Inter Press Service » Economy & Trade Turning the World Downside Up Thu, 08 Oct 2015 21:13:35 +0000 en-US hourly 1 Analysis: India’s Challenge on the SDGs Thu, 08 Oct 2015 21:13:35 +0000 N Chandra Mohan

N Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
NEW DELHI, Oct 8 2015 (IPS)

India’s stance on sustainable development goals is evolving as there are differing voices on what should be done. Over the next 15 years, the global development agenda will be preoccupied with the ambitious challenge of achieving 17 SDGs and 169 targets. The SDGs follow the Millennium Development Goals which were conceptualized as a set of eight goals on diverse development dimensions including poverty alleviation, gender equality, health and environmental sustainability. The buzz in the development community is that as the relative success of MDGs is a result of China’s super-rapid growth, the relative success of the SDGs will be because of India.

N Chandra Mohan

N Chandra Mohan

The National Democratic Alliance (NDA) government, for its part, appears confident in meeting these development goals. Prime Minister Modi told the UN General Assembly that many of the SDGs – which form the core of the 2030 Agenda for Sustainable Development – are already being implemented through flagship programmes of the government such as Swachh Bharat Abhiyaan (for better sanitation), Make in India, Digital India, Skill India, Smart Cities and Jan Dhan Yojana (banking the unbanked). He even mentioned his focus on the Blue Revolution, which includes the prosperity and sustainable use of marine wealth and blue skies. India’s development agenda thus is mirrored in the SDGs.

However, Mrs Sindhushree Khullar, CEO of NITI Aayog, a successor to the Planning Commission that has been tasked with the implementation of SDGs, candidly indicated some challenges facing the country in this regard. She argued that while they are indeed formidable in achieving 169 targets, in the 12th five-year plan (2012-17) there were only 25 indicators, many of which could not be updated due to data problems. At a consultation with stakeholders on SDGs, organised by the Research and Information System for Developing Countries (RIS) in New Delhi, she wondered whether the country could do all 169.

Between now and 2030, at the mid-point of 2022, India would be celebrating 75 years of independence when the objective of providing health, nutrition, housing, education and drinking water for all, along with road and digital connectivity, would hopefully be fulfilled. The sceptical voice of NITI Aayog’s CEO ought to be heeded as it is well recognized that the country has had a mixed track-record in implementing MDGs or even hitting the modest domestic socio-economic targets set in the 12th five-year plan. Mrs Khullar knows what she talking about as NITI Aayog has already undertaken the mid-term appraisal of this plan.

In sharp contrast, a growth-can-fix-SDGs stand was outlined by the vice-chairman of NITI Aayog, Dr Arvind Panagariya. Speaking at an event organised by RIS and Permanent Mission of India in New York ahead of the special session of UN General Assembly, he argued that “We simply cannot overstate the importance of robust economic growth, which in turn depends on well-functioning infrastructure and policies that enhance productivity. Without it, none of our objectives, be it eradication of poverty, empowerment of women, provision of basic services or even protection of environment and reversing climate change, would be possible by 2030.”

India’s success in sustaining high growth and therefore poverty alleviation will contribute in substantial measure to the success of the SDGs, added Dr Panagariya. Improving the lives of 1.4 billion Indians would make a major dent in the goal of improving the lives of all humanity. Besides the example of fast-growing China in reducing poverty and achieving MDGs, other erstwhile developing countries like South Korea, Taiwan and Singapore also relied on faster growth to eliminate poverty within a single generation. Social programs and social spending in these countries came later in terms of sequencing of development strategy.

If achieving SDGs through growth is India’s policy stance, it appears to be on fragile foundations. The latest IMF data show the country overtaking China with 7.5 per cent growth in 2016-17. The big assumption is of a Modi-dividend on growth. In other words, the formation of a majority government in India in May 2014 is expected to result in crucial policy reforms that can revive investor sentiment and boost growth. But this reforms-driven spurt in growth hasn’t materialised until now and there is little or no basis to infer that India will continue to grow by 7.5 per cent indefinitely. Extrapolating from the past to the future is only the stuff of statistical dreams.

India experienced 8 per cent growth over a full decade but that did not help in achieving MDGs. The country is on track for meeting the target of poverty reduction, reducing the spread of HIV/AIDS and reducing gender disparity in primary education, but lags behind on reduction in hunger, universal primary education, reduction in under-5 mortality rates, reduction in maternal mortality rates, reduction in the spread of malaria and other diseases and basic provision of safe water and sanitation, according to India Country Report 2015 on MDGs brought out by the Ministry of Statistics and Policy Implementation.

Robust economic growth will not help in hitting the SDGs either. For all the talk of flagship programmes doing the needful, the NDA government has savagely cut back on social sector spending in its latest union budget for 2015-16. Public spending on health is only 1 per cent of GDP. The provision of accessible, affordable and effective health services to all is difficult to deliver under these circumstances. The swingeing spending cuts affect universal primary education, especially schooling the girl child in various states of the country. Despite slower economic growth, Bangladesh has done a lot more in this regard.

A conscious policy focus on women will help India realise the first seven SDGs that complete the unfinished agenda on MDGs. More than growth per se a focus on redistribution will ensure meeting other goals such as 8, 9 and 10 that cover aspects such as inclusiveness and jobs, infrastructure and industrialization and distribution. The final seven goals lay down the framework for sustainability spanning urbanization, consumption and production, climate change, resources and environment, peace and justice and means of implementation and global partnership for it. Growth is not the magic bullet for achieving these goals either.


]]> 0
Healthy Oceans Key to Fighting Hunger Thu, 08 Oct 2015 17:06:44 +0000 Marianela Jarroud U.S. Secretary of State John Kerry addressing the second international Our Ocean conference, held in the Chilean port of Valparaíso. Sitting next to him are Chilean Foreign Minister Heraldo Muñoz and President Michelle Bachelet. Credit: Foreign Ministry of Chile

U.S. Secretary of State John Kerry addressing the second international Our Ocean conference, held in the Chilean port of Valparaíso. Sitting next to him are Chilean Foreign Minister Heraldo Muñoz and President Michelle Bachelet. Credit: Foreign Ministry of Chile

By Marianela Jarroud
VALPARAÍSO, Chile, Oct 8 2015 (IPS)

Seafood offers a large amount of animal protein in diets around the world, and the livelihoods of 12 percent of the global population depend directly or indirectly on fisheries and aquaculture.

However, the impacts of climate change, plastic waste pollution, illegal fishing, and acidification threaten the oceans and their biodiversity, said experts at the second international Our Ocean conference, held Oct. 5-6 in the Chilean port of Valparaíso, 120 km northwest of Santiago.

The more than 500 participants from 56 countries taking part in the gathering committed to some 80 marine conservation and protection initiatives for over 2.1 billion dollars, covering more than 1.9 billion km of ocean, said Chile’s foreign minister, Heraldo Muñoz.

Muñoz and his U.S. counterpart, Secretary of State John Kerry, hosted the conference, whose first edition took place in 2014 in Washington, D.C.

In one of the keynote speeches, the director general of the United Nations Food and Agriculture Organisation (FAO), José Graziano da Silva, said keeping the oceans healthy and productive was key to eradicating hunger and reaching the 2030 Agenda for Sustainable Development adopted by the international community during a Sept. 25-27 U.N. summit in New York.

“We cannot continue to use water resources as if they were infinite,” said Graziano da Silva, who pointed out that nearly one-third of the world’s fish stocks are overfished.

The U.N. official said oceans do not have an infinite capacity to withstand the threats they face: over-exploitation of marine resources, climate change, pollution and loss of habitat.

“The health of our own planet and our food security depends on how we treat the blue world,” he stated.

FAO emphasises that fish is a highly nutritious complement to diets lacking in essential vitamins and minerals.

According to FAO, about one billion people – largely in developing countries – rely on fish as their primary source of animal protein. And in 2010, “fish provided more than 2.9 billion people with almost 20 percent of their intake of animal protein, and 4.3 billion people with about 15 percent of such protein.”

And in some countries, especially small island states, fish accounts for over 25 percent of animal protein intake, the U.N. agency reports.

Besides offering a staple element in diets worldwide, fishing and aquaculture provide jobs and incomes to millions of people across the planet.

“Fishing is part of the oldest, most remote history of the American continent,” social anthropologist Juan Carlos Skewes told IPS. “In the interior of the continent as well as along the coasts and rivers it provided sustenance for dozens of native peoples, especially groups whose nomadic way of life depended on the sea.”

And that is still true: 12 percent of the global population – or 875,000,000 people – depend directly or indirectly on fishing and aquaculture.

“The sea is so important for us because it not only feeds us, but gives us life,” said Petero Edmunds, mayor of Rapa Nui, better known as Easter Island, located 3,700 km off the coast of Chile in the Pacific ocean.

Oceans cover over 70 percent of the planet’s surface and 97 percent of all water on earth is salty, but only one percent is protected. Credit: Marianela Jarroud/IPS

Oceans cover over 70 percent of the planet’s surface and 97 percent of all water on earth is salty, but only one percent is protected. Credit: Marianela Jarroud/IPS

“For Polynesians, the sea is our source of life,” he said in an interview with IPS. “It is so important that in our mythology we have Tangaloa, the God of the Sea, and in Rapa Nui’s ancient traditions, when a baby is born, the first thing the father must do is dip it into the sea, to return it to its natural state.”

In Latin America and the Caribbean there are over two million small-scale fisherpersons who generate some three billion dollars a year in revenues, according to the Latin American Organisation for Fisheries Development (OLDEPESCA).

Three of the world’s large marine ecosystems are found along South America’s coasts.

The main one is the Humboldt Current, in the Pacific ocean. It flows north along the west coast of South America, from the southern tip of Chile, past Ecuador, to northern Peru, creating one of the world’s most productive marine ecosystems with approximately 20 percent of the world’s fish catch, according to FAO.

Other important ecosystems in the region, in the Atlantic ocean, are the Patagonian Shelf along the coasts of Argentina and Uruguay, and the South Brazil Shelf.

But these ecosystems are in serious danger: Around eight million tons of plastic bottles, bags, toys and other plastic waste is dumped into the oceans every year, killing innumerable marine animals and sea birds.

In addition, nearly one-third of global fish stocks are overfished.

Of the 17 Sustainable Development Goals (SDGs) approved at the late September global summit in New York, number 14 is to “conserve and sustainably use the oceans, seas and marine resources.”

But the interdependence of the 2030 Agenda for Sustainable Development and the vital role played by oceans which, for example, absorb more than 30 percent of carbon dioxide emissions, mean the SDGs are impossible to achieve without healthy and resilient oceans.

“Today we know there is a much closer relationship between oceans and climate change,” EU Commissioner for Environment, Maritime Affairs and Fisheries Karmenu Vella told IPS.

He added that the protection of oceans should be a central focus of the 21st session of the Conference of the Parties (COP21) to the U.N. Framework Convention on Climate Change (UNFCCC) to be held in Paris from Nov. 30 to Dec. 11.

Foreign Minister Muñoz, meanwhile, said the government leaders taking part in the conference in Chile, who will also attend COP21, “have promised that protection of the oceans will be included in the documents and commitments that emerge from the summit.”

Muñoz stressed the importance of the announcements made by a number of countries at the Valparaíso conference.

He emphasised Chile’s pledge to protect more than one million sq km of sea, which will be one of the largest protected marine areas in the world.

As part of that initiative, the country announced the creation of 720,000 sq km of protected areas in Rapa Nui, as demanded by the island’s slightly over 5,000 inhabitants, who are seeking to protect the biodiversity of the surrounding waters, which are home to 142 endemic species, 27 of which are endangered or threatened.

The measure will also make it possible for them to continue their ancestral practice of subsistence fishing in the island’s 50 nautical mile zone.

“Artisanal fishing is still practiced according to our ancestral traditions in Rapa Nui,” Edmunds said. “Rocks are used as weights for the hooks, so we can catch tuna or other big fish.”

He said the creation of the marine protected area, announced by President Michelle Bachelet at the opening of the conference, would help combat illegal fishing in the waters surrounding the island.

“For decades we have seen ‘ghost’ ships that appear in the early hours of morning as lights on the horizon, which take our fish,” the mayor said.

“With the help of NGOs (non-governmental organisations), it has been shown that an average of 20 illegal vessels a day fish in our waters, which are taking our resources, and we don’t want them to be exhausted,” he added.

Bachelet also announced the creation of the Nazca-Desventuradas Marine Park covering 297,518 sq km, which will be the biggest such protected area in the Americas.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
Opinion: Five Key Takeaways from India’s New Climate Plan Thu, 08 Oct 2015 16:24:55 +0000 Apurba Mitra

Apurba Mitra, Thomas Damassa, Taryn Fransen, Fred Stolle and Kathleen Mogelgaard of World Resources Institute, Washington DC

By Apurba Mitra, Thomas Damassa, Taryn Fransen, Fred Stolle and Kathleen Mogelgaard

Last week, India announced its new climate plan, also known as its Intended Nationally Determined Contribution, or INDC. As the world’s third-largest emitter and a country that’s highly vulnerable to the impacts of climate change, it is encouraging to witness India investing in actions to tackle climate change while addressing poverty, food security and access to healthcare and education.

India’s INDC builds on its goal of installing 175 gigawatts (GW) of renewable energy capacity by 2022 by setting a new target to increase its share of non-fossil based energy from 30 per cent today to about 40 per cent by 2030.

