Inter Press ServiceFinancial Crisis – Inter Press Service http://www.ipsnews.net News and Views from the Global South Sat, 19 May 2018 21:14:47 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.6 Wider Views for More Equal Societieshttp://www.ipsnews.net/2018/05/wider-views-equal-societies/?utm_source=rss&utm_medium=rss&utm_campaign=wider-views-equal-societies http://www.ipsnews.net/2018/05/wider-views-equal-societies/#comments Wed, 02 May 2018 01:08:45 +0000 Oscar A. Garcia http://www.ipsnews.net/?p=155570 Inequalities are on the rise. Since 1980, 1% of the richest people have received double income than the 50% of the poorest. After several years of decline, hunger is also on the rise. The report on the State of Food Security and Nutrition in the World estimates that the number of chronically undernourished people in […]

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By Oscar A. Garcia*
ROME, May 2 2018 (IPS)

Inequalities are on the rise. Since 1980, 1% of the richest people have received double income than the 50% of the poorest. After several years of decline, hunger is also on the rise. The report on the State of Food Security and Nutrition in the World estimates that the number of chronically undernourished people in the world increased from 777 million in 2015 to 815 million in 2016. If we go deeper into the analysis we observe that three-quarters of the world’s extremely poor and food-insecure people live in rural areas.

Oscar A. Garcia

Poorest and excluded

Along the path to economic growth, millions of people are excluded. They are individuals who belong to groups that are discriminated against and excluded within their own societies. This discrimination may be on grounds of religion, ethnicity, gender and/or disability. Inequalities are multi-dimensional, multi-layered and cumulative; untangling such complexities is a challenge we must act on. Without understanding the root causes of inequalities, we cannot remove the inequalities themselves, along with the immense barriers they create and which prevent the world’s poorest – those at the “bottom of the pyramid” – from thriving. Without transforming the restrictions that reinforce the deep-seated causes of chronic poverty, substantial progress is unlikely.

Comprehensive analysis to enlighten the path

The discourse needs to shift its focus to the structural issues of inequality, whether economic, political or social. Why is it that tens of millions of people are without clean water? Why is it that poor women do not have access to land? Why is that millions are without food and adequate living conditions? The answers and the realities go far deeper than the issue of poverty alone, and we must arrive at the last corner of those realities and the spaces where people are discriminated against.

Countering inequalities requires robust evidence and more disaggregated data. It also requires going beyond traditional approaches. We need to improve our analytical frameworks, ask the right evaluation questions, talk to poor people and understand their needs, based on which a revitalized development agenda on inequality will emerge. High levels of inequalities can be brought down if we are able to create redistributive policies geared toward shared prosperity, social justice, and democracy for all people.

These and other issues will be discussed at the International Conference “Rural Inequalities: Evaluating approaches to overcome disparities“, organized by the Independent Office of Evaluation of IFAD, and held on 2-3 May in Rome.

*Oscar A. Garcia, is Director of the Independent Office of Evaluation of the International Fund for Agricultural Development, IFAD, a specialized agency of the United Nations.

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Blending Finance Not SDG Financing Silver Bullethttp://www.ipsnews.net/2018/04/blending-finance-not-sdg-financing-silver-bullet/?utm_source=rss&utm_medium=rss&utm_campaign=blending-finance-not-sdg-financing-silver-bullet http://www.ipsnews.net/2018/04/blending-finance-not-sdg-financing-silver-bullet/#respond Mon, 30 Apr 2018 13:42:21 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=155535 After largely failing to provide 0.7 per cent of their Gross National Income (GNI) in aid to developing countries for almost half a century since making the commitment, donor countries have recently promoted blended finance (BF) as a solution to the financing for development challenge. Blending refers to combining public development funds (in the form […]

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By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Apr 30 2018 (IPS)

After largely failing to provide 0.7 per cent of their Gross National Income (GNI) in aid to developing countries for almost half a century since making the commitment, donor countries have recently promoted blended finance (BF) as a solution to the financing for development challenge. Blending refers to combining public development funds (in the form of grants, technical assistance or interest indemnification) with loans from private lenders.

Credit: OECD

Following adoption of Agenda 2030 for the Sustainable Development Goals (SDGs), the OECD and the World Economic Forum (WEF) claimed that “blended finance represents an opportunity to drive significant new capital flows into high-impact sectors, while effectively leveraging private sector expertise in identifying and executing development investment strategies”.

Potential and progress
The OECD and WEF launched the multi-year ReDesigning Development Finance Initiative (RDFI) in 2013 to promote public-private cooperation for sustainable development. The RDFI defines BF as “the strategic use of development finance and philanthropic funds to mobilize private capital flows to emerging and frontier markets”.

The RDFI promoted BF at the Third International Conference on Financing for Development (FfD3) in Addis Ababa in July 2015. A BF pioneer claimed BF had been effective in targeted development interventions and would complement traditional overseas development aid (ODA) such as grants.

The European Council endorsed BF as a tool of development cooperation in 2014, with other donors following suit. Multilateral development banks (MDBs) have enthusiastically embraced BF, issuing From Billions to Trillions: Transforming Development Finance, which claimed that it ensures “the best possible use of each grant dollar”. The Canadian minister of international development echoed this in Turning billions into trillions: The power of blended finance.

In a 2017 report, the OECD argued that BF can help bridge the US$2.5 trillion annual investment gap for SDGs in developing countries. The European Union (EU), the single largest promoter of BF, has made the European Fund for Sustainable Development key to its External Investment Plan (EIP) to address investment gaps in 18 countries of Southeastern Europe, Central and West Asia, and Africa, with a budget of €2.6 billion and guarantees of €1.5 billion.

According to the 2018 Inter-Agency Task Force (IATF) report on Financing for Development, 17 of 23 DAC members are engaged in BF, often through intermediaries such as development banks and finance institutions. It also noted that 167 new blended finance facilities, with approximately US$31 billion in commitments, and 189 blended finance funds were launched during 2000-2016.

A 2016 OECD survey found US$81.1 billion from the private sector mobilized through five instruments (guarantees, syndicated loans, credit lines, direct investments in companies, and shares in collective investment vehicles) during 2012-2015.

What’s the catch?
The IATF Report noted the lack of a universally agreed definition of BF, while a 2017 OXFAM-EURODAD report listed six different definitions. All accept ODA (e.g., grants), but other non-ODA official finance (e.g., export credit) are also included. Confusingly, terms such as ‘leveraging’, ‘mobilizing’ and ‘catalyzing’ are used interchangeably.

Thus, monitoring BF’s actual magnitude and development impact is difficult. BF often lacks transparency and accountability, with insufficient information made public. Noting the confusion, OXFAM-EURODAD argued that BF can be problematic: it is not necessarily pro-poor and mainly serves middle-income countries.

Like others, they also found donor country private corporations favoured, as with tied aid. When relying on external private finance, BF often crowded out host country financial sectors. Furthermore, BF projects may not be aligned with national plans, and usually do not involve stakeholder participation, undermining country ownership. An evaluation of the EU’s EIP found no reliable evidence of BF mechanisms actually aligned with and contributing to development objectives.

Worsening inequality

The IATF found BF has largely bypassed LDCs so far. ¬In 2016, the MDBs mobilized US$49.9 billion in private co-financing, with only US$1 billion going to LDCs, where infrastructure gaps are greatest. An OECD survey found that only 7 per cent of private finance was for projects in LDCs. According to the 2017 OECD report, between 2012 and 2015, most private financing mobilized by ODA was for middle income countries, with little trickling to LDCs. It also noted that private capital was greatest for finance and energy.

The IATF also observed that BF tends to target investment areas where the business case is clearer—such as energy, growth, infrastructure, climate action and, to a lesser extent, water and sanitation. BF is much smaller for areas such as ecosystems, reflecting such investments’ strong ‘public good’ character, with public finance generally more effective.

OXFAM-EURODAD noted that by pooling public resources and using ODA to subsidize private companies usually owned and domiciled in OECD countries, BF diverts aid from social programmes and essential services. Clearly, private finance is not guided by the same interests and principles as public finance, and cannot be presumed to serve the public interest.

Labelling BF a ‘honey trap’, The Economist noted, “Private investors do not typically fund the construction of rural roads in Africa, say, or vaccination drives in villages, even though the returns on such investments are often enormous. That is because the returns are either hard to monetize, or the risks are too great for the private sector to tolerate.”

It is unclear how public development funds, channelled through risky commercial financial services, will effectively mobilize private resources for sustainable development. There is no evidence that current BF practices are achieving development outcomes that would not have happened otherwise. After all, existing BF mechanisms do not safeguard the public interest and achieve development objectives.

The IATF report noted limited evidence of any additional development impact due to BF. Many BF projects do not monitor development impacts, while the few evaluations made are rarely publicly available. The limited evidence available suggests a modest impact on poverty.

Going forward
ODA nevertheless remains crucial for low-income countries. Private finances cannot achieve what public finances can, especially for social development and environmental protection. Public finance is more predictable and effective in providing public goods. Despite much enthusiasm for using ODA or public funds to leverage private finance, many unanswered questions remain, suggesting BF is no silver bullet.

