Inter Press Service » Economy & Trade http://www.ipsnews.net Journalism and Communication for Global Change Wed, 23 Jul 2014 07:17:42 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 BRICS – The End of Western Dominance of the Global Financial and Economic Order http://www.ipsnews.net/2014/07/brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order/?utm_source=rss&utm_medium=rss&utm_campaign=brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order http://www.ipsnews.net/2014/07/brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order/#comments Wed, 23 Jul 2014 07:17:42 +0000 Shyam Saran http://www.ipsnews.net/?p=135688

In this column, Shyam Saran, former Indian Foreign Secretary and currently Chairman of India’s National Security Advisory Board, argues that the new financial institutions put in place by the BRICS countries at their recent summit in Brazil will alter the global financial landscape irreversibly.

By Shyam Saran
NEW DELHI, Jul 23 2014 (IPS)

The sixth BRICS Summit which has just ended in Brazil marks the transition of a grouping based hitherto on shared concerns to one based on shared interests.

Since the inception of BRICS (bringing together Brazil, Russia, India, China and South Africa) in 2009, it has been seen as a mainly flag waving exercise by a group of influential emerging economies, with little in terms of convergent interest other than signalling their strong dissatisfaction over persistent Western dominance of the world economic, financial as well as security order, but unable to fashion credible alternative governance structures themselves.

However, with the Fortaleza Summit finally announcing the much awaited establishment of the New Development Bank (NDB) with a 50 billion dollar subscribed capital and a Contingency Reserve Arrangement (CRA) of 100 billion dollars, the monopoly status and role of the Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – stand broken.

Shyam Saran

Shyam Saran

True, it may take the NDB and the CRA considerable time and experience to evolve into credible international financial institutions but that clearly is the intent.

BRICS leaders have kept the door open for other stakeholders, but will retain at least a 55 percent equity share. They have also been careful to declare that these new institutions will supplement the activities of the World Bank and the IMF, and this has also been the initial response from the latter.

Nevertheless, the emergence of an alternative source of financing with norms different from those followed by the established institutions will alter the global financial landscape irreversibly.

It may be noted for the future that the one component of the global financial infrastructure where Western companies still remain supreme is the insurance and reinsurance sector. Global trade flows, in particular energy flows are almost invariably insured by a handful of Western companies which also determine risk factors and premiums.

In Brazil, the BRICS countries have given notice that they will examine the prospect of pooling their capacities in this sector. A more competitive situation in this sector can only be a positive development for developing countries.“The emergence of an alternative source of financing [BRICS Bank] with norms different from those followed by the established institutions will alter the global financial landscape irreversibly”

The BRICS initiatives were born out of mounting frustration among emerging countries that even a modest restructuring of the governing structures of the Bretton Woods institutions, to reflect their growing economic profile, was being resisted. The commitment made in 2010 at the G20 to enlarge their stake in the IMF remains unfulfilled while the restructuring of the World Bank is yet to be taken up.

The longer the delay in such restructuring, the more rapid the consolidation of the new BRICS institutions is likely to be. It is this factor which played a role in helping resolve some of the differences among the BRICS countries over the structure and governance of these proposed institutions.

The setting up of the BRICS institutions owed a great deal to the energy and push displayed by China. It is doubtful that the proposals would have been actualised had China not put its full weight behind them and showed a readiness to accommodate other member countries, in particular India. Russia became more enthusiastic after being drummed out of the G8 and subjected to Western sanctions.

Chinese activism on this score must be seen in the context of other parallel developments in which China has also been the prime mover and sometimes the initiator. These are:

1. The proposal for setting up an Asian Infrastructure Investment Bank (AIIB) to fund infrastructure and connectivity projects in Asia, in particular, those which would help revive the maritime and land “Silk Routes” linking China with both its eastern and western flanks. The parallel with the NDB is hard to miss.

2. The consolidation of the Chiang Mai Initiative Multilateralisation (CMIM) and the associated Asian Multilateral Research Organisation (AMRO) among the Association of Southeast Asian Nations (ASEAN) + 3 (China, Japan and the Republic of Korea). The CMIM is now a 240 billion dollar financing facility to help member countries deal with balance of payments difficulties. This is similar to the 100 billion dollar CRA set up by BRICS.

AMRO has evolved into a mechanism for macro-economic surveillance of member countries and provides a benchmark for their economic health and performance. This would enable sound lending policies and may very well be linked in future to the AIIB. The CMIM and the AMRO thus provide building blocks which could serve as the template for the NDB, the CRA and the AIIB.

3. In addition to the CMIM and the AMRO, there are ongoing initiatives within ASEAN + 3 to develop a truly Asian Bond Market which could mobilise regional savings into regional investments through local currency bonds. To support this initiative, a regional Credit Guarantee and Investment Facility has been established. A Regional Settlement Intermediary is proposed to facilitate cross-border multi-currency transfers.

These developments are taking place just when there is a rapidly growing Chinese yuan-denominated bond market, the so-called dim-sum bonds, which have become an important source of corporate financing. This reduces the dependence on euro and U.S. dollar-denominated bonds. The NDB could tap into this market to build up its own finances.

It is important to keep in mind this broader picture in assessing the significance of the decisions taken at the Fortaleza Summit. In systematically pursuing a number of parallel initiatives, China is attempting to create an alternative financial infrastructure which would have it in the lead role. The dilemma for other emerging countries is that there appear to be no credible alternatives, especially since the Western countries are unwilling to cede any enhanced role to them.

The Fortaleza Summit marks the beginning of the end of the post-Second World War Western dominance of the global economic and financial order. The existing institutions will now have to share space with the new entrants and may be compelled to adjust their norms to compete with the latter.

The prime mover behind the establishment of a rival network of financial institutions is China, whose global profile and influence is likely to increase as the various building blocks it has put in place come together to shape a new global financial architecture. This is still in the future but the trend is unmistakable. (END/IPS COLUMNIST SERVICE)

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Disasters Poised to Sweep Away Development Gains http://www.ipsnews.net/2014/07/disasters-poised-to-sweep-away-development-gains/?utm_source=rss&utm_medium=rss&utm_campaign=disasters-poised-to-sweep-away-development-gains http://www.ipsnews.net/2014/07/disasters-poised-to-sweep-away-development-gains/#comments Tue, 22 Jul 2014 17:39:42 +0000 Stephen Leahy http://www.ipsnews.net/?p=135682 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 Stephen Leahy
UXBRIDGE, Canada, Jul 22 2014 (IPS)

Ending extreme poverty and hunger will be impossible on a rapidly overheating planet plagued by punishing droughts, catastrophic floods and ever wilder weather, said climate activists involved in talks to set the Sustainable Development Goals (SDGs).

Last weekend, the United Nations released the 17 draft SDGs following a year and a half of discussion by more than 60 countries participating in the voluntary process."You can’t climb out of poverty if you have to rebuild your home every other year." -- Harjeet Singh

The SDGs are a set of goals and targets intended to eliminate extreme poverty and pursue sustainable development. When finalised in 2015, at the expiration of the eight Millennium Development Goals (MDGs), the SDGs are intended to be the roadmap for countries to follow in making environmental, social and economic policies and decisions.

“Disasters are a major reason many of the MDG goals will not be met,” said Harjeet Singh of ActionAid International, an NGO based in Johannesburg.

“A big flood or typhoon can set a region’s development back 20 years,” Singh, ActionAid’s international coordinator of disaster risk reduction, told IPS.

Last year’s Super Typhoon Haiyan killed more than 6,000 people and left nearly two million homeless in the Philippines, he said. Less than a year earlier, the Philippines was hit by Typhoon Bopha, which killed more than 1,000 people and caused an estimated 350 million dollars in damage.

In the past two weeks, the country was struck by two destructive typhoons. The Philippines may face another 20 before the end of typhoon season.

“Everything is affected by disasters — food security, health, education, infrastructure and so on. You can’t climb out of poverty if you have to rebuild your home every other year,” Singh said.

Goals for poverty elimination or nearly anything else in the proposed SDGs are “meaningless without reductions in carbon emissions”, he said.

Carbon emissions from burning oil, coal and gas are trapping heat from the sun. The amount of this extra heat-energy is like exploding 400,000 Hiroshima atomic bombs per day 365 days per year, according to James Hansen, a climate scientist and former head of the NASA Goddard Institute for Space Studies. As a result the entire planet is now 0.8 C hotter.

“All weather events are affected by climate change because the environment in which they occur is warmer and moister than it used to be,” Kevin Trenberth, senior scientist at the National Center for Atmospheric Research in Boulder, Colorado previously told IPS.

Climate change doesn’t necessarily cause weather disasters but it certainly makes them worse, said Trenberth, an expert on extreme events.

Climate and low-carbon development pathways need to be fully reflected in the SDGs, said  Bernadette Fischler, co-chair of Beyond 2015 UK. Beyond 2015 is a coalition of more than 1,000 civil society organisations working for a strong and effective set of SDGs.

“Climate change is an urgent issue and needs to be highly visible in the SDGs,” Fischler told IPS.

In the current SDG draft climate is goal 13. It calls on countries to “take urgent action to combat climate change and its impacts”. There is no target to reduce emissions, and nearly all of the targets are about adapting to the coming climate impacts.

“Countries don’t want to pre-empt their positions in the U.N. climate change negotiations,” said Lina Dabbagh of the Climate Action Network, a global network of environmental NGOs.

The U.N. Framework Convention on Climate Change ( UNFCCC) involves every country in a negotiation to create a new global climate treaty in 2015. After five years of talks, countries are deadlocked on key issues.

“The SDGs are a huge opportunity to move forward on climate, but the climate goal is weak and there is no action agenda,” Dabbagh told IPS.

Finalising the SDGs draft was highly politicised, resulting in very cautious wording. The country alliances and divisions are remarkably similar to those in the UNFCCC negotiations, including the South-North divide, she said.

Every country is concerned about climate change and its impacts but there is wide disagreement on how this should be reflected in the SDGs, with some only wanting a mention in the preamble, said Fischler.

Some countries such as the United Kingdom think 17 goals is too many and it is possible that some will be cut during the final year of negotiations that start once the SDGs are formally introduced at the U.N. General Assembly on Sep. 24.

The day before that the U.N. secretary-general will host a Climate Summit with leaders of many countries in attendance. The summit is intended to kick-start political momentum for an ambitious, global, legal climate treaty in 2015.

“Civil society will make a big push during the summit to make climate an integral part of the SDGs,” said Dabbagh.

However, much work remains to help political leaders and the public understand that climate action is the key to eliminating extreme poverty and achieving sustainable development, she said.

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Stunting: The Cruel Curse of Malnutrition in Nepal http://www.ipsnews.net/2014/07/stunting-the-cruel-curse-of-malnutrition-in-nepal/?utm_source=rss&utm_medium=rss&utm_campaign=stunting-the-cruel-curse-of-malnutrition-in-nepal http://www.ipsnews.net/2014/07/stunting-the-cruel-curse-of-malnutrition-in-nepal/#comments Tue, 22 Jul 2014 11:59:26 +0000 Mallika Aryal http://www.ipsnews.net/?p=135646 Sadhana Ghimire, 23, makes sure to give her 18-month-old daughter nutritious food, such as porridge containing grains and pulses, in order to prevent stunting. Credit: Mallika Aryal/IPS

Sadhana Ghimire, 23, makes sure to give her 18-month-old daughter nutritious food, such as porridge containing grains and pulses, in order to prevent stunting. Credit: Mallika Aryal/IPS

By Mallika Aryal
RASUWA, Nepal, Jul 22 2014 (IPS)

Durga Ghimire had her first child at the age of 18 and the second at 21. As a young mother, Durga didn’t really understand the importance of taking care of her own health during pregnancy.

“I didn’t realise it would have an impact on my baby,” she says as she sits on the porch of her house in Laharepauwa, some 120 kilometers from Nepal’s capital, Kathmandu, nursing her third newborn child.

It is late in the afternoon and she is waiting expectantly for her two older daughters to return from school. One is nine and the other is six, but they look much smaller than their actual age.

“They are smaller in height and build and teachers at school say their learning process is also much slower,” Durga tells IPS. She is worried that the girls are stunted, and is trying to ensure her third child gets proper care.

A recent United Nations Children Fund (UNICEF) report shows that Nepal is among 10 countries in the world with the highest stunting prevalence, and one of the top 20 countries with the highest number of stunted children.

“Reducing stunting among children increases their chances of reaching their full development potential, which in turn will have a long-term impact on families’, communities’ and the country’s ability to thrive.” -- Peter Oyloe, chief of USAID Nepal’s Suaahara (‘Good Nutrition’) project at Save the Children-Nepal
UNICEF explains stunting as chronic under-nutrition during critical periods of growth and development between the ages of 0-59 months. The consequences of stunting are irreversible and in Nepal the condition affects 41 percent of children under the age of five.

“Nepal’s ranking […] is worrying, not just globally but also in South Asia,” Giri Raj Subedi, senior public health officer at Nepal’s ministry of health and population, tells IPS.

A 2013 progress report on the Millennium Development Goals (MDGs) done by Nepal’s National Planning Commission (NPC) says while the number of stunted children declined from 57 percent in 2001 to 41 percent in 2011, it is still high above the 30 percent target set by the U.N..

“Stunting is a specific measure of the height of a child compared to the age of the child, and it is indicative of how well the child is developing cognitively,” says Peter Oyloe, chief of party of USAID Nepal’s Suaahara, or ‘Good Nutrition’ project at Save the Children Nepal.

Oyloe adds, “Reducing stunting among children increases their chances of reaching their full development potential, which in turn will have a long-term impact on families’, communities’ and the country’s ability to thrive.”

Child health and nutrition experts argue that, while poverty is directly related to inadequate intake of food, it is not the sole indicator of malnutrition or increased stunting.

Saba Mebrahtu, chief of the nutrition section at UNICEF-Nepal, says the immediate causes include poor nutrient intake, particularly early in life. Fifty percent of stunting happens during pregnancy and the rest after infants are born.

“When we are talking about nutrient-rich food […] we are talking about ensuring that children get enough of it even before they are born,” says Mebrahtu. The time between conception and a child’s second birthday is a crucial period, she said, one of rapid growth and cognitive development.

Thus it is incumbent on expecting mothers to follow a careful diet before the baby is born.

Basic education could save lives

Sadhana Ghimire, 23, lives a few doors down from Durga. Separated by a few houses, their approaches to nutrition are worlds apart.

Ghimire breast-fed her 18-month-old daughter exclusively for six months. She continues to make sure that her own diet includes green leafy vegetables, meat or eggs, along with rice and other staples, as she is still nursing.

She gives credit to the female community health-worker in her village, who informed her about the importance of the first 1,000 days of a child’s life.

In preparation for her daughter’s feeding time, Ghimire mixes together a bowl of homemade leeto, a porridge containing one-part whole grains such as millet or wheat and two-parts pulses such as beans or soy.

“I was only using grains to make the leeto before I was taught to make it properly by the health workers and Suaahara,” she says.