The country also commits to reduce by 2030 its emissions intensity per unit GDP by 33 to 35 per cent below 2005 levels and to create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 through additional tree cover. The plan also prioritizes efforts to build resilience to climate change impacts and gives a broad indication of the amount of financing necessary to reach its goals.

Here are five major takeaways on India’s new INDC:

1) It Sets a Clear Signal for Clean Energy

Achieving its target of about a 40 per cent share of non-fossil energy sources by 2030 would result in at least 200 GW of new renewable capacity. However, if India achieves its previously announced goal of 175 GW of renewable energy by 2022 – mostly from solar – much of this capacity will come sooner. The 2022 target is extremely ambitious (the world’s entire installed solar power capacity was 181 GW in 2014) and clearly positions India as a major renewable energy player. With approximately 900 GW of estimated renewable capacity and favorable economic conditions, these targets can be met as long as financing and policy barriers are overcome.

While coal and other fossil fuels will continue to play a role in India’s energy mix in the decades to come, the targets announced yesterday will spur a transition toward cleaner sources. That’s good news for the environment, economy and the estimated 300 million Indians who today do not have adequate power supply.

2) Its Emissions Intensity Target Could Go Further

India’s emissions intensity (CO2 emissions per unit of GDP) declined by approximately 18 per cent between 1990 and 2005, and the country has already committed to reduce it by another 20-25 per cent from 2005 levels by 2020. The new INDC target commits India to go further – 33-35 per cent from 2005 by 2030.

Surprisingly, it is not clear that the country’s intensity target reflects the scale of mitigation that would result from its planned investments in renewables. In fact, a number of studies suggest that India could reduce its emissions intensity by that much or more even in the absence of significant new measures. In the course of meeting its renewable energy and non-fossil targets, and by tapping the substantial potential of energy efficiency improvements, India should be able to easily exceed its intensity target.

3) It Will Sequester Carbon by Increasing Forest Cover

India’s INDC recognizes the importance of aggressively restoring forest cover in a manner consistent with supporting livelihoods. Creating an additional carbon sink of 2.5 to 3 billion tonnes of CO2 through additional forest and tree cover would require average annual carbon sequestration to increase by at least 14 per cent over the next 15 years relative to the 2008-2013 period. With the Green India Mission expected to deliver 50-60 per cent of the required total, India needs to provide further detail on how it plans to achieve the rest. The INDC notes the importance of financing to address implementation challenges.

4) Adaptation Is a Key Priority

As a country exceptionally vulnerable to climate change, there is heavy focus on adaptation and resilience in India’s INDC. It highlights current initiatives in sensitive sectors, including agriculture, water, health and more, and points toward plans under development in each state. While India currently spends 3 per cent of its GDP on adaptation, the INDC noted that enhanced investment in these activities will require additional support through domestic and international funds. The country estimates it will need 206 billion dollars for the period 2015-2030, with additional investments needed for disaster management.

5) Policies Are Detailed while Targets Remain Vague

While India’s INDC lays out its existing climate measures in detail, it falls short on a number of the elements of transparency mentioned in a decision made at the Lima climate talks last December.

These include a lack of clarity on emissions intensity in the base year (2005) and target year (2030), as well as the scope and coverage of the intensity target and the methodologies for measuring it. This information is crucial for monitoring progress towards India’s target and for understanding how it contributes to the global goal of limiting temperature rise to 2 degrees Celsius.

On the other hand, the INDC lays out a compelling justification of fairness and ambition in the context of existing efforts and the country’s broader sustainable development challenges. It also stresses the importance of lifestyle changes and sustainable consumption.

Looking Ahead

India has put forward a well-balanced climate plan that – alongside its renewable energy goals – will generate transformational changes. These actions are also being proposed alongside an aggressive development agenda. Although implementation challenges remain, the INDC makes clear that India – along with its peers – is working toward a strong international climate agreement.


]]> 0
TPP is “Worst Trade Agreement” for Medicine Access, Says Doctors Without Borders Wed, 07 Oct 2015 19:28:09 +0000 Tharanga Yakupitiyage By Tharanga Yakupitiyage

“The TPP [Trans-Pacific Partnership] will…go down in history as the worst trade agreement for access to medicines in developing countries,” said Doctors without Borders/Médecins Sans Frontières (MSF) in a statement following the signing of the TPP trade deal.

The controversial agreement is the largest trade deal in a generation, bringing together 12 countries around the world including the United States to govern 40 percent of the world’s economy.

Negotiations on the TPP deal, initiated in 2008, finally came to a conclusion on Oct. 5 in the southern US city of Atlanta. It includes a range of economic policies including lowered tariffs as well as standards for labor law, environmental regulation, and international investments.

“This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products,” said US President Barack Obama in a statement following the end of negotiations. He also noted that the deal has the “strongest” commitments on labor and the environment of any trade agreement in history.

Though the deal has yet to be formally adopted by the signatories’ legislative bodies, it has already received criticism from numerous civil society members, including MSF, whose main concern arises from the deal’s provisions on data protection for biologic drugs.

Biologic drugs include any therapy from a biological source including vaccines, anti-toxins and monoclonal antibodies for diseases including cancer and HIV/AIDS.

According to the Brookings Institution, a US-based think tank, biologics are larger and structurally more complex than other drugs, making them more difficult and costly to develop. On average, biologics cost 22 times more than nonbiologics.

Due to these high costs, companies utilize data from the original drug creator to develop “biosimilars,” cheaper, generic versions of biologics. MSF has stated that this competition is the “best way to reduce drug prices and improve access to treatment.”

For instance, MSF treats almost 300,000 people with HIV/AIDS in 21 countries with generic drugs. These drugs have reduced the organization’s cost of treatment from US$10,000 per patient per year to US$140 per patient per year.

However, in the US, biologics creators have 12 years of data exclusivity. During this period, the US Food and Drug Administration (FDA) cannot approve a biosimilar that utilizes original biologic data.

Data protection rules vary in other countries, while Peru, Chile and Mexico do not have any biologics data rules at all.

As part of the TPP negotiations, the U.S. sought to include the 12-year protection rule. Trade ministers went back and forth on the rule, finally settling on a mandatory minimum of five to eight years of data protection.

As a result, biosimilars will not be able to enter the market in countries that previously had no restrictions. According to MSF, this will lead to high, sustained drug prices by pharmaceutical companies, preventing individuals and health providers from acquiring affordable and essential medicines.

MSF predicts that at least half a billion people will be unable to access medicines once the TPP takes effect.

“The big losers in the TPP are patients and treatment providers in developing countries,” MSF said in its statement.

The organization urged governments and its legislatures to consider the consequences.

“The negative impact of the TPP on public health will be enormous, be felt for years to come, and will not be limited to the current 12 TPP countries, as it is a dangerous blueprint for future agreements,” MSF warned.


]]> 0
Analysis: Is the Miracle of Microfinance Illusory? Wed, 07 Oct 2015 16:58:08 +0000 S Kulkami vani_raghav_ok

By S. Kulkami and Raghav Gaiha

Mohammad Yunus, the founder of Grameen Bank in Bangladesh, transformed the lives of millions of poor women through unsecured micro loans or micro credit to self-help groups. Microcredit evolved into microfinance that also includes savings and basic forms of insurance and transfer mechanisms. Within a few years, microfinance became a global phenomenon. Although microfinance continues to grow, the enthusiasm for it shows signs of waning.

In recent years, there has been a great deal of scepticism regarding the “miracle” of microfinance. Critics have questioned whether the rhetoric has moved far ahead of the evidence, with some even suggesting that microfinance can spell the death of local economies. Meanwhile, its defenders present robust evidence to substantiate their claims that microfinance delivers enormous benefits. We argue that the miracle is largely intact but needs strengthening.

According to data from MIX, which tracks microfinance institutions (MFIs), there is a solid and growing base of microfinance providers, with a global loan portfolio amounting to US$ 81.5 billion in 2012 with an outreach of 91.4 million low income clients. Women make up 80 per cent of the clients of the world’s largest 34 microlenders. Yet half of the world’s adults still do not have accounts in financial institutions and 76 per cent of the poor are unbanked. When you add all this up, the case for vigorous expansion of financial inclusion in the SDGs is patently obvious.

Recent shift of the focus to financial sustainability raises serious concerns about dilution of the outreach of microfinance [for example, the number (breadth) and socioeconomic level (depth) of the clients served by MFIs.] That the trade-off exists is undeniable but little is known about its extent. It is often emphasised that large-scale outreach to the poor on a long term basis cannot be guaranteed if MFIs are not financially sustainable. Consequently, donors, policy makers, and other financiers of microfinance have shifted from subsidising MFIs towards financial sustainability and efficiency of these institutions.

Analysis of a large cross-section of countries reveals that MFIs providing mainly individual loans are more profitable, but the fraction of poor borrowers and of women in the loan portfolio is lower than in institutions that concentrate on group lending. Moreover, MFIs that provide individual loans increasingly focus on wealthier clients, a phenomenon that is often referred to as “mission drift,” while this is less so for the group-based MFIs. So the importance of institutional design in reducing the trade-off cannot be overlooked. Besides, sustainability is feasible without mission drift by reducing costs and gaining efficiency through innovative use of information and communication technology.

Research has documented that social networks help the diffusion of microfinance. A survey in Guatemala demonstrated that individuals imitate the choices made by other members of the same network – in this case a household’s access to credit was closely related to membership in a church network. In another example, a majority of representatives of financial institutions in India concurred that self-help groups (SHGs) were more likely to be successful in villages with a high density of social networks and associations.

Not only do SHGs benefit from the presence of networks, they themselves also contribute to trust, reciprocity and associational capital (such as through strengthening of local institutions). Moreover, presence of successful SHGs induces quicker formation of other SHGs at a much cheaper cost and the self-reinforcing process gathers momentum over time.

Group lending not only reduces transaction costs of small loans but also ensures high repayment rates. However, group liability may also impose a “cost.”

The incentive for group participants is to reduce the risk taken by their fellow members, since participants do not benefit from the upside of any risky investment, but are liable for the downside. As a result, members of a group may impose excessive risk aversion. Our analysis of selected Asian countries – especially India – offers insights.

Drawing upon Indian evidence, assortative matching into poor and rich groups was reported by about 71 per cent of members of SHGs.

Few believed that the poor were excluded because of high interest rates and/or stringency of financial discipline. However, remoteness of villages, absence of functioning local institutions and lack of awareness of benefits of group lending were identified as major impediments in covering larger segments of the poor – especially by representatives of financial institutions.

A cross-country analysis establishes robustly that gross loan portfolio (GLP) of MFIs benefits not just the poor but also the poorest. In other words, GLP of MFIs is negatively associated with the incidence, depth, and severity of poverty. Hence sustained flows to MFIs may help avert accentuation of poverty as a consequence of the slow and faltering recovery of the global economy.

Much of micro evidence (such as that which is gathered at the household level) on poverty reduction is mixed. A striking case is that of Bangladesh, where the impact in some studies is positive and large, while in others the impact has been insignificant or weak. In Peru, it is the “better-off” rather than the core poor who benefit most from microfinance. By contrast, there is a substantial positive effect on a multi-dimensional welfare indicator in India. In China, while microfinance is welfare enhancing, the main beneficiaries are the non-poor. Experimental evidence for Thailand, the Philippines and India (Hyderabad slums) suggests that the (relatively) affluent benefit more.

An important insight for Bangladesh and elsewhere is that the exit from poverty requires longer-term participation. Household entrepreneurs require time to achieve productive efficiency or to earn higher returns from self-employment activities. Since existing members of microcredit generally obtain larger amounts, MFIs should be encouraged to offer larger loans sooner rather than later.

Before the 2004 Tsunami in Sri Lanka, access to microfinance helped income convergence among the borrowers – a process that was disrupted by this natural disaster. However, microfinance loans after the Tsunami helped in reducing the income gap between those who were hit by it and others who were not. This process of recovery was fast. There is thus strong evidence for the effectiveness of microfinance as a recovery tool.

Women in higher loan cycles of Kashf’s microfinance programme in Pakistan experienced a significant increase in empowerment compared to their counterparts in the first loan cycle. Being in a higher loan cycle affects the ability of a female borrower to decide how to use the loan. Microlending thus leads to higher financial empowerment. Besides, there was social empowerment as mobility restrictions were much fewer among them.

A detailed analysis for India has a much broader focus on women’s empowerment and offers a positive role of microfinance. A large majority of SHG participants themselves reported that they had gained self-confidence, greater respect within the family, a more assertive role in family decision-making, a more important role in children’s health and education and that there was a reduction in domestic violence. In the broader community sphere, however, a considerably lower share of respondents gave a positive response.

But these indices of empowerment do not reveal the “costs.” Higher incomes and a broadening of spheres of activities entailed greater responsibilities for women and extra hours of work. In the absence of reallocation of domestic responsibilities, some of the welfare gains from extra incomes earned were partly offset by longer hours of work.

In conclusion, while the miracle of microfinance has eroded somewhat with financial sustainability overriding social goals, there are ample grounds for optimism about recreating it.


