.

The move was immediately hailed by the nuclear industry, which has faced mounting concerns in recent years over the economic feasibility of nuclear power in today’s energy landscape. Yet public interest groups and environmentalists offered quick criticism, warning that U.S. regulators have failed to learn lessons from recent nuclear disasters and that the projects are too risky for taxpayer funding."This is a technology that continues to be beset with safety issues and produces toxic wastes that we still don’t have a solution for." -- Allison Fisher

Ahead of a Thursday trip to the southeastern state of Georgia, where the two plants are to be built, Energy Secretary Ernest Moniz noted that the loan guarantees, worth 6.5 billion dollars, are specifically meant to rejuvenate the U.S. nuclear industry.

“The construction of new nuclear power facilities like this one … is not only a major milestone in the [Obama] administration’s commitment to jumpstart the U.S. nuclear power industry,” Moniz told reporters here, “it is also an important part of our all-of-the-above approach to American energy as we move toward a low-carbon energy future.”

The administration provisionally approved the loans four years ago, and these were expected to be finalised in 2012 (a loan for a third project remains under negotiation). Around that time, however, the high-profile and politically contentious failure of a solar energy start-up company, another recipient of federal government backing, failed, causing officials to pull back temporarily.

Private capital, meanwhile, remained largely uninterested in funding the projects, in part due to the ongoing recovery from the 2008 recession and in part due to continued reverberations from the 2011 nuclear disaster in Fukushima, Japan. Indeed, the Energy Department is now touting a new reactor design to be used for the two projects, which in part is distinguished by having an automatic shutoff system in case of emergency.

Yet green groups say significant safety concerns remain.

“We have particular concerns about this current design – we were part of a challenge to that design after the Fukushima disaster, and the United States hasn’t yet incorporated lessons learned from that experience,” Katherine Fuchs, a nuclear subsidies campaigner at Friends of the Earth US (FOE), an advocacy group here, told IPS.

“Just last week we had an earthquake in Georgia and [nearby] South Carolina, underlining continued risks that we need to make sure are taken into account. It’s significant that these are the first two plants being built in decades – there are lots of good reasons for this, particularly economics and safety concerns.”

chart-of-nuclear-power-generation640Prohibitive expense

Although nuclear energy continues to produce about a fifth of U.S. electricity, the last construction cycle for U.S. nuclear power plants ended abruptly in 1979.

In March of that year, a nuclear reactor in Pennsylvania partially melted down, the result of a confluence of poor design, technical malfunction and user error. Although the resulting release of radioactive material was never officially held responsible for any public health problems, the incident led to broad changes in regulation and oversight of nuclear power plants.

While U.S. nuclear plants have come online since then – the most recent was in the mid-1990s, for a project that began during the 1970s – the focus of both federal authorities and the private sector has largely moved on. Particularly in the context of new “fracking” technologies that allow engineers to access previously hard-to-reach natural gas deposits, the heavy capital investment required to build a new nuclear reactor – estimated by some at around nine billion dollars – has increasingly come to be seen as prohibitive.

Over the past year alone, four nuclear power plants have closed down in the United States over financial feasibility concerns, and FOE’s Fuchs points to several plans for new plants that have been shelved. Meanwhile, Wall Street investors have reportedly refused to get involved in the Georgia projects, making the federal government’s backing all the more critical if these proposals were to go forward.

Such a situation leads many critics to suggest that any nuclear project today would be too risky for the use of federal funds.

“The construction of the two new reactors … are 21 months behind schedule and 1.6 billion dollars over budget,” Allison Fisher, outreach director for the energy programme at Public Citizen, a watchdog group here, said Wednesday.

“This not only calls into question the decision to underwrite this risky project with taxpayer dollars, but … this is a technology that continues to be beset with safety issues and produces toxic wastes that we still don’t have a solution for – hardly a technology the government should be promoting and propping up with taxpayer funds.”

Clean and green?