Caution is needed as the development community ascertains the pros and cons of using public money to ‘leverage’ private finance. First steps would include a universally acceptable BF definition and a monitoring framework to ascertain the additionality of alternative BF mechanisms for both finance and development impacts.

Additionally, BF should respond to recipient country’s development strategies in the spirit of the 2015 Addis Ababa FfD Action Agenda which recognizes its potential while urging caution.

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Improving Our Anti-money Laundering Operations Will Help Prevent Great-Power Warhttp://www.ipsnews.net/2018/04/improving-anti-money-laundering-operations-will-help-prevent-great-power-war/?utm_source=rss&utm_medium=rss&utm_campaign=improving-anti-money-laundering-operations-will-help-prevent-great-power-war http://www.ipsnews.net/2018/04/improving-anti-money-laundering-operations-will-help-prevent-great-power-war/#respond Fri, 20 Apr 2018 12:32:47 +0000 Clay R. Fuller http://www.ipsnews.net/?p=155364 Clay R. Fuller is a Jeane Kirkpatrick Fellow at the American Enterprise Institute (AEI)*

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Clay R. Fuller is a Jeane Kirkpatrick Fellow at the American Enterprise Institute (AEI)*

By Clay R. Fuller
WASHINGTON DC, Apr 20 2018 (IPS)

Interest is growing in illicit finance because great-power competition is playing out in boardrooms, stock markets, trade wars, and compliance departments. The US anti-money laundering (AML) regime needs an update that enhances national security and sets an example for the rest of the world.

Clay R. Fuller

The US leads in crafting and enforcing global standards of financial integrity and accountability. However, like most US economic regulations, the current AML regime is a haphazard, ad hoc patchwork riddled with loopholes and inefficiencies.

An illicit finance bill should encourage communication between and within compliance and law enforcement, safeguard individual privacy rights, and help smaller businesses and financial institutions. It has been 17 years since the last AML overhaul. It is time to address the clear and present danger — dirty money.

National security concerns

For the past thirty years Western democracies have actively and passively sought out economic integration with authoritarian states. Westerners hoped (and many still do) that modernization would create middle classes that demand rights. Investors and businesses simply saw new markets as opportunities to turn a profit.

Profits came to fruition, but economic integration morphed into a sort of messy imbroglio, or a rules-based liberal order entangled with opaque, violent, and kleptocratic authoritarians eager to bend the rules in their favor.

Currently, kleptocrats and their ilk can store and move wealth in the US anonymously. Some profit from breaking drug laws, others evade taxes, and many set up simplistic fraud schemes. Dastardly agitators use anonymous capital to support political and economic espionage, nationalistic violence, and religious zealotry.

The absence of clear and transparent rules in non-democracies (and among thieves) breeds instability, uncertainty, and violence. A simple first step toward protecting the US from these negative externalities is to require legal entities to register and verify their beneficial ownership (BO) at the time of incorporation.

Two examples

The General Services Administration apparently cannot identify the ultimate beneficial owners of up to a third of high security leases. This means that unidentified Russians can, and might, own the buildings that the FBI leases to investigate Russian activities.

An investigative report recently uncovered thousands of planes in the US registered to companies known to use secrecy tactics to provide services to non-US citizens. Planes transport drugs — and, post 9/11, well.

New reporting and securing individual privacy rights

Thresholds for currency transaction reports (CTRs) and suspicious activity reports (SARs) are not adjusted for inflation. The estimated 55,000 SARs that the Financial Crimes Enforcement Network (FinCEN) receives every day are not being efficiently communicated or leveraged with simple, cheap, and powerful data science tools.

Legislation should ensure that reporting data (BO, SARs, and CTRs) will never be made public. But data sharing within and between financial institutions and law enforcement needs to be increased and modernized.

The problem is that privacy is now protected by effectively deputizing the financial sector. In the current threat environment, this puts a massive amorphous burden on compliance departments. That cost is ultimately passed on to the consumer and hamstrings the effectiveness of law enforcement.

One solution is for FinCEN to host a basic BO dataset (such as name, address, ID) that compliance departments can access and search, verifying their own due diligence findings. This allows FinCEN to leverage big data analytical tools to easily find trends in CTRs and SARs. Also, more sensitive information remains in private hands.

How legislation can help smaller competitors

A small American shipping company has to turn a profit in order to pay its employees and stay open. A drug cartel-owned shipping company in the same town has no need to turn a profit. All it has to do is not get caught. It can and does swallow up fair competitors by seeking out legit accounts to cover its illegitimate activity.

Second, large government contracts have “set asides” for small businesses. Shell companies defraud the government by underbidding fairly competing small businesses for these set asides and then providing shoddy product or engaging in other schemes. Congress could also make it cheaper and easier for businesses to become a publicly-traded company.

Bottom Line: Updating the AML regime for the explicit purposes of creating a better business environment strikes a pragmatic balance between the duty of government to provide the public good of national security and the privacy necessary for free enterprise. Doing it before great-power competition turns into great-power war might just be what prevents that calamity and ushers in a brighter future.

The link to the original article in the AEI policy blog:
https://www.aei.org/publication/anti-money-laundering-and-great-power-war/

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Excerpt:

Clay R. Fuller is a Jeane Kirkpatrick Fellow at the American Enterprise Institute (AEI)*

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Another Debt Crisis for Poor Countries?http://www.ipsnews.net/2018/04/another-debt-crisis-poor-countries/?utm_source=rss&utm_medium=rss&utm_campaign=another-debt-crisis-poor-countries http://www.ipsnews.net/2018/04/another-debt-crisis-poor-countries/#comments Wed, 18 Apr 2018 13:27:50 +0000 Masood Ahmed http://www.ipsnews.net/?p=155329 Masood Ahmed is President of the Center for Global Development*

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Masood Ahmed is President of the Center for Global Development*

By Masood Ahmed
WASHINGTON DC, Apr 18 2018 (IPS)

When the world’s finance ministers and central bank governors assemble in Washington later this month for their semi-annual IMF meeting, they will no doubt set aside time for yet another discussion of the lingering debt problems in the Eurozone or how impaired bank debt could impact financial stability in China.

Masood Ahmed

They would do well to also focus on another looming debt crisis that could hit some of the poorest countries in the world, many of whom are also struggling with problems of conflict and fragility and none of which has the institutional capacity to cope with a major debt crisis without lasting damage to their already-challenged development prospects.

Nearly two decades ago, an unprecedented international effort—the Heavily Indebted Poor Countries (HIPC) Debt initiative—resulted in writing off the unsustainable debt of poor countries to levels that they could manage without compromising their economic and social development.

The hope was that a combination of responsible borrowing and lending practices and a more productive use of any new liabilities, all under the watchful eyes of the IMF and World Bank, would prevent a recurrence of excessive debt buildup.

Alas, as a just-released IMF paper points out, the situation has turned out to be much less favorable. Since the financial crisis and the more recent collapse in commodity prices, there has been a sharp buildup of debt by low-income countries, to the point that 40 percent of them (24 out of 60) are now either already in a debt crisis or highly vulnerable to one—twice as many as only five years ago.

Moreover, the majority, mostly in Sub-Saharan Africa, have fallen into difficulties through relatively recent actions by themselves or their creditors. They include, predictably, commodity exporters like Chad, Congo, and Zambia who have run up debt as they adjusted (or not) to revenue loss from the collapse in oil and metals prices.

But they also include a large number of diversified exporters (Ethiopia, Ghana, and the Gambia among others) where the run-up in debt is a reflection of larger-than-planned fiscal deficits, often financing overruns in current spending or, in a few cases, substantial fraud and corruption (the Gambia, Moldova, and Mozambique).

The increased appetite of sovereign borrowers has been facilitated by the willingness of commercial lenders looking for yield in a market awash with liquidity, and by credit from China and other bilateral lenders who are not part of the Paris Club.

It is striking that between 2013-16, China’s share of the debt of poor countries increased by more than that held by the Paris Club, the World Bank and all the regional development banks put together.

Nor do traditional donors come out entirely blameless. Concessional funding for low-income countries from the (largely OECD) members of the DAC fell by 20 percent between 2013–16, precisely the period in which their other liabilities increased dramatically.

As for the IMF and World Bank, while it may have been wishful thinking to hope they could prevent a recurrence of excessive debt, it was not unreasonable to expect that they would have been more aware as this buildup was taking place and sounded the alarm earlier for the international community.

There is also a plausible argument that excessively rigid rules limiting the access of low-income countries to the non-concessional funding windows of the IMF and World Bank left no recourse but to go for more expensive commercial borrowing, with the consequences now visible.

How likely is it that these countries are heading for a debt crisis, and how difficult will it be to resolve one if it happens? The fact that there has been a near doubling in the past five years of the number of countries in debt distress or at high risk is itself not encouraging.

And while debt ratios are still below the levels that led to HIPC, the risks are higher because much more of the debt is on commercial terms with higher interest rates, shorter maturities and more unpredictable lender behavior than the traditional multilaterals.