]]> 0
Opinion: International Tax Cooperation Crucial for Development Wed, 07 Oct 2015 16:25:40 +0000 Jomo Kwame Sundaram Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Oct 7 2015 (IPS)

It has become clear that the South, including the least developed countries, has little reason to expect any real progress to the almost half century old commitment to transfer 0.7 percent of developed countries’ income to developing countries. But to add insult to injury, developing countries have, once again, been denied full participation in inter-governmental discussions to enhance overall as well as national tax capacities.

The ability to pursue development policies depends crucially on available fiscal space, which relies mostly on domestic revenues, especially taxes. However, tax revenues in most low- and lower middle-income developing countries are low. The average tax-GDP ratios in low-income and lower-middle income countries are around 15 and 19 per cent respectively, compared to the OECD average of around 34 per cent.

Although non-tax revenues may add significantly to total revenues in some countries, these ratios are typically low even in countries with considerable non-petroleum mineral resource extraction activity. Therefore, low- and lower-middle-income countries should take steps to increase their revenues after considering various options for doing so.
This is necessary because the main approach in recent decades has been to increase tax rates only if unavoidable. It was presumed that lower rates would ensure better compliance with tax laws, and thus raise revenue.

The prevailing tax wisdom also favoured broadening the tax base, even when taxation capacities are modest. Thus, indirect taxation has tended to increase while direct taxation of corporations and individuals has tended to decline. The latter was supposed to be good for investment and growth although the empirical support for this presumption is dubious.

In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined, as international trade taxes accounted for the largest share of tax revenue. As tariffs and export duties declined with trade liberalization, the share of trade taxes has fallen.

Unfortunately, other taxes have not grown to compensate for the lower trade taxes. There is an urgent need to reverse this trend, with greater commitment to revenue generation in order to improve social protection, create employment and otherwise contribute to sustained economic recovery.

For many developing countries, total tax revenues were mainly from three sources: domestic taxes on goods and services (general sales tax, excises), foreign trade taxes (mostly import duties) and direct taxes (mostly from corporations, rather than individuals). Wealth and property taxes as well as social security contributions continue to make modest contributions.

For rich countries, however, income taxes (mostly from individuals) make the largest contribution (around 34 per cent), with consumption taxes at the around the same level, with social insurance contributions accounting for 26 per cent of total tax revenue and trade taxes quite insignificant.

With their different economic circumstances, it does not make sense for developing countries to simply emulate developed economies in trying to generate revenue. Even among developing countries, no one size fits all.

And certainly not for all time, as tax systems must evolve with changing economic circumstances. A key question is: which taxes are most likely to meet the requirements of effective collection, buoyancy and stability?

Globalization and Tax Evasion

Revenue losses due to globalization need to be addressed. There are three main reasons for revenue losses:

First, capital movements increase opportunities for tax evasion because of the limited capacity that any tax authority has to check the overseas incomes of its residents; evasion is easier as some governments and financial institutions systematically facilitate the concealment of relevant tax information from home tax authorities.

Where dividends, interest, royalties and management fees are not taxed in the country in which they are paid, they more easily escape notice in the countries where the beneficiaries live. There have been large non-resident aliens’ bank deposits in some countries like the US that impose no taxes on interest from such deposits.

Second, avoidance (not evasion) may increase, given international differences in tax rules and rates, because of the choice of tax regime that international-tax-treatment of enterprise income commonly offers. This is more likely for taxation of profits from corporations’ international operations. Transfer pricing for goods, services and resources – moving among branches or subsidiaries of a company – provides opportunities for shifting income to minimize tax liability.

Third, international competition for inward foreign direct investment may lead governments to reduce tax rates and increase concessions for foreign investors. Income tax rates have fallen sharply since the 1980s. The tax rates that governments can impose are thus constrained by international competition. They are reluctant to raise rates or to tax dividend and interest income for fear of capital flight. Yet, it has long been known that direct-tax concessions have little or no effect in diverting international investment, let alone in attracting such flows. Hence, such tax concessions constitute an unnecessary loss of revenue.

Beggar-thy-neighbour policies have led to revenue losses for many developing countries in a race-to-the-bottom also involving labour and environmental standards, which in turn erodes the prospects for balanced, inclusive and sustainable development.

Finance ministries and tax authorities in developing countries need to cooperate among themselves and with their developed economies counterparts in the Organisation for Economic Co-operation and Development (OECD) to learn from one another and to close existing loopholes in their mutual interest. With the huge and growing size of public debts and the real and imagined fiscal constraints to sustained global economic recovery, inclusive international tax cooperation is more urgent than ever.

]]> 0
Shale Drives Uncertain New Geoeconomics of Oil Wed, 07 Oct 2015 13:04:09 +0000 Emilio Godoy Experts predict that in the long term, shale gas production will not be sustainable in the United States. The photo shows a shale gas well in Montrose, in the U.S. state of Pennsylvania. Credit: Emilio Godoy/IPS

Experts predict that in the long term, shale gas production will not be sustainable in the United States. The photo shows a shale gas well in Montrose, in the U.S. state of Pennsylvania. Credit: Emilio Godoy/IPS

By Emilio Godoy
WASHINGTON, Oct 7 2015 (IPS)

The emergence of fracking has modified the global market for fossil fuels. But the plunge in oil prices has diluted the effect, in a struggle that experts in the United States believe conventional producers could win in the next decade.

The U.S. oil industry had peaked – when the discovery of new deposits and output from existing wells begins to fall – which made the country more dependent on imports. But the equation was turned around thanks to the new technique.“The bubble won’t explode, but it will progressively deflate. At current prices, we would see a relatively quick shrinking of capital availability for the shale sector, because those companies are producing at a loss.” -- David Livingston

The innovative technology of hydraulic fracturing or fracking and the discovery of large deposits of shale gas and oil, along with massive investment flows, led to predictions that the United States would become autonomous in fossil fuels this decade. But these forecasts have been undermined by the drop in prices.

“The world is entering a new era of uncertainty in the geoeconomics of oil,” said David Livingston, an associate in the Energy and Climate Programme of the U.S. Carnegie Endowment for International Peace. “It is far from certain that the notoriously volatile oil market will become less cyclical.”

The analyst told IPS that as a result of domestic U.S. demand, “Companies will lose spare capacity, between what they can produce and what they produce, which is important, because the market is determined by that capacity.”

After 2003 international oil prices climbed, to 140 dollars a barrel in 2008, when the global financial crisis brought them down.

This decade they rallied, to around 100 dollars a barrel. But they have fallen again since late 2014, to about 40 dollars a barrel.

That means U.S. producers, in particular shale gas producers, are facing extremely low prices, overproduction, a lack of infrastructure for storing the surplus and a credit crunch for the industry’s projects, even though prices have gone down.

In addition, China’s economic slowdown and Europe’s stagnation are hindering the recovery in demand for energy.

The development of shale oil and gas has also put the U.S. industry on a collision course with the members of the Organisation of the Petroleum Exporting Countries (OPEC), especially since one of its widely touted objectives is to reduce imports from that bloc.

A warning about the danger of methane emissions in one of the shale gas Wells in Dimock, Pennsylvania. Credit: Emilio Godoy/IPS

A warning about the danger of methane emissions in one of the shale gas Wells in Dimock, Pennsylvania. Credit: Emilio Godoy/IPS

Since November 2014, OPEC has kept its production quotas stable, as part of a strategy imposed by the bloc’s biggest producer, Saudi Arabia, aimed at keeping prices low and discouraging the development of shale deposits, which are much more costly to tap into than the organisation’s conventional reserves.

In late 2014, the Norwegian consultancy Rystad Energy put the cost of producing a barrel of shale oil in the United States at 65 dollars a barrel, which means the industry is operating at a loss. The average cost of extracting a barrel of conventional oil in that country is 13 dollars, compared to five dollars in the Gulf.

For Miriam Grunstein, a professor at the Centre for Economic Research and Teaching (CIDE) in Mexico, the outlook is very uncertain.

Fracking, public enemy

Fracking involves the massive pumping of water, chemicals and sand at high pressure into the well, a technique that opens and extends fractures in the shale rock deep below the surface, to release the natural gas. Environmentalists warn that the chemical additives are harmful to health and the environment.

The process generates large amounts of waste liquids containing dissolved chemicals and other pollutants that require treatment before disposal, as well as emissions of methane, a potent greenhouse gas.

This has led to widespread public opposition to fracking in U.S. communities where exploration for shale gas is going on.

“There are doubts for several reasons. First of all, due to the low prices,” she told IPS from Mexico, which has begun to explore its significant reserves of shale gas.

“Although it has forced many companies to improve their operating capacity, reduce investments and achieve greater efficiency, they are in an environment where they have to look for markets, in Europe or Asia. But that requires liquefaction infrastructure, which implies major investments,” she added, referring to the current situation faced by shale gas producers.

In June, the United States produced 9.3 million barrels per day of crude oil, about half of which was shale oil, according to data from the Energy Information Administration (EIA).

The prospects for the industry are beginning to look less promising. In its Drilling Productivity Report published in late August, the EIA projected a fall in shale gas production in September, for the first time this year, to 44.9 billion cubic feet per day.

The agency stressed that output from new wells is not enough to offset the decline in existing wells.

For Livingston, “OPEC as an institution – and Saudi Arabia, its leader – is likely to emerge from this paradigm shift stronger than before in many ways. With its new strategy – one born out of necessity – the kingdom is emphasising market share, rather than price, while also moving to delegate the burden of balancing the world oil market to the U.S. shale industry.”

The United States would become the new “swing producer”, although without achieving the same power as the Gulf producers in influencing the market.

In the long run, total U.S. oil production will tend to drop, according to EIA projections. In 2020, crude oil production is expected to stand at 10.6 million barrels per day; in 2030, 10.04; and 10 years later, 9.43.

In the case of shale gas, projections are favourable, but at higher prices. In 2020, the country should be producing 15.44 trillion cubic feet per day; 10 years later 17.85; and in 2040, 19.58.

In total, the EIA forecasts that the country will produce 28.82 trillion cubic feet per day of natural gas in 2020; 33.01 in 2030; and 35.45 in 2040.

But the average price will go up. This year, the Henry Hub reference price for U.S. natural gas has stood at 2.93 dollars per million British thermal units (Btu), the heat required to raise the temperature of one pound of water.

The price should go up to 4.88 dollars per Btu in 2020; to 5.69 in 2030; and to 7.80 in 2040.

“The bubble won’t explode, but it will progressively deflate. At current prices, we would see a relatively quick shrinking of capital availability for the shale sector, because those companies are producing at a loss,” said Livingston.

Grunstein said: “Saudi Arabia’s aim is to keep the United States from becoming a major exporter. The strong markets exert the most pressure. If demand does not recover, the demand-price ratio is awkward. Consumption is needed, and I don’t see where it would come from.”

Livingston said one option is to review the 1970s-era ban on exporting U.S. crude oil, because “If production rises, refineries can’t process it and therefore new markets are needed.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
United Arab Emirates and Cuba Forge Closer Ties Tue, 06 Oct 2015 19:10:19 +0000 Patricia Grogg The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Oct 6 2015 (IPS)

Cuba and the United Arab Emirates agreed to strengthen diplomatic ties and bilateral cooperation during an official visit to this Caribbean island nation by the UAE minister of foreign affairs, Sheikh Abdullah bin Zayed Al Nahyan.

During his 24-hour stay, Al Nahyan met on Monday Oct. 5 with Cuban authorities, signed two agreements, and inaugurated his country’s embassy in Havana, which he said was a clear sign of the consolidation of the ties established by the two countries in March 2002.

“I am sure that the next few years will witness the prosperity of our ties,” he added during his official meeting with his Cuban counterpart, Bruno Rodríguez, with whom he signed an agreement on air services “between and beyond our territories” which will facilitate the expansion of opportunities for international air transport.

In the meeting, Rodríguez reaffirmed his government’s support for Arab peoples in their struggle to maintain their independence and territorial integrity.

According to official sources, the two foreign ministers concurred that the opening of the UAE embassy is an important step forward in bilateral ties and will permit closer follow-up of questions of mutual interest.

Al Nahyan also met with the first vice president of the councils of state and ministers, Miguel Díaz Canel. The two officials confirmed the good state of bilateral ties and the possibilities for cooperation on the economic, trade and financial fronts, Cuba’s prime-time TV newscast reported.

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

Cuba’s minister of foreign trade and investment, Rodrigo Malmierca, signed a credit agreement with the Abu Dhabi Fund for Development, to finance a solar energy farm that will generate 10 MW of electricity.

Al Nahyan first visited Havana on Oct. 1-2, 2009 in response to an official invitation from minister Rodríguez. On that occasion they signed two agreements, one on economic, trade and technical cooperation, and another between the two foreign ministries.

“We have great confidence in Cuba’s leaders and in our capacity to carry out these kinds of projects,” Al Nahyan told the local media on that occasion.

United Arab Emirates, a federation made up of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain – established diplomatic relations with Cuba in March 2002, in an accord signed in Cairo.

The decision to open an embassy in the Cuban capital was reached in a June 2014 cabinet meeting presided over by Sheikh Mohammed bin Rashid Al Maktoum, the UAE vice president and prime minister, and the ruler of Dubai.

In late February 2015, Al Maktoum received the letters of credentials for the new ambassador of Cuba in the UAE, Enrique Enríquez, during a ceremony in the Al Mushrif Palace in the Emirati capital.