Reaction from the nuclear industry, meanwhile, has underlined the importance of the Energy Department’s backing. On Thursday, the Nuclear Energy Institute (NEI), a trade association, dubbed the new agreement “historic”.

“The agreement demonstrates the Obama administration’s recognition of the key role nuclear energy must play in a successful clean energy policy,” Marvin Fertel, the NEI’s president, said in a statement sent to IPS. “The loan guarantee program … will act as a catalyst in hastening the construction of low- and non-emitting sources of electricity, such as nuclear power plants.”

As Fertel notes, the new loan guarantees are coming from a pot of money created by the U.S. Congress in 2005 to support new and “innovative” energy technologies. In announcing the new deal, the Energy Department, too, has been keen to conflate nuclear power and clean energy.

The new reactors “will produce enough clean electricity to power more than 1.5 million homes,” Peter W. Davidson, a senior Energy Department official, wrote in a blog post Thursday. “At the same time, this project will help fight climate change by keeping about 10 million tons of carbon dioxide pollution out of our atmosphere. That’s like taking 2 million cars off the road.”

The debate over nuclear energy’s impact on global warming has heated up somewhat in the environmental community in recent years. Yet for many green groups, such conflation is misleading.

“Nuclear power is not clean energy,” FOE’s Fuchs says. “There is no way to deal with the waste, and we don’t yet have safe designs or adequate regulation. It’s entirely wrong to lump nuclear energy in with green energy, and it’s unbelievable that the administration would tout such a thing.”

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Half of U.S. Farmland Being Eyed by Private Equity http://www.ipsnews.net/2014/02/half-u-s-farmland-eyed-private-equity/?utm_source=rss&utm_medium=rss&utm_campaign=half-u-s-farmland-eyed-private-equity http://www.ipsnews.net/2014/02/half-u-s-farmland-eyed-private-equity/#comments Wed, 19 Feb 2014 00:52:14 +0000 Carey L. Biron http://www.ipsnews.net/?p=131762 An estimated 400 million acres of farmland in the United States will likely change hands over the coming two decades as older farmers retire, even as new evidence indicates this land is being strongly pursued by private equity investors. Mirroring a trend being experienced across the globe, this strengthening focus on agriculture-related investment by the […]

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Industry analysts say the institutional share of U.S. farmland ownership is rising quickly. Credit: Bigstock

Industry analysts say the institutional share of U.S. farmland ownership is rising quickly. Credit: Bigstock

By Carey L. Biron
WASHINGTON, Feb 19 2014 (IPS)

An estimated 400 million acres of farmland in the United States will likely change hands over the coming two decades as older farmers retire, even as new evidence indicates this land is being strongly pursued by private equity investors.

Mirroring a trend being experienced across the globe, this strengthening focus on agriculture-related investment by the private sector is already leading to a spike in U.S. farmland prices. Coupled with relatively weak federal policies, these rising prices are barring many young farmers from continuing or starting up small-scale agricultural operations of their own."This is no longer necessarily about food at all, but rather is a way to reap financial profits." -- Anuradha Mittal

In the long term, critics say, this dynamic could speed up the already fast-consolidating U.S. food industry, with broad ramifications for both human and environmental health.

“When non-operators own farms, they tend to source out the oversight to management companies, leading in part to horrific conditions around labour and how we treat the land,” Anuradha Mittal, the executive director of the Oakland Institute, a U.S. watchdog group focusing on global large-scale land acquisitions, told IPS.

“They also reprioritise what commodities are grown on that land, based on what can yield the highest return. This is no longer necessarily about food at all, but rather is a way to reap financial profits. Unfortunately, that’s far removed from the central role that land ultimately plays in terms of climate change, growing hunger and the stability of the global economy.”

In a new report released Tuesday, the Oakland Institute tracks rising interest from some of the financial industry’s largest players. Citing information from Freedom of Information Act requests, the group says this includes bank subsidiaries (the Swiss UBS Agrivest), pension funds (the U.S. TIAA-CREF) and other private equity interests (such as HAIG, a subsidiary of Canada’s largest insurance group).