More importantly, while the projections for all countries are based on improved policies for the future, the IMF itself acknowledges that this may turn out to be unrealistic.

And finally, the debt numbers, worrying as they are, miss out some contingent liabilities that haven’t been recorded or disclosed as transparently as they should have been but which will need to be dealt with in any restructuring or write-off.

The changing composition of creditors also means that we can no longer rely on the traditional arrangements for dealing with low-income country debt problems. The Paris Club is now dwarfed by the six-times-larger holdings of debt by countries outside the Paris Club.

Commodity traders have lent money that is collateralized by assets, making the overall resolution process more complicated. And a whole slew of new plurilateral lenders have claims that they believe need to be serviced before others, a position that has yet to be tested.

It is too late to prevent some low-income countries from falling into debt difficulties, but action now can prevent a crisis in many others. The principal responsibility lies with borrowing country governments, but their development partners and donors need to raise the profile of this issue in the conversations they will have in Washington.

There is also an urgent need to work with China and other new lenders to create a fit-for-purpose framework for resolving low-income country debt problems when they occur.

This is not about persuading these lenders to join the Paris Club but rather about evolution towards a new mechanism that recognizes the much larger role of the new lenders, and demonstrates why it is in their own interest to have such a mechanism for collective action.

Traditional donors also need to look at their allocation of ODA resources, which face the risk of further fragmentation under competing pressures, including for financing the costs in donor countries of hosting refugees.

Finally, the assembled policymakers should urge the IMF to prioritize building a complete picture of debt and contingent liabilities as part of its country surveillance and lending programs, and to base its projections for future economic and debt outcomes on more realistic expectations.

They should also commission a review to examine the scope for increased access to non-concessional IFI funding for (at least) the more creditworthy low-income borrowers.

It is the poor and vulnerable that pay the heaviest price in a national debt crisis. They have the right to demand action by global financial leaders to make such a crisis less likely.

*Masood Ahmed previously led the World Bank’s Heavily Indebted Poor Countries debt relief initiative, which has to-date brought relief from debt burdens to 36 of the world’s poorest nations.

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Excerpt:

Masood Ahmed is President of the Center for Global Development*

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The UN tells private enterprise leaders that “Business as Usual Won’t Work”.http://www.ipsnews.net/2018/04/un-tells-private-enterprise-leaders-business-usual-wont-work/?utm_source=rss&utm_medium=rss&utm_campaign=un-tells-private-enterprise-leaders-business-usual-wont-work http://www.ipsnews.net/2018/04/un-tells-private-enterprise-leaders-business-usual-wont-work/#comments Wed, 11 Apr 2018 17:42:20 +0000 Will Higginbotham http://www.ipsnews.net/?p=155241 As global citizens face an array of issues from unemployment to discrimination, affecting their livelihoods and potential, a UN agency called upon businesses to employ a new, sustainable, and inclusive model that benefits all. Business leaders from around the world convened at the United Nation’s 2018 Economic and Social Council (ECOSOC) partnership forum to hear […]

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By Will Higginbotham
UNITED NATIONS, Apr 11 2018 (IPS)

As global citizens face an array of issues from unemployment to discrimination, affecting their livelihoods and potential, a UN agency called upon businesses to employ a new, sustainable, and inclusive model that benefits all.

2018 ECOSOC Partnership Forum. Credit: UN Photo/Loey Felipe

Business leaders from around the world convened at the United Nation’s 2018 Economic and Social Council (ECOSOC) partnership forum to hear how the private sector can work with governments to improve global economic opportunities.

“The private sector is an indisputable partner in reducing global inequalities and improving employment opportunities for all” the UN Deputy Secretary-General Amina Mohammed told the audience.

Mohammed stressed that the private sectors contribution to development was essential if the world is to meet the 2030 Sustainable Development Goals (SDGs).

However, in order for this to happen Mohammed said that “business as usual simply won’t work.”

Instead, leaders were challenged to commit to align their business goals with the SDGs by investing in sustainable business models.

“I would also like to take the opportunity to challenge the business leaders present here today to make bold commitments to a more inclusive future for all,” said Marie Chatardova, president of the ECOSOC.

Chatardova reminded the leaders of the UN’s Business and Sustainable Development Commissions recent research that found that investment in sustainable models could create some $12 trillion dollars in economic opportunities by 2030.

“Investing in sustainable development goals – it’s a ‘win-win partnership,” she said.

Calling for Inclusion

Today, 192 million people are unemployed. Eight per cent of the global population live in poverty. There is a mounting youth unemployment crisis. Women, indigenous and disabled persons continue to face barriers to equitable and meaningful employment.

Attendees highlighted the importance of sustainable business models that prioritize diversity and inclusivity by getting women, youth, indigenous and disabled persons into the workforce.

In panel discussions, many business leaders spoke of their companies’ ongoing diversity programs.

Sara Enright, director of the Global Impact Sourcing Coalition (GISC), pointed to Impact Sourcing – an example of inclusive business practice.

Impact sourcing, Ms Enright told the forum is: “when a company prioritises suppliers who are hiring and providing career development to people who otherwise have limited prospects of formal employment.”

The GISC is a global network of 40 business that include – Google, Microsoft, Aegis, and Bloomberg – that have committed to impact sourcing.

In March, GISC members were challenged to hire and provide training to over 100,000 new workers by 2020. Enright said so far ten companies have responded to the challenge, pledging to hire over 12,000 workers across Kenya, Nepal, Cambodia and the United States.

Enright said she expected many more companies to sign up and stressed that the GISC would monitor and measure the outcomes.

The UN applauded GISC’s work as an inspiring example of the private sector working collaboratively and inclusively to meet the SDGs vision.

Curb Your Corruption

Another issue that arose during the forum was corruption in development.

Last year global development funding reached $143 trillion dollars, of which the UN estimates that over 30 percent of funds failed to reach their intended destinations.

The UN told business leaders that if they commit to using technology that better tracks where money goes in development, then it will help curb corruption.

Bob Wigley, chairman of UK Finance, encouraged businesses to invest in technologies like ‘Block Chain’.

Block-chain, or Distributed Ledger Technology, is a digitized public record book of online transactions that was developed in 2008 with the rise of online currency ‘bitcoin’.

It is an entirely decentralized means of record keeping, meaning it is operated on a peer-to-peer basis rather than one central authority.

Wigley said the technology allows the direct tracking of online payments, ensuring that it is delivered correctly.

“If I was the recipient of state aid or wanting to know where my funds are going exactly then I’d be using block-chain systems, not the antiquated bookkeeping that gives rise to potential corruption every time a payment trickles from one set of hands to another,” he said.

“Think of how embracing and enhancing block chain technology could ensure accountability and transparency – things that are critical to meeting the SDGs,” Wigley continued.

A Race to the Top

Whilst many businesses are committing to the SDGs and implementing sustainable initiatives, more still needs to be done to unlock the full potential of the sector.

Kristine Cooper from United Kingdom insurance company Avia said it is a question of creating ‘competition’ between business by tracking them in their commitment and delivery.

“Lots of companies are doing great things in diversity and SDG commitments and how they do business to meet these goals, but it’s hard to know who’s doing really well, there is no consistency with reporting,” Cooper said.

“The system lacks the incentives to make right decisions and make organizations live up their responsibility.”

Ranking companies and holding them accountable, Cooper said, would create a “race to the top” and in the process, truly unleash “the power of the corporate and private sector in meeting development goals”.

Discussion points from this meeting will be further discussed in ECOSOC meetings held in May 2018, as well as at the High-level Political Forum on Sustainable Development in July 2018.

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International Community Ramps Up Action on Venezuela Crisishttp://www.ipsnews.net/2018/04/international-community-ramps-action-venezuela-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=international-community-ramps-action-venezuela-crisis http://www.ipsnews.net/2018/04/international-community-ramps-action-venezuela-crisis/#comments Tue, 10 Apr 2018 21:13:04 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=155223 One year into the most recent series of protests and a humanitarian crisis with no end in sight, international groups have called for action to help protect Venezuelans. A complex political and economic crisis in Venezuela has left millions without access to basic services and resources, prompting UN agencies and human rights groups like Human […]

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Venezuelans arrive in Pacaraima, border city with Venezuela, and wait at the Federal Police, the entity responsible for receiving Venezuelans seeking asylum or special stay permits in Brazil, 16 February 2018. Credit: UNHCR/Reynesson Damasceno

By Tharanga Yakupitiyage
UNITED NATIONS, Apr 10 2018 (IPS)

One year into the most recent series of protests and a humanitarian crisis with no end in sight, international groups have called for action to help protect Venezuelans.

A complex political and economic crisis in Venezuela has left millions without access to basic services and resources, prompting UN agencies and human rights groups like Human Rights Watch to speak up and urge action.

“Venezuela needs help to tackle and overwhelming crisis,” said singer Ricardo Montaner alongside Human Rights Watch at the launch of the #TodosConVenezuela, or Together with Venezuelans, campaign.

“Join me. It’s not just my job or yours, it’s something we should all do. Tell your friends—let’s do this together,” he continued.