However, making leeto was not the most important lesson Ghimire learned as an expecting mother. “I had no idea that simple things like washing my hands properly could have such a long term effect on my daughter’s health,” she says.

Even seemingly common infections like diarrhoea can, in the first two years, put a child at greater risk of stunting.

“That is because the nutrients children are using for development are used instead to fight against infection,” says Mebrahtu emphasising the need for simple practices such as proper hand washing and cleaning of utensils.

If children are suffering from infection due to poor hygiene and sanitation they can have up to six diarrhoeal episodes per year, she warns, adding that while “children recover from these infections, they don’t come back to what they were before.”

Fighting on all fronts

Food insecurity is one of the biggest contributing factors to stunting in Nepal. Rugged hills and mountains comprise 77 percent of the country’s total land area, where 52 percent of Nepal’s 27 million people live.

Food insecurity is worst in the central and far western regions of the country; the prevalance of stunting in these areas is also extreme, with rates above 60 percent in some locations.

Thus experts recognise the need to fight simultaneously on multiple fronts.

“Our work in nutrition has proven again and again that a single approach to stunting doesn’t work because the causes are so many – it really has to be tackled in a coordinated way,” says UNICEF’s Mebrahtu.

In 2009 the government conducted the Nutrition Assessment and Gap Analysis (NAGA), which recommended building a multi-sector nutrition architecture to address the gaps in health and nutrition programmes.

“The NAGA study stated clearly that nutrition was not the responsibility of one department, as was previously thought,” Radha Krishna Pradhan, programme director of health and nutrition at Nepal’s NPC, tells IPS.

Nepal is also one of the first countries to commit to the global Scaling Up Nutrition (SUN) movement, which recognises multiple causes of malnutrition and recommends that partners work across sectors to achieve nutritional goals.

Thus, in 2012, five ministries in Nepal came together with the NPC and development partners to form the Multi-Sector Nutrition Plan (MSNP).

Public health experts say MSNP is a living example of the SUN movement in action and offers interventions with the aim of reducing the current prevalence of malnutrition by one-third.

Interventions include biannual vitamin D and folic acid supplements for expectant mothers, deworming for children, prenatal care, and life skills for adolescent girls.

On the agricultural front, ministries aim to increase the availability of food at the community level through homestead food production, access to clean and cheap energy sources such a biogas and improved cooking stoves, and the education of men to share household loads.

MSNP’s long-term vision is to work towards significantly reducing malnutrition so it is no longer an impending factor towards development. The World Bank has estimated that malnutrition can cause productivity losses of as much as 10 percent of lifetime earnings among the affected, and cause a reduction of up to three percent of a country’s GDP.

At present the Plan is in its initial phase and has been implemented in six out of 75 districts in Nepal since 2013.

(END)

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Food Insecurity a New Threat for Lebanon’s Syrian Refugees http://www.ipsnews.net/2014/07/food-insecurity-a-new-threat-for-lebanons-syrian-refugees/?utm_source=rss&utm_medium=rss&utm_campaign=food-insecurity-a-new-threat-for-lebanons-syrian-refugees http://www.ipsnews.net/2014/07/food-insecurity-a-new-threat-for-lebanons-syrian-refugees/#comments Tue, 22 Jul 2014 11:01:34 +0000 Mona Alami http://www.ipsnews.net/?p=135672 By Mona Alami
BEIRUT, Jul 22 2014 (IPS)

A declining economy and a severe drought have raised concerns in Lebanon over food security as the country faces one of its worst refugee crises, resulting from the nearby Syria war, and it is these refugees and impoverished Lebanese border populations that are most vulnerable to this new threat.

A severe drought has put the Lebanese agricultural sector at risk. According to the Meteorological Department at Rafik Hariri International Airport, average rainfall in 2014 is estimated at 470 mm, far below annual averages of 824 mm.

The drought has left farmers squabbling over water. “We could not plant this year and our orchards are drying up, we are only getting six hours of water per week,” says Georges Karam, the mayor of Zabougha, a town located in the Bekfaya area in Lebanon.“Any major domestic or regional security or political disruptions which undermine economic growth and job creation could lead to higher poverty levels and associated food insecurity” – Maurice Saade of the World Bank's Middle East and North Africa Department

The drought has resulted in a substantial decline in agricultural production throughout the country. “The most affected products are fruits and vegetables, the prices of which have increased, thus affecting economic access of the poor and vulnerable populations,”says Maurice Saade, Senior Agriculture Economist at the World Bank’s Middle East and North Africa Department.

According to the Food and Agricultural Organization (FAO), food security exists when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs. Although most households in Lebanon are considered food secure, lower income households are vulnerable to inflationary trends in food items because they tend to spend a larger share of their disposable income on staples, explains Saade.

Lebanon’s poverty pockets are generally concentrated in the north (Akkar and Dinnyeh), Northern Bekaa (Baalbek and Hermel) and in the south, as well as the slums located south of Beirut. These areas currently host the largest number areas of refugee population, fleeing the nearby Syria war.

According to Clemens Breisinger, senior research fellow at the International Food Policy Research Institute (IFPRI), Lebanon currently imports about 90 percent of its food needs. “This means meant that the drought’s impact should be limited in term of the food available on the market,” he says.

However, populations residing in Lebanon’s impoverished areas are still at risk, especially those who are not financially supported by relatives (as is the custom in Lebanon) or benefit from state aid or from local charities operating in border areas. Lebanese host populations are most likely the most vulnerable to food insecurity, explains Saade.

According to the UNHCR, there are just over one million Syrian refugees in Lebanon. While the food situation is still manageable thanks to efforts of international donors who maintain food supplies to the population, “these rations are nonetheless always threatened by the lack of donor funding,” Saade stresses. In addition, refugee populations are largely dependent on food aid, because they are essentially comprised of women and children, with little or no access to the job market.

Given that Lebanon depends to a large extent on food imports, mostly from international markets, maintaining food security also depends on the ability of lower income groups to preserve their purchasing power as well as the stability of these external markets.

“This means that any major domestic or regional security or political disruptions which undermine economic growth and job creation could lead to higher poverty levels and associated food insecurity,” says Saade.

In addition any spikes in international food prices, such as those witnessed in 2008, could lead to widespread hunger among vulnerable populations.

Breisinger believes that despite increased awareness of the international community, the factors leading to a new food crisis are still present.Increased demand for food generally, fuel prices, the drop in food reserves, certain government policies as well as the diversion of grain and oilseed crops for biofuel production are elements that put pressure on the food supply chain and can eventually contribute to hunger in certain vulnerable countries.

To avoid such a risk, some countries have implemented specific measures such as building grain reserves. “I am not sure how Lebanon has reacted so far,” says Breisinger.  With little government oversight and widespread corruption, Lebanon’s vulnerability to food insecurity has been compounded by unforgiving weather conditions, a refugee crisis and worsening economic conditions which, if left unattended, could spiral out of control.

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From Havana to Bali, Third World Gets the Trade Crumbs http://www.ipsnews.net/2014/07/from-havana-to-bali-third-world-gets-the-trade-crumbs/?utm_source=rss&utm_medium=rss&utm_campaign=from-havana-to-bali-third-world-gets-the-trade-crumbs http://www.ipsnews.net/2014/07/from-havana-to-bali-third-world-gets-the-trade-crumbs/#comments Tue, 22 Jul 2014 08:27:23 +0000 chakravarthi-raghavan http://www.ipsnews.net/?p=135663

In this column, Chakravarthi Raghavan, renowned journalist and long-time observer of multilateral negotiations, analyses agreements to liberalise world trade since the Second World War up the recent Bali conference, and concludes that the Northern powers have always imposed their own interests to the detriment of Third World countries and their development aspirations.

By Chakravarthi Raghavan
GENEVA, Jul 22 2014 (IPS)

The world of today is considerably different from the one at the end of the Second World War; there are no more any colonies, though there are still some ‘dependent’ territories.

In the 1950s and 1960s, as the decolonisation process unfolded, in most of the newly independent countries leaders emerged who had simply fought against foreign rule, without much thought on their post-independence economic and social objectives and policies.

Some naively thought that with political independence and power, economic well-being would be automatic.

Chakravarthi Raghavan

Chakravarthi Raghavan

By the late 1950s, the former colonies, and those early leaders within them who yearned for better conditions for their peoples, realised that something more than political independence was needed, and began looking at the international economic environment, organisations and institutions.

In the immediate post-war years, the focus of efforts to fashion new international economic institutions (arising out of U.S.-U.K. wartime commercial policy agreements) was on international moves for reconstruction and development in war-ravaged Europe.

As a result, in the sectors of money and finance, the Bretton Woods institutions [the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD) or World Bank], were established – even ahead of agreeing on the United Nations Charter and its principle of sovereign equality of states (one nation, one vote in U.N. bodies) – on the basis of the ‘one-dollar one-vote’ principle.“Within the Bretton Woods institutions, there was no direct focus on promoting ‘development’ of the former colonies; what little happened was at best a side-effect of the lending policies of these institutions and the few crumbs that fell off the table here and there, often to further Cold War interests”

In pursuing their wartime commercial policy agreements, the United Kingdom and the United States submitted proposals in 1946 to the U.N. Economic and Social Council (ECOSOC) for the establishment of an international trade body, an International Trade Organization (ITO).

ECOSOC convened the U.N. Conference on Trade and Employment to consider the proposals; the Preparatory Committee for the Conference drafted a Charter for the trade body, and it was discussed and approved in 1948 at a U.N. conference in Havana.

Pending ratification of the Havana Charter, the commercial policy chapter of the planned international trade body was fashioned into the General Agreement on Tariffs and Trade (GATT) and brought into being through the protocol of provisional application, as a multilateral executive agreement to govern trade relations, i.e., governments agreeing to implement their commitments to reduce trade barriers and resume pre-war trading relations through executive actions subject to their domestic laws.

At Havana, during the negotiations on the Charter, Brazil and India had expressed their dissatisfaction, but had reluctantly agreed to the outcome and the provisional GATT.

The U.S. Senate, as a result of corporate lobbying, was however unwilling to allow the United States to be subject to the disciplines of the Havana Charter and did not consent to an ITO Charter; the result was that the provisional GATT remained provisional for 47 years, until the Marrakesh Treaty which brought the World Trade Organization (WTO) into being in 1995.

Within the Bretton Woods institutions, there was no direct focus on promoting “development” of the former colonies; what little happened was at best a side-effect of the lending policies of these institutions and the few crumbs that fell off the table here and there, often to further Cold War interests.

From about the early 1950s, to the extent that it provided any reconstruction and development loans to the developing world, the IBRD acted in the interests of the United States, its largest single shareholder, and favoured the private sector.

For example, early Indian efforts to obtain IBRD loans for the public sector to set up core industries like steel, which needed large infusions of equity capital that the Indian private sector was in no position to provide, were turned down, based purely on the ideological dogma of private-vs-public-enterprise.

It was only much later that a separate window, the International Development Association (IDA), was created at the World Bank to provide soft loans (with low interest and long repayment periods) to low-income countries.

But the IDA did not function as professed and did not provide loans to set up industries or promote development in poorer countries; in actual practice it acted to advance the interests of the developed countries in the Third World.

IDA loans came with conditionalities to promote structural adjustment programmes, such as unilateral trade liberalisation, resulting in deindustrialisation of the poorer African countries. Even worse, IDA loans came with additional conditionalities to cater to the fads and fashions of the day and the concerns of Northern, in particular Washington-based, civil society.

The IDA “donor countries” dominated its governance and used their clout there to sway IDA lending – initially, the IDA obtained funds from the United States and other developed countries, and there were two or three substantial replenishments thereafter.

Subsequently, the funds from loan repayments and the profits of the World Bank (earned by lending at market rates to developing countries) were used to fund IDA, with small new contributions from the “donors” at every replenishment.

Though developing countries borrowing from the IBRD at market rates thus turned out to be the funders of the IDA, they had no voice in IDA governance, and the developed countries, with very little new money, have maintained control over the IDA and IBRD policies, to promote their own policies and the interests of their corporations in developing countries.

On the trade front, in successive rounds of negotiations at the GATT, the group of major developed countries (the United States, Canada, Europe, and later Japan) negotiated among themselves the exchange of tariff concessions, but paid little attention to the developing countries and their requests for tariff reduction in areas of export interest to them.

The only crumbs that fell their way were the result of the multilateralisation of the bilateral concessions exchanged in the rounds, through the application of the “Most Favoured Nation” (MFN) principle. From the Dillon Round on (through the Kennedy and Tokyo Rounds), each saw new discriminatory arrangements against the Third World and its exports.

In the Uruguay Round (1986-94), culminating in the Marrakesh Treaty, the developing countries undertook onerous advance commitments in goods trade, and in new areas such as ‘services’ trade and in intellectual property protection, on the promise of commitment of developed countries to undertake a major reform of their subsidised trade in agriculture and other areas of export interest to developing countries.

These remain in the area of promises while, after the 2013 December  Bali Ministerial Conference, the United States, Europe and the WTO leadership are attempting to put aside as ‘out of date’, all past commitments, while pursuing the ‘trade facilitation’ agreement, involving no concessions from them, but resulting in the equivalent of a 10 percent tariff cut by developing countries.

In much of Africa, this will complete the “deindustrialisation process” and ensure that the Third World will remain “hewers of wood and drawers of water”.  (END/IPS COLUMNIST SERVICE)

 

* This text is based on Chakravarthi Raghavan’s recently published book, ‘The THIRD WORLD in the Third Millennium CE’.

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U.S. Debating “Historic” Support for Off-Grid Electricity in Africa http://www.ipsnews.net/2014/07/u-s-debating-historic-support-for-off-grid-electricity-in-africa/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-debating-historic-support-for-off-grid-electricity-in-africa http://www.ipsnews.net/2014/07/u-s-debating-historic-support-for-off-grid-electricity-in-africa/#comments Mon, 21 Jul 2014 23:02:57 +0000 Carey L. Biron http://www.ipsnews.net/?p=135654 Sub-Saharan Africa has large potential for hydropower generation, but is yet to exploit it. Pictured here is the Kariba Dam. Credit: Kristin Palitza/IPS

Sub-Saharan Africa has large potential for hydropower generation, but is yet to exploit it. Pictured here is the Kariba Dam. Credit: Kristin Palitza/IPS

By Carey L. Biron
WASHINGTON, Jul 21 2014 (IPS)

Pressure is building here for lawmakers to pass a bill that would funnel billions of dollars of U.S. investment into strengthening Africa’s electricity production and distribution capabilities, and could offer broad new support for off-grid opportunities.

With half of the U.S. Congress having already acted on the issue, supporters are now hoping that the Senate will follow suit before a major summit takes place here during the first week of August. That event is expected to include heads of state or representatives from as many as 50 African countries."We could see an energy revolution that looks similar to what happened with mobile phones – leapfrogging centralised systems altogether and moving towards transformative solutions.” -- Justin Guay

The summit, the first time that such an event has been organised in Washington, will focus in particular on investment opportunities. As such, many are hoping that the three-day event’s centrepiece will be President Barack Obama’s signing of a broad investment deal aimed at Africa’s power sector.