“Today, enthusiasm for agriculture borders on speculative mania. Driven by everything from rising food prices to growing demand for biofuel, the financial sector is taking an interest in farmland as never before,” the report states.

“Driven by the same structural factors and perpetrated by many of the same investors, the corporate consolidation of agriculture is being felt just as strongly in Iowa and California as it is in the Philippines and Mozambique.”

As yet, the amount of U.S. land owned by private investors is thought to be relatively low. The report points to a 2011 industry estimate that large-scale investors at the time owned around one percent of U.S. farmland, worth between three five billion dollars.

Last year, however, another industry analyst put this figure at around 10 billion dollars, suggesting that the institutional share of farmland ownership is rising quickly.

“We’ve been seeing a decimation of the family farmer for a long time, but now these processes are accelerating,” Mittal says. “We need a tightening at the policy level before we’re swamped by these trends.”

Demographic collision

In the year after food prices suddenly rose in 2008, global speculation in land rose by some 200 percent. With the international financial meltdown coinciding almost simultaneously with this crisis, investors have increasingly viewed agricultural land as a relatively safe place to put their money amidst rising volatility.

In the United States, investors are particularly eyeing potential future returns from mineral prospecting, water rights and strengthening trends in meat consumption. U.S. farmland is also seen as globally desirable due to a combination of high-tech farming opportunities and lax regulations regarding the use of genetically modified crops.

As a result of this new interest, land prices in the United States have risen by an estimated 213 percent over the past decade. This could now play into two trends at once.

Already, the United States is home to relatively low numbers of farmers, with the country famously home to more prisoners than full-time agriculturalists. But those who do continue to farm are also quickly aging.

While federal agriculture officials are expected to offer updated demographic information within the coming week, the most recent statistics suggest that just 6 percent of farmers are under 35 of age. Further, some 70 percent of U.S. farmland is owned by people 65 years or older.

“The older generation needs to cash out because they have no retirement funds, even as the new generation doesn’t have the capital to get into the kind of debt that [starting a farm] requires,” Severine von Tscharner Fleming, a farmer and co-founder of the Agrarian Trust, a group that helps new farmers access land, told IPS.

“Today there is a huge number of older folks trying to decide what to do with their land, and in many places we don’t have many years to help them make that decision. So in that sense there’s an urgent need, and we don’t have many tools at the federal level to help.”

For the most part, Fleming suggests, U.S. federal agriculture policy today is not aligned to the country’s best interests, instead pointing away from greater agricultural diversity, regional resilience and greater strengthened opportunity for rural economies. Nonetheless, she says that her organisation is encountering a surge of attention from young people that want to start their own farms.

“Over the past seven years, we’ve had an explosion of interest in being trained as a farmer and entering the trade of agriculture, and this is very much related to the crises around the banks and the environment,” she says.

“The problem we’re facing is not one in which nobody wants to farm, but rather the fact that the U.S. economy is structured in such a way that makes it really hard to start a farm in this country.”

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OECD in “Game-Changing” Move to Halt Tax Evasion http://www.ipsnews.net/2014/02/oecd-game-changing-move-halt-tax-evasion/?utm_source=rss&utm_medium=rss&utm_campaign=oecd-game-changing-move-halt-tax-evasion http://www.ipsnews.net/2014/02/oecd-game-changing-move-halt-tax-evasion/#comments Thu, 13 Feb 2014 20:38:35 +0000 Carey L. Biron http://www.ipsnews.net/?p=131601 A major grouping of rich countries has unveiled a new model for the automatic exchange of certain individual financial information between countries, aimed at significantly cutting down on offshore tax evasion. Advocates of stronger financial transparency measures are lauding the move, announced Thursday by the Organisation for Economic Cooperation and Development (OECD). But anti-poverty campaigners […]

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By Carey L. Biron
WASHINGTON, Feb 13 2014 (IPS)

A major grouping of rich countries has unveiled a new model for the automatic exchange of certain individual financial information between countries, aimed at significantly cutting down on offshore tax evasion.