The campaign, launched ahead of the Summit of the Americas where world leaders will discuss the situation in Venezuela, asks the public to tweet at Latin American presidents to confront Venezuela President Nicolas Maduro about government abuses.

Such abuses include the suppression of dissent as government critics are often arbitarily detained and prosecuted in military tribunals.

An estimated 700 civilians have been prosecuted in military courts for offenses such as rebellion and treason.

Numerous UN Special Rapporteurs also found “excessive and indiscriminate use of force” during anti-government protests.

“Protests must not be criminalized,” they said.

Meanwhile, Venezuela has been facing a severe economic crisis since global oil prices plummeted in 2014.

The South American nation now has the highest inflation rate in the world which now exceeds 6,000 percent, making it nearly impossible for Venezuelans to access medicine and food and causing a health crisis.

In one year alone, maternal mortality and infant mortality increased by 65 percent and 30 percent respectively. Over 80 percent of the country now live in poverty.

Driven by the lack of access to basic services as well as political tensions, almost two million Venezuelans have left the country, causing the humanitarian crisis to spill over.

Carlos Miguele Machado told Human Rights Wach that he left his home country because he could not find medicine that his wife needed after undergoing thyroid surgery.

“I had to travel far, go from pharmacy to pharmacy looking for the medicine, and I could not find it—and it is very expensive in the black market,” he said.

Both Colombia and Brazil have seen the largest numbers of migrants crossing their borders in recent months. To date, over 1 million Venezuelans have reached Colombia while Brazil estimates that over 800 enters its country every day.

“As the complex political and socio-economic situation in their country continues to worsen, arriving Venezuelans are in more desperate need of food, shelter, and health care. Many also need international protection,” said UN High Comissioner for Refugees (UNHCR) spokesperson William Spindler.

As public services in Brazil become more and more stretched in response to the inflows, UNCHR has ramped up its efforts to help register and house Venezuelans. The agency has opened up new shelters for vulnerable Venezuelans which are already almost at capacity.

In order to implement its regional response plan, UNCHR made an appeal of $46 million to donors. So far, it is only four percent funded.

Similarly, the International Organizaation for Migration (IOM) launched a regional action plan to strengthen response to the large-scale of flows of Venezuelans.

“IOM’s Regional Action Plan…represents a call for the international community to contribute to and strengthen the government efforts to receive and assist Venezuelans, so that those efforts may be sustained,” said IOM’s Regional Director for South America Diego Beltrand, encouraging host countries to adopt measures to help regularize Venezuelans’ stay.

World Food Programme Director David Beasely also urged the international community step up international donor funding in order to prevent the “humanitarian catastrophe” unraveling at the Colombian border.

“This could turn into an absolute disaster in unprecedented proportions for the Western Hemisphere,” Beasely said while visiting Colombia.

“I don’t think people around the world realize how bad the situation is and how much worse it could very well be,” he continued, pointing to the case of Syria’s crisis which began with a minor food emergency.

The upcoming presidential vote in May in Venezuela could determine the future of the country and its citizens.

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Ten reflections on today’s crisishttp://www.ipsnews.net/2018/04/ten-reflections-todays-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=ten-reflections-todays-crisis http://www.ipsnews.net/2018/04/ten-reflections-todays-crisis/#respond Tue, 10 Apr 2018 18:51:49 +0000 Roberto Savio http://www.ipsnews.net/?p=155221 Roberto Savio is founder of IPS Inter Press Service and President Emeritus

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Roberto Savio is founder of IPS Inter Press Service and President Emeritus

By Roberto Savio
ROME, Apr 10 2018 (IPS)

It is now clearly evident that w e are in a period of transition, even though we remain uncertain as to its outcome.

The political, economic and social system that has accompanied us since the end of the Second World War is no longer sustainable.

Roberto Savio

Roberto Savio

The exponentially growing inequalities have, according to Amnesty International, taken us back almost to levels seen in Victorian times – albeit now at a global level. Ten years ago, 652 people had the same wealth as 2.3 billion people. Now there are eight.

Today’s eighteen-year-olds, according to projections of the International Labour Organization, will retire with an average pension of 632 Euros a month.

Despite official warnings, we are, with great indifference, breaching the 2 degrees centigrade temperature limit beyond which our planet will undergo irreversible changes.

Our financial system today operates largely disentangled from the economy in a parallel world privy of international controls, and where financial transactions on any given day are forty times higher than the production of goods and services around the planet.

The main banks have paid, since 2009, over $800 billion in fines for illegal operations. We must also note that political participation (voting in elect ions) has declined, from an average of 86% in 1960, to 63.7% today.

A profound analysis is very complex and involves all aspects of our life. But it is possible to identify important points for reflection and debate and on which we can jointly explore.

Hopefully they will also lead us to reflect on other points, since the theme of the crisis is in fact holistic and touches on all aspects of our lives. Reflect ions such as these are always subjective. What follows are facts that this writer experienced personally.

REFLECTION NO. 1: The crisis has distant roots.

It was in 1973 that the United Nations General Assembly unanimously adopted a global governance plan, which aimed at reducing inequalities among its members: it was called the New International Economic Order. This plan was born with the support of the United States (even though originally launched by Mexico and Algeria).

The post-war international system, including the United Nations, was put together on the initiative of the United States, by the principal victors of the Second World War.

They were keen on preserving peace and pursuing development, after a war in which they lost about half a million soldiers out of a total population of 140 million people (in comparison, Germany lost more than 15 million out of 78 million inhabitants, and more than two million civilians, against none in t he United States and twenty million in the Soviet Union).

The United Nations was therefore born with Washington’s commitment to contribute 25% of its budget (contrast this with the present day when the T rump administration threatens US withdrawal).

But until the Cancun Summit in 1981, which brought together the twenty-two most important heads of state in the world (communist countries excluded), we lived with the illusion of the end of inequality, based on a world democracy, where the majority of countries decide the course to follow for the common good.

At Cancun, the newly elected US President Ronald Reagan announced that the United States no longer accepted to be subject to the rules of an abstract world democracy.

The United States was an exceptional country, and on this basis would decide her foreign and economic policy.

Attending the same meeting was the UK Premier, Margaret Thatcher, who would become Reagan’s most important European ally.

In Cancun, a different vision of the world was born: society does not exist – only individuals (Thatcher). It is not the factories polluting, but the trees (Reagan). Poverty produces poverty: wealth produces wealth. As such, the rich should be taxed as little as possible because they distribute wealth.

REFLECTION NO. 2: Shortly after Cancun, in 1989, the Berlin Wall fell and with it, the end of ideologies, the straitjackets that gave us both Nazism and Communism.

The driving idea that followed was that we must be pragmatic. Politics must solve concrete problems, not pursue utopias. But the solution of a given problem without consideration for the final vision of the society (right or left, does not matter) is actually called utilitarianism; and politics aimed at administration and not at ideas reduces political participation and increases corruption.

Without programs driven by ideals, the politician’s personality (possibly telegenic), measured on TV and not in the streets, became the main tool for electoral campaigns supported by marketing campaigns, not ideas or programs.

REFLECTION NO. 3: At the same time, neoliberal globalization became the single most powerful guiding thought – think of Thatcher’s TINA “There is n o alternative”.

It was based on the socioeconomic and political model of the so-called Washington Consensus, the development paradigm imposed by the International Monetary Fund, the World Bank and the US Treasury. It envisaged the adoption of the following reforms: macroeconomic stabilization, liberalization (of trade, investment and finance), privatization and deregulation.

It eliminated the barriers of national protection everywhere, reduced non-productive expenditure (education, health, social assistance), and promoted free competition among states.

Known as Kissinger’s dictum: “the new paradigm of American supremacy”, developing countries were forced to submit to the economic rules imposed by the North.

Kissinger did not see that once free trade was imposed, China and other countries would emerge as winners.

It is interesting to note that before the fall of the Berlin Wall, the term globalization does not appear in the media.

REFLECTION NO. 4: The reaction of the left to this “pensee unique” was the “Third Way” which was successfully proposed and promoted by Tony Blair.

In substance, it argued that it was time to abandon the old ideas of the le ft and ride the wave of globalization, accepting the lack of alternatives.

Social democracy, from Blair (in UK) to Renzi (in Italy), sought to transform itself into a transversal party, one that embraced the center, with an active policy on concrete facts stripped of outdated ideological cages.

The result? The parties of the left were abandoned in droves by their voter s, and the 2008 crisis, largely due to the absence of controls on American banks and subsequently those in Europe (and with left-leaning governments in power in most Western countries), eliminated its ability to redistribute surpluses.

Blue-collar workers and middle classes in crisis, all victims of globalization, sought new defenders who promptly appeared in the form of Le Pen, Farage, Wilders and so on, and today will still vote for Salvini and the 5 Star Movement (in Italy).

REFLECTION NO. 5: Numerous historians believe that greed and fear were amongst the main engines of change in history.

Riccardo Petrella, in his latest book “In the Name of Humanity”, believes t hat these engines were made using three traps: In the name of God, in the name of the nation and in the name of profit.