“The overwhelming majority of the African leaders are going to be coming to Washington emphasising trade and investment, and in that context this issue is very central to their many constituencies – touching on economic, political and social issues,” Ben Leo, a senior fellow at the Center for Global Development, a think tank here, told IPS.

“Coming forward with something concrete that will lead to additional capital, tools or engagement will be noticed and welcomed. But lack thereof would also have a message for African leaders and others travelling to Washington.”

A U.S. Senate subcommittee did pass a bill, called the Energize Africa Act, late last month, but much remains to be done. The legislation now needs to be voted on by the full Senate, after which the final proposal would have to be brought into alignment with a similar bill voted through by the House of Representatives in May.

Meanwhile, the entire Congress is scheduled to go into recess for a month at the end of July. Still, backroom talks are reportedly well underway.

“There’s growing pressure and momentum in the Senate, as well as a growing appreciation of how doing this is both strategic and important,” Leo says. “Not having a bill to sign would certainly be a missed opportunity in terms of the optics and concreteness of action, either before or when everyone’s in Washington.”

Some 68 percent of the sub-Saharan population lacks access to electricity. Both the House and Senate bills would seek to assist African countries in expanding basic electricity access to some 50 million people.

“Our support for this bill is a direct response to what we hear from African leaders, citizens and global development experts,” Tom Hart, U.S. executive director of ONE, an advocacy group that focuses on eliminating poverty in Africa and has mounted a major campaign in favour of the Senate bill, said in a statement.

“[O]ne of the biggest challenges for overcoming extreme poverty is the inability for millions of people to access the basic electricity necessary to power health clinics, farms, schools, factories and businesses.”

Beyond the grid

The current legislative push comes a year after President Obama unveiled a new initiative called Power Africa, proposed during his June 2013 trip to the continent. Seen as the president’s signature development plan for the region, Power Africa aims to double energy access in sub-Saharan countries through a mix of public and private investment.

While Power Africa is ambitious, its long-term impact greatly depends on the legislation currently under debate.

For instance, while Power Africa directly affects just six countries, the bills before Congress take a continental approach. Likewise, as an executive-level project, the initiative’s policy priorities can only be cemented through full legislation.

Power Africa initially came under significant fire from environmental and some development groups for its reliance on fossil fuel (particularly natural gas) and centralised power projects. Many groups say that such a focus is ultimately counterproductive for poor and marginalised communities.

Yet last month, the United States announced a billion-dollar initiative to focus on off-grid energy projects across the continent. This approach could now be codified through the legislative discussions currently taking place in Congress.

“Congress is now looking to pass a bill that would be relatively historic in terms of its support for beyond-the-grid markets,” Justin Guay, Washington representative for the Sierra Club, a conservation and advocacy group, told IPS. “The [Senate] bill is the first legislation we’ve seen starting to drive investment to unlock that potential.”

To date, Guay says, most investment from the U.S. government and multilateral agencies has skewed in favour of fossil fuels and centralised power generation. For the first time, the new legislation could start to balance out this mix – a potential boon for the environment and local communities alike.

“If you look at the energy access problem in sub-Saharan Africa, it’s largely a rural issue. So this bill could stimulate distributed, clean-energy solutions that can get into the hands of poor populations today, rather than forcing them to wait decades in the dark for power,” Guay says.

“In this way, we could see an energy revolution that looks similar to what happened with mobile phones – leapfrogging centralised systems altogether and moving towards transformative solutions.”

The House’s companion bill includes fewer progressive provisions than the Senate version, but it also doesn’t include amendments that could deliberately doom the legislation. Still, it remains to be seen how conservatives in the House react to the Senate’s proposals.

Strengthened support

These new opportunities have broadened support for the Senate’s legislation. On Friday, for instance, the Global Off Grid Lighting Association, a Germany-based trade group, expressed its “strong support” for the Energize Africa Act.

The legislation is also being welcomed by African environmentalists.

“We believe this bill has emerged as a strong source of support for our efforts to address energy poverty,” Mithika Mwenda, secretary general of the Pan African Climate Justice Alliance, said in a letter to U.S. lawmakers from earlier this month.

“We are particularly supportive of new efforts to expand loan guarantee authority at USAID” – the main U.S. foreign aid agency – “as well as the goal of ending kerosene based lighting. Both of these aspects are critical to ending energy poverty in poor rural areas.”

Meanwhile, both the House and Senate bills have enjoyed an unusual level of bipartisan support. Still, it’s not clear whether that will translate into the passage of a new law – particularly by the U.S.-Africa Leaders Summit, slated for Aug. 4-6.

“There’s not a lot of time left, so it’s is very difficult,” the Center for Global Development’s Leo says. “However, if it doesn’t pass by the summit, the summit will invariably create a lot of action shortly thereafter.”

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Fragility of WTO’s Bali Package Exposed http://www.ipsnews.net/2014/07/fragility-of-wtos-bali-package-exposed/?utm_source=rss&utm_medium=rss&utm_campaign=fragility-of-wtos-bali-package-exposed http://www.ipsnews.net/2014/07/fragility-of-wtos-bali-package-exposed/#comments Mon, 21 Jul 2014 22:19:23 +0000 Ravi Kanth Devarakonda http://www.ipsnews.net/?p=135658 By Ravi Kanth Devarakonda
GENEVA, Jul 21 2014 (IPS)

The “fragility” of the World Trade Organization’s ‘Bali package’ was brought into the open at the weekend meeting in Sydney, Australia, of trade ministers from the world’s 20 major economies (G20).

The Bali package is a trade agreement resulting from the 9th Ministerial Conference of the WTO in Bali, Indonesia, in December last year, and forms part of the Doha Development Round, which started in 2001.

The G20 group of countries includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, the United States, and the European Union.“… the Bali package is not just about trade facilitation and it also includes other issues ... That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing” – South African trade minister Rob Davies

During the Sydney meeting, India and South Africa challenged the industrialised countries present to come clean on implementation of the issues concerning the poor countries in agriculture and development, according to participants present at the two-day meeting.

Ahead of the G20 leaders meeting in Brisbane, Australia, in mid-November, Sydney hosted the trade ministerial meeting to discuss implementation of the Bali package, particularly the trade facilitation agreement (TFA). The TFA has been at the heart of the industrialised countries’ trade agenda since 1996.

More importantly, Australia, as host of the November meeting, has decided to prepare the ground for pursuing the new trade agenda based on global value chains in which trade facilitation and services related to finance, information, telecommunications, and logistics play a main role.

“I said the Bali package is not just about trade facilitation and it also includes other issues,” South Africa’s trade minister Rob Davies told IPS Monday. “That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing.”

Davies said that “the issue is that while South Africa doesn’t need any assistance, many developing and poor countries have to make investments and implement new procedures [because of the TFA]. What was there in the [TF] agreement is a series of best endeavour provisions in terms of technical and financial support together with best endeavour undertakings in terms of issues pertaining to least developed countries in agriculture and so on.”

Over the last few months, several industrialised countries, including the United States, have said that they can address issues in the Bali package concerning the poor countries as part of the Doha Single Undertaking, which implies that nothing is agreed until everything is agreed.

The specific issues that concern the interests of the least-developed countries include elimination of cotton subsidies and unimpeded market access for cotton exported by the African countries, preferential rules of origin for the poorest countries to export industrial products to the rich countries, and preferential treatment to services and services suppliers of least developed countries, among others.

“Even if there is an early harvest there has to be an outcome on other issues in the Bali package,” the South African minister argued.

There is lot of concern at the G20 meeting that if the trade facilitation protocol is not implemented by the end of this month, the WTO would be undermined.

“What we said from South Africa is to commit on the delivery of the outcomes in the Bali package,” Davies told IPS. “And a number of developing countries present at the meeting agreed with our formulation that there has to be substantial delivery of the outcomes in the Bali package.”

At the Sydney meeting, the industrialised countries pushed hard for a common stand on the protocol for implementing the Trade Facilitation Agreement by July 31. The TF protocol is a prerequisite for implementing the trade facilitation agreement by the end of July 2015.

The United States also cautioned that if there is no outcome by the end of this month, the post-Bali package would face problems. “Talking about post-Bali agenda while failing to implement the TFA isn’t just putting the cart before the horse, it’s slaughtering the horse,” U.S. Trade Representative Ambassador Michael Froman tweeted from Sydney.

The industrialised countries offered assurances that they would address the other issues in the Bali package, including public distribution programmes for food security, raised by developing countries. But they were not prepared to wait for any delay in the implementation of the TF agreement.

Over the last four months, the developing and poorest countries have realised that their issues in the Bali package are being given short shrift while all the energies are singularly focused on implementing the trade facilitation agreement.

The African countries are the first to point out the glaring mismatch between implementation of the TFA on the one hand and lack of any concerted effort to address other issues in the Bali package on the other. The African Union has suggested implementing the TFA on a provisional basis until all other issues in the Doha Development Agenda are implemented.

The industrialised countries mounted unprecedented pressure and issued dire threats to the African countries to back off from their stand on the provisional agreement. At the AU leaders meeting in Malibu, Equatorial Guinea, last month, African countries were forces to retract from their position on the provisional agreement.

However, South Africa, Tanzania, Zimbabwe and Uganda insisted on a clear linkage between the TFA and the Doha agenda.

India is fighting hard, along with other developing countries in the G33 coalition of developing countries on trade and economic issues, for a permanent solution to exempt public distribution programmes for food security from WTO rules in agriculture.

New Delhi has found out over the last six months that the industrialised countries are not only creating hurdles for finding a simple and effective solution for public distribution programmes but continue to raise extraneous issues that are well outside the purview of the mandate to arrive at an agreement on food security.

India announced on July 2 that it will not join consensus unless all issues concerning agriculture and development are addressed along with the TF protocol.

India’s new trade minister Nirmala Sitaraman, along with South Africa, made it clear in Sydney that they could only join consensus on the protocol once they have complete confidence that the remaining issues in the Bali package are fully addressed.

Against this backdrop, the G20 trade ministers on Saturday failed to bridge their differences arising from their colliding trade agendas.

The developing countries, particularly India, want firm commitment that there is a permanent solution on public distribution programmes for food security along with all other issues concerning development, an Indian official told IPS.

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U.S. Ranks Near Bottom Globally in Energy Efficiency http://www.ipsnews.net/2014/07/u-s-ranks-near-bottom-globally-in-energy-efficiency/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-ranks-near-bottom-globally-in-energy-efficiency http://www.ipsnews.net/2014/07/u-s-ranks-near-bottom-globally-in-energy-efficiency/#comments Fri, 18 Jul 2014 23:26:46 +0000 Julia Hotz http://www.ipsnews.net/?p=135640 Energy-saving compact fluorescent lightbulbs (CFLs). Credit: Anton Fomkin/cc by 2.0

Energy-saving compact fluorescent lightbulbs (CFLs). Credit: Anton Fomkin/cc by 2.0

By Julia Hotz
WASHINGTON, Jul 18 2014 (IPS)

A new ranking has lauded Germany for its energy efficiency, while condemning the United States for lagging near the bottom.

The American Council for an Energy-Efficient Economy (ACEEE), a non-profit here, called the U.S. economy’s inefficiency “a tremendous waste” of both resources and money, in a scorecard released Thursday. Looking at 16 of the world’s largest economies, the rankings use 31 metrics to measure efficiency-related measures within each nation’s legislative efforts as well as the industrial, transportation and building sectors.“The most important kilowatt hour is the one you don’t have to produce.” -- Mark Konold

“A country that uses less energy to achieve the same or better results reduces its costs and pollution, creating a stronger, more competitive economy,” the ACEEE’s report begins. “While energy efficiency has played a role in the economies of developed nations for decades, cost-effective energy efficiency remains a massively underutilized energy resource.”

Though Germany produced the highest overall score- with 65 out of 100 possible points- and came in first in the “industry” sector, China had the top-scoring assessment in the “buildings” category, Italy had the most efficient “transportation” sector, and France, Italy and the European Union tied three-ways in the “national efforts” division.

Rachel Young, an ACEEE research analyst, told IPS that the U.S government has taken important recent steps to limit carbon emissions, particularly from existing power plants. But she recommends much broader actions.

The U.S. needs to “implement a national ‘energy savings’ target, strengthen national model building codes, support education and training in the industrial sector, and prioritise energy efficiency in transportation,” she says. Doing so, Young suggests, would not only reduce emissions but also save money and create jobs.

ACEEE’s focus has traditionally been on improving energy efficiency in the United States. But the new scorecard’s broad emphasis – on how energy efficiency makes for both an environmentally and financially wide investment – can be applied to international economies as well.

The Worldwatch Institute, a think tank here, is one of the many international development-focused organisations that have adopted this approach.

“We think that energy efficiency is one of the fastest ways that countries can get more mileage out of their energy usage,” Mark Konold, the Caribbean project manager at the Worldwatch Institute, told IPS. “The most important kilowatt hour is the one you don’t have to produce.”

Citing the Caribbean, West Africa, Central America and South America as prime examples, Konold says energy efficiency can be a wise economic investment for governments and individuals alike.

“Especially in island countries, which face disproportionately large energy bills, energy efficiency can go a long way in terms of reducing [an individual’s] financial burden,” he says. “Something as simple as window installations can make buildings in these island countries more efficient.”

Paradigm shift?

Worldwatch and others increasingly consider energy efficiency a key element in the sustainability agenda.

Konold, who recently co-authored a study on sustainable energy in Jamaica, believes it is critical to examine the return on investment of energy-efficient practices. Doing so, he says, can help determine which cost-effective energy models should be implemented in developing nations.

Such recommendations are particularly relevant given the international community’s growing focus on efficiency issues.

The United Nations and the World Bank, for instance, recently established the Sustainable Energy for All (SE4ALL) initiative to help “promote [a] paradigm shift” towards sustainability in developing countries. As one its three objectives, SE4ALL mandates “doubling the global rate of improvement in energy efficiency”.

“There is a growing realisation that energy efficiency is the lowest-cost energy and greenhouse gas emission option,” Nate Aden, a research fellow the climate and energy programme at the World Resources Institute, a think tank here, told IPS. “This is especially important for developing countries that are trying to address energy access while also addressing climate change.”

Part of this new focus is specifically due to the SE4ALL initiative, Aden says. Further,  he believes that the programme’s other two goals – doubling the share of renewable energy and providing universal energy access – are “consistent and complimentary” with energy efficiency.

“For example, in India, there’s a lot of discussion about the appropriate choices going forward, given that you have hundreds of millions who still lack access to energy,” Aden says. “You have to ask what the right choice is in terms of not only producing low-carbon emissions, but also in bringing energy to people.”

Aden also spoke enthusiastically about the “unique perspective” that private companies may take on energy efficiency, pointing to the efficiency efforts of Phillips, a U.S.-based lighting company. Aden believes that the ACEEE’s call for more energy-efficient practices will help make companies “able to plan effectively and be well-positioned from the supplier side” of energy.

Cultural change

While actions by the international community will clearly be important in implementing energy-efficient strategies from the top down, some are also emphasising the need for cultural change at the individual level.