Advocates of stronger financial transparency measures are lauding the move, announced Thursday by the Organisation for Economic Cooperation and Development (OECD). But anti-poverty campaigners are warning that developing economies were not included in discussions around the new common reporting standard.“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream.” -- Heather Lowe

Indeed, the new standard has yet to offer clarity on how it would include poor countries, despite the fact that developing economies are among the hardest-hit by global tax evasion.

“This is a real game changer. Globalisation of the world’s financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence,” OECD Secretary-General Angel Gurria said Thursday.

“This new standard on automatic exchange of information will ramp up international tax cooperation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion.”

The new proposal comes in the context of rising public frustration around the world, particularly in the aftermath of the global financial crisis, with reports of rich companies and individuals stashing as much as 20 trillion dollars overseas in order to escape national taxation. That public sentiment coincides with increasingly strapped government coffers, new enforcement of painful austerity measures, and officials looking for ways to strengthen national revenue streams.

The OECD developed the new standard after being requested to do so last fall by the Group of 20 (G20) of developed and emerging economies. It will now be formally presented to a G20 ministerial meeting in Australia later this month, and potentially adopted at a G20 summit in September.

The developing world lost 903 billion dollars in illicit outflows in 2009, despite the massive financial crisis which rocked the global economy in late 2008. The capital outflows stem from crime, corruption, tax evasion, and other illicit activity.

The top 10 countries with the highest measured cumulative illicit financial outflows between 2000 and 2009 were:

• China: 2.74 trillion dollars
• Mexico: 504 billion dollars
• Russia: 501 billon dollars
• Saudi Arabia: 380 billion dollars
• Malaysia: 350 billion dollars
• United Arab Emirates: 296 billion dollars
• Kuwait: 271 billion dollars
• Nigeria: 182 billion dollars
• Venezuela: 179 billion dollars
• Qatar: 130 billion dollars

Source: GFI

If adopted, the changes would mark a sea change in global financial transparency, and one that advocates say came about with astounding speed.

“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream,” Heather Lowe, director of government affairs for Global Financial Integrity (GFI), a Washington watchdog group, told IPS.

“So it’s fantastic and amazing that we’ve gotten to the point where everybody recognises that the automatic exchange of tax information is necessary in order to fill those holes in the international financial system that allow illicit money to hide out.”

Truly global

The OECD common reporting standard would see participating countries automatically share information on foreign bank accounts, capital gains and other interest earned. Previously, such information would have needed to be formally requested by governments, an often cumbersome process that could be easily stonewalled.

Significant parts of the new standard reflect landmark U.S. legislation, known as the Foreign Account Tax Compliance Act (FATCA), which the OECD says played a “catalytic role” in the creation of the new model. Since its enactment in 2010, FATCA has been roiling international discussions by requiring overseas financial institutions to turn over information about U.S. customers.

“Today’s announcement underscores that promoting tax transparency is a global priority and we are proud to lead the charge on this pressing issue by implementing FATCA and collaborating closely with our G20 partners,” the U.S. Treasury told IPS in a statement.

“We expect the G20’s endorsement of the common reporting standard to add further momentum to our network of intergovernmental agreements, as countries see the extent to which our model agreements reflect this new international standard.”

Already, the OECD says more than 40 countries have agreed to adopt the new standard. Yet poor countries have thus far been largely left outside of the process, despite a high-level summit last year declaring that a prime motivation for any strengthened exchange of tax information would be to assist developing countries collect the taxes due to them.

“This model is being billed as a global standard, but it won’t be global unless all countries can sign up to it, and that includes developing countries,” GFI’s Lowe says. “Otherwise, we could easily create a system in which rich countries get richer and poor countries get poorer, because their wealthy officials and businesspeople continue putting money abroad where tax authorities can’t reach it.”