There is no doubt that since the fall of the Wall, the values of globalization (competition, profit, individualism, exaltation of wealth), together with t he disappearance of social justice, solidarity, transparency, equity, etc. from political debate have created an ethics based on greed.

And twenty years later, in 2009, the economic and financial crisis, first in the United States with the sub-prime collapse, and then in Europe with sovereign bonds, gave way to a second cycle – that of fear.

REFLECTION NO. 6: The cycle of fear, in whose grip we are fully now (without having abandoned that of greed, and the traps of God, the Nation and Profit are once again being put to good use) has led to the emergence of a new right – which is not based on ideas, but emotions.

Brexit and Trump are easy-to-see phenomena. But the phenomenon is much deeper. We are in a liquid society, not structured around ideologies or class. And in such societies, it is easy for leaders, riding the waves of fear and greed, to easily rise to the forefront.

The 2009 crisis kicked off the massive immigration from countries invaded b y the West, to depose dictators and automatically introduce democracy (but the disintegration of Yugoslavia, a modern and European country, after Tito’s death, should have warned us).

Democracy did not immediately take over – rather we have seen chaos, civil war, bloodshed and destruction. In 2003, George W Bush began the invasion of Iraq.

In 2011, civil war broke out in Syria and rapidly became a confrontation between Arab, European, American and Russian forces (leading to over six million displaced persons and over half a million dead).

In 2013, Sarkozy pushed for an invasion of Libya ostensibly to depose Gaddafi.

From the ruins of Iraq we have seen the emergence of ISIS, terrorism in the name of God, for a return to original Islam (Wahhabism, financed by Saudi Arabia in excess of 80 billion dollars in the last twenty years).

All of this took place fifteen years after the veterans of the US-funded war against the Russian occupation in Afghanistan gathered together as Al-Qaeda under B in Laden to launch the first attack in history on American soil.

As the famous cartoonist El Roto in El Pais remarked, “we send bombs and they send us refugees”. The resultant refugees are caught in the jaws of two traps: in the name of God and of the country.

Today in Europe, the identity and sovereignty parties are the second largest political force, outnumbering the socialists. If European elections were held today, the radical right would have forty million votes.

It is in government in Hungary, Poland, the Czech Republic, Slovakia and Austria, but it also plays a key role in the governments of the Netherlands and now, Germany, since the AFD won 92 seats in the last elections.

Viktor Orban of Hungary has launched the so-called “illiberal democracy”, Poland denounces the secularism of the European Union and has called for a great m arch with the populists and sovereigns of all Europe, to the cry of “In the name of God”.

The Visegrad Group (Hungary, Czech Republic, Slovakia, Poland, and now Austria) denounces the capitulation of Europe to Islam and is creating an East-West fracture of a Europe, which joins the North-South fracture on the vision of economy: austerity or solidarity.

But there is something new. The United States is intervening in Europe, openly supporting nationalist and xenophobic right-wing parties, which at the same time look not only to Trump but also to Putin (who is also intervening in Europe an elections), as a point of reference.

As Italy’s Salvini shouted at an electoral campaign rally at Piazza del Popolo in Rome “good work Putin and Trump”.

As a result, in a rapidly aging Europe (for example, in Italy young people between 18 and 25 years are only 3% of those entitled to vote), immigration has become a great flag of the populist and xenophobic right wing.

Meanwhile, the International Monetary Fund has launched a warning: Europe needs to rapidly absorb 20.5 million immigrants, to support its pension system and productivity.

Statistics show that immigrants contribute to the system more than they cost; they constitute the great majority of the new small businesses; that their dream is to be quickly integrated into the system. But there is no debate on migration, and what kind of immigrants to welcome.

They are now all seen as dangerous invaders, intent on destroying European identity, on crime, and taking work away from European citizens, the latter victims of intense unemployment.

Even Trump, in a country made up of immigrants, has made immigration control one of his battle cries. A tragic phenomenon is that young people, much les s so than pensioners, are no longer politically active.

Since time immemorial, young people burst onto the political scene to change the world they found. Had they voted, Brexit would not have happened.

But the political system, by and for the elderly, ignores them. In Italy, t he Renzi government allocated 30 billion Euros to save four banks. In the same year the total in the budget for Italian youth was a paltry two billion.

From the creation of the United Nations in 1945, we have gone from a global population of 2.5 billion people to 7.5 billion people today.

The growth will stop only in 2050, when we will be 9.5 billion people. In the period to 2050, Africa will double her population. Either we are able to find accords to govern mobility flows according to needs, or we will have to shoot on immigrants, as some already propose.

REFLECTION NO. 7: Intellectuals and political scientists are increasingly surprised by the passivity of citizens who seem completely anaesthetized and no longer react to anything, even if politics goes against their interests. The history of Brexit, for instance, has been the subject of many analyses.

How is it possible that the most depressed areas, which received so much from Europe, voted to leave Europe?

How is it that Poland, the largest recipient of European funds (three times the Marshall plan) votes against Europe?

How is it possible that Trump, who promised to drain the swamp from the special interests in favour of the people ignored by the same special interests and government, now is a firm ally of big capital and the military (not excluding his family interests) and the voters remain faithful?

Today 92% of those who voted for him say they are ready to re-elect him.

There are many possible interpretations to this paradoxical situation. But as Talleyrand said, every people has the government it deserves.

And we should recognize that since the 2009 crisis, the political class has lost the most credit. We should be examining the impact of reality shows like “Big Brother” TV since 1989: the feeling of extraneousness from political power.

Like the shelter of a virtual space, like the Internet, it has contributed to an individualism that is the result of frustration and the lack of debate on ideas.

The macroscopic example of this anesthesia is climate change. Citizens see it every day in their daily lives: impressive photos of disappearing glaciers, snowfall in the Sahara, hurricanes, forest fires, storms …

They also have all the data of the scientific community, which in Paris, obliged the world’s governments to sign an insufficient agreement without controls. But they do not need to study, to know.

They can also see how governments speak, but do not act. They continue to spend to finance the fossil (fuel) industry three times what they invest in the renewable energy industry.

Italy even called a referendum to continue exploiting the oil fields in the South. The Spanish government is fighting its electricity producers, who want to c lose their coal-fired power stations.

In the same Spain, pensioners have organized an impressive march to defend their pensions: but no country has announced a march to raise awareness on the climate peril we face.

On the surprising absence of citizens’ reactions to vital problems, one could write a lot. And this is the basis of the epochal change in which we find ourselves.

REFLECTION NO. 8: The impact of technology: Let us consider the impact of the imminent fourth industrial revolution.

Let us recall: the first was at the beginning of the 1800s, when mechanization replaced the individual work, with mechanical looms taking over. It was easy to recycle the workers, who passed from the frame of the house to that of the factory.

The second was at the end of the 1800s, thanks to the use of machines powered by mechanical energy and the use of new energy sources such as the use of steam which led to the birth of, and development of railway networks, the construction of steam ships and faster means of communication, to important discoveries in the chemical and medical fields, to the assembly line, electricity, telephone, etc.

Even here, thanks to the transfer from the fields to the factories, humans remained vital for production. And the political battles born out of the desire for a fair recognition of work done gave way to what we now consider modern politics.

The Third Revolution began after the end of the Second World War, where technology increasingly changed the way people work, culminating in the internet revolution today.

And we are now on the cusp of the fourth revolution, which is based on Artificial Intelligence and robotics.

Today this accounts for 17% of the production of goods and services but it is estimated that this will be 30% by 2030.

The automation of the transportation sector will lay waste to six million jobs as taxi drivers, truck drivers, drivers of public transport in Europe find their services no longer needed. This automation will totally change the transport system, the automotive industry, insurance companies, etc.

But this time, will the taxi drivers be able to recycle themselves in a society that will privilege technological knowledge over traditional work?

We are rushing headlong towards a structural problem, which politics, with its short-term horizons, seems determined to ignore.

Will this transition risk increasing unemployment, fear, social and political tensions? It is just an example of how large the gap between politics, technology, finance and globalization has become.

REFLECTION NO. 9: The crisis of multilateralism: From the ruins of the Second World War, the conscience was born that only through multilateral cooperation could one seek lasting peace, after the tragedies provoked by nationalism and the idea of domination over others.

International organizations such as the United Nations, with all its agencies and funds, from UNICEF to FAO, from the World Health Organization to the International Atomic Energy Agency, were born; and in Europe the great project of the European Community, together with all the regional projects, from ASEAN to the Organization of African Unity, the Organization of American States, Mercosur, etc.

Today, the whole multilateral system is in crisis. Trump’s trade wars are destroying the multilateral trade system.

From Roosevelt’s world democracy to Reagan’s free trade and competition, we have moved on to American interests only, America first.

Next on the horizon are monetary wars. The idea of competing and not cooperating, greed as a value to replace the value of cooperation, which helps the weak and controls the powerful is ending.

But just as Kissinger did not see that free competition would one day turn against the United States, Trump does not see that opening a politics of confrontation could turn against the United States one day. Russia, China and the United States are returning to the era of gunboat policy, which seemed to have disappeared.

The present and the immediate future seem a dangerous re-enaction of the Thirties, which resulted in the Second World War.