“A huge chunk of this issue is education and awareness-building,” Worldwatch’s Konold says. “And once we start to spread the message that individuals can better their own situation, that’s when we start seeing a change,”

He says there is a profound lack of awareness around energy in many countries, pointing to a phenomenon he refers to as “leaving the air-conditioning on with the windows open”. But Konold emphasises that individuals can indeed make broad, substantive impact if they adopt more energy-saving behaviours in their homes.

This sentiment was echoed by the ACEEE’s Young, whose report pointed out that Americans are particularly guilty of energy-wasting behaviours, consuming roughly 6.8 tonnes of oil equivalent per person. This put the U.S. in second to last place in terms of individual energy consumption, only beating out Canada, where estimated oil consumption was 7.2 tonnes.

Based on this phenomenon, Young believes that individuals should “take advantage of incentives offered by their local utilities and governments to learn more about what they can do to reduce energy waste”, and to check out the ACEEE website, which “has dozens of consumer tips on improving energy efficiency.”

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Do Not GM My Food! http://www.ipsnews.net/2014/07/do-not-gm-my-food/?utm_source=rss&utm_medium=rss&utm_campaign=do-not-gm-my-food http://www.ipsnews.net/2014/07/do-not-gm-my-food/#comments Fri, 18 Jul 2014 18:19:50 +0000 Julio Godoy http://www.ipsnews.net/?p=135627 By Julio Godoy
BERLIN, Jul 18 2014 (IPS)

Attempts to genetically modify food staples, such as crops and cattle, to increase their nutritional value and overall performance have prompted world-wide criticism by environmental, nutritionists and agriculture experts, who say that protecting and fomenting biodiversity is a far better solution to hunger and malnutrition.

Two cases have received world-wide attention: one is a project to genetically modify bananas, the other is an international bull genome project.

In June, the Bill & Melinda Gates Foundation announced that it has allocated some 10 million dollars to finance an Australian research team at the Queensland University of Technology (QUT), working on vitamin A-enriched bananas in Uganda, by genetically modifying the fruit.

On the other hand,  according to its project team, the “1000 bull genomes project” aims “to provide, for the bovine research community, a large database for imputation of genetic variants for genomic prediction and genome wide association studies in all cattle breeds.”“It makes little sense to support genetic engineering at the expense of (traditional, organic) technologies that have proven to substantially increase yields, especially in many developing countries” – ‘Failure to Yield’, a study by the U.S. Union of Concerned Scientists

In both cases, the genetic modification (GM) of bananas and of bovines is an instrument to allegedly increase the nutritional value and improve the overall quality of the food staples, be it the fruit itself, or, in the case of cattle, of meat and milk.

James Dale, professor at QUT, and leader of the GM banana project, claims that “good science can make a massive difference here by enriching staple crops such as Ugandan bananas with pro-vitamin A and providing poor and subsistence-farming populations with nutritionally rewarding food.”

In the ‘1000 bull genomes project’, the scientists involved (from Australia, France, Germany, and other countries) have sequenced – that is, established the order of – the whole genomes of hundreds of cows and bulls. “This sequencing includes data for 129 individuals from the global Holstein-Friesian population, 43 individuals from the Fleckvieh breed and 15 individuals from the Jersey breed,” write the scientists in an article published in Nature Genetics of July 13.

The reactions from environmental activists, nutritionists, and scientists could not be more critical. The banana case has even prompted a specific campaign launched in India – the “No to GMO Bananas Campaign”.

The campaign, launched by Navdanya, a non-governmental organisation founded by the international environmental icon Vandana Shiva, insists that “GMO bananas are … not a solution to” malnutrition and hunger.

The group argues that so-called bio-fortification of bananas – “the genetic manipulation of the fruit, to cut and paste a gene, seeking to make a new or lost micronutrient,” as genetic expert Bob Phelps has put it – is a waste of time and money, and constitutes a risk to biodiversity.

“Bananas are highly nutritional but have only 0.44 mg of iron per 100 grams of edible portion,” a Navdanya spokesperson said. “All the effort to increase iron content of bananas will fall short the (natural) iron content of indigenous biodiversity.”

The rationale supporting bio-fortication suggests that the genetic manipulation can multiply the iron content of bananas by six. This increase would lead to an iron content of 2.6 mg per 100 grams of edible fruit.

“That would be 3,000 percent less than iron content in turmeric, or lotus stem, 2,000 percent less than mango powder,” the spokesperson at Navdanya said. “The safe, biodiverse alternatives to GM bananas are multifold.”

Scientists have indeed demonstrated that the GM agriculture has so far failed to deliver higher yields than organic processes.

In a study carried out in 2009, the U.S. Union of Concerned Scientists demonstrated that the yields of GM soybeans and corn have increased only marginally, if at all. The report, “Failure to Yield“, found out that increases in yields for both crops between 1995 and 2008 were largely due to traditional breeding or improvements in agricultural practices.

“Failure to Yield” also analyses the potential role in increasing food production over the next few decades, and concludes that “it makes little sense to support genetic engineering at the expense of (traditional, organic) technologies that have proven to substantially increase yields, especially in many developing countries.”

Additionally, the authors say, “recent studies have shown that organic and similar farming methods that minimize the use of pesticides and synthetic fertilizers can more than double crop yields at little cost to poor farmers in such developing regions as Sub-Saharan Africa.”

Yet another ground for criticism is the fact that Bill Gates has repeated an often refuted legend about the risk of extinction of the banana variety Cavendish, grown all over the world for the North American market.

In his blog, Gates claims that “a blight has spread among plantations in Asia and Australia in recent years, badly damaging production of … Cavendish. This disease, a fungus, hasn’t spread to Latin America yet, but if it does, bananas could get a lot scarcer and more expensive in North America and elsewhere.”

The risk of extinction, however, is practically inexistent, as the United Nations Food and Agricultural Organisation (FAO), among other institutions, had already shown in 2003.

“What is happening is the inevitable consequence of growing one genotype on a large scale,” said Eric Kueneman, at the time head of FAO’s Crop and Grassland Service. That is, monoculture is the main cause of the fungus.

“The Cavendish banana is a “dessert type” banana that is cultivated mostly by the large-scale banana companies for international trade,” recalled Kueneman, today an independent consultant on agriculture.

On the other hand, as FAO numbers show, the Cavendish banana is important in world trade, but accounts for only 10 percent of bananas produced and consumed globally. Virtually all commercially important plantations grow this single genotype, and by so doing, make the fruit vulnerable to diseases. As FAO said in 2003, “fortunately, small-scale farmers around the world have maintained a broad genetic pool which can be used for future banana crop improvement.”

Actually, the most frequent reasons for malnutrition and starvation can be found in food access, itself a consequence of poverty, inequity and social injustice. Thus, as Bob Phelps, founder of Gene Ethics, says, “the challenge to feed everyone well is much more than adding one or two key nutrients to an impoverished diet dominated by a staple food or two.”

The same goes for the genome sequencing of bulls and cows, says Ottmar Distl, professor at the Institute for Animal Breeding and Genetics at the University of Hannover. “Some years ago, we thought that it would impossible to obtain more than 1,000 kilograms of milk per year per cow,” Distl said. “Today, it is normal to milk 7,000 kilograms, and even as much as 10,000 kilograms per year.”

But such performance has a price – most such “optimised” cows calve only twice in their lives and die quite young.

And yet, the leading researchers of the “1000 bull genomes project” look at further optimising the cows’ and bulls’ performance by genetic manipulation of the cattle in order to, as they say in their report, meet the world-wide forecasted, rising demand for milk and meat.

Distl disagrees. “Whoever increases the milk output hasn’t yet done anything against worldwide malnutrition and hunger.” In addition, he warned, the constant optimisation of some races can lead to the extinction of other lines, thus affecting the populations depending precisely on those seldom older races.

It goes without saying that such an extinction would hardly serve the interests of the world’s consumers.

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Caribbean Grapples with Intense New Cycles of Flooding and Drought http://www.ipsnews.net/2014/07/caribbean-grapples-with-intense-new-cycles-of-flooding-and-drought/?utm_source=rss&utm_medium=rss&utm_campaign=caribbean-grapples-with-intense-new-cycles-of-flooding-and-drought http://www.ipsnews.net/2014/07/caribbean-grapples-with-intense-new-cycles-of-flooding-and-drought/#comments Fri, 18 Jul 2014 16:39:18 +0000 Desmond Brown http://www.ipsnews.net/?p=135629 Dr. Paulette Bynoe, a specialist in community-based disaster risk management, climate change adaptation policy and environmental management, says integrated water resource management is critical. Credit: Desmond Brown/IPS

Dr. Paulette Bynoe, a specialist in community-based disaster risk management, climate change adaptation policy and environmental management, says integrated water resource management is critical. Credit: Desmond Brown/IPS

By Desmond Brown
CASTRIES, St. Lucia, Jul 18 2014 (IPS)

As unpredictable weather patterns impact water availability and quality in St. Lucia, the Caribbean island is moving to build resilience to climate-related stresses in its water sector.

Dr. Paulette Bynoe, a specialist in community-based disaster risk management, climate change adaptation policy and environmental management, says integrated water resource management is critical."All governments must work together within the region and lessons learnt in one country can be translated to other countries." -- Dr. Paulette Bynoe

“We have been making progress…making professionals and other important stakeholders aware of the issue. That is the first step,” she told IPS.

“So in other sectors we can also look at coordination whether we talk about agriculture or tourism. It’s important that we think outside of the box and we stop having turfs and really work together,” she added.

Earlier this month, Bynoe facilitated a three-day workshop on Hydro-Climatic Disasters in Integrated Water Resource Management (IWRM) in St. Lucia. The workshop was held as part of the Organisation of Eastern Caribbean States-Reducing the Risks to Human and Natural Assets Resulting from Climate Change (OECS-RRACC) project.

Participants were exposed to the key principles of IWRM and Disaster Risk Reduction (DRR); the implications of climate change and variability for water resources management; policy legislation and institutional requirements needed at the community level to facilitate DRR in IWRM; the economics of disasters; and emergency response issues.

Rupert Lay, a water resources specialist with the RRACC Project, said the training is consistent with the overall goals of the climate change demonstration project in GIS technology currently being implemented by the OECS Secretariat.

“What we need to do now in the region and even further afield is to directly correlate the effects, the financial impacts of these adverse weather conditions as it relates to water resources,” he told IPS.

“We need to make that link strongly so that all of us can appreciate the extent to which and the importance of building resilience and adapting to these stresses.”

On Jul. 9, the St. Lucia Water and Sewage Company (WASCO) placed the entire island under a water emergency schedule as the drought worsened. The government has described the current situation as a “water crisis”.

The crisis, initially declared for the north of the island, has expanded to the entire country.

Managing director of WASCO Vincent Hippolyte said that there had not been sufficient rainfall to meet the demands of consumers. At the most recent assessment, the dam’s water level was at 322 feet, while normal overflow levels are 333 feet.

“Despite the rains and the greenery, drought conditions exist because the rivers are not moving. They do not have the volume of water that will enable WASCO to extract sufficient water to meet demand,” he said.

“We are in the early stages in the drought situation. It is not as severe as the later stages, but we are still in drought conditions.”

The government said that experts predicted the drought would persist through the month of August.

Bynoe said what’s happening in St. Lucia and elsewhere in the Caribbean is consistent with the projections of the Inter-Governmental Panel on Climate Change (IPCC) and the Climate Modeling Group from the University of the West Indies.

She said both bodies had given possible future scenarios of climate change as it relates to the Small Island Developing States, and how climate change and climate variability could affect water resources.

“I think generally the issue is that in the region there is a high likelihood that we can have a shortage of water so we can experience droughts; and perhaps at the same time when we do have precipitation it can be very intense,” Bynoe, who is also Director of the School of Earth and Environmental Sciences at the University of Guyana, said.

She noted that the models are saying there can either be too little water or too much water, either of which could create serious problems for the Caribbean.

“With too much water now you can have run off, sedimentation, water pollution and water contamination which means in countries where we depend on surface water the treatment of water become critical and this will then bring cost implications because water treatment is very costly,” Bynoe explained.

“But also, if you are going to treat water you have to use a lot of energy and energy is one of the sectors that contribute to greenhouse gasses. So you can see where the impact of climate change is affecting water but with water treatment you can also contribute to climate change.”

For St. Lucia and its neighbours, Bynoe said lack of financial resources tops the list of challenges when it comes to disaster mitigation and adapting new measures in reference to hydro-climatic disasters.

She also pointed to the importance of human capital, citing the need to have persons trained in specific areas as specialists to help with modeling, “because in preparation we first have to know what’s the issue, we have to know what’s the probability of occurrence, we have to know what are the specific paths that we can take which could bring the best benefits to us.”

She used her home country Guyana, which suffers from a high level of migration, as one example of how sustainable development could be negatively affected by capital flight.

“But you also need human capital because first of all governments must work together within the region and lessons learnt in one country can be translated to other countries so that we can replicate the good experiences so that we don’t fall prey to the same sort of issues,” Bynoe said.

“But also social capital within the country in which we try to ensure that all stakeholders are involved, a very democratic process because it’s not only about policymakers; every person, every household must play a role to the whole issue of adaptation, it starts with the man or woman in the mirror,” she added.

In October 2010, Hurricane Tomas passed very near St. Lucia killing 14 people and leaving millions of dollars in monetary losses. The island was one of three Eastern Caribbean countries on which a slow-moving, low-level trough on Dec 24, 2013 dumped hundreds of millimetres of rain, killing 13 people.

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As Winds of Change Blow, South America Builds Its House with BRICS http://www.ipsnews.net/2014/07/as-winds-of-change-blow-south-america-builds-its-house-with-brics/?utm_source=rss&utm_medium=rss&utm_campaign=as-winds-of-change-blow-south-america-builds-its-house-with-brics http://www.ipsnews.net/2014/07/as-winds-of-change-blow-south-america-builds-its-house-with-brics/#comments Fri, 18 Jul 2014 14:36:36 +0000 Diana Cariboni http://www.ipsnews.net/?p=135624 Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

By Diana Cariboni
MONTEVIDEO, Jul 18 2014 (IPS)

While this week’s BRICS summit might have been off the radar of Western powers, the leaders of its five member countries launched a financial system to rival Bretton Woods institutions and held an unprecedented meeting with the governments of South America.

The New Development Bank (NDB) and the Contingent Reserve Arrangement signal the will of BRICS countries (Brazil, Russia, India, China and South Africa) to reconcile global governance instruments with a world where the United States no longer wields the influence that it once did.“The U.S. government clearly doesn't like this, although it will not say much publicly.” -- Mark Weisbrot

More striking for Washington could be the fact that the 6th BRICS summit, held in Brazil, set the stage to display how delighted the heads of state and government of South America – long-regarded as the United States’ “backyard”— were to meet Russia’s president Vladimir Putin.

At odds with Washington and just expelled from the Group of Eight (G8) following Russia’s intervention in the Ukrainian crisis, Putin was warmly received in the region, where he also visited Cuba and Argentina.