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

Later, UAE Assistant Foreign Minister for Political Affairs Ahmed al Jarman and Enríquez discussed the state of bilateral relations and agreed to take immediate concrete steps to expand and strengthen ties in different areas.

Enríquez also met with Cubans living in Abu Dhabi with a view to bolstering relations between them and their home country. They agreed on periodic future gatherings.

In May 2014, the UAE and Cuba signed an open skies agreement to allow the airlines of both countries to operate in each other’s territories, as well as opening the door to new plans for flights between the two countries, the UAE General Civil Aviation Authority (GCAA) reported.

The accord formed part of a strategy to boost trade with other countries, said Saif Mohammed al Suwaidi, director general of the GCAA, who headed a delegation of officials and representatives of national airlines during a two-day visit to Cuba.

The UAE signed similar agreements with other Latin American countries, including Argentina, Brazil, Chile, Colombia and Mexico, as part of its effort at closer relations with this region, which is of growing interest to the Gulf country.

Talks have also been announced between the UAE and Russia to build a giant airport in Cuba, which would serve as an international airport hub for Latin America, the Abu Dhabi-based National newspaper reported in February.

The proposal is being discussed by the Russian government and the Abu Dhabi state investment fund Mubadala, mandated to diversify the emirate’s economy.

In 2013 and 2014, UAE was named the world’s largest official development aid donor in a report released by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD). In 2013, the Gulf nation provided five billion dollars in ODA to other countries.

Last year, according to OECD data, the only Gulf country to have a Ministry of International Cooperation and Development spent 1.34 percent of their gross domestic product in development cooperation.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
The Global South Will Make Its Contribution to Fighting Climate Change Mon, 05 Oct 2015 17:14:26 +0000 Diego Arguedas Ortiz Deforestation is one of the main sources of greenhouse gas emissions by the Global South, such as in this area of Rio Branco in the northern Brazilian state of Acre. Credit: Kate Evans/Center for International Forestry Research (CIFOR)

Deforestation is one of the main sources of greenhouse gas emissions by the Global South, such as in this area of Rio Branco in the northern Brazilian state of Acre. Credit: Kate Evans/Center for International Forestry Research (CIFOR)

By Diego Arguedas Ortiz
SAN JOSE, Oct 5 2015 (IPS)

Seen for years as passive actors in the fight against global warming, more than 100 countries of the Global South have submitted their national contributions to reducing greenhouse gas emissions and decarbonising their economies.

With differing levels of ambition and some targets conditional on international financing, the commitments assumed by developing economies put pressure on the big global emitters of greenhouse gases (GHG) and reinforce the ethical stance that the phenomenon of climate change requires contributions by all countries, said experts consulted by IPS.

“We’ve seen a number of strong commitments from Global South countries in spite of their small role in creating this challenge,” said Ellie Johnston, the World Climate Project manager at Climate Interactive, a U.S.-based organisation that helps people see what works to address climate change and related issues.

In their national contributions, developing countries have focused on clean energies, the fight against deforestation, the need for new forms of financing, and the design of climate change adaptation strategies.

A total of 146 governments met the Oct. 1 deadline to submit their Intended Nationally Determined Contributions (INDCs) for cutting GHG emissions, while 49 failed to do so.

The INDCs that were presented are not enough to keep the global temperature rise to two degrees Celsius with respect to pre-industrial levels – the limit set by experts to avoid climate catastrophe.

The country climate pledges are to be incorporated into the new universal binding treaty to be approved at the 21st yearly session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC), to be held Nov. 30 to Dec. 11 in Paris.

An analysis by Climate Interactive found that the national contributions to date would result in expected warming of 3.5 degrees Celsius by 2100

Another estimate, by the Climate Action Tracker, predicted that the combination of government climate action plans, if implemented, would bring global warming down to 2.7 degrees Celsius.

The differences in the estimates arise from the different methodologies used, mainly with regard to emissions from China and India after 2030 – the two emerging powers that in the last two decades have become the world’s first and third largest emitters of GHG. The second is the United States, the fourth Russia, and the fifth Japan.

“Our analysis shows that more ambitious contributions are needed across the Global South and Global North to ensure we reach the internationally agreed upon goal of two degrees C, and we hope that the Paris climate talks will create a framework that ensures this can happen,” Climate Interactive’s Johnston told IPS.

Some of the governments presented ambitious targets. And one thing that stood out was clear objectives for adaptation, one of the most important elements for the Global South, a term that refers to the diverse range of developing countries in Africa, Latin America and the Caribbean, and Asia.

An increase in clean energies and a reduction in fossil fuel use are part of the commitments assumed by the countries of the Global South to cut greenhouse gas emissions. The photo shows a wind farm in the La Paz y Casamata mountains near the capital of Costa Rica. Credit: Diego Arguedas Ortiz/IPS

An increase in clean energies and a reduction in fossil fuel use are part of the commitments assumed by the countries of the Global South to cut greenhouse gas emissions. The photo shows a wind farm in the La Paz y Casamata mountains near the capital of Costa Rica. Credit: Diego Arguedas Ortiz/IPS

Johnston celebrated the presentation of commitments by the emerging economies, and said that given the disparity between historic responsibility and action-taking capacity, industrialised countries should step up their contributions.

The division between industrialised and developing countries is a basic part of the UNFCCC, because of their different levels of responsibility in generating the phenomenon of climate change.

But after COP20, held in Lima in December 2014, all countries committed to contributing to curbing global warming, by means of the INDCs.

In the crucial Paris conference, negotiators will have to combine the INDCs presented by each country in the new binding climate treaty, which will enter into force in 2020, with the goal of keeping the global temperature rise below two degrees Celsius by 2100.

“When viewed from an equity and fairness perspective there are quite a few that have gone beyond what we could consider as their fair share, especially among the smaller LDCs (Least Developed Countries) and SIDS (Small Island Developing States), who are least responsible for the causes of climate change,” Tasneem Essop, the head of the World Wildlife Fund (WWF) delegation to the UNFCCC climate talks, told IPS.

The South African activist said the problem with the INDCs is that in Lima, clear standards were not set for their design.

Costa Rica pledged to limit its per capita emissions to 1.19 tons by 2050, and the hope is that the global average will be no more than two tons per capita. Cameroon is to cut its emissions by 32 percent, with respect to the level it would have in 2035 at the current rate of growth, but like many other countries, it clarified that to reach that goal, it would need international financing.

Papua New Guinea, where the logging industry is powerful, will focus on combating deforestation and on land-use change, its main problem.

Brazil, meanwhile, proposed to reduce emissions by 37 percent by 2025, with respect to 2005 levels, and it is one of the few countries of the South to present “absolute targets”.

“The problem we have, and this applies to all the INDCs and not just Global South countries, is that these INDCs have not been developed on a common framework or with common standards. So it makes it very difficult to compare,” said Essop.

The countries that failed to meet the deadline for the submission of INDCs included some with more limited technical capacity to draw them up, and others that the experts considered the least motivated to take action. The list of countries that did not present INDCs includes Bolivia, Iran, Malaysia, Pakistan, Saudi Arabia, Sudan and Venezuela.

Essop stressed that the commitments assumed by the Global South should keep in mind the balance between the three principal elements of climate action and the new treaty – mitigation, adaptation and means of implementation – where internal and external financing play an essential role.

“An important and interesting feature in some Global South countries’ INDCs has been the clarity in terms of what the country can fund domestically and what actions can be enhanced with support,” said Essop.

In 2009, industrialised nations pledged 100 billion dollars a year by 2020 to finance the struggle against global warming. But the funds have been slow in coming. “Finance will not be an issue that is resolved until the final night in Paris,” said Kat Watts, Global Climate Policy Advisor for Carbon Market Watch.

Watts told IPS that the old divisions in the climate negotiations – Annex 1 and Annex 2 industrialised countries, and the rest of the countries in a separate group – are crumbling under the weight of the INDCs and other actions.

The British analyst said it was important that the submission of the national climate pledges and the approval of the 2030 Agenda for Sustainable Development and its Sustainable Development Goals (SDGs), at a Sep. 25-27 U.N. summit in New York, had happened at the same time.

“The INDC and SDG processes both happening this year means that there is a real opportunity for each country to consider how to make any planned development both low carbon and resistant to predicted climate impacts,” said Watts.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
Brazil’s Expanded Climate Targets Frustrate Environmentalists Fri, 02 Oct 2015 21:05:26 +0000 Mario Osava Grasslands replaced the Amazon rainforest in Brasil Novo, a municipality in the Xingú River basin, where the giant Belo Monte hydroelectric dam is being built. Low-productivity stock-raising, with just one or two animals per hectare, is the big factor in deforestation and soil degradation in the region, and the government’s goal is to recover just one-fourth of the area degraded by this activity. Credit: Mario Osava/IPS

Grasslands replaced the Amazon rainforest in Brasil Novo, a municipality in the Xingú River basin, where the giant Belo Monte hydroelectric dam is being built. Low-productivity stock-raising, with just one or two animals per hectare, is the big factor in deforestation and soil degradation in the region, and the government’s goal is to recover just one-fourth of the area degraded by this activity. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Oct 2 2015 (IPS)

Brazil’s greenhouse gas emissions reduction programme, hailed as bold, has nevertheless left environmentalists frustrated at its lack of ambition in key aspects.

“The decision to present absolute reduction targets is praiseworthy, but they could be better and more ambitious, to the benefit of the country itself and of the global climate change talks,” said André Ferretti, general coordinator of the Climate Observatory, a Brazilian network of 37 environmental groups.

On Sep. 27, President Dilma Rousseff announced at the Sep. 25-27 U.N. Sustainable Development Summit in New York that Brazil’s goal is to cut greenhouse gas (GHG) emissions by 37 percent by 2025 and 43 percent by 2030, with a base year of 2005.“The weakest point in Brazil’s commitment is with respect to the forest question. It is demeaning to promise to end illegal deforestation by 2030, admitting that illegal practices will be tolerated for a decade and a half.” -- André Ferretti

This is Brazil’s Intended Nationally Determined Contribution (INDC) to keeping the global temperature rise below two degrees Celsius this century, the ceiling set by experts to ward off a climate catastrophe.

Each country had until Oct. 1 to submit its INDC, to be incorporated into the new universal binding treaty to be approved at the 21st yearly session of the Conference of the Parties to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), to be held Nov. 30 to Dec. 11 in Paris.

In order for Brazil to meet these goals, at least 45 percent of its total energy mix is to be made up of renewable sources, including hydropower, by 2030. The global average is just 13 percent, the Brazilian president pointed out.

Alternative sources like wind, solar, biomass and ethanol will account for 23 percent of the country’s electricity output, up from nine percent today.

In addition, the country will attempt to eliminate illegal deforestation in the Amazon rainforest and pledged to offset emissions from regulated deforestation.

Reforesting 12 million hectares and recovering 15 million hectares of degraded grasslands are other goals announced by Rousseff, who noted that Brazil is one of the first countries of the developing South to assume absolute reduction targets for cutting GHG emissions, with goals even higher than those set by many industrialised countries.

Other countries offer reductions with respect to projected future emissions, based on current rates of production, consumption and economic growth. At the COP15, held in 2009 in Copenhagen, Brazil promised to reduce its GHG emissions by 36 to 39 percent below its projected emissions for 2020.

President Dilma Rousseff announced Brazil’s national greenhouse gas emissions reduction contribution during the Sep. 25-27 U.N. Sustainable Development Summit in New York. Credit: UN/Mark Garten

President Dilma Rousseff announced Brazil’s national greenhouse gas emissions reduction contribution during the Sep. 25-27 U.N. Sustainable Development Summit in New York. Credit: UN/Mark Garten

But the country’s INDC goals “are still lower than what the country could achieve, and add very little to what has already been done,” Ferreti told IPS.

In 2012, GHG emissions had already been cut 41 percent with respect to 2005, basically due to a lower rate of deforestation in the Amazon, although they rose later because of greater use of fossil fuels.

Currently Brazil, Latin America’s biggest GHG emitter, releases nearly 1.48 billion tons a year of emissions into the atmosphere.

The target for net emissions for 2030 does not differ much from the 1.2 billion tons of carbon dioxide released in 2012, according to the Ministry of Science and Technology.

“The weakest point in Brazil’s commitment is with respect to the forest question,” said Ferretti, who is also manager of conservation strategies in the Boticario Group Foundation for Nature Protection. “It is demeaning to promise to end illegal deforestation by 2030, admitting that illegal practices will be tolerated for a decade and a half.”

“In legal terms, it is contradictory to set such a lengthy timeframe to combat an illegal activity,” former lawmaker Liszt Vieira, who directed Rio de Janeiro’s botanical garden for 10 years, told IPS.

Furthermore, the targets only refer to the Amazon, leaving out other ecosystems, such as the Cerrado, the savannah that covers 203.6 million hectares, or 24 percent of the national territory, and is suffering heavy and growing deforestation, said Ferretti.

“All of this reflects the Brazilian government’s weak commitment on this issue,” said Paulo Barreto, a senior researcher at the Amazon Institute of People and the Environment. “Brazil could assume a zero deforestation goal for 2030, which would be feasible because this country has learned a lot about the issue, has the necessary technology, and has land that has already been deforested, for the expansion of agriculture.

“Besides, it would be in the best interests of the country, which depends heavily on rainfall for agriculture and energy,” he said in an interview with IPS. “Its vulnerability to drought has been revealed by the current water and energy crisis, especially in the state of São Paulo, after scarce rainfall for the last two years.”