Other groups are decrying the fact that developing countries were excluded from the negotiating process surrounding the new OECD model.

“Up to nine trillion dollars is thought to be hidden offshore from the tax authorities in developing countries. Those governments need information just as much as [developed countries], but they are being told they will have to wait,” Joseph Stead, a senior economic justice adviser for Christian Aid, a British charity, said Thursday.

“We want to see the U.K., OECD and G20 commit to a process which enables developing countries to be part of the new system and to start benefiting from it before they are burdened with costs.”

Reciprocity and reluctance

The OECD plan outlines two G20-directed processes mandated to figure out how to bring developing countries in under the tax information-sharing umbrella. The first of these blueprints are to be released in September, and will show “how developing countries can overcome obstacles to participation in the automatic exchange standard and to assist them in meeting the standard”.

While necessary, there will likely be at least two obstacles in the attempt to begin regular exchange of tax information with developing countries.

First and foremost, while the OECD model calls for information-sharing “reciprocity”, many developing countries currently lack the basic technical capacity to make such information available. While programmes to offer both financial and training assistance are already going forward, GFI and other groups are calling on multilateral institutions and G20 donors to prioritise such work as the model goes forward.

A second obstacle could be reluctance on the part of certain governments or individual officials in developing countries to open their systems up to greater scrutiny, over concerns of past or future corruption.

“This is clearly a very tricky issue, but in certain cases it won’t be a question of what a government wants but, rather, what’s right for the people in developing countries,” GFI’s Lowe says.

“Fortunately, I think there’s a growing movement among populations around the world about illicit money and tracing it and returning it to developing countries. So as that continues to grow, the pressure will be on developing country governments to take part, and it will be up to others to support those grassroots movements.”

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DRC Mega-Dam to Be Funded by Private Sector, Groups Charge http://www.ipsnews.net/2014/02/drc-mega-dam-funded-private-sector-groups-charge/?utm_source=rss&utm_medium=rss&utm_campaign=drc-mega-dam-funded-private-sector-groups-charge http://www.ipsnews.net/2014/02/drc-mega-dam-funded-private-sector-groups-charge/#comments Tue, 11 Feb 2014 01:58:55 +0000 Carey L. Biron http://www.ipsnews.net/?p=131424 Watchdog groups here are warning that a deal has been struck that would see Chinese investors fund a massive, contentious dam on the Congo River, the first phase of a project that could eventually be the largest hydroelectric project in the world. Discussions around the Inga III dam proposal, in the Democratic Republic of Congo […]

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The Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. Credit: alaindg/GNU license

The Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. Credit: alaindg/GNU license

By Carey L. Biron
WASHINGTON, Feb 11 2014 (IPS)

Watchdog groups here are warning that a deal has been struck that would see Chinese investors fund a massive, contentious dam on the Congo River, the first phase of a project that could eventually be the largest hydroelectric project in the world.

Discussions around the Inga III dam proposal, in the Democratic Republic of Congo (DRC), have been taking place in some form for decades. They have picked up speed over the past year, however, under the auspices of the World Bank, the Washington-based development funder.“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project.” -- Peter Bosshard

On Tuesday, the bank’s board of directors were to have voted on an initial 73-million-dollar loan for the project, to be offered through the International Development Association (IDA), the institution’s programme for the world’s poorest countries. Last week, however, that vote was abruptly postponed.

Now, civil society groups are reporting that the project may be going forward instead under the World Bank’s private-sector arm, the International Finance Corporation (IFC), with the backing of Chinese investors. Yet critics, who have long worried about the local social and environmental impact of the Inga project, worry that greater involvement by the private sector will result in skewed prioritisation of beneficiaries.

“Handing the project over to a private investor will make it even less likely the country’s poor people would benefit from the project,” Peter Bosshard, policy director for International Rivers, an advocacy group, said Monday.