In Buenos Aires, Putin and the president of Argentina, Cristina Fernández, signed agreements on energy, judicial cooperation, communications and nuclear development.

Argentina, troubled by an impending default, is hoping Russian energy giant Gazprom will expand investments in the rich and almost unexploited shale oil and gas fields of Vaca Muerta.

Although Argentina ranks fourth among the Russia’s main trade partners in the region, Putin stressed the country is “a key strategic partner” not only in Latin America, but also within the G20 and the United Nations.

Buenos Aires and Moscow have recently reached greater understanding on a number of international issues, like the conflicts in Syria and Crimea, Argentina sovereignty claim over the Malvinas/Falkland islands and its strategy against the bond holdouts.

Meanwhile, the relationship between Washington and Buenos Aires remains cool, as it has been with Brasilia since last year’s revelations of massive surveillance carried out by the National Security Agency against Brazil.

Some leftist governments –namely Bolivia, Venezuela and Ecuador— frequently accuse Washington of pursuing an imperialist agenda in the region.

But it was the president of Uruguay, José Mujica –whose government has warm and close ties with the Barack Obama administration— who better explained the shifting balance experienced by Latin America in its relationships with the rest of the world.

Transparency clause

In an interview before the summit, Ambassador Flávio Damico, head of the department of inter-regional mechanisms of the Brazilian foreign ministry, said a clause on transparency in the New Development Bank’s articles of agreement “will constitute the base for the policies to be followed in this area.”

Article 15, on transparency and accountability, states that “the Bank shall ensure that its proceedings are transparent and shall elaborate in its own Rules of Procedure specific provisions regarding access to its documents.”

There are no further references to this subject neither to social or environmental safeguards in the document.

After a dinner in Buenos Aires and a meeting in Brasilia with Putin, Mujica said the current presence of Russia and China in South America opens “new roads” and shows “that this region is important somehow, so the rest of the world perhaps begins to value us a little more.”

Furthermore, he reflected, “pitting one bloc against another… is not good for the world’s future. It is better to share [ties and relationships, in order to] keep alternatives available.”

Almost at the same time, Washington announced it was ready to transfer six Guantanamo Bay detainees to Uruguay, one of the subjects Obama and Mujica agreed on when the Uruguayan visited the U.S. president in May.

Mujica has invited companies from United States, China and now Russia to take part in an international tender to build a deepwater port on the Atlantic ocean which, Uruguay expects, could be a logistic hub for the region.

But beyond Russia, which has relevant commercial agreements with Venezuela, the real centre of gravity in the region is China, the first trade partner of Brazil, Chile and Perú, and the second one of a growing number of Latin American countries.

China’s president Xi Jiping travels on Friday to Argentina, and then to Venezuela and Cuba.

“The U.S. government clearly doesn’t like this, although it will not say much publicly,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research.

“With a handful of rich allies, they have controlled the most important economic decision-making institutions for 70 years, including the IMF [International Monetary Fund], the World Bank, and more recently the G8 and the G20, and they wrote the rules for the WTO [World Trade Organisation],” Weisbrot told IPS.

The BRICS bank “is the first alternative where the rest of the world can have a voice.  Washington does not like competition,” he added.

However, the United States’ foreign priorities are elsewhere: Eastern Europe, Asia and the Middle East.

And with the exception of the migration crisis on its southern border and evergreen concerns about security and defence, Washington seems to have little in common with its Latin American neighbours.

“I wish they were really indifferent. But the truth is, they would like to get rid of all of the left governments in Latin America, and will take advantage of opportunities where they arise,” said Weisbrot.

Nevertheless, new actors and interests are operating in the region.

The Mercosur bloc (Argentina, Brazil, Paraguay and Uruguay) and the European Union are currently negotiating a trade agreement.

Colombia, Chile, México and Perú have joined forces in the Pacific Alliance, while the last three also joined negotiations to establish the Trans-Pacific Partnership.

In this scenario, the BRICS and their new financial institutions pose further questions about the ability of Latin America to overcome its traditional role of commodities supplier and to achieve real development.

“I don’t think that the BRICS alliance is going to get in the way of that,” said Weisbrot.

According to María José Romero, policy and advocacy manager with the European Network on Debt and Development (Eurodad), the need to “moderate extractive industries” could lead to “changes in the relationship with countries like China, which looks at this region largely as a grain basket.”

Romero, who attended civil society meetings held on the sidelines of the BRICS summit, is the author of “A private affair”, which analyses the growing influence of private interests in the development financial institutions and raises key warnings for the new BRICS banking system.

BRICS nations should be able “to promote a sustainable and inclusive development,” she told IPS, “one which takes into account the impacts and benefits for all within their societies and within the countries where they operate.”

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India’s Cut-Rose Sector Pushes Past Barriers http://www.ipsnews.net/2014/07/indias-cut-rose-sector-pushes-past-barriers/?utm_source=rss&utm_medium=rss&utm_campaign=indias-cut-rose-sector-pushes-past-barriers http://www.ipsnews.net/2014/07/indias-cut-rose-sector-pushes-past-barriers/#comments Fri, 18 Jul 2014 12:33:35 +0000 Keya Acharya http://www.ipsnews.net/?p=135621 Rose growers in Bangalore, India, rely on sustainable rainwater harvesting techniques. Credit: Keya Acharya/IPS

Rose growers in Bangalore, India, rely on sustainable rainwater harvesting techniques. Credit: Keya Acharya/IPS

By Keya Acharya
BANGALORE, Jul 18 2014 (IPS)

Neat rows of pampered-looking rose plants, drip-irrigated and ‘misted’ by tiny sprinklers, grow inside temperature-controlled greenhouses with high domes opened periodically for fresh air, offering 10 million cut-rose stems for export each year.

The 25-hectare farm, located roughly 35 km outside the southern Indian city of Bangalore, belongs to Suvarna Florex, arguably India’s largest cut-rose exporter.

But though the plants are thriving, the industry is hassled by such thorny issues as the high royalty rates of its foreign-bred roses and steadily increasing input costs.

“This is a billion-dollar industry, controlled by European [mainly Dutch and French] breeders." -- Dr. Thilak Subbaiah, horticultural consultant
Occupying a niche in the flower market – hitherto dominated by traditional demand for loose flowers for cultural and religious occasions – the cut-rose industry in India is on the rise, registering a 17-20 percent increase last year alone, with growers exporting some 76.73 million tonnes, mainly roses, in 2012-2013.

Major export destinations are Europe, the United Arab Emirates (UAE), Japan, Canada and Australia.

Until 2010, the Bangalore-based operation Karuturi commanded nearly 10 percent of the cut-rose market in Europe and expanded rapidly from rose farms in Kenya to agricultural crops in Ethiopia.

Tangled in a web of bankruptcy, violations of labour and taxation laws in Kenya and money troubles – among others – in Ethiopia, Karuturi faced a storm of criticism over its controversial acquisition on paper of 400,000 hectares of virgin lands in Ethiopia at a very inexpensive rate, beginning in 2010.

The move, which some called a ‘land grab’ and which resulted in the threat of displacement of thousands and the loss of livelihoods for many in the Gambella region of Ethiopia, quickly became synonymous with Karuturi’s notorious founder Sai Ramakrishna, whose reputation tainted India’s operations in Africa.

According to a disgruntled rose-grower and former chief of the forest services in the neighbouring state of Andhra Pradesh, R. D. Reddy, Ramakrishna is “a playboy in all respects; one who speculated in stocks with borrowed money and lost heavily, and now the whole industry in India is being blamed because of him.”

Dr. Manjunatha Reddy, a Dubai-based Indian industrialist with a rose farm located just five km away from Karuturi’s flower operations in the Holata region, near the Ethiopian capital Addis Ababa, says that the ‘takeover on paper’ in the Gambella region is symptomatic of Ramakrishna’s speculative Ponzi-like financial schemes.

“His misdeeds have really turned public sentiment against Indian industry in Africa,” he told IPS, adding that a bad commercial reputation goes viral in a continent where local communities rely heavily on the land for their livelihoods.

Reddy says other Indian enterprises like telecommunications and farming have also been tarnished with the same negative image cast by Karuturi’s actions on the ground.

“We now have difficulty even in raising funds for agri-business from venture capitalists and investment brokers,” Reddy asserted.

Karuturi’s head offices in Bangalore did not respond to IPS’ repeated requests for an interview.

A matter of royalties

Other growers, situated in the elevated Deccan plateau lands surrounding the southern cities of Bangalore and Pune, dismiss Karuturi’s reputation as ‘immaterial’, nothing more than an embarrassment for the sector.

What’s really bothering major players in the industry, according to Suvarna Florex Managing Director Sridhar Chowdary, are the “huge royalties we have to pay foreign breeders for rose varieties.”

An ‘introduced industry’ stemming from the demand for cut-flowers in the international market, India’s flower sector was initially heavily in debt due to huge capital expenses incurred from the purchase of foreign greenhouse infrastructure imported from the Netherlands, along with Dutch patents for its roses.

On average, each grower incurred costs of up to 20 million rupees (roughly 332,000 dollars) per hectare of rose farm. Now, 20 years later, the cost of setting up a farm with indigenous technology costs less than half that amount.

“This is a billion dollar industry, controlled by European [mainly Dutch and French] breeders,” horticultural consultant Dr. Thilak Subbaiah told IPS.

“There is no way we can compete,” he stressed, adding that problem is made worse by Indian horticultural institutes’ lack of attention to breeding research.

According to Anne Ramesh, president of the South India Floriculture Association and chairman of Suvarna Florex, royalty rates for Indian growers average between 0.85 and 1.25 euros per plant for each variety of rose.

“This is the same rate as Kenya, which grows 100 percent [of its flowers] for export, whilst we grow half that percentage at best, the rest being for the domestic market,” he told IPS. “We find it unfair to have the same rate of royalty imposed on us.”

Small steps in a growing industry

As late as 2007 the industry at large was still complaining about a marked lack of awareness on exporters’ needs and a dearth of any government assistance.

Cold-chain systems for transportation, facilitated international flights, phyto-sanitary inspections and the lack of any financial incentives for the industry were among the top concerns over half a decade ago.

Recents developments, however, have stemmed some of the criticisms directed at the administration.

A cold-chain flower-auction centre set up in Bangalore, capital of the state of Karnataka, is described by rose-growers as one of the best in the world market. This, coupled with speedy transportation and easy facilitation at Bangalore’s Kempegowda International Airport, is putting a smile on many exporters’ faces.

In addition, the government has made some important concessions that have greatly reduced the burden on local growers.

“The South India Floriculture Association approached the government with our financial constraints and we subsequently got a one-time waiver of 50 percent of our heavy loans [in 2004-2005] incurred due to imported infrastructure,” Ramesh said.

“Today we have greenhouse-technology pioneers, we have employment at the village-level and small farmers who can put up greenhouses because of state and central government incentives. We managed to progress because the government saw the industry as a way to rural development,” he stated.

In the neighbouring state of Tamil Nadu alone, the rose industry employs 10,000 women and 3,000 men.

Rural farmers now cater mostly to the domestic market, says Satish Aswathappa, co-owner of Nandi Floriculture, based in Devanahalli, about 40 km outside Bangalore city.

“We are farmers ourselves, we deal directly with other rural farmers who give us their roses and we have a same-day system of grading and sending the roses by public bus to Hyderabad [capital of Andhra Pradesh],” he added.

Environmental concerns also influence the industry, whether domestic or export-oriented.

Chowdary says protective environmental measures are perceived by growers as “survival technologies.”

Walking IPS around Suvarna Florex’s huge farm, Chowdary demonstrated how rainwater is collected in aqeducts and then channeled into a central pond, reducing dependency on groundwater.

There are also checkdams, plastic sheeted ‘ponds’ where rainwater is held in troughs, recharge measures around groundwater pumps and wells, and vermicomposting of plant leafage for manuring.

With groundwater sources steadily depleting due to overusage by consumers and mismanagement by the government, the quality of groundwater has also suffered, he said, which could be disastrous for rose-growers since the plants thrive best when fed uncontaminated water.

Rose growers guzzle water at the rate of millions of litres per week for a farm covering 25 hectares. Sustainable rainwater harvesting techniques are crucial, since an hour’s rain provides enough water to sustain a 25-hectare plot for two days.

Still, input costs remain high, since the use of chemicals has increased in “application and in price”, according to Subbaiah. “We also pay more than government-stipulated wages plus incentives just to ensure the [workers] turn up,” he added

Organic compost has depleted too as lands and cattle around the cities disappear into urbanisation.

Despite these problems, a steadily increasing domestic market means the industry will likely be around for a while.

(END)

 

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U.S. Accused of Forcing EU to Accept Tar Sands Oil http://www.ipsnews.net/2014/07/u-s-accused-of-forcing-eu-to-accept-tar-sands-oil/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-accused-of-forcing-eu-to-accept-tar-sands-oil http://www.ipsnews.net/2014/07/u-s-accused-of-forcing-eu-to-accept-tar-sands-oil/#comments Thu, 17 Jul 2014 23:59:06 +0000 Carey L. Biron http://www.ipsnews.net/?p=135619 Mining tar sands oil at Fort McMurray in Alberta, Canada. Credit: Chris Arsenault/IPS

Mining tar sands oil at Fort McMurray in Alberta, Canada. Credit: Chris Arsenault/IPS

By Carey L. Biron
WASHINGTON, Jul 17 2014 (IPS)

Newly publicised internal documents suggest that U.S. negotiators are working to permanently block a landmark regulatory proposal in the European Union aimed at addressing climate change, and instead to force European countries to import particularly dirty forms of oil.

Environmentalists, working off of documents released through open government requests, say U.S. trade representatives are responding to frustrations voiced by the oil and gas industry here. This week, U.S. and E.U. officials are in Brussels for the sixth round of talks towards what would be the world’s largest free-trade area, known as the Transatlantic Trade and Investment Partnership (TTIP).“These documents show that the U.S. is simply not interested in an open, transparent [negotiation] process.” -- Bill Waren

“These documents show that the U.S. is simply not interested in an open, transparent [negotiation] process,” Bill Waren, a senior trade analyst with Friends of the Earth U.S., a watchdog group, told IPS. “Rather, U.S. representatives have been lobbying on the [E.U. regulatory proposal] in a way that reflects the interests of Chevron, ExxonMobil and others.”

The oil industry has repeatedly expressed concern over the European Union’s potential tightening of regulations around transport fuel emissions, first proposed in 2009 for what’s known as the Fuel Quality Directive (FQD). Yet according to a report released Thursday by Friends of the Earth Europe, the sector now appears to have convinced the U.S. government to work to permanently block the implementation of this standard.

Current negotiating texts for the TTIP talks are unavailable. But critics say the negotiations are forcing open the massive E.U market for a particularly heavy form of petroleum known as tar sands oil, significant deposits of which are in the Canadian province of Alberta.

“Since the adoption of the revised Fuel Quality Directive in 2009, the international oil companies … petroleum refiners, the Cana­dian government and the Albertan provincial government have spent enormous resources and used aggressive lobbying tactics to delay and weaken the implementation proposal,” the new report, which is being supported by a half-dozen environmental groups, states.