“That’s why a good climate accord in Paris would be good for Brazil,” to prevent extreme events like drought, he said.

An ambitious goal, like zero deforestation nationwide, would give Brazil a certain leadership role in the climate conference, to encourage contributions from other countries and the reaching of agreements that would make it possible to limit climate change to less disastrous levels, said both Barreto and Vieira.

Furthermore, the role that forests play in regulating rainfall, especially the Amazon jungle in South America, is understood better today.

Brazil could also present more ambitious goals with respect to energy from alternative sources, expanding investment in wind and solar energy, said Vieira. In energy, the country is going against the current, he said, increasing generation of thermal power with fossil fuels and putting a priority on producing oil from the pre-salt deposits discovered beneath a two-kilometre-thick salt layer under rock, sand and deep water in the Atlantic.

Vieira believes Brazil has lost the leadership role it had in environment and the climate for nearly two decades, since it hosted the 1992 U.N. Conference on Environment and Development, or Earth Summit, in Rio de Janeiro. In his view, it is the big players in the issue – China, the United States and Europe – that will decide the future of the global climate.

But despite the limitations of the government’s national climate programme, the environmentalists consulted by IPS admitted that Rousseff’s announcement was a happy surprise.

“We expected something worse from a development-oriented government that has treated environmentalism as an obstacle to development and economic growth,” said Vieira, who formed part of the current administration until 2013, as president of the botanical garden, a position of trust in the Environment Ministry.

“The presentation of the targets was both a relief and a frustration,” said Ferretti. “It was bad because it could have been better, both in the forest question and in energy, with more attention to biomass and solar energy.”

“And it was good because, besides some good measures, such as the recovery of degraded land, goals were set for 2025 and 2030, indicating that they would be revised every five years and could be expanded, opening a door to negotiation with and emulation by other countries,” he added.

It was also positive, he said, because Brazil abandoned its stance of inflexibly defending “common but differentiated responsibilities” exempting developing countries from meeting the same kinds of targets, as they are not equally responsible for the problem of global warming.

That separation between the two blocs boosted the “Third World” leadership by some countries like Brazil, but hindered negotiations, Ferretti argued.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
The Spectre of Jobless Growth in India Fri, 02 Oct 2015 12:21:48 +0000 N Chandra Mohan

N Chandra Mohan, is an economics and business commentator

By N Chandra Mohan
NEW DELHI, Oct 2 2015 (IPS)

India faces a serious challenge of dealing with joblessness despite statistically being the world’s fastest growing economy. The spread, depth and intensity of the problem, especially among the educated youth, is not reflected the latest unemployment number of 4.9 per cent in 2013-14. This estimate captures the chronically unemployed – those who sought or were available for work for the major part of the year – but it rarely figures in public discourse as the rate is relatively low and stable over time. Another reason is that the economy continues to generate employment opportunities even if they are largely casual or temporary in the informal sector.

N Chandra Mohan

N Chandra Mohan

A better description of the reality is jobless growth. An adequate number of jobs is not being created despite economic growth accelerating to 6.9 per cent in 2013-14. In other words, growth is not employment-intensive enough, as evidenced by the fact that the state government of Uttar Pradesh recently received 2.3 million applications for 368 job openings as peons. What’s more, these job seekers included 250 PhD candidates, 25,000 post graduates and 152,000 graduates. In Chhattisgarh, 75,000 people applied for 30 job openings as peons, some of whom were post graduates and engineers. These bleak employment prospects are observed in other states as well.

An important characteristic of the chronically unemployed – highlighted in all the five-yearly surveys of the National Sample Survey Organisation (NSSO) – is the concentration among the educated youth. Three-quarters of those without work on a long-term basis were observed to be fresh entrants to the labour force who are 15-29 years of age. Nothing much has changed over the years in this regard. If anything, this trend has worsened. In NSSO’s survey for 2011-12, four-fifths of those chronically employed were fresh entrants. The applicants for the posts of peons are from the ranks of educated youth.

Why are the long-term unemployed concentrated in this segment? Educated youth prefer to wait for better opportunities, unlike the poor who take up whatever is available. Supply-side factors like population and labour force growth also ensure that the share of the youth cohort is bound to be high among the fresh entrants. With rising enrolment in institutions of higher education, most of the new entrants are also educated. Attendance in institutions of higher education, corresponding to graduation and above among [DSJ1] those 20-24 years of age recorded the highest rates of growth according to the NSSO. Higher unemployment among the youth and among the educated thus are two sides of the same coin.

A growing reserve army of unemployed youth portends serious strains on the country’s social fabric. As the electorate that swept the Narendra Modi-led Bharatiya Janata Party (BJP) into power in May 2014 is predominantly young ­ from villages and small towns ­ the government must expeditiously address the challenge of jobless growth. This threatens to turn India’s demographic dividend of having a young population into a curse. Such voters are likely to expect employment opportunities to be generated immediately. Currently, there are only two million jobs being created annually, which are inadequate to absorb the 12 million young people who seek work every year.

Tackling jobless growth cannot be done through quick fixes. It is not only about labour reform. It is not possible to address the problem without developing skills that industry wants. India presents a paradox of skill shortages despite a situation of labour surplus. Around 15 percent of India’s trucks are idle due to a shortage of drivers. The steel industry is short of metallurgists. The healthcare sector is short of paramedics and technicians. The booming construction sector has a shortage of civil engineers. These skill mismatches must be met by stepping up enrolment in industrial training, vocational institutes and public-funded institutions of higher learning.

Creating more productive jobs over the near term thus is a big policy challenge for the National Democratic Alliance (NDA) government. As expectations are high, it must deliver soon on its promises, especially to the youth that has voted it to power with such a commanding majority. Consider the consequences if the shift of population away from agriculture gathers momentum and the trend of jobless growth persists in India’s manufacturing sector. If fewer jobs are created outside agriculture, more will be forced to stay in this sector, increasing the pressure on land and lowering incomes. Income inequalities will worsen while the growing ranks of jobless youth will turn restive.

The growing frustration has already spilled out onto the streets of Gujarat with the relatively well-off Patel community demanding backward caste reservation for education and jobs. The fresh entrants to the towns and cities who are looking for work are unlikely to be satisfied with the quality of employment that is on offer in urban India. Most of the jobs being generated are in the construction sector outside the purview of labour legislation or trade unionism. Employment in large factories, where work conditions are better protected, is sluggish. Equally unacceptable are temporary or causal odd-jobbing in the informal sector. In this dismal milieu, the lowly job of a peon has had many takers.

But the vast majority of the chronically unemployed are unlikely to be satisfied with such job openings. The NDA government must deliver on its flagship programmes like Make in India to generate meaningful employment opportunities. The absolute number of the educated unemployed will only keep rising due to the growth of the youth cohort among the fresh entrants to the labour force. To absorb them gainfully, labour-intensive manufacturing like textiles has to be re-vitalised. Greenfield investments to set up factories in other industries like automobiles also must be incentivised.

Lowering the official 4.9 percent rate of chronic unemployment may not seem like an urgent matter. After all, if you look at such figures the problem appears much worse elsewhere in the world, especially in Spain and Greece. Further, Brazil and Russia are deep in recession and unemployment has hit 7.5 per cent and 5.3 per cent respectively. In South Africa, joblessness is as high as 25 per cent. By contrast, the rate of unemployment in India may appear manageable. But to really think so would be a terrible mistake as the spectre of jobless growth haunts India.

]]> 0
Honduran Fishing Village Says Adios to Candles and Dirty Energy Thu, 01 Oct 2015 21:28:07 +0000 Thelma Mejia View from the Caribbean sea of the village of Plan Grande in the northern Honduran department of Colón. The isolated fishing community, which can only be reached after a 20-minute motorboat ride, is a 10-hour drive on difficult roads away from Tegucigalpa, and has become an example of sustainable energy management. Credit: Thelma Mejía/IPS

View from the Caribbean sea of the village of Plan Grande in the northern Honduran department of Colón. The isolated fishing community, which can only be reached after a 20-minute motorboat ride, is a 10-hour drive on difficult roads away from Tegucigalpa, and has become an example of sustainable energy management. Credit: Thelma Mejía/IPS

By Thelma Mejía
PLAN GRANDE, Honduras, Oct 1 2015 (IPS)

A small fishing village on the Caribbean coast of Honduras has become an example to be followed in renewable energies, after replacing candles and dirty costly energy based on fossil fuels with hydropower from a mini-dam, while reforesting the river basin.

They now have round-the-clock electric power, compared to just three hours a week in the past.

The community, Plan Grande, is in the municipality of Santa Fe in the northern department of Colón, and can only be reached by sea, after a 10-hour, 400-km drive from Tegucigalpa on difficult roads to the village of Río Coco on the Caribbean coast.

From Río Coco you take a motorboat the next morning, which takes 20 minutes to reach Plan Grande.

It’s 6:00 AM and the sun has started to come up. The sea is calm and the conditions are good, say the motorboat operators, who add that manatees used to be found in these waters but have since disappeared, which they blame on the damage caused to the environment.

Plan Grande, a village of 500 people, is at the foot of steep slopes, along the Caribbean coast.

On the boat ride to the village, seagulls can be seen flying in the distance as the fishermen return in their cayucos (dugout canoes) and small boats after fishing all night at sea. Others take jobs on larger fishing boats, which keeps them away from home for eight months at a stretch.

Fishing and farming are the only sources of work in the village, which makes electricity all the more important: in the past, because they couldn’t refrigerate their catch, they had to sell it quickly, at low prices.

“There was very little room for negotiating prices, and we would lose out,” community leader Óscar Padilla, the driving force behind the changes in Plan Grande, told IPS.

The village finally got electricity for the first time in 2004, thanks to development aid from Spain. But it was thermal energy, and for just three hours a week of public lighting they paid between 13 and 17 dollars a month per dwelling.

Óscar Padilla, a community leader in Plan Grande who was the main driving force behind the initiative that finally brought round-the-clock energy to the village, in the 21st century. Sustainable management of renewable energy, based on a plan marked by solidarity, has transformed this fishing village in Honduras’ northern Caribbean region. Credit: Thelma Mejía/IPS

Óscar Padilla, a community leader in Plan Grande who was the main driving force behind the initiative that finally brought round-the-clock energy to the village, in the 21st century. Sustainable management of renewable energy, based on a plan marked by solidarity, has transformed this fishing village in Honduras’ northern Caribbean region. Credit: Thelma Mejía/IPS

“We couldn’t afford anything more than street lamps – no electricity for TV and no refrigerator, because the costs would skyrocket. We couldn’t keep things on ice for long, and our dairy products and meat would spoil,” said Padilla, 65.

But in 2011 the people of Plan Grande opted for hydropower after a visit by technicians from the Small Grants Programme (SGP), implemented by the Global Environment Facility (GEF) and the United Nations Development Programme (UNDP), who suggested a small community-owned hydroelectric plant.

The entire community got involved and designed their own project for renewable energy and sustainability. With 30,000 dollars from the SGP and aid from Germany’s International Cooperation Agency (GIZ) and the Honduran Foundation for Agricultural Research (FHIA), a round-the-clock power supply became possible and Plan Grande left candles and dirty energy based on fossil fuels in the past.

“Our lives have changed – we now have electricity 24 hours a day and we can have a refrigerator, a freezer, a fan, and even a TV set – although we have to use the energy rationally and respect the limits and controls that we set for ourselves,” another local resident, Edgardo Padilla, told IPS.

“If we’re not careful, demand for power will soar, which would create problems for us again,” said the 33-year-old fisherman, who is responsible for running the energy supply from the micro-hydroelectric power station.

Edgardo Padilla, who administers the use of the small hydroelectric dam, explains how the process works and the rules the community has established to ensure rational use and distribution of electricity in Plan Grande, a fishing village on the Caribbean coast of Honduras. Credit: Thelma Mejía/IPS

Edgardo Padilla, who administers the use of the small hydroelectric dam, explains how the process works and the rules the community has established to ensure rational use and distribution of electricity in Plan Grande, a fishing village on the Caribbean coast of Honduras. Credit: Thelma Mejía/IPS

The rules and schedules set by the villagers to optimise and ration energy use include specific times for watching soap operas, turn on freezers, or use fans. For example, freezers are turned on from 10 PM to 6 AM, which is the time of lowest consumption, he said.

“For now, air conditioning is not allowed because it uses so much electricity, and light bulbs and freezers have to be the energy efficient kind,” said Edgardo Padilla, who added that they also focus on transparency and accountability in their energy policy.

The change in the source of energy has brought huge advantages. “We used to pay 360 lempiras (17 dollars) for three hours a week; now we pay 100 lempiras (four dollars) for a round-the-clock power supply,” he said.

The villagers also set a sliding pay scale. Families who have a refrigerator, fan, TV set, computer and freezer pay 11 dollars a month; those who have only a fan and a TV set pay six dollars; and families who just have light bulbs or lamps pay just four dollars.

The Plan Grande mini dam is 2.5 km from the centre of the village, along footpaths through a 300-hectare forest that runs along the Matías river, which provides them with electricity. The plant generates 16.5 kilowatt-hours (kWh).

The villagers also developed a conservation plan to preserve their water sources and installed cameras to monitor illegal logging and to identify the local fauna.