Are those who vote for nationalism aware of this? As Pope Francis says, we are already in a fractional Third World War … we have exceeded the number of refugees at the time. To wars in the name of the homeland in Africa, we are adding those in the name of God, from Rohingya to Burma, to Islamic terrorists … we have spent decades breaking down walls, and we are creating more than before …

The future seems to go against the interests of humanity, which now knows planetary threats that did not exist in the 1930s, from climate to nuclear, in a process of social and economic Darwinism whose outcome we can only imagine.

REFLECTION NO. 10: It is evident that the final reflection is the need to find a governability of globalization and the Fourth Industrial Revolution. It is not true that we lack ideologies.

Neoliberal globalization is an ideology of an unprecedented force, which ha s produced new phenomena, such as global finance, a multinational system stronger than governments, where the example of the use of Facebook to use citizens as merchandise, to influence political and commercial choices, shows us how profound the crisis of democracy is.

We are entering a dystopian world described by the pioneers of science fiction: the world of Orwell and Clark, based on the machines and power of the few.

Only ten years ago, the ascent to total power like Xi in China, Erdogan in Turkey or Putin in Russia was unthinkable. Both Brexit and Trump were unthinkable.

It was unthinkable that tax havens could amass the colossal figure of 80 trillion dollars. It was unthinkable that eight people could have the same wealth as 2.3 billion people. It was unthinkable that Norway would see a winter whose temperatures would be close to those of spring.

Ten years ago, the financial crisis opened a period of deep and dramatic transformations. With this rhythm of the acceleration of history, as Toynbe e called it, where will we be in ten years?

We must immediately find a dialogue between everyone, which can only be based on the rediscovery of common values, on the construction of peace and cooperation, on international law as a basis for relations between states, and rediscover the sense of sharing, peace and social justice as the basis for cohabitation, which brings man back to the center of society – not capital, finance or greed, and which frees us from fear.

Will we be able to find the way to do it?

In these 10 reflections, I have found it useful to consider where we have come from and contemplate as to where we are headed.

We are called upon to reflect keenly as to our fate: ours is a society that is increasingly becoming barbaric, one in which we read and dialogue less.

We spend twice as much on advertising as we do on education; the average voter is today lost and without a compass to guide them.

The reader is not obliged to agree with me. You are welcome to your own views and reflections. After all, what matters is that we reflect!

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Excerpt:

Roberto Savio is founder of IPS Inter Press Service and President Emeritus

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I Am a Migrant: Integrating Through Syrian ‘Hummus’http://www.ipsnews.net/2018/04/migrant-integrating-syrian-hummus/?utm_source=rss&utm_medium=rss&utm_campaign=migrant-integrating-syrian-hummus http://www.ipsnews.net/2018/04/migrant-integrating-syrian-hummus/#respond Wed, 04 Apr 2018 07:45:46 +0000 Maged Srour http://www.ipsnews.net/?p=155140 Khaled left Syria in 2015, when his country was already in its fourth year of war. He is 27 years old and can clearly remember what his life was like then in Damascus: a happy life, with a happy family, in a happy country. Despite coming from a land now devastated by war, Khaled does […]

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What’s different about Trump’s tariffs?http://www.ipsnews.net/2018/04/whats-different-trumps-tariffs/?utm_source=rss&utm_medium=rss&utm_campaign=whats-different-trumps-tariffs http://www.ipsnews.net/2018/04/whats-different-trumps-tariffs/#comments Tue, 03 Apr 2018 14:57:47 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=155129 At Davos in January, US President Donald Trump warned that the US “will no longer turn a blind eye to unfair economic practices” of others, interpreted by many as declaring world trade war. Before the US mid-term elections in November, Washington is expected to focus on others’ alleged “massive intellectual property theft, industrial subsidies and […]

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By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Apr 3 2018 (IPS)

At Davos in January, US President Donald Trump warned that the US “will no longer turn a blind eye to unfair economic practices” of others, interpreted by many as declaring world trade war. Before the US mid-term elections in November, Washington is expected to focus on others’ alleged “massive intellectual property theft, industrial subsidies and pervasive state-led economic planning” pointing to China without always naming names. With the Republican Party already united behind his tax bill, Trump senses an opportunity to finally unite the party behind him and to continue his campaign for re-election in 2020.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Since January, Trump has taken steps threatened in his mid-2016 election economic policy document, drafted by US’s National Trade Council head Peter Navarro and Commerce Secretary Wilbur Ross. In particular, he has imposed tariffs and other restrictions on imports to revive US manufacturing. Import tariffs of 25% and 10% on steel and aluminium respectively have been imposed by invoking Section 232 of the US 1962 Trade Expansion Act, allowing unilateral measures to protect domestic industries for “national defence” and “national security”.

Trump’s action was supported by a US Department of Commerce Bureau of Industry and Security report, released earlier. It made the case for imposing import tariffs on both metals for national security reasons as “national security can be interpreted more broadly to include the general security and welfare of certain industries, beyond those necessary to satisfy national defense requirements….”

Trade war memories
After his announcement, several major trading countries and blocs retaliated or threatened to retaliate against US imports, raising the prospect of a trade war. The resurgence of US trade protectionism poses two threats. The US has a long history of using ‘anti-dumping measures’, especially on steel. Earlier, imports of washing machines and solar panels were restricted by Trump after the US International Trade Commission declared that they unfairly hurt domestic manufacturers.

The US President has also threatened to impose “reciprocal taxes” against countries imposing tariffs on US exports. This threat has invoked references to the 1930 Smoot-Hawley Tariff Act. Its Republican sponsors, Senator Reed Smoot and Congressman Walter Hawley then argued that it would protect US jobs by shielding American industries from import competition by imposing tariffs on over 20,000 imported goods.

This aggressive protectionism then precipitated the collapse of global trade, as its trade partners then restricted US export access into their own markets. The ensuing trade war undoubtedly exacerbated the Great Depression. Recent developments have understandably revived fears of a new trade war, with similar consequences.

Undermining trade multilateralism
The US’s unilateral actions have seriously challenged the multilateral framework of World Trade Organization (WTO) trade rules. The Trump administration has been challenging post-Bretton Woods rules-based trade multilateralism, which sought to develop international trade regulation. Besides many rhetorical attacks on the multilateral trading system, the Trump administration has largely avoided engaging with the WTO while also avoiding violating the letter of existing trade agreements.

Undermining the WTO and its rules is hardly new for the Trump administration, but what is rarely acknowledged is that it also represents continuity with previous presidents including his arch-nemesis, Obama’s. Both administrations have blocked appointing WTO Appellate Body (AB) members, effectively undermining the WTO’s dispute settlement process. The AB should have seven members, but will soon only have three members left, undermining its functioning. Aggrieved WTO members wishing to challenge alleged violations of its rules have no redress without a functioning AB.

Advocates of international trade liberalization have long claimed that it boosts growth and makes everyone better off in the long run, although many acknowledge shorter term casualties in ‘uncompetitive’ economic activities. With successful political mobilization around growing doubts over such claims, these claims have lost credibility, feeding the tide of ethno-populist-nationalism in the West.

Freer trade has widely distributed benefits in terms of lower consumer prices while seemingly concentrating costs on displaced producers. Conversely, tariffs meant to protect particular industries have concentrated benefits while widely distributing costs. Thus, even without considering the consequences of retaliatory trade measures by others, some (e.g., US steel) jobs may be saved while consumers pay more for ‘downstream’ products, threatening related jobs downstream. Consumers, however, are unlikely to act politically because they have to pay a little more for some goods, whereas workers are more likely to be mobilized if their livelihoods are threatened by foreign import competition.

Is Trump all that different?
Trump has long complained about US and foreign trade policies. He seems to believe that trade is a zero-sum game in which the goal is to export more and to eliminate the US trade deficit. Importing from another country implies that country has “won” and the United States has “lost”. Thus, his version of US ‘sovereigntism’ links trade to national pride. Thus, he accuses others, especially China, of “laughing at us”. As trade issues are about US jobs, pride and dignity, costs or losses become “a small price to pay”. Thus, imposing tariffs will show foreigners that the US is strong, and cannot be taken advantage of.

With this logic, “winning” may involve losing although the tariffs will benefit relatively few workers in protected industries at the expense of the vast majority of other workers in downstream industries and consumers. But longstanding economic imbalances and inequities are unlikely to be well addressed by protecting a few politically influential industries.

For half a century, the US has gone back and forth with trade liberalization, often coming dangerously close to trade warfare. President Ronald Reagan’s 1980s protectionism is rarely acknowledged as he is now the paragon of US economic neoliberalism. (Current US Trade Representative Robert Lighthizer earned his reputation in Reagan’s administration.) His trade restrictions used loopholes in trade agreements to raise tariffs and limit many imports besides forcing political allies to accept “voluntary restraints”. Dani Rodrik has argued that Reagan’s protectionism “let off political steam”, enabling the US economy to recover and globalization to accelerate.