“The oil industry and the Canadian government … are afraid that the FQD could set a precedent by recognising and labelling tar sands as highly polluting and inspire similar legislation elsewhere.”

Safeguarding investments

At issue is the mechanism by which the European Union would determine the greenhouse gas emissions of various types of oil and gas. As part of Europe’s broader climate pledges, the FQD was revised to reduce the emissions of transport fuels by six percent by the end of the decade.

In 2011, the E.U. proposed that tar sands and other unconventional oils be formally characterised as having higher greenhouse gas “intensity” than conventional oil, given that they require more energy to produce – 23 percent higher, according to a study for the European Commission.

Yet tar sands have received massive interest from oil majors in recent years. Some 150 billion dollars were invested in Canadian tar sands between 2001 and 2012, according to Friends of the Earth, a figure expected to grow to nearly 200 billion dollars through 2022.

“Major oil investors want to immediately move as much tar sands oil as possible to Europe,” Waren says. “Over the longer term, they want to get the investments that will allow them to develop the infrastructure necessary to ship that exceptionally dirty fossil fuel to Europe.”

Many investors likely assumed the Canadian tar sands oil would have a ready market in the United States. But not only is the U.S. economy reducing its dependence on oil – particularly imports – but the trans-national transport of Canadian tar sands oils has become a major political flashpoint here, and remains uncertain.

So, last year, oil lobbyists here began to push U.S. trade representatives to use the nascent TTIP talks to safeguard the E.U. market for unconventional oils.

“[I]f the EU approves the proposed amendment to the FQD … it would adversely affect the U.S.-EU relationship, potentially eliminating a $32 billion-a-year flow of trade,” David Friedman, a vice-president with American Fuel & Petrochemical Manufacturers, a major trade association, wrote in a May 2013 letter to the top U.S. trade official.

Now, according to an internal European Commission e-mail uncovered by Friends of the Earth Europe and outlined in the new report, U.S. trade representatives appear to be echoing this analysis.

“[T]he US Mission informed us formally that the US authorities have concerns about the transparency and process, as well as substantive concerns about the existing proposal (the singling out of two crudes – Canada and Venezuela,” the letter, said to be from October 2013, reportedly states.

Canada and Venezuela have the world’s largest deposits of tar sands oil.

The letter also notes that the U.S. negotiators would prefer a “system of averaging out the crudes”, meaning that all forms of oil would simply receive one median score regarding their emissions intensity. This would effectively lift any E.U. bar on unconventional oils – and, according to the Friends of the Earth analysis, add an additional 19 million tons of carbon dioxide to the atmosphere.

‘Threatening’ climate policies

The new revelations come just a week after the leaking of a TTIP paper on E.U. energy policy, which would push the United States to abolish restrictions and automatically approve crude oil exports to the European Union. The document offered a rare glimpse into notoriously secret talks.

“We strongly oppose attempts by the E.U. to use this trade agreement, negotiated behind closed doors, to secure automatic access to U.S. oil and gas,” Ilana Solomon, director of the Responsible Trade Program at the Sierra Club, a conservation and watchdog group, told IPS. “I think there’s strong support for continued restrictions on this issue among both the public and policymakers, due to the implications for both energy security and the climate.”

The new disclosures have indeed caught the attention of the U.S. Congress. Last week, 11 lawmakers renewed a line of questioning from last year about Washington’s influence on E.U. tar sands policy.

“We reiterate that actions pressuring the EU to alter its FQD would be inconsistent with the goals expressed in President Obama’s Climate Action Plan,” the lawmakers wrote to the U.S. trade representative, Michael Froman, “and we remain concerned that trade and investment rules may be being used to undermine or threaten important climate policies of other nations.”

Yet such concerns may already be too late.

Last month, media reports suggested that the European Commission is now considering a proposal to go with the U.S.-pushed “averaging” approach to its fuel-emissions calculation. The same week, Europe’s first shipment of tar sands oil – 570,000 barrels from Canada – reportedly arrived on Spanish shores.

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Public Stockholding Programmes for Food Security Face Uphill Struggle http://www.ipsnews.net/2014/07/public-stockholding-programmes-for-food-security-face-uphill-struggle/?utm_source=rss&utm_medium=rss&utm_campaign=public-stockholding-programmes-for-food-security-face-uphill-struggle http://www.ipsnews.net/2014/07/public-stockholding-programmes-for-food-security-face-uphill-struggle/#comments Thu, 17 Jul 2014 22:12:26 +0000 Ravi Kanth Devarakonda http://www.ipsnews.net/?p=135617 By Ravi Kanth Devarakonda
GENEVA, Jul 17 2014 (IPS)

Framing rules at the World Trade Organization for maintaining public stockholding programmes for food security in developing countries is not an easy task, and for Ambassador Jayant Dasgupta, former Indian trade envoy to the WTO, “this is even more so when countries refuse to acknowledge the real problem and hide behind legal texts and interpretations in a slanted way to suit their interests.”

“The major problem is that the WTO’s Agreement on Agriculture (AOA) was negotiated in early 1990s and there are many issues which were not taken into account then,” says Ambassador Dasgupta, who played a prominent role in articulating the developing countries’ position on food security in the run-up to the WTO’s ninth ministerial meeting in Bali, Indonesia, last year.

“If the WTO has to carry on as an institution catering for international trade and its member states, especially the developing and least-developed countries, the rules have to be modified to ensure food security and livelihood security for hundreds of millions of poor farmers,” Ambassador Dasgupta told IPS Thursday.

Ironically, the rich countries – which continue to provide tens of billions of dollars for subsidies to their farmers – are insisting on inflexible disciplines for public stockholding programmes in the developing world.“Credible disciplines for food security are vital for the survival of poor farmers in the developing countries who cannot be left to the vagaries of market forces and extortion by middlemen” – Ambassador Jayant Dasgupta, former Indian trade envoy to the WTO

The United States, a major subsidiser of farm programmes in the world and charged for distorting global cotton trade by the WTO’s Appellate Body, has called for a thorough review of farm policies of  developing countries seeking a permanent solution for public stockholding programmes to address food security.

“Food security is an enormously complex topic affected by a number of policies, including trade distorting domestic support, export subsidies, export restrictions, and high tariffs,” says a United States proposal circulated at the WTO on July 14.

“These policies [in the developing countries],” continues the proposal, “can impede the food security of food insecure peoples throughout the world.” The United States insists that food security policies must be consistent with the rules framed in the Uruguay Round of trade negotiations that came into effect in 1995.

“Public stockholding is only one tool used to address food security, and disciplines regarding its application are already addressed in the Agreement on Agriculture,” the United States maintains.

The agriculture agreement of the trade body was largely based on the understandings reached between the two largest subsidisers – the European Union and the United States – which culminated in what is called the Blair House Agreement in 1992. The major subsidisers were provided a “peace clause” for ten years (1995-2005) from facing any challenges to their farm subsidy programmes at the WTO.

The AOA also includes complex rules regarding how its members, especially industrialised countries, must reduce their most-distorting farm subsidies.

In the face of increased legal challenges at the WTO and also demands raised for steep cuts in subsidies during the current Doha trade negotiations, several industrialised countries shifted their subsidies from what are called most trade-distorting “amber box” measures to “green box” payments which are exempted from disputes. Jacques Berthelot, a French civil society activist, says that the United States has placed some of its illegal subsidies into the green box.

When it comes to disciplines on food security, however, the United States says it is important to ensure that “[food security] programmes do not distort trade or adversely affect the food security of other members.”  The United States has suggested several “elements” for a Work Programme on food security, including the issue of public stockholding programmes, for arriving at a permanent solution. Washington wants a thorough review of how countries have implemented food security in developing countries.

The U.S. proposal, says a South American farm trade official, is aimed at “frustrating” the developing countries from arriving at a simple and effective solution that would enable them to continue their public stockholding programmes without many hurdles. “The United States is interested in preserving the Uruguay Round rules but not address the issues raised by the developing countries in the Doha Round of trade negotiations that seek to address concerns raised by developing countries,” the official adds.

The G-33 group – with over 45 developing and least-developed countries – has brought the food security issue to the centre-stage at the WTO. Over the last two years, the G-33, led by Indonesia with China, India, Pakistan, the Philippines, Kenya, Nigeria, Zimbabwe, Bolivia, Cuba and Peru among others, has called for updating the external reference price based on 1986-88 prices to ensure that they can continue with their public stockholding programmes under what is called de minimis support for developing countries.

Following the G-33’s insistence on a solution for public stockholding programmes for food security, which became a make-or-break issue at the WTO’s Bali ministerial meeting, trade ministers had agreed on a decision “with the aim of making recommendations for a permanent solution.” The ministers directed their negotiators to arrive at a solution in four years.

Over the last six months, there has been little progress in addressing the core issues in the Bali package raised by developing countries, including food security. “We are deeply concerned that the Ministerial Decision on Public Stockholding for Food Security Purposes is getting side-lined,“ India told members at the WTO on July 2.

“In this and other areas, instead of engaging in meaningful discussion, certain members have been attempting to divert attention to the policies and programmes of selected developing country members,” says New Delhi, emphasising that “the issues raised are in no way relevant to the core mandate that we have been provided in the Bali Decisions.”

At a time when the industrialised countries want rapid implementation of the complex agreement on trade facilitation, their continued stonewalling tactics on the issues raised by developing countries has created serious doubts whether food security issue will be addressed in a meaningful manner at all.

“Credible disciplines for food security are vital for the survival of poor farmers in the developing countries who cannot be left to the vagaries of market forces and extortion by middlemen,” says Ambassador Dasgupta. “The delay in addressing food security will pose problems for millions of people below poverty who are dependent on public distribution programmes.”

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International Reform Activists Dissatisfied by BRICS Bank http://www.ipsnews.net/2014/07/international-reform-activists-dissatisfied-by-brics-bank/?utm_source=rss&utm_medium=rss&utm_campaign=international-reform-activists-dissatisfied-by-brics-bank http://www.ipsnews.net/2014/07/international-reform-activists-dissatisfied-by-brics-bank/#comments Thu, 17 Jul 2014 21:39:24 +0000 Mario Osava http://www.ipsnews.net/?p=135613 Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 17 2014 (IPS)

The creation of BRICS’ (Brazil, Russia, India, China and South Africa) own financial institutions was “a disappointment” for activists from the five countries, meeting in this northeastern Brazilian city after the group’s leaders concluded their sixth annual summit here.

The New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), launched Tuesday Jul. 15 at the summit in the northeastern Brazilian city of Fortaleza, represent progress “from United States unilateralism to multilateralism,” said Graciela Rodriguez, of the Brazilian Network for the Integration of Peoples (REBRIP).

But “the opportunity for real reform was lost,” she complained to IPS at the International Seminar on the BRICS Bank, held in this city Wednesday and Thursday Jul. 16-17 as a forum for civil society organisations in parallel to the sixth summit.

The format announced for the NDB “does not meet our needs,” she said.

The NDB will promote “a new kind of development" only if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals. -- Carlos Cosendey, international relations secretary at the Brazilian foreign ministry
The bank’s goal is to finance infrastructure and sustainable development in the BRICS and other countries of the developing South, with an initial capital investment of 50 billion dollars, to be expanded through the acquisition of additional resources.

“We want an international system that serves the majority, not just the seven most powerful countries (the Group of Seven),” that does not depend on the dollar and that has an international arbitration tribunal for financial controversies, said Oscar Ugarteche, an economics researcher at the National Autonomous University of Mexico.

“It is unacceptable that a district court judge in New York should put a country at risk,” he told IPS, referring to the June ruling of the U.S. justice system in favour of holdouts (“vulture funds”) in their dispute with Argentina, which could force another suspension of payments.

“We need international financial law,” similar to existing trade law, and an end to the dominance of the dollar in exchange transactions, which enables serious injustice against nations and persons, like embargoes on payments and income in the United States, he said.

“Existing international institutions do not work,” and the proof of this is that they have still not overcome the effects of the 2008 financial crisis, said the Mexican researcher.

Major powers like the United States and Japan have unsustainable debt and fiscal deficits, yet are not harassed by the International Monetary Fund (IMF), in contrast to the treatment meted out to less powerful nations, particularly in the developing South.

During the seminar, organised by REBRIP and Germany’s Heinrich Böll Foundation, oft-repeated demands were for civil society participation, transparency, environmental standards and consultation with the populations affected by projects financed by the NDB.

These demands have not yet been included in the NDB but may be discussed during its operational design over the next few years, while the group’s parliaments ratify its approval, said Carlos Cosendey, international relations secretary at the Brazilian foreign ministry, in a dialogue with activists.

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Cosendey said that a disadvantage of the multilateral bank was the need for its regulations not to be confused with infringement of national sovereignty of member states. The political, cultural, legal and ethnic differences between the five countries could pose a major obstacle to the adoption of common criteria, he said.

The NDB can be constructive “if it integrates human rights” into its principles and presents solutions for the social impacts of the projects it finances, said Nondumiso Nsibande, of ActionAid South Africa, an NGO.

“We need roads, other infrastructure and jobs, as well as education, health and housing,” but big projects tend to harm poor communities in the places where they are carried out, she told IPS. It is still not known what levels of transparency and social concern the bank will have, she said.

In the view of Chankrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, the NDB will alleviate India’s great needs for infrastructure, energy, long distance transport and ports. However, he does not expect it to make large investments in one key service for Indians: sanitation.

Having an Indian as the bank’s first president, as the five leaders have decided, will help attract more investments, but he said people’s access to water must remain a priority.

Cosenday said the NDB will promote “a new kind of development.”

But Chalapurath told IPS that this will only happen if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals, as well as human rights and other best practices.

Adopting democratic processes within the bank will facilitate dialogue with social movements, parliaments and society in general, he said.

Incorporating environmental issues and gender parity is also essential, said Ugarteche and Rodriguez, who regards this as necessary in order to make progress towards “environmental justice.”

Not only roads and ports need to be built; even more important is the “social infrastructure” that includes sanitation, water, health and education, said Rodriguez, the coordinator of the REBRIP working group on International Economic Architecture.

Mobilising resistance to large projects that affect local populations in the places they are constructed will be part of the response to the probable priority placed by the NDB on financing physical infrastructure projects, she announced.

The social organisations gathered in Fortaleza, with representatives from Brazil, India, China, South Africa and other countries that are not members of the group, are preparing to coordinate actions to influence the way the bank and its policies are designed, and to monitor its operations and the actions of the BRICS group itself.

Brazilian economist Ademar Mineiro, also of REBRIP, said there was potential for national societies to influence the format and policies of the NDB, and time for them to organise and mobilise. “It is an unprecedented opportunity,” he told IPS.

Russia did not originally support the BRICS bank, preferring private funding. But Mineiro said its position changed after the United States and the European Union involved multilateral financial institutions like the World Bank in sanctions against Moscow for its annexation of Crimea, a part of Ukraine.