Belkys García is in charge of the Plan Grande nursery, where seedlings are grown to reforest the Matías river basin, which provides hydropower for the village, and to grow fruit and timber trees to generate incomes for this isolated fishing village in Honduras’ northern Caribbean region. Credit: Thelma Mejía/IPS

Belkys García is in charge of the Plan Grande nursery, where seedlings are grown to reforest the Matías river basin, which provides hydropower for the village, and to grow fruit and timber trees to generate incomes for this isolated fishing village in Honduras’ northern Caribbean region. Credit: Thelma Mejía/IPS

Belkys García runs a nursery created a year ago to grow trees such as pine, which can be used for timber, in order to reforest and keep the area green. She organises maintenance and reforestation crews, which all villagers take part in.

“If someone doesn’t come on the day they were scheduled to do clean-up and maintenance of the nursery or the streets and paths that lead to the dam, they have to pay for that day of missed work,” García, 27, told IPS while watering seedlings.

“We organise ourselves, and using the nursery we also want to become entrepreneurs in other income-generating areas, such as growing rambutan (Nephelium lappaceum),” said García.

The local population is of mixed-race heritage. The municipality of Santa Fe is mainly Garifuna – descendants of African slaves who intermarried with members of the indigenous Carib tribe. The mayor of Santa Fe, Noel Ruíz of the Garifuna community, is proud of the village. “It is a model at the national level for the good use of clean energy,” he told IPS.

“It’s worth investing here; this is a committed community and its leaders know about accountability, believe in transparency and love nature, three things that you can’t find easily,” said the 44-year-old mayor, who was reelected to a second term.

“These people are happy because while the country has energy problems, they don’t; they have understood that there is a correlation between conservation of nature and well-being for the community,” added Ruíz, an agronomist.

Energy demand in this country of 8.8 million people is estimated at 1,375 MW. Sixty percent of that is generated by the national power utility, ENEE, and the rest comes from private companies or is imported by means of interconnection with other Central American nations.

Energy in Honduras comes from four sources: thermal, hydropower, wind and biomass. In 2010, 70 percent came from thermal power stations, and 30 percent from renewable sources. But since 2013, that has changed, and thermal energy now represents 51 percent of the total, while the rest comes from renewables.

The village of Plan Grande is now an example of the rational use and conservation of renewable energy.

Thanks to the new power supply this isolated community now has its own bakery.

“As a little girl I would imagine that one day I would trade my candle for a lamp. Things have really changed for us!” a 55-year-old local resident, Julia Baños, told IPS.

This reporting series was conceived in collaboration with Ecosocialist Horizons.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
Opinion: Renewed Optimism or Higgledy-Piggledy Vision? Wed, 30 Sep 2015 13:05:51 +0000 S Kulkami vani_raghav_ok

By S. Kulkami and Raghav Gaiha
Philadelphia and Boston, Sep 30 2015 (IPS)

The 17 sustainable development goals (SDGs) and the whopping 169 targets were adopted in the largest ever United Nations Summit, attended by Prime Ministers, Presidents and the Pope, among other luminaries, in New York. These goals encompass world peace, the environment, gender equality, elimination of poverty and hunger and much, much more.

So far, they have evoked mixed reactions ranging from complete dismissal to grudging acceptance and overwhelming euphoria. Much of the scepticism is rooted in the ambitiousness of the SDGs relative to highly varying and, in most cases, limited capacities of developing countries to accomplish them. A comment in The Economist (19 September, 2015) derides them as “higgledy-piggledy, “bloated” and “unwieldy” but acknowledges a shift in development thinking.

While we commend the vision of SDGs for their comprehensiveness, emphasis on their inter-relatedness and inclusiveness, we have drawn upon recent evidence to develop the following key strategic elements in the spirit of enriching the policy debates.

A profound and lasting contribution of the Millennium Development Goals (MDGs) was that they enhanced awareness of the multiple deprivations that afflicted large majorities of the people in many developing countries and policy challenges that confronted the governments, multilaterals and donors.

The SDGs have not just expanded their vision but also enriched it by focusing on sustainability. As Amartya Sen emphasised in the context of universal health care, it is not so much lack of affordability but a failure to recognise the capacity of poor countries (such as Rwanda), and states (such as Kerala in India) to mobilise and utilise resources effectively.

As global poverty fell, so did the gap between rural and urban poverty. Still, more than three-fourths of the extremely poor live in rural areas. It is clear, then, that global poverty remains a rural problem.

Overemphatic endorsement in recent studies of urbanisation as the main strategy for sustainable development neglects agriculture and the rural non-farm economy (RNFE) as key drivers of growth and reduction of inequality and poverty, as a vast majority of rural people still depend on them for their livelihoods.

Structural changes have occurred in both agriculture and the RNFE. Some features of changes in agriculture include its commercialisation, the emergence of high value food chains associated with demographic changes, urbanisation and growing affluence, and growth of agricultural exports.

Some have questioned the importance assigned to smallholder agriculture as a pathway out of poverty. Specifically, they contest the argument of the World Development Report 2008 that stimulating agricultural growth is “vital for stimulating growth in other parts of the economy,” and that smallholders are at the core of this strategy.

Pervasiveness of smallholder participation in high value food chains in different regions – especially in vegetables and fruits, milk and dairy products, and meat – is much higher than generally expected.

But there are barriers, too: lack of access to technology, credit markets, economies of scale in marketing, and ways of meeting stringent food quality standards. Contract farming is an option. Producers’ associations also contribute to overcoming some of these constraints. Central to this is inculcation of entrepreneurial skills among smallholders – especially young men and women – making sure that land, labour, credit and output markets function more efficiently.

While a majority of recent studies are emphatic about low labour productivity in agriculture impeding sustainable agricultural development, it is seldom acknowledged that these are manifestations of “underinvestment” in agriculture and market imperfections (e.g. dominance of local money lenders charging exorbitant interest rates, limited land rental markets, the sharp wedge between farm gate and wholesale prices for smallholders). Size neutrality of new agricultural technology implies an important role for extension services.

As part of the diversification of the rural economy, the RNFE has assumed greater importance in that it comprises a diverse set of activities ranging from pottery to trading and manufacturing with varied returns. Available evidence points to a large “overlap” between smallholders and those engaged in the RNFE using time disposition data. There is also some evidence that more than a small share of those classified as engaged in the RNFE live in rural areas but work in urban areas, raising questions about a sharp rural-urban dichotomy.

Other issues that deserve greater attention include labour tightening and higher wage rates, reduction of vulnerability of agriculture to weather shocks, volatility of prices, and forging of closer linkages with small and secondary towns. Central to expansion of the RNFE is how to make it more attractive for not just those who are engaged in both agriculture and the RNFE but also others who may move out of agriculture in pursuit of more rewarding opportunities elsewhere. Inculcation of managerial skills, more efficient credit and output markets, and improvements in rural infrastructure to enable easier access to output markets could stem the rural-urban migration tide and thereby the rapid growth of slums.

For poverty reduction, some forms of inequality matter more than others. Important ones include inequality in the distribution of assets, especially land, human capital, financial capital and access to public assets such as rural infrastructure. Broadly, a pro-poor agenda should include measures to moderate current income inequality while facilitating access to income-generating assets and the promotion of employment opportunities for the poor.

Much of the cross-country evidence relates to the benefits of financial depth rather than to broad financial inclusion. The Global Financial Development Report 2014 (World Bank, 2014) makes an emphatic case for the latter on the grounds it reflects a growing realization of its potentially transformative power to accelerate development gains through greater access to resources for investing in education, capitalizing on business opportunities, and confronting shocks. Indeed, greater diversification of clientele through financial inclusion is likely to lead to a more resilient and more stable economy.

As more and more economies upgrade to middle-income and institutional quality improves, private capital inflows will become increasingly important. A stable macro-economic environment and incentives for public-private partnerships would promote growth and poverty reduction. Greater transparency of contracts and better enforcement are imperative. Not just national but local institutions matter a great deal in a sustainable rural transformation and poverty reduction.

Institutional responses to risks need to be strengthened by promoting community level institutions; widening and deepening of the reach of financial institutions; and providing social protection to the most vulnerable. When designed well and targeted effectively, these institutions and programmes help poor households build resilience against risks and severe hardships.

Local organizations (e.g water users’ associations, producers’ groups, women’s groups) not only help in equitable use of scarce natural resources in a community but also in facilitating access to credit and other markets.

Indeed, contrary to the deep pessimism, the SDGs reflect a renewed commitment to and optimism about bettering the “nasty, short and brutish lives” of the poor, disadvantaged and vulnerable in the near future.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.

]]> 2
Opinion: The Party’s Over for U.N.’s Sustainable Development Goals Wed, 30 Sep 2015 11:52:03 +0000 Adriano Campolina

Adriano Campolina, is Chief Executive of ActionAid International

By Adriano Campolina

The Pope has left the U.N. and the traffic in Manhattan is back to normal. The hoard of government delegations, NGOs and civil society representatives are packing up and the press is moving on. The party’s over for the Sustainable Development Goals.

Adriano Campolina

Adriano Campolina

Last week member states of the U.N. agreed goals, which set to end extreme poverty, fight against inequality and fix climate change. The Sustainable Development goals cover almost every aspect of poverty and are targets for every country around the world – developed and developing alike.

For such ambitious goals to be achieved, leaders will need to turn their promises on inequality into policies that will deliver real change. One day after the deal was done, I had a glimpse of how hard it will be to convince the world’s leaders. Attending a meeting on growth as part of the official SDG agenda, I was surprised the narrative of free trade and mega-investments continued to flow unbounded from governments.

Despite having a goal dedicated to ending inequality, the language of false market-based solutions continues – the same solutions which for years have locked people into low paid employment, divested money from public services and helped drive up inequality in almost all countries. The consequences of bad investments on people and the environment – causing environmental degradation, evictions and land grabbing – were blatantly ignored.

But here lies the catch. Corporations are not just stalking the corridors of the U.N. and promoting investments damaging to the poor, they also have a stranglehold on how countries raise tax, which will enable them to pay for the goals.

ActionAid research last month discovered tax incentives given to big corporations in West Africa drain the region of an estimated 9.6 billion dollars a year – money which could be spent on health and education. And globally it is estimated that developing countries lose over 200 billion dollars a year from corporate tax dodging. Yet rich countries continue to block moves for a global body on tax to make the rules fairer.

The 800 million people in poverty worldwide need change. In many ways, people are ahead of the U.N. as they’re doing it without flashy launch events or concerts. Across Africa, people have been mobilised and fought for the right to free primary school education, with massive wins.

And in my native Brazil, women without access to land have organised themselves, taken on brutal landlords and won the right to farm the land. Leaders are acknowledging the idea of inequality but poor people around the world are not just recognising it, they are wrenching it from its roots and organising themselves to build something new.

To achieve real change for poor people, the business as usual approach I saw at the U.N. over the last few days won’t be good enough. The climate conference in Paris in December will be the first test. If world leaders do not commit to emissions cuts and agree to financing to help developing countries with climate impacts, then success for the goals will be off to a very shaky start.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.

]]> 1
Africa Must Depend Less on Development Aid, Says New Study Tue, 29 Sep 2015 20:48:53 +0000 Thalif Deen By Thalif Deen

As the U.N.’s Millennium Development Goals (MDGs) reach their targeted date by the end of December, one of the lingering questions has long remained unanswered – at least, until now.

industry_0Why did most African nations make progress in some, but failed to reach their targets in most others?

A new study, titled “Assessing Progress in Africa Toward the Millennium Development Goals” released here, points out that poor implementation mechanisms and excessive reliance on development aid undermined the economic sustainability of several of the eight MDGs, including the elimination or reduction of extreme poverty and hunger.

The report, produced jointly by the Economic Commission for Africa (ECA), the African Union (AU), the African Development Bank (AfDB) and the U.N. Development Programme (UNDP), says: “Having made encouraging progress on MDGs, African countries have the opportunity to use the newly launched Sustainable Development Goals (SDGs) to tackle remaining challenges and achieve a development breakthrough.”

The 17 SDGs, adopted at a summit meeting of world leaders last week, targets the year 2030 for the total elimination of poverty and hunger worldwide.

With official development assistance (ODA) to Africa projected to remain low over the period 2015-2018, at an average of around 47 billion dollars annually, the focus should be on boosting and diversifying economies, mobilizing domestic resources and new partners, unleashing the economic potential of women and fighting illicit financial flows, says the report.

Asked about the slow progress made by African nations in implementing the MDGs, Abdoulaye Mar Dieye, Director of UNDP’s Regional Bureau for Africa, told IPS lack of adequate financial resources has been one of the biggest constraints in meeting the MDGs.

And ODA seems to be reaching a plateau, he said.

“Therefore, there is a need for countries to make concerted efforts to mobilize domestic resources, build up financial infrastructure, and ensure appropriate regulatory measures and institutions are put in place.”

Still, he pointed out, mobilizing resources is not enough; this must be accompanied by appropriate policies for effective utilization of the resources for the purpose intended.

He also said: “We must design strategies for overcoming the funding challenge. ODA should serve as a catalyst.”

For instance, a substantial proportion of ODA should be used to development institutional capacity for domestic resource mobilization in Least Developed Countries (LDCs).

In addition, other sources of funding need to be mobilized, such as remittances, the private sector, South-South cooperation, financing from extractives and other sectors, he added.