International economic liberalization or globalization since Reagan has also transformed the international context and the consequences of Trump’s recent measures. Unlike Reagan who arm-twisted political allies to accept his demands as necessary concessions during the Cold War, Trump’s ‘US sovereigntism’ is based on ‘victimhood’, invoking the image of an ex-hegemon, and makes no pretensions of being mutually advantageous or reciprocal.

Yet, prematurely ‘crying wolf’ about trade war may also accelerate trade war momentum as it remains unclear how international policy is made and changed in Trump’s White House. While possibly ominous of much more to come, premature, exaggerated criticism of his unilateral trade measures may become ‘self-fulfilling’, given the political need for continued ethno-populist and nationalist mobilization against enemies, real or imagined.

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Washington’s Ambiguity Equals De Facto Sanctions On Teheranhttp://www.ipsnews.net/2018/03/washingtons-ambiguity-equals-de-facto-sanctions-teheran/?utm_source=rss&utm_medium=rss&utm_campaign=washingtons-ambiguity-equals-de-facto-sanctions-teheran http://www.ipsnews.net/2018/03/washingtons-ambiguity-equals-de-facto-sanctions-teheran/#respond Fri, 30 Mar 2018 14:37:02 +0000 Ann-Kathrin Pohlers http://www.ipsnews.net/?p=155105 Over the last few months, the United States’ rhetoric on the Iran nuclear agreement has been ambiguous, creating an uncertain environment for investors. With John Bolton, President Donald Trump has now appointed a national security adviser who is actively seeking to leave the Iran deal. In December 2017, a new wave of protests swept Iran’s […]

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In 2017, Iran’s oil exports came close to 1 billion barrels. Pictured here are oil fields in West Iran. Credit: Nicholas V.

By Ann-Kathrin Pohlers
UNITED NATIONS, Mar 30 2018 (IPS)

Over the last few months, the United States’ rhetoric on the Iran nuclear agreement has been ambiguous, creating an uncertain environment for investors. With John Bolton, President Donald Trump has now appointed a national security adviser who is actively seeking to leave the Iran deal.

In December 2017, a new wave of protests swept Iran’s cities. As the uprising movement faced repression, more than 25 people ended up dead in a few days. Many of them died in prison; the official story is they all committed suicide.

As these escalations caught most by surprise, there is a significant difference in the Iranian Green Movement. A movement much larger than the recent one, the Green Movement wasn’t as widespread as the December protest and mainly showcased within the city borders of Teheran.

The 2017 unrest, however, took place in small to midsize cities across the country and featured a different demographic. While the Green Movement is considered a middle-class movement, the recent uproar is one of Iran’s working class.

Iran’s economic crisis led many companies to lose money and workers to lose their pensions. The triggering factors for the protests, primarily political and economic, can be linked to the Joint Comprehensive Plan of Action – the Iran nuclear deal.

“Unemployment is a very critical factor in all of this. Then you have Rouhani going to the Parliament and hinting at the new budget and what it would look like,” Trita Parsi, author of ‘Losing an Enemy – Obama, Iran, and the Triumph of Diplomacy,’ told IPS. “You have a tremendous deep frustration in the population with things such as corruption and mismanagement.”

This frustration escalated seven months into moderate President Hassan Rouhani’s second term after he beat the Conservatives in a landslide, even though the Rouhani administration faced accusations they had promised more than the sanctions relief did for the Iranian economy. Surveys show that the promised economic benefits of the deal were significant and so was breaking out of isolation and not finding themselves in a situation in which the risk of war with the United States would be a constant presence.

“That, the deal has achieved,” Parsi said. “The expectations where the economy would go after the deal, however, were not met. Despite that though, there was still strong support for [Hassan Rouhani], partly because the majority opposed the alternative which was a return to conservative rule.”

So it wasn’t the situation Iran which drastically changed, it was the United States’ Iran policy. While the nuclear agreement went into effect under Barack Obama, the new administration takes a two-track approach to the nuclear deal as they renegotiate with allies as well as prepare to withdraw from it.

“If you take a look at Iran’s economy on paper, it looks as if it’s doing quite well. There’s a growth of roughly six and a half percent. Well, that growth is almost entirely because of oil sales. As a result of the deal, they were capable of selling oil again, and it’s probably the only area in which they have been able to go back to the pre-sanction years,” Parsi said. In 2017, Iran’s oil exports came close to one billion barrels. “But oil sales do not create jobs.”

In the absence of job creation, Iran’s unemployment rate continues to increase, especially among young people and particularly among young women. “Combined with the fact that this is a highly educated population, you have a lot of people with two master’s degrees driving the Iranian version of Uber,” Parsi added.

Even though Iran’s economy is growing, its population is still stagnant as job-creating investments aren’t taking place. Companies interested in the Iranian market face the problem that they can’t find financing as none of the major banks are willing to invest as they fear the United States’ withdrawal from the nuclear agreement and new sanctions.

“Many job-creating projects are five to seven years long, and banks are not charities. They want to have some degree of security and certainty that the deal will be in place for that period but they can’t even get four months of security because Donald Trump is constantly saying he will not renew the sanction waivers,” Parsi said.

The waivers temporarily deactivate the sanctions on Iran and are part of the nuclear agreement. Many, Trita Parsi included, expected Trump not to renew them but then the President pushed back the original January deadline for his administration and its European allies to agree on renegotiations to May 12.

“The White House strategy is to infuse uncertainty which is already working because now you see protests in Iran. All they need to do is to continue to constantly make everyone guess if they renew the waivers or not.”

The United States is not the only party to the deal – European banks and entities are as well.

“Those sanctions are targeting countries trading with Iran which means Europe, China, India, and Asia,” according to Parsi. “The question then is will Europe stand firm and continue to honor the deal?”

To do so, Europe would have to revive 1990s-era sanction blocking mechanisms as already suggested by David O’Sullivan, EU ambassador to the United States. This threat, however, will most likely remain empty as it essentially means the United States sanctions Europe and Europe sanctions the United States to block the secondary sanctions on Iran. These blocking mechanism would shield companies from U.S.-imposed fines, but they can’t shield European banks from losing access to the American market. “Would I choose the Iranian over the U.S. market? I would not,” Parsi stated.

And it’s that uncertainty preventing banks and businesses from coming in, in effect imposing de facto sanctions on Iran and paralyzing its economy.

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Trump’s Trade War in Perspectivehttp://www.ipsnews.net/2018/03/trumps-trade-war-perspective/?utm_source=rss&utm_medium=rss&utm_campaign=trumps-trade-war-perspective http://www.ipsnews.net/2018/03/trumps-trade-war-perspective/#respond Mon, 12 Mar 2018 08:34:36 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=154746 US President Donald Trump’s recent announcement of steep tariffs on steel and aluminium imports seems to have shocked US allies, even though these were among his 2016 election promises. The European Union (EU), Australia and Canada reacted sharply, in contrast to the more restrained response from China, the main target of earlier actions. During his […]

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By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR, Mar 12 2018 (IPS)

US President Donald Trump’s recent announcement of steep tariffs on steel and aluminium imports seems to have shocked US allies, even though these were among his 2016 election promises. The European Union (EU), Australia and Canada reacted sharply, in contrast to the more restrained response from China, the main target of earlier actions.

Steel imports. Credit: IPS

During his 2015-2016 election campaign, Trump repeatedly claimed that the US is being unfairly treated. He reiterated this recently, accusing the EU of being “particularly tough on the United States”, adding “They make it almost impossible for the United States to do business with them. And yet they send their cars and everything else …”.

This trade war has been raging for some time, especially since the 2008-2009 global financial crisis (GFC). The World Trade Organization (WTO) has been quite helpless in preventing the resurgence of protectionism, or stopping developed countries from effectively sending the WTO’s Doha Development Round (DDR) into a coma.

Slowing output, trade: chicken and egg?

The WTO’s World Trade Statistical Review 2017 showed that world merchandise trade growth slowed down from 2.6 per cent in 2015 to 1.3 per cent in 2016, the slowest since the GFC. World merchandise trade grew about 1.5 times faster than output after the Second World War, accelerating to more than twice in the 1990s. After the GFC, this ratio dropped to around one, and then to 0.6 in 2016, for the first time since 2001.

Explaining the trade growth slowdown by blaming prolonged slower global economic growth ignores the output-trade growth dialectic. It does not explain why trade expansion has been faster – or slower – than output growth at different times. After all, trade liberalization was associated with general economic liberalization and globalization despite slower world output growth during the 1990s.

The relationship between the output growth decline and the trade growth slowdown since the GFC raises similar doubts. Rising protectionism may explain trade growth falling below tepid output expansion. Yet, increasing protectionism is not only a response to slower growth, but may also contribute to it.

According to research by law firm Gowling WLG, the world’s top 60 economies adopted more than 7,000 protectionist trade measures between 2009 and 2016. It also found the US and EU mainly responsible for harmful trade policies! Since the GFC, the EU has adopted some 5,657 trade-restrictive measures, while the US has introduced 1,297 measures ‘harmful’ to international trade.