BRICS evolved “from the economic to the political,” with its members demanding more power in the international system. The alliance is one of the pillars of the Chinese strategy to conquer greater influence, including in the West, said Cui Shoujun, a professor at the School of International Studies of Renmin University in China.

“The BRICS need China more than the other way round,” he told IPS, adding that the Chinese economy is 20 times larger than South Africa’s and four times larger than those of India and Russia.

As well as seeking natural resources from other countries, among the reasons why China has joined and supports BRICS is strengthening the legitimacy in power of the Communist Party through internal stability and prosperity, the academic said.

(END)

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India’s Great Invisible Workforce http://www.ipsnews.net/2014/07/indias-great-invisible-workforce/?utm_source=rss&utm_medium=rss&utm_campaign=indias-great-invisible-workforce http://www.ipsnews.net/2014/07/indias-great-invisible-workforce/#comments Thu, 17 Jul 2014 20:58:10 +0000 Neeta Lal http://www.ipsnews.net/?p=135610 Millions of Indian women are confined to their homes performing domestic duties for which they receive no compensation. Credit: Malini Shankar/IPS

Millions of Indian women are confined to their homes performing domestic duties for which they receive no compensation. Credit: Malini Shankar/IPS

By Neeta Lal
NEW DELHI, Jul 17 2014 (IPS)

According to census data released this month, a whopping 160 million women in India, 88 percent of who are of working age (15 to 59 years), are confined to their homes performing ‘household duties’ rather than gainfully employed in the formal job sector.

Dubbed India’s ‘great invisible workforce’, this demographic is primarily involved in rearing families within the four walls of their homes.

This asymmetry in the workforce, experts say, reflects illiberal economic policies as well as complex social dynamics, which scupper the chances of women in the world’s so-called ‘largest democracy’ to realise their full income-generating potential.

The odds are heavily stacked against women in this vast country of 1.2 billion. Though more women are going out to work, India primarily remains a nation of stay-at-home wives who play a pivotal role in keeping families together in a country with virtually no government-aided social security.

Small wonder, then, that India ranks an abysmal 101st in a 136-nation survey titled ‘The Global Gender Gap Report, released by the World Economic Forum in 2013, which tracks international progress in bridging the gender gap worldwide.

“Policy makers should encourage women’s participation in powering the growth of Asia’s third largest economy, which can have a multiplier effect in eradicating poverty and illiteracy.” -- Aditi Parikh, a Mumbai-based demographer and sociologist
The index measures the “relative gaps between women and men” across countries in four key areas – health, education, economics and politics. With so many million women out of the workforce, India’s overall ranking reflects lopsided government policies that are failing to harness the full potential of a key demographic.

“The stay-at-home woman syndrome is a shocking loss to the country as well as to the women themselves,” says Aditi Parikh, a Mumbai-based demographer and sociologist.

“Policy makers should encourage women’s participation in powering the growth of Asia’s third largest economy, which can have a multiplier effect in eradicating poverty and illiteracy.”

Even though women achievers have earned admiration and respect in Indian society, gender-stereotyping results in most women facing a clash between work and family life, especially when they have to prioritise one over the other.

Despite a boom in the education sector, Indian women also remain less educated than men even though they make up nearly half the population.

The literacy rate for Indian women hovers at around 65 percent as per the 2011 census, compared to over 82 percent literacy among men.

This is an overwhelming reason for Indian women’s unemployment, say analysts.

Most Indian women comprise part of the country’s sprawling ‘informal’ sector‘, defined by the absence of decent working conditions as specified by the International Labour Organisation (ILO), lax labour laws and insufficient or insecure wages.

According to a 2011 ILO report, 83.8 percent of South Asian women are engaged in so-called ‘vulnerable employment’ that can in most cases be defined as casual labour or sporadic employment such as the manufacturing of garments and other handmade items produced within the worker’s own home.

Indian women workers represent a considerable share of this segment, which has expanded substantially over the last 20 years, researchers say.

While the percentage of women employed in the informal economy remains high, the number of Indian women engaged in formal, secure and recognised labour is still minimal. Only 14-15 percent of workers in the formal sector are women, a number that has remained stagnant for several years.

India also lags far behind the world’s average when it comes to female representation in management, with women occupying a miserable two to three percent of administrative and managerial positions nationwide.

According to Dr. Manasi Mishra, head of research at the Centre for Social Research (CSR), a New Delhi-based think tank, “Indian women usually tend to drop out at mid-career-level positions as they prioritise personal commitments and find it difficult to balance organisational demands, career aspirations and family commitments.”

Also, despite valiant efforts to build gender diversity in the workplace, corporate India still has less than five percent of women at top management and board levels. Only 50 percent of the women who graduate from business schools enter the workforce, says a CSR survey entitled ‘Women Managers In India – Challenges & Opportunities’.

The persistence of an invisible glass ceiling in the workplace and the prevalence of stereotyped gender roles also contribute to lower representation of women in higher-level positions, Mishra says.

“Society and organisations should work in synergy to prevent [women from dropping out] on the journey from education to employment,” she stressed.

Unfortunately, the problem is not specific to India. According to Ernst & Young’s 2013 Worldwide Index of Women as Public Sector Leaders, women make up about 48 percent of the overall public sector workforce, but represent less than 20 percent of public sector leadership across the G20 countries the consulting firm studied.

Diversity, according to the index, is crucial to delivering more effective governance and increased economic competitiveness.

Ernst & Young also found that the ratios of women in leadership roles vary widely. Over half of Germany’s public sector workforce is female (52 percent), but only 15 percent of women have leadership positions.

In Japan, the world’s third-largest economy, women make up 42 percent of the public sector workforce, but only three percent are leaders.

Russia, with the highest number of women represented across the public sector (71 percent), has just 13 percent female representation in leadership roles.

Here too, India languishes at the bottom of the pyramid with only 7.7 percent of its public sector leaders being female.

Experts say there is an urgent need for gender-sensitisation.

“The precondition for any effective social security policy aimed at women,” explains Amitabh Kumar, head of the media and communications division at CSR, “is the provision of economic security through ownership rights, and the securing of women’s right to resources such as land, housing, energy and technology.

“As long as the State takes no effective measures to ensure these very basic rights for women, we can’t expect even those social security policies aimed at women to have any effect.”

For the time being, it appears that India’s great invisible workforce will remain in the shadows until the government makes a determined effort to bring these women into the light.

(END)

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BRICS Forges Ahead With Two New Power Drivers – India and China http://www.ipsnews.net/2014/07/brics-forges-ahead-with-two-new-power-drivers-india-and-china/?utm_source=rss&utm_medium=rss&utm_campaign=brics-forges-ahead-with-two-new-power-drivers-india-and-china http://www.ipsnews.net/2014/07/brics-forges-ahead-with-two-new-power-drivers-india-and-china/#comments Thu, 17 Jul 2014 18:07:51 +0000 Shastri Ramachandaran http://www.ipsnews.net/?p=135604 By Shastri Ramachandaran
NEW DELHI, Jul 17 2014 (IPS)

The Sixth BRICS Summit which ended Wednesday in Fortaleza, Brazil, attracted more attention than any other such gathering in the alliance’s short history, and not just from its own members – Brazil, Russia, India, China and South Africa.

Two external groups defined by divergent interests closely watched proceedings: on the one hand, emerging economies and developing countries, and on the other, a group comprising the United States, Japan and other Western countries thriving on the Washington Consensus and the Bretton Woods twins (the World Bank and the International Monetary Fund).

The first group wanted BRICS to succeed in taking its first big steps towards a more democratic global order where international institutions can be reshaped to become more equitable and representative of the world’s majority. The second group has routinely inspired obituaries of BRICS and gambled on the hope that India-China rivalry would stall the BRICS alliance from turning words into deeds.The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

In the event, the outcome of the three-day BRICS Summit must be a disappointment to the latter group. First, the obituaries were belied as being premature, if not unwarranted. Second, as its more sophisticated opponents have been “advising”, BRICS did not stick to an economic agenda; instead, there emerged a ringing political declaration that would resonate in the world’s trouble spots from Gaza and Syria to Iraq and Afghanistan.

Third, and importantly, far from so-called Indian-China rivalry stalling decisions on the New Development Bank (NDB) and the emergency fund, the Contingency Reserve Arrangement (CRA), the Asian giants grasped the nettle to add a strategic dimension to BRICS.

With a shift in the global economic balance of power towards Asia, the failure of the Washington Consensus and the Bretton Woods twins in spite of conditionalities, structural adjustment programmes and “reforms”, financial meltdown and the collapse of leading banks and financial institutions in the West, there had been an urgent need for new thinking and new instruments for the building of a new order.

Despite the felt need and multilateral meetings that involved developing countries, including China and India which bucked the financial downturn, there had been no sign of alternatives being formed.

It is against this backdrop – of the compelling case for firm and feasible steps towards a new global architecture of financial institutions – that BRICS, after much deliberation, succeeded in agreeing on a bank and an emergency fund.

From India’s viewpoint, this summit of BRICS – which represents one-quarter of the world’s land mass across four continents and 40 percent of the world population with a combined GDP of 24 trillion dollars – was an unqualified success. The success is sweeter for the National Democratic Alliance (NDA) government led by the Bharatiya Janata Party (BJP) because the BRICS summit was new Prime Minister Narendra Modi’s first multilateral engagement.

For a debutant, Modi acquitted himself creditably by steering clear of pitfalls in the multilateral forum as well as in bilateral exchanges – particularly in his talks with Chinese President Xi Jiping, with Russian President Vladimir Putin and with Brazilian President Dilma Rousseff – and by delivering a strong political statement calling for reform of the U.N. Security Council and the IMF.

In fact, the intensification and scaling up of India-China relations by their respective powerful leaders is an important outcome of the meeting in Brazil, even though the dialogue between the Asian giants was on the summit’s side-lines. Nevertheless, Modi and Xi spoke in almost in one voice on global politics and conflict, and on the case for reform of international institutions.

The new leaders of India and China, with the power of their recently-acquired mandates, sent out an unmistakable signal that they have more interests in common that unite them than differences that separate them.

Against this backdrop, Indian Prime Minister Modi’s outing was significant for other reasons, not least because of the rapport he was able to strike up, in his first meeting, with Chinese President Xi. The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

As it happened, Modi and Xi hit it off, much to the consternation of both the United States and Japan. They spoke of shared interests and common concerns, their resolve to press ahead with the agenda of BRICS and the two went so far as to agree on the need for an early resolution of their boundary issue. They invited each other for a state visit, and Xi went one better by inviting Modi to the Asia-Pacific Economic Cooperation meeting in China in November and asking India to deepen its involvement in the Shanghai Cooperation Organisation (SCO).

Modi’s “fruitful” 80-minute meeting with Xi highlights that the two are inclined to seize the opportunities for mutually beneficial partnerships towards larger economic, political and strategic objectives. This meeting has set the tone for Xi’s visit to India in September.

Although strengthening India-China relationship, opening up new tracks and widening and deepening engagement had been one of former Indian Prime Minister Manmohan Singh’s biggest achievements in 10 years of government (2004-2014), after a certain point there was no new trigger or momentum to the ties. Now Xi and Modi are investing effort to infuse new vitality into the relationship which will have an impact in the region and beyond.

As is the wont when it comes to foreign affairs and national security, Modi’s new government has not deviated from the path charted out by the previous government. BRICS as a foreign policy priority represents both continuity and consistency. Even so, the BJP deserves full marks because it did not treat BRICS and the Brazil summit as something it had to go through with for the sake of form or as a chore handed down by the previous government of Manmohan Singh.

Before leaving for Brazil, Modi stressed the “high importance” he attached to BRICS and left no one in doubt that global politics would be high on its agenda.

He pointed attention to the political dimension of the BRICS Summit as a highly political event taking place “at a time of political turmoil, conflict and humanitarian crises in several parts of the world.”

“I look at the BRICS Summit as an opportunity to discuss with my BRICS partners how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world,” Modi had said on eve of the summit.

Having struck the right notes that would endear him to the Chinese leadership, Modi hailed Russia as “India’s greatest friend” after he met President Vladimir Putin on the side-lines of the summit.

India belongs to BRICS, and if BRICS is the way to move forward in the world, then BRICS can look to India, along with China, for leading the way, regardless of political change at home. That would appear to be the point made by Modi in his first multilateral appearance.

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BRICS Build New Architecture for Financial Democracy http://www.ipsnews.net/2014/07/brics-build-new-architecture-for-financial-democracy/?utm_source=rss&utm_medium=rss&utm_campaign=brics-build-new-architecture-for-financial-democracy http://www.ipsnews.net/2014/07/brics-build-new-architecture-for-financial-democracy/#comments Wed, 16 Jul 2014 20:41:04 +0000 Mario Osava http://www.ipsnews.net/?p=135601 The five BRICS leaders pose for the cameras at the sixth annual summit in the Brazilian city of Fortaleza. Credit: Agência Brasil/EBC

The five BRICS leaders pose for the cameras at the sixth annual summit in the Brazilian city of Fortaleza. Credit: Agência Brasil/EBC

By Mario Osava
FORTALEZA, Brazil, Jul 16 2014 (IPS)

The BRICS alliance (Brazil, Russia, India, China and South Africa) launched the New Development Bank (NDB) and Contingency Reserve Arrangement (CRA) during its sixth summit, institutionalising a new financial architecture for the emerging powers.

Two other agreements, one for Cooperation among Export Credit and Guarantees Agencies and another on Cooperation for Innovation among national development banks, complete the structure established Tuesday Jul. 15 by the five heads of state in the northeastern Brazilian city of Fortaleza.

The BRICS Summit concludes Wednesday with a meeting between the five leaders and the presidents of the Union of South American Nations (UNASUR) held in Brasilia, as well as several bilateral meetings.

The NDB and CRA are not being created “against anyone,” but as a “response to our needs,” said the summit host, Brazilian President Dilma Rousseff, at a press conference after the meeting with Vladimir Putin (Russia), Narendra Modi (India), Xi Jinping (China) and Jacob Zuma (South Africa).

BRICS leaders reject interpretations that the mechanisms have been created in opposition to or as alternatives to the World Bank and the International Monetary Fund (IMF), part of the Bretton Woods global financial system established in the 1940s.

Social inclusion - a voice from India

A key promoter of the New Development Bank and the country that will appoint the first NDB president, India was also the voice of social concerns at the Sixth BRICS Summit.

Prime Minister Narendra Modi said in Fortaleza that fighting poverty should be the main focus of the group, especially through construction of the Sustainable Development Goals which will shape the development agenda after 2015.

Food security is another issue that Modi identified as a priority, as did members of the Indian business community who participted in the BRICS Business Forum on Monday Jul. 14. It is a highly sensitive topic in India, where hundreds of millions of people live in poverty, most of them subsistence farmers in rural areas.

BRICS should not be a centralised, hierarchical institution, but should focus attention on local areas and people, and involve youth, Modi said in his speech at the Summit. He suggested the creation of a Young Scientists’ Forum and a BRICS university, using the internet for intensive contact between students in the five countries.