Although overall poverty rates are still hovering around 48 percent, according to the most recent estimates, most countries have made progress on at least one goal.

The Gambia reduced poverty by 32 percent between 1990 and 2010, while Ethiopia decreased its poverty rate by one third, focusing on agriculture and rural livelihoods.

Some policies and initiatives have been groundbreaking, says the report, pointing out Niger’s School for Husbands, which has been successful in transforming men into allies in promoting women’s reproductive health, family planning and behavioral change towards gender equality.

Cabo Verde increased its forest cover by more than 6.0 percentage points, with millions of trees planted in recent years.

Still, the study says much more work lies ahead to ensure living standards improve for all African women and men.

“While economic growth has been relatively strong, it has not been rapid or inclusive enough to create jobs. Similarly, many countries have managed to achieve access to primary schooling however considerable issues of quality and equity need to be addressed. “

Projecting into the future, the study says achieving sustainable development will also be impossible unless African nations and communities are resilient, able to anticipate, shape and adapt to the many shocks and challenges they face, including climate-related disasters, health crises such as the Ebola epidemic in West Africa and conflict and instability. Investments now in prevention and preparedness will minimize risk and future costs.

Africa has seen an acceleration in economic growth, established ambitious social safety nets and designed policies for boosting education and tackling HIV and other diseases.

Africa has also introduced women’s quotas in parliament, leading the way internationally on gender equality, and increased gender parity in primary schools.

The continent’s new development priorities, as embodied in the African Union’s Agenda 2063 and the 17 Sustainable Development Goals, are both comprehensive and universal, while their implementation will entail mobilizing additional resources and partners, and putting in place more robust monitoring systems.

The writer can be contacted at

]]> 2
Electoral Revolution in Brazil Aimed at Neutralising Corporate Influence Tue, 29 Sep 2015 20:45:49 +0000 Mario Osava Brazil’s Supreme Court during the Sep. 17 reading of the landmark ruling which declared that laws allowing corporate donations to election campaigns are unconstitutional. Credit: STF

Brazil’s Supreme Court during the Sep. 17 reading of the landmark ruling which declared that laws allowing corporate donations to election campaigns are unconstitutional. Credit: STF

By Mario Osava
RIO DE JANEIRO, Sep 29 2015 (IPS)

From now on, elections in Brazil will be more democratic, without corporate interference, which had become decisive and corruptive. A Sep. 17 Supreme Court ruling declared unconstitutional articles of the elections act that allow corporate donations to election campaigns.

The 8-3 verdict came in response to a legal challenge brought by the Brazilian Bar Association (OAB) against the laws authorising and regulating donations by big corporations to political parties and candidates.

In its challenge to the constitutionality of the elections act articles in question, the OAB argued that they violate the democratic principle – the backbone of the 1988 constitution – which established that all citizens are political equals, with each individual vote carrying the same weight.

The verdict also stated that corporate financing runs counter to the first article of the constitution, which establishes that the political representatives elected by the people must serve the public good and that there must be a strict separation between the public and private spheres.

Citing academic studies, the OAB further asserted that corporate donations transfer economic inequality to the political sphere, negating democracy and tending towards a “plutocracy” or government by the rich.

Campaign donations from corporations give them undue influence over politics by putting candidates in their debt, bound to defend “the economic interests of their donors in the drafting of legislation, the design and execution of the budget, administrative regulation, public tenders and public procurement,” the OAB added.

Corruption is also a major factor in this promiscuous relationship between money and politics. And campaign financing is almost always an element present in political scandals.“The legal door of donations was closed and the illegal route has become more difficult, after the scandals, imprisonment, and disqualification of many of the people implicated in the corruption, but they will look for loopholes in the law.” -- Fernando Lattman-Weltman

Today’s big scandal, which decisively influenced the Supreme Court ruling, involves a kickback scheme in the state-owned oil firm Petrobras, which suffered at least six billion dollars in losses from graft and overvalued assets.

More than 30 politicians have been accused of receiving bribes from large construction and engineering firms in return for inflated contracts, and part of the funds allegedly financed candidates and political parties in election campaigns.

The ban on corporate donations will also lead to a reduction in gender imbalances in politics, sociologist Clara Araujo at the Rio de Janeiro State University (UERJ) told IPS.

Female candidates receive little campaign funding from their parties, but they are given larger proportions of donations from individuals than from companies, the opposite of male candidates, she said, based on the study “Women in the 2010 Elections”, which she co-authored, and on figures from 2014.

As a result of discrimination by political parties, reflected by underfunding and less advertising time, especially on TV, women are underrepresented in Congress, where they hold only 10 percent of seats in the lower house and 13.6 percent in the Senate, although they make up 52 percent of voters.

“The Supreme Court judgment is good news in the midst of the chaos of Brazil’s political crisis,” because it brings new balance to a game that was unfavourable to women, Guacira de Oliveira, one of the directors of the Feminist Centre of Studies and Advice (CFEMEA), told IPS.

But it has come at a moment of great uncertainty, when the crisis tends to have a greater impact on progressive political currents, and it will not change the rules that maintain inequality within and between the political parties.

Public resources, such as the official Party Fund, and radio and TV time for candidates will continue to benefit the big parties, since they are distributed proportionally to the number of seats held by each party, Oliveira lamented.

Only in-depth political reforms, called for by civil society organisations, could effectively democratise the election process. But the current legislature, where conservative lawmakers are a majority, would never approve that.

Far-reaching political reforms would require a constituent assembly to rewrite the constitution – which may become a possibility if the crisis gets worse.

But without corporate donations, “campaigns will suffer a sharp drop in funding, which means candidates and parties will have to cut costs. Internet and the social networks, which already had a growing participation in the elections, will become much more important,” said Fernando Lattman-Weltman, a professor of politics at the UERJ.

“But money will seek other ways to influence politics,” he added. “The legal door of donations was closed and the illegal route has become more difficult, after the scandals, imprisonment, and disqualification of many of the people implicated in the corruption, but they will look for loopholes in the law,” he told IPS.

Gilmar Mendes (left), one of the three Supreme Court magistrates who voted against the ban on corporate funding for elections in Brazil. In April 2014 he successfully stalled for time, requesting a longer timeframe to analyse the issue, which enabled private companies to finance much of last year’s presidential election campaign. Credit: Fabio Rodrigues Pozzebom/Agência Brasil

Gilmar Mendes (left), one of the three Supreme Court magistrates who voted against the ban on corporate funding for elections in Brazil. In April 2014 he successfully stalled for time, requesting a longer timeframe to analyse the issue, which enabled private companies to finance much of last year’s presidential election campaign. Credit: Fabio Rodrigues Pozzebom/Agência Brasil

Election campaigns have become expensive in Brazil in the last two decades, with the intense use of advertising techniques. Media advisers have become indispensable, and more and more costly to hire. Some have become celebrities, whose fame has transcended national borders.

After their triumphs in Brazil, they have been hired for tens of millions of dollars to head campaigns in other countries of Latin America, or in Africa.

Large campaign teams specialising in working the airwaves and the press have turned election campaigns into a media war between well-paid armies of advisers, following the U.S. model, with ongoing qualitative surveys providing guidance for speeches, slogans and TV ads and appearances.

Now candidates will have to return to the basics: personal speeches, direct public relations, street rallies and armies of volunteers, said Lattman-Weltman.

Without resources to produce and broadcast sophisticated ads, “candidates will try to seduce the media, trying to make them more biased and identified with specific parties,” like in the United States, he said, referring to dangerous side-effects of the new scenario.

Generating new political developments and creativity in campaigns will also become more important factors, he said.

Without the millions of dollars in donations from companies, the game will be less unequal, but candidates who already have power and are well-known by the public, like legislators, governors or other political leaders, will enjoy a big advantage over new candidates, Oliveira said.

That is a disadvantage faced by women in general, who began to participate in elections more recently, and who make up a small minority in the executive and legislative branches – even though one woman, Dilma Rousseff, has been president of this country of 202 million people since 2011.

Celebrities like TV hosts, actors and footballers, along with prominent trade unionists and social activists, will likely be the most sought-after by the parties.

The next elections, for mayors and city councilors in Brazil’s 5,570 municipalities, will be a test of how campaigns will work without legal and illegal donations from the big sponsors, especially in big cities like São Paulo and Rio de Janeiro.

Statistics from the Superior Electoral Court from 2010 and 2014, when presidential, state and legislative elections were held, point to “a strong correlation between the amount of spending and victory,” said Araujo.

So without a right to vote, companies had become a decisive factor in elections. In other words, “the big voter was money,” said Claudio Weber Abramo, director of the anti-corruption watchdog Transparency Brazil, in a statement reflected by the OAB in its successful legal challenge that led the Supreme Court to put an end to elections dominated by corporate financing.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
Solar Power Slowly Making Inroads into Mideast and Africa Tue, 29 Sep 2015 19:38:05 +0000 a Global Information Network correspondent Mohammed-Park

By a Global Information Network correspondent
DUBAI, Sep 29 2015 (IPS)

To the ordinary eye, it looks like an empty desert but from this spit of endless sand is rising the largest photovoltaic solar project in the Middle East.

The Mohammed bin Rashid Al Maktoum Solar Park, located 30 miles south of Dubai, was launched with 13 megawatts of capacity. It could be producing 3,000 megawatts by 2030.

A similar project is rising in Morocco, future home of what may be the world’s largest concentrated solar power complex. Built in Quarzazate province, it is the kingdom’s answer to costly fossil fuel imports and climate change.

These two projects, along with other solar developments in Egypt, Jordan, Saudi Arabia and elsewhere, are demonstrating that the Middle East and North Africa will have a Plan B if oil prices continue to fall.

By contrast, sub-Saharan Africa has some of the world’s most abundant and least exploited renewable energy sources, especially solar power.

The need is undeniable. Today in Africa, 621 million people – two-thirds of the population – live without electricity. The problem is most acute in East Africa, where only 23 percent of Kenyans; 10.8 percent of Rwandans; and 14.8 percent of Tanzanians have access to an electricity supply, according to the World Bank.

But a new breed of “solar-preneurs” is emerging, increasing access to power and generating revenues at the same time.

“Solar is a valuable source of distributed energy,” says Sachi DeCou, co-founder of Juabar, a company running a network of solar charging kiosks in Tanzania.

“Here in Africa, populations are quite dispersed. Solar is modular so it can be sized to fit the needs of anywhere, from a light to a business, household to an entire village.”

Jesse Moore, managing director at M-Kopa Solar, which provides “pay-as-you-go” renewable energy for off-grid households in Kenya, Uganda and Tanzania, agrees.

M-Kopa Solar provides power to more than 140,000 households in East Africa for 0.45 dollar per day, and is adding over 4,000 homes each week. Revenues are nearing 20 million dollars per year, and the company is starting to license its technology in other markets, such as Ghana.

“Solar is a massive opportunity for entrepreneurs and investors alike,” Moore says.

In Rwanda, Henri Nyakarundi developed a mobile solar charging kiosk, operated under a franchise model that offers Rwandans the chance to run income-generating businesses by providing services such as charging of electronics and sales of electronic vouchers.

Opportunities to create solar businesses in Africa are huge, he says, but they only exist at the micro level. The next step is to produce power for the grid through solar, he adds, but this requires large investment and local banks are not yet willing to finance such projects unless you are a big company. (END)

]]> 0
Opinion: We Can Overcome Poverty and Hunger by 2030 Tue, 29 Sep 2015 19:24:13 +0000 Jomo Kwame Sundaram Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Sep 29 2015 (IPS)

Over three quarters of the extreme poor in the world live in the countryside. Reducing rural poverty will therefore require significantly higher rural incomes. Since most rural incomes are related to agriculture, raising agricultural productivity can help raise rural incomes all round.

In the 1960s and 1970s, many governments invested a great deal to increase agricultural, especially food production. In the second half of the 20th century, agricultural productivity rose rapidly. However, intense price competition meant that productive resource suppliers and consumers benefitted more from productivity gains.

Lower food prices thus helped reduce poverty while transnational agri-business has profited greatly from changes in agricultural production, credit, processing and marketing chains.

In the last decade, food prices went up again as production rose more slowly than before, partly due to greater land and other resource constraints, reduced public investments as well as increased demand for food crops, including for bio-fuels and more animal feed.

Supply and demand

Food price increases from a decade ago have been associated not only with significant supply and demand changes, but also with biofuel mandates and subsidies as well as greater commodity speculative investments.

But with food prices receding again more recently, food would become cheaper, reducing farmer incomes and the incentive to produce more food.

Poor countries are doubly handicapped by their limited tax capacities, due to low tax rates on low incomes. While agricultural taxation is generally proportional to land cultivated or output, much government rural or agricultural spending has benefited plantations and larger farmers more than smaller smallholders, tenants or sharecroppers. Nevertheless, the poor may have benefited in so far as greater output lifts all boats.

While there is little excessive taxation of small farmers these days, there are also modest urban-to-rural resource transfers through the fiscal system or other transfer arrangements.

However, with a few notable exceptions, most government spending on agriculture is not biased to the poor.

Government spending in rural areas and on agriculture has generally been motivated by political considerations, especially the desire to secure rural political support, not least by raising agricultural output, productivity and incomes.