“The IFC deal was arranged behind closed doors without any accountability to the DRC parliament, the World Bank’s board of directors, or civil society … Non-transparent deals such as the Inga 3 Dam are the best recipe for deepening corruption in the DRC. They will not strengthen the public accountability that is necessary for social and economic development.”

Citing multiple sources within the bank, Bosshard says the decision to change the Inga III funding modality appears to have been made between high-level officials from the World Bank, the IFC and USAID, the U.S. government’s main foreign-aid arm, reportedly bypassing the bank’s board of directors. Thus far, none of these institutions have publicly confirmed any deal.

“The World Bank Group is fully committed to supporting the Inga III hydropower project, which has the potential to improve the lives of millions of Africans,” a bank spokesperson told IPS in a statement. “We postponed presenting to our Board a Technical Assistance package related to the design of the project’s operation, but the project has not been cancelled, and our commitment to Inga III is unchanged.”

Primary beneficiaries

As currently envisioned, the Inga III dam would be the first in a series of hydroelectric installations along the Congo River, collectively referred to as the Grand Inga project. This would include a single 145 metre dam, which would flood an area known as the Bundi Valley, home to around 30,000 people.

The full project could provide up to 40,000 megawatts of electricity, a power potential that has been eyed hungrily by the rest of the continent for decades. While DRC’s chaotic governance has stymied forward progress on the project for years, the Grand Inga vision received an important boost last year when the South African government agreed to purchase a substantial amount of power produced by Inga III.

The 12-billion-dollar dam is now supposed to be built by 2020 and, according to Congolese government estimates from November, would produce around 4,800 MW of electricity. Of this, 2,500 MW would go to South Africa while another 1,300 MW would be earmarked for use by mines and related industry in the province of Katanga.

“There is little indication that the dam development schemes underway would address the issue of access to electricity for the population at-large; industrial users stand to be the primary beneficiaries,” Maurice Carney, executive director of Friends of the Congo, an advocacy group here, told IPS.

“Only 10 percent of Congo’s population has access to electricity and the situation is even worse for rural population, where only 1 percent has access to electricity. For a country like the DRC that is endowed with a plethora of alternative energy options, smaller-scale renewable energy technologies would be the best way forward.”

Carney and others are calling for a cumulative assessment of the Grand Inga scheme, to include study of all social and environmental impacts. Indeed, these have been longstanding concerns, but now some development advocates worry that greater private sector involvement in the Inga III project will further exacerbate such issues.

“We have questions about whether the scheme can deliver any development at all in the hands of the private sector,” Joshua Klemm, manager of the Africa programme at the Bank Information Center, a watchdog group here that focuses on the World Bank, told IPS.

“For good or bad, if this project belongs to the Congolese government, there’s at least some hope to expand electricity access in the country. That would go out the window if we’re talking about a purely private sector project.”

Duelling U.S. stances

As the Inga III project picked up momentum in recent months, USAID too expressed its interest in the proposal. The agency’s administrator, Rajiv Shah, visited the Inga III dam site in mid-December, and stated that the proposal could be added to a new, large-scale initiative by the United States to significantly increase electrification across Africa.

Although USAID was unable to comment for this story by deadline, any involvement by the agency in brokering a deal with the IFC would be interesting. Just last month, the U.S. Congress passed a landmark new law requiring the U.S. Treasury to formally vote against multilateral funding for large-scale hydroelectric projects in developing countries.

The new provisions, contained in a huge appropriations bill funding the federal government, impact both on bilateral U.S. funding through agencies such as USAID, as well as on the significant contributions that the United States provides to multilateral development institutions, particularly the World Bank. (The U.S. Treasury was unable to comment by deadline.)

“Under the [appropriations] language, the United States will have to oppose the Inga III dam at the IFC as much as it would have had to do this if it were an IDA project,” International Rivers’ Bosshard told IPS. “There’s no difference there, but it is ironic that the USAID administrator would have pushed the deal.”

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