According to the WTO, G20 economies had implemented 1583 restrictive trade measures by October 2016 compared to around 300 eight years before, i.e., about 1300 more. Between mid-October 2015 and mid-May 2016, G20 economies applied 145 new trade-restrictive measures – averaging almost 21 monthly, up from 17 between mid-May and mid-October 2015. The latest WTO report observed that G20 economies have implemented less traditional and more opaque measures, making it more difficult to monitor and report.

All this despite G20 leaders repeatedly reiterating the mantra from their first Summit in Washington DC in 2008 declaring: “We underscore the critical importance of rejecting protectionism and not turning inward … Further, we shall strive to reach agreement … that leads to a successful conclusion to the WTO’s Doha Development Agenda with an ambitious and balanced outcome. ….. We also agree that our countries have the largest stake in the global trading system and therefore each must make the positive contributions necessary to achieve such an outcome”. As is well-known, subsequent actions did not match these words.

An earlier WTO report with wider geographic coverage found 2,557 new trade restrictions by October 2015, up 17% from the previous year. Countries have increasingly resorted to discretionary, non-transparent, non-tariff barriers (NTBs), instead of more traditional, transparent trade barriers such as tariffs. These NTBs include subsidies, domestic content requirements, health and safety requirements, state-owned enterprises and public procurement. They involve much discretion, and greatly affect developing country exports.

Trump’s difference

So, what is so special about Trump’s announcement? With characteristic bluster, he announced transparent tariff measures – rather than non-transparent NTBs. Equally significantly, they were to be imposed on all others – US ‘friends’ and ‘foes’ alike, without discrimination. The Trump difference lies in his ‘America First’ brazenness. Belatedly realizing the likely political impact of treating all other parties equally, Trump later announced possible exemptions for ‘national security’ reasons.

Frustrated by the slow progress of protracted multilateral negotiations, many countries have turned to bilateral and plurilateral free trade agreements (FTAs), especially after the Obama administration and European Trade Commissioners put the DDR on hold. As Jagdish Bhagwati has long argued, such non-multilateral FTA ‘termites’ not only undermine multilateral solutions, but may – ironically – slow global trade growth.

The plurilateral Trans-Pacific Partnership (TPP) and its replacement, the Comprehensive and Progressive TPP, for the 11 other TPP countries after the January 2017 US withdrawal, have mainly been about non-trade issues. These include extending intellectual property protection and non-judicial investor-state dispute settlement, besides limiting state-owned enterprises and public procurement. Such measures involve other types of protectionism sacrificing the national interest, particularly of developing countries, while benefiting influential transnational corporations.

If the developed world really wants to avoid all-out trade war, they must return to and advance multilateralism for sustainable, comprehensive solutions. Fairly concluding the Doha Round, while keeping its development promise, as pledged by G20 leaders, will be prerequisites in this endeavour.

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Helping Women, Periodhttp://www.ipsnews.net/2018/03/helping-women-period/?utm_source=rss&utm_medium=rss&utm_campaign=helping-women-period http://www.ipsnews.net/2018/03/helping-women-period/#comments Fri, 09 Mar 2018 20:05:38 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=154741 The United Nations Headquarters and Brooklyn Bridge were lit up on Thursday night not to help tourists navigate the major landmarks but to bring attention to a key issue that many women and girls face today: period poverty. In commemoration of International Women’s Day, the innovative menstruation-proof underwear company THINX shed the light on period […]

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By Tharanga Yakupitiyage
UNITED NATIONS, Mar 9 2018 (IPS)

The United Nations Headquarters and Brooklyn Bridge were lit up on Thursday night not to help tourists navigate the major landmarks but to bring attention to a key issue that many women and girls face today: period poverty.

In commemoration of International Women’s Day, the innovative menstruation-proof underwear company THINX shed the light on period poverty and urged world leaders to ensure that menstrual equity exists around the world.

“Today of all days on Women’s Day, we want to come together and light the path forward for greater equality,” Vice President of Brand at THINX Siobhán Lonergan told IPS.

But what is period poverty?

The Poor Have Periods Too

Half of the almost 4 billion women around the world are of reproductive age. For these women and girls, menstruation is a natural monthly reality.

However, millions of poor and marginalized women and girls around the world still lack access to basic sanitary products to help manage menstrual bleeding.

“Period poverty is having access to products that basically allow you human dignity to get up and do what you need to do everyday whether that is go to work or go to school,” Lonergan said.

“If you don’t have access to products for a human bodily function that happens every month, then how can you exist? How can you go about your regular everyday functions?” she continued.

In Bangladesh, many families are unable to afford sanitary pads and instead use rags from old clothing.

In India, only 12 percent of women have access to sanitary products leaving others to use materials from old newspapers to sand.

The use of unsanitary materials often has health implications, including reproductive tract infections and cervical cancer.

Approximately one in 53 Indian women are diagnosed with cervical cancer.

The lack of such hygiene products also affects girls’ attendance and participation in school.

In Nepal, 30 percent of girls report missing school during their periods.

This is partly due to the lack of sanitation facilities at schools such as private toilets and clean water needed for girls to clean and manage their menstruation.

Another significant dimension which keep menstruating girls from school is ongoing cultural taboos.

“Untouchable”

Menstruation has long been shamed in many communities, including those around South Asia.

Such stigma has put over 100 million adolescent girls between the ages of 12-14 at risk of dropping out of school in India.

In August 2017, a 12-year-old girl in Tamil Nadu committed suicide after a teacher shamed her over a period stain on her uniform.

The stigma arises from customs such as Chhaupadi which banishes girls and women to a hut outside of the main house for the duration of their period

Translating to “untouchable being”, Chhaupadi dictates that she cannot enter her home, cook, touch her parents, and go to school or temple.

The UN has found reports of pneumonia, attacks from wild animals, and rape when women and girls are banished to a shed.

However, if a woman doesn’t follow the rules, she is told that she will bring destruction and misfortune to their family.

Though Chhaupadi was outlawed in Nepal in 2005, the practice is still widely observed across the South Asian region.

Shopna and Monira, 14- and 17-year-olds from Bangladesh, told the UN Children’s Fund (UNICEF) of the stigmatization of periods in their community including the ideas that monthly periods are shameful and menstrual blood is dangerous.

“We are taught that things will be spoiled if we touch them during our periods…we can’t touch food, cooking utensils or the kitchen gardens,” Shopna said.

“Hindu girls can’t touch cows or even the cow-shed because cows are holy,” Monira added.

They also described the lack of family support as mothers rarely speak to their daughters about their menstruation.

“The topic of periods has never been at the forefront of conversations, it’s always been this thing that has been kind of brushed underground,” Lonergan told IPS.

Lighting the Way Forward

Lonergan highlighted the importance of menstrual care and as it is a health care issue, governments must take action and provide access to affordable hygiene products.

“If we are working towards true gender equality, we must expand access to menstrual products whether that is in public spaces, schools, or in the workplace. It is really imperative that we have policies that ensure menstrual products are safe and available for those who need them,” she said.

At the grassroots level, citizens have already sprung into action to find ways to make such products accessible, including Arunachalam Muruganantham.

Also known as the ‘Pad Man’, Muruganantham set about to create affordable sanitary pads after discovering that his wife had been using dirty rags during her periods.

“When I asked her why, she said we would have to cut half of our milk budget to buy sanitary pads,” he said.

Muruganantham has become a pioneer of menstrual health after successfully developing a machine that produces low-cost sanitary pads and teaching women how to use it.

Media groups like Inter Press Service (IPS) have also conducted workshops for teachers and students about the importance of healthcare and hygiene in Bangladesh.

Lonergan pointed to the need for women and girls to learn about reproductive health and menstruation.

“It starts with education—a basic understanding of what your period is before it happens and then how to actually manage it and then having access to products to get you there,” she said, adding that both boys and girls must be educated about the natural bodily function.

“Without periods, none of us would be born in the first place,” Lonergan concluded.

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Model Trade Deal Conhttp://www.ipsnews.net/2018/02/model-trade-deal-con/?utm_source=rss&utm_medium=rss&utm_campaign=model-trade-deal-con http://www.ipsnews.net/2018/02/model-trade-deal-con/#comments Mon, 26 Feb 2018 10:08:16 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=154487 In early 2016, the Trans-Pacific Partnership (TPP) Agreement — involving twelve countries on the Pacific Ocean rim, including the USA — was signed in New Zealand. Right after his inauguration in January 2017, newly elected US President Donald Trump withdrew from the TPP, effectively killing the agreement as its terms require the participation of both […]

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Shipping Container - Credit: Bigstock

Shipping Container - Credit: Bigstock

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Feb 26 2018 (IPS)

In early 2016, the Trans-Pacific Partnership (TPP) Agreement — involving twelve countries on the Pacific Ocean rim, including the USA — was signed in New Zealand. Right after his inauguration in January 2017, newly elected US President Donald Trump withdrew from the TPP, effectively killing the agreement as its terms require the participation of both the US and Japan.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Almost comprehensive, but hardly progressive

On 8 March 2018, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be signed in the presence of outgoing Chilean President Michelle Bachelet. After that, six countries must ratify the deal for it to take effect.

Twenty-two of the original TPP provisions will be ‘suspended’, leaving over a thousand others intact. The 22 provisions have only been suspended, apparently to