Instead, such public expenditure tends to benefit the relatively better-off in agriculture. This is generally true with improved rural infrastructure or social services, including health and schooling, as well as agricultural support in the form of subsidized fertilizer or other agricultural inputs – usually distributed according to the amount of land owned.

Closing food security gaps

The Green Revolution of the 1960s and 1970s mainly involved wheat, rice and maize. Closing the productivity, output and income gaps of sub-Saharan Africa (SSA) with the rest of the world will require appropriate measures addressing the many disincentives to greater food and other investments in the continent needed to improve livelihoods.

Undoubtedly, increased food production can enhance food security, reduce hunger and improve nutrition in SSA for the farmers themselves. But food security has been undermined by trade liberalization and export promotion in the last three decades.

The recent purchase or long-term lease by foreign interests of choice African agricultural land to produce food for export is especially problematic.

Experience since the mid-20th century reminds us that increasing food production alone will not be enough to eliminate poverty and hunger in the world. There has long been enough food in the world to feed everyone, but the hungry typically do not have the incomes or other means to secure access to sufficient food to adequately feed themselves.

As many hundreds of millions are so deprived, and likely to remain so for a long time to come, especially with the likelihood of a prolonged economic slowdown, with high levels of underemployment and unemployment, there is no other way to overcome poverty and hunger except with some basic social provisioning for all, by establishing what is called a basic ‘social protection floor’.

In this connection, FAO seeks to accelerate the transition ‘from protection to production’, and thus ensure sustainable means to eliminate hunger and poverty while ensuring resilience in the longer term.

With the growing consensus, momentum and commitment to eradicate world poverty and hunger by 2030 enshrined in the post-2015 Sustainable Development Goals, it will be necessary to deploy all the necessary instruments as soon as possible.

The Addis Ababa Action Agenda emerging from the third Financing for Development Conference in July is supposed to ensure adequate financial and other means of implementation for this purpose.

At Addis, the Rome-based U.N. agencies presented an affordable and feasible way to quickly eliminate hunger and poverty through social protection, while increasing the earned incomes of the poor with adequate pro-poor investments during 2016-2030 costing about 0.3 percent of current global income. Clearly, together, we can – and must – eliminate hunger and poverty by 2030.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.

]]> 0
Mexican Government Depends More and More on Private Business Partners Mon, 28 Sep 2015 16:07:20 +0000 Emilio Godoy The Mexican government has increasingly turned to public–private partnerships (PPPs) to build energy industry infrastructure. The photo shows a gas pipeline belonging to Mexico’s state oil company, Pemex. Credit: Courtesy of Pemex

The Mexican government has increasingly turned to public–private partnerships (PPPs) to build energy industry infrastructure. The photo shows a gas pipeline belonging to Mexico’s state oil company, Pemex. Credit: Courtesy of Pemex

By Emilio Godoy
MEXICO CITY, Sep 28 2015 (IPS)

The Mexican government has increasingly turned to public–private partnerships (PPPs) to build infrastructure in the energy industry and other areas. But critics say this system operates under a cloak of opacity and is plagued by the discretional use of funds.

As the 2013 energy reform, which opened the industry to national and international private capital, is implemented, PPPs have become more and more frequent.

In the case of the state oil company Pemex, “it doesn’t form alliances with just anyone, only with corporate giants. It doesn’t talk much about those deals. They’re very hard to track,” said Omar Escamilla, a researcher on fossil fuels with the non-governmental Project on Organising, Development, Education, and Research (PODER).

The analyst told IPS that “The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”

“What is worrisome is who the partnerships are formed with, where the capital comes from, and what is the history of those companies,” he said.“The PPPs are formed with companies registered in tax havens, which makes it difficult for the Mexican justice system to hold them accountable or request reports on how the funds are used.”-- Omar Escamilla

The Law on Public–Private Partnerships, in effect since 2012 and amended in 2014, regulates long-term contractual arrangements by the public sector for the provision of services that use infrastructure partially or totally provided by the private sector.

The law requires that the contracts be put out to tender, and gives the state the power to declare the works of public utility and to expropriate land, while setting a minimum timeframe of 40 years for the contracts.

Mexico is in seventh place among developing countries in terms of the number of PPPs. In Latin America, only Brazil uses this scheme more frequently. The largest number of PPPs has involved the construction of roads, although they are also used in the construction of hospitals, prisons, airports, railroads and the energy industry.

According to the World Bank, “PPPs are typically medium to long term arrangements between the public and private sectors whereby some of the service obligations of the public sector are provided by the private sector, with clear agreement on shared objectives for delivery of public infrastructure and/ or public services.”

PPPs are seen as improving the equation between quality and prices for services, transferring risks to the private sector, improving incentives for efficient production, reducing public spending, and transferring debt to the private sector.

But critics say they bind governments to payments under lengthy contracts. They also argue that they can bring down spending on public services, mask the true extent of the public debt, disguise the privatisation of public services, and drive up costs.

At the federal level, Mexico has 29 PPPs, while different states have a combined total of 20.

The energy reform approved in December 2013, the biggest transformation of the industry in the last eight decades, opened up oil exploration, extraction, refining, transportation, distribution and sale of oil and its by-products to local and foreign private investment.

In the last 20 years, Pemex has turned to PPPs to build oil industry infrastructure, as a way to get around the legal and economic limitations of a state monopoly, says the study “Analysis of the business structure in Mexico’s oil industry,” published by PODER in June.

For example, in 1996 Pemex and the U.S.-based Sempra Energy formed a partnership to create Gasoductos de Chihuahua, which became the biggest player in Mexico’s natural gas industry, because it controls nine companies by means of two joint ventures and seven partner companies, all of which form part of Pemex’s organisational chart.

With the aim of developing three mature fields in the southern state of Tabasco, PMI Campos Maduros Sanma, a subsidiary of Pemex, formed a partnership in 2011 with the subsidiaries in Mexico of the private trasnational corporations Petrofac Limited (UK) and Schlumberger Limited (U.S.).

In 2013, Pemex transferred the Planta Clorados III petrochemical complex, one of the national petrochemical industry’s most important assets, to the local firm Mexichem, creating the company Petroquímica Mexicana de Vinilo. In the joint venture, Mexichem controls 55.1 percent of the shares and Pemex holds the rest.

Another case is Gasoductos de Chihuahua, the company that will be responsible for the operation and maintenance of the Los Ramones pipeline, the biggest investment in infrastructure for transporting gas in half a century, with a capacity to transport 3.5 billion cubic feet of natural gas a day over a distance of 900 km.

The pipeline will link central Mexico with the U.S. border in the north.

The gas pipelines that the Mexican government is building to provide gas industry infrastructure are actually the biggest business scheme for the private sector to form ties with Pemex in the natural gas industry, says the Poder report.

The Comisión Federal de Electricidad, a state power company, has followed a similar strategy with the construction and operation of wind power farms in the southern states of Oaxaca and Chiapas.

“Oversight, accountability and transparency are pending tasks, to carry out a comprehensive review of these mechanisms,” Arturo Oropeza, a professor at the National Autonomous University of Mexico’s Economic Research Institute, told IPS.

“There has been a lack of instruments for this, as well as a lack of an integral vision for understanding what happened. What is needed is a sectoral evaluation,” he said.

“Evaluating the environment for public-private partnerships in Latin America and the Caribbean”, published in April, lists Mexico among the countries with the best conditions for PPPs.

The list, which assessed 19 countries in the region based on 19 indicators involving electricity, transportation and water infrastructure, classified Mexico as the best-placed in terms of investment climate and worst in terms of the domestic context.

The report was produced by the Inter-American Development Bank; its private financing arm, the Multilateral Investment Fund; and the Intelligence Unit of the British magazine The Economist.

It states that issues like transparency represent a challenge to the development of more PPPs.

The report mentions the lack of significant independent oversight of compliance with contracts, and says the largest projects have been granted through direct negotiations in cases where there was only one interested party, even though the law requires that they be put out to tender.

Chile headed the list, with nearly 77 points out of a possible 100, followed by Brazil (75); Peru (70.5) and Mexico (nearly 68). Nicaragua, Argentina and Venezuela tailed the list.

Mexico has earmarked some 300 billion dollars for PPPs over the next three years.

In Escamilla’s view, the outlook in Mexico is not promising, given the increased use of PPPs.

“It’s important to generate frameworks for oversight and operability. PPPs should be held accountable with regard to how the partner was chosen, their profile, their history of bribes and fraudulent payments….And if these criteria are not met, the option is to look for other partners,” he said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

]]> 0
Opinion: Secret Trade Negotiations Threaten Sustainable Development Goals Fri, 25 Sep 2015 19:37:06 +0000 Sam Cossar Friends of the Earth International ]]>

Sam Cossar-Gilbert is Economic Justice and Resisting Neoliberalism coordinator at Friends of the Earth International

By Sam Cossar-Gilbert
AMSTERDAM, Sep 25 2015 (IPS)

World leaders and Pope Francis met in New York Friday to announce ‘a plan to transform our world’, the Sustainable Development Goals.

Sam Cossar-Gilbert

Sam Cossar-Gilbert

Yet as the United Nations announce goals to be achieved by 2030, a crucial but secret trade meeting is taking place to advance the Trans Pacific Partnership, which will set the economic rules for 40 percent of the world economy, and threatens to undermine the U.N. goals before they have even begun.

The Sustainable Development Goals, or SDGs, are made up of 17 general goals with 169 targets, including an end to extreme poverty and hunger, providing universal access to clean water and protecting the world’s oceans. The initiative is supported by 193 countries, the United Nations, the World Bank and countless non-profits, and establishes the international development agenda for the next 15 years.

The SDGs replace the 2000-2015 Millennium Development Goals, which aimed to half extreme poverty globally. The SDGs set similarly broad targets, with little policy prescription about how to get there. While this makes a consensus easier to reach, it fails to address some of the key drivers of poverty and climate change – corporate power, the fossil fuel industry and unjust trade agreements.

The Trans Pacific Partnership (TPP) trade deal being negotiated in Atlanta September 26-30 by 12 countries in the Pacific will undermine a number of key SDGs, highlighting a distinct lack of policy coherence.

While President Obama is shaking hands with world leaders, announcing plans to end all curable diseases, U.S. trade negotiators continue to force developing countries to extend patents on important pharmaceuticals and accept higher medicine prices.

No right to regulate for sustainability

The 12th Sustainable Development Goal aims to “ensure sustainable consumption and production patterns” by 2030. This is a bold and ambitious goal given that the current corporate-driven global trade system is responsible for massively wasteful consumption and production patterns.

Current trade rules put profits before the planet, limiting government’s ability to support local sustainability initiatives and regulate dangerous chemicals.

The TPP would drive a race to the bottom in environmental protection. The TPP chapters on technical barriers to trade will threaten regulators’ access to the tools needed to effectively regulate the roughly 85,000 chemicals in commerce needed to protect human health and our environment.

Even very simple consumer sustainability measures like efficiency rating and food labelling on imported goods could be impossible under TPP, because labelling regulation can be deemed a “barrier to trade”.

No right to health under TPP

The third Sustainable Development Goal aims to “Ensure healthy lives and promote well-being for all at all ages”, with a focus on achieving universal health coverage, access to affordable medicines and vaccines for all. Yet new Intellectual Property rules included in the TPP would restrict access to life-saving medicines for millions of people.

These Intellectual Property rules would increase patent and data protections for pharmaceutical companies and dismantle public health safeguard enshrined in national and international law.

U.S. Trade Representatives, lobbied by multinational companies, have sought to impose a lengthy 12-year “exclusivity period” over biologic clinical data, which could greatly undermine global efforts to end major epidemics like AIDS. The shorter the period of exclusivity, the quicker cheaper generic drugs can reach the people in need.

The New Zealand Prime Minister John Key admitted that the TPP would increase the price of medicine. For every extra year added to a medical patent is another year that big pharmaceutical companies can continue to charge artificially high prices for the drug, free from generic competition. In many developing countries this means a choice between life and death for their citizens. If similar rules were introduced globally it would be impossible for countries to achieve the third SDG goal.

Climate goals traded away

The 11th Sustainable Development Goal calls for “urgent action to combat climate change and its impacts.” Yet the Investor State Dispute Settlement mechanism (ISDS) included in the TPP – and other trade agreements – grants foreign investors access to a secret tribunal if they believe actions taken by a government will affect their future profits.

This provision is a ticking time-bomb for climate policy, because almost any government policies needed to address global warming could be challenged by such undemocratic tribunals.

In 2009 Vattenfall, the Swedish energy giant, launched a USD1.9 billion ISDS case against Germany for its decision to delay a coal fired power station and impose stricter environmental standards. To avoid the potentially massive fine looming under ISDS, the government reached a settlement that involved removing additional environmental requirements, enabling the coal plant to begin operating in 2014. Coal contains more carbon than other fossil fuels and is the single greatest threat to the climate.

At a time when the world pledges to the Sustainable Development Goals, calling for a transition to clean energy, the TPP’s energy chapter does the opposite: it aims at liberalising oil and gas exports, and increasing the trade in dirty fossil fuels.

If world leaders are serious about creating a sustainable future, they need to allow a new trade system that helps, not hinders, local economies, environmental standards, better social protection and clean energy.
If the word ‘Sustainable’ is not there just to boost public relations appeal, it requires meaningful action. One concrete way to make our future more sustainable would be to walk away from bad trade deals like the TPP and ensure a fairer trade system.

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service.

]]> 2