The uniqueness of BRICS, he said, is that “for the first time” it brings together a group of nations on the basis of “future potential,” rather than existing characteristics. This “forward looking” idea creates fresh perspectives and institutional changes for a more stable world, overcoming present economic conflicts and turbulence, Modi said.

The theme of the BRICS Summit is “Inclusive growth: sustainable solutions.”

Chinese President Xi Jinping said his country, which is the major trading partner of 128 nations, seeks “win-win” cooperation to promote better world economic governance.

Africa is in urgent need of “inclusive and dynamic growth,” said Jacob Zuma, the president of South Africa, while Russian President Vladimir Putin proposed the formation of a BRICS Energy Association, with a fuel reserve bank to ensure the energy security of its member states.

The NDB will complement existing multilateral and regional financial institutions, whose lack of resources constrain financing of infrastructure projects in developing countries, according to the summit’s final declaration, signed by the participating heads of state.

The CRA, a mechanism through which the five countries make available a total of 100 billion dollars from their reserves, is a currency pool that provides financial security for its members, without departing from the IMF, summit speakers said.

If one of the BRICS countries wishes to borrow more than 30 percent of the sum it is entitled to, in order to overcome threats to its balance of payments, it will have to face questions from the IMF about conditions of payment, said the Brazilian finance minister, Guido Mántega.

Brazil, Russia and India can withdraw up to the value of their contributions of 18 billion dollars each. South Africa may take out twice the five billion dollars it will contribute to the mechanism, and China up to half its 41 billion dollar commitment.

The new institutions “consolidate” the BRICS alliance, Mántega said. Before they become operational, they must be ratified by the countries’ parliaments, he said.

The bank and the reserve fund are so constituted as to prevent aspirations of dominance, Rousseff said. The countries will have equal shares in the NDB, of 10 billion dollars each, and equal voting rights. The capital may later be doubled.

Bank presidents and its governing councils will be appointed on a rotating basis.

China will contribute 41 percent of CRA funds but decisions will be taken by a broader majority, reaching consensus for the negotiation of larger loans, Mántega said.

But the NBD headquarters will be located in the Chinese city of Shanghai, and it will be difficult to avoid the economic and monetary weight of the Asian power from translating into greater decision-making power for Beijing.

The NDB’s composition avoids inequalities at the outset, but equal participation is only a formality as “in practice the future trend will be towards greater Chinese influence,” according to Carlos Langoni, former president of the Brazilian Central Bank.

To be effective, the bank will have to increase its initial capital of 50 billion dollars, recruiting new financing resources, and in this as well as in crises the “dominant role” of the country offering most capital and guarantees is an influential factor, added Langoni, who is the present director of the World Economics Centre at the Getulio Vargas Foundation.

China is interested in diversifying its investments, in multilateral and regional institutions as well as bilaterally. In recent years it has become the largest investor in Latin America.

It already participates in several regional financial mechanisms, such as the Chiang Mai Initiative, similar to the CRA and involving countries of the Association of Southeast Asian Nations, and it is seeking to establish the Asian Infrastructure Investment Bank, as an alternative to the Asian Development Bank in which Japan has decisive influence.

Langoni believes that the BRICS, with the CRA resting on “mega-economies” with their enormous currency reserves, will in the long term be able to “grow faster and have more weight than the IMF, which is already facing difficulties raising funds because of its rules.”

However, the IMF will remain the most powerful multilateral financial body over the next decade, he said.

The rise of the BRICS reflects a multipolar world, as the alliance includes military powers like Russia and China, nuclear powers like both these countries and India, and “moderators” without military ambitions like Brazil and South Africa.

Progress in strengthening and institutionalising the group at its Fortaleza summit could help reduce border tensions existing between China and India, or between Russia and the West, Langoni said.

In his view, what cements the group is its “frustration over the action of multilateral bodies, particularly the IMF,” in the face of the financial crises. These institutions are very complex and made up of a large number of countries.

The BRICS countries can operate with greater ease with their own financial instruments, which can also supply their urgent needs for investment in infrastructure, especially in Brazil and India, he argued.

The BRICS “found their identity” by working with the Group of Twenty (G20) industrial and emerging countries to defend the stimulation of growth, rather than recession-inducing austerity, after the 2008 global financial crisis, Mántega pointed out. Later they came to demand reform of the IMF, which spearheaded response to the crisis.

Some reforms to grant emerging countries greater participation in IMF decision-making were approved by the G20, but then stalled because they were rejected in the U.S. Congress.

The IMF is regarded as extremely undemocratic, because the United States has power of veto and some countries of the industrial North have a majority of votes, in contradiction with the present correlation of economic forces and the weight of emerging powers.

The absence of reforms “negatively impacts on the IMF’s legitimacy, credibility and effectiveness.” The reforms must lead to the “modernisation of its governance structure so as to better reflect the increasing weight of emerging markets and developing countries (EMDCs),” says the Fortaleza Declaration, signed by the five BRICS leaders.

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Russia Hoping Cuba Can Help Spur Trade with Latin America http://www.ipsnews.net/2014/07/russia-hoping-cuba-can-help-spur-trade-with-latin-america/?utm_source=rss&utm_medium=rss&utm_campaign=russia-hoping-cuba-can-help-spur-trade-with-latin-america http://www.ipsnews.net/2014/07/russia-hoping-cuba-can-help-spur-trade-with-latin-america/#comments Wed, 16 Jul 2014 16:20:51 +0000 Peter J. Marzalik http://www.ipsnews.net/?p=135596 By Peter J. Marzalik
MOSCOW, Jul 16 2014 (EurasiaNet)

Amid deteriorating relations with the West, Russian President Vladimir Putin is looking to diversify a Russian economy that is tightly linked to European markets. Fittingly, an old Soviet-era satellite state seems eager to lend a helping hand.

Emilio Lozada, Cuba’s ambassador to Russia, led a trade delegation in June to Kazan, the capital of Tatarstan, a resource-rich republic located 500 miles east of Moscow on the Volga River. Garcia met with Tatarstan’s chief executive, Rustam Minnikhanov, to discuss Cuba’s efforts to emulate the “Tatarstan model,” which has seen the autonomous republic emerge as one of Russia’s most prosperous regions during the post-Soviet era.The diversification push stands to make Russia less vulnerable to economic pressure, especially sanctions exerted by the United States and European Union in response to the ongoing crisis in Ukraine.

Lozada explained that Cuban officials, in studying Tatarstan’s economic experiences over the past few decades, seek to “find many useful things for ourselves,” the Tatar-Inform news agency reported.

Cuba by no means represents an alternative to Europe, but the Kremlin is still very interested in encouraging Cuban trade. In late May, prior to the Cuban delegation’s trip to Tatarstan, two major Russian energy companies, Rosneft and Zarubezhnetf, signed joint exploration agreements with the Cuban energy concern, Cupet.

Underscored by its recent gas deal with China, Russia is intent on reorienting trade away from Europe. Toward this end, the Kremlin hopes an expansion of commerce with Cuba could act like a wedge, opening broader ties with Latin American states.

The diversification push stands to make Russia less vulnerable to economic pressure, especially sanctions exerted by the United States and European Union in response to the ongoing crisis in Ukraine. Annual trade turnover between Russia and Latin America stood at 16.2 billion dollars in 2012, according to International Monetary Fund data.

The Kremlin’s revived interest in Latin America was also evident in Foreign Minister Sergei Lavrov’s recent tour of the region. Lavrov sought to bolster relations with old allies, such as Cuba and Nicaragua, as well as woo traditionally anti-Communist states, especially Chile and Peru.

During their Kazan meeting, Lozada and Minnikhanov discussed ways Tatar businesses in the oil, pharmaceutical, and tourism sectors could help bolster economic development in Cuba.

“I think that this is a very useful undertaking. These contacts were started [back in the Soviet era], and now they need to be restored, to work actively with Cuba; through it they can access all of Latin America,” Shamil Ageev, the chairman of Tatarstan’s Chamber of Commerce, asserted.

While many Russian regions are struggling, Tatarstan has comparatively thrived over the past two decades. The republic produces 32 million tons of oil per year and possesses reserves estimated at more than one billion tonnes. In addition, Tatarstan hosts the Kamaz truck factory, the Kazan helicopter plant, and Tupolev aviation production facilities.

Cuba’s ties to Tatarstan date back to the early 1990s, a time known among Cubans as the special period, when the island’s economy imploded due to the Soviet Union’s collapse and cut-off of aid from Moscow.

“We will never forget that late in the 90s, when our country experienced serious difficulties, Tatarstan opened an economic representation in Cuba,” Ambassador Lozada said in Kazan.

“Cooperation between Russia and Cuba are getting stronger and diverse ties between Tatarstan and Cuba develop within its framework. We are your friends and Tatarstan is open for you,” Mintimer Shaimiev, the former long-time Tatar president who now serves as a senior advisor to the autonomous republic’s government, was quoted as telling the visiting Cuban delegation.

Editor’s note:  Peter J. Marzalik is an independent analyst of Islamic affairs in the Russian Federation. This story originally appeared on EurasiaNet.org.

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North’s Policies Affecting South’s Economies http://www.ipsnews.net/2014/07/norths-policies-affecting-souths-economies/?utm_source=rss&utm_medium=rss&utm_campaign=norths-policies-affecting-souths-economies http://www.ipsnews.net/2014/07/norths-policies-affecting-souths-economies/#comments Wed, 16 Jul 2014 08:40:13 +0000 Yilmaz Akyuz http://www.ipsnews.net/?p=135587

In this column, Yilmaz Akyuz, chief economist of the South Centre in Geneva, argues that in recent years developing countries have lost steam as recovery in advanced economies has remained weak or absent due to the fading effect of counter-cyclical policies and the narrowing of policy space, and he recommends measures to reduce the external financial vulnerability of the South.

By Yilmaz Akyuz
GENEVA, Jul 16 2014 (IPS)

Since the onset of the crisis, the South Centre has argued that policy responses to the crisis by the European Union and the United States has suffered from serious shortcomings that would delay recovery and entail unnecessary losses of income and jobs, and also endanger future growth and stability. 

Despite cautious optimism from the International Monetary Fund (IMF), the world economy is not in good shape. Six years into the crisis, the United States has not fully recovered, the Euro zone has barely started recovering, and developing countries are losing steam. There is fear that the crisis is moving to developing countries.

Yilmaz Akyuz

Yilmaz Akyuz

There is concern in regard to the longer-term prospects for three main reasons.

First, the crisis and policy response aggravated systemic problems, whereby inequality has widened. Inequality is no longer only a social problem, but also presents a macroeconomic problem. Inequality is holding back growth and creating temptation to rely on financial bubbles once again in order to generate spending.

Second, global trade imbalances have been redistributed at the expense of developing countries, whereby the Euro zone especially Germany has become a deadweight on global expansion.

Third, systemic financial instability remains unaddressed, despite the initial enthusiasm in terms of reform of governance of international finance, and in addition new fragilities have been added due to the ultra-easy monetary policy.“The external financial vulnerability of the South is linked to developing countries’ integration in global financial markets and the significant liberalisation of external finance and capital accounts in these countries” – Yilmaz Akyuz

The policy response to the crisis has been an inconsistent policy mix, including fiscal austerity and an ultra-easy monetary policy. While the crisis was created by finance, the solution was still sought through finance. Countries focused on a search for a finance-driven boom in private spending via asset price bubbles and credit expansion. Fiscal policy has been invariably tight.

The ultra-easy monetary policy created over one trillion dollars in fiscal benefits in the United States – which was more than the initial fiscal stimulus; the entire initial fiscal stimulus was limited to 800 billion dollars.

There was reluctance to remove debt overhang through comprehensive restructuring (i.e. for mortgages in the United States and sovereign and bank debt in the European Union). Thus, the focus was on bailing out creditors.

There was also reluctance to remove mortgage overhang and no attempt to tax the rich and support the poor, particularly in the United Kingdom and the United States – where marginal tax rates are low compared with continental Europe. There has been resistance against permanent monetisation of public deficits and debt, which does not pose more dangers for prices and financial stability than the ultra-easy monetary policy.

The situation in the United States has been better than in other advanced economies. The United States dealt with the financial but not with the economic crisis, whereby recovery has been slow due to fiscal drag and debt overhang. And employment is not expected to return to pre-crisis levels before 2018.

As for the Euro zone, Japan and the United Kingdom, all have had second or third dips since 2008. None of them have restored pre-crisis incomes and jobs.

Meanwhile, trade imbalances have not been removed, but redistributed. East Asian surplus has dropped sharply and Latin America and sub-Saharan Africa have moved to large deficits. Developing countries’ surplus has fallen from 720 billion dollars to 260 billion dollars. On the contrary, advanced economies have moved from deficit to surplus, whereby U.S. deficits have fallen and the Euro zone has moved from a 100 billion dollars deficit to a 300 billion dollars surplus.

As tapering comes to an end and the U.S. Federal Reserve stops buying further assets, the attention will be turned to the question of exit, normalisation and the expectations of increased instability of financial markets for both the United States and the emerging economies.

This exit will also create fiscal problems for the United States because, as bonds held by the Federal Reserve mature and quantitative easing ends, long-term interest rates will rise and the fiscal benefits of the ultra-easy monetary policy would be reversed.

Developing countries lost steam as recovery in advanced economies remained weak or absent due to the fading effect of counter-cyclical policies and the narrowing of policy space. China could not keep on investing and doing the same thing. Another factor contributing to the change of context in developing countries has been the weakened capital inflows that became highly unstable with the deepening of the Euro zone crisis and then Federal Reserve tapering. Several emerging economies have been under stress as markets are pricing-in normalisation of monetary policy even before it has started.

The external financial vulnerability of the South is linked to developing countries’ integration in global financial markets and the significant liberalisation of external finance and capital accounts in these countries. These include opening up securities markets, private borrowing abroad, resident outflows, and opening up to foreign banks. While developing countries did not manage capital flows adequately, the IMF did not provide support in this area, tolerating capital controls only as a last resort and on a temporary basis.

Several deficit developing countries with asset, credit and spending bubbles are particularly vulnerable.  Countries with strong foreign reserves and current account positions would not be insulated from shocks, as seen after the Lehman crisis. When a country is integrated in the international financial system, it will feel the shock one way or another, although those countries with deficits remain more vulnerable.

In regard to policy responses in the case of a renewed turmoil, it is convenient to avoid business-as-usual, including using reserves and borrowing from the IMF or advanced economies to finance large outflows. The IMF lends, not to revive the economy but to keep stable the debt levels and avoid default. It is also inconvenient to adjust through retrenching and austerity.

Ways should be found to bail-in foreign investors and lenders, and use exchange controls and temporary debt standstills. In this sense, the IMF should support such approaches through lending into arrears.

More importantly, the U.S. Federal Reserve is responsible for the emergence of this situation and should take on its responsibility and act as a lender of last resort to emerging economies, through swaps or buying bonds as and when needed. These are not necessarily more toxic than the bonds issued at the time of subprime crisis. The United States has much at stake in the stability of emerging economies. (END/IPS COLUMNIST SERVICE)

 

*   A longer version of this column has been published in the South Centre Bulletin (No. 80, 30 June 2014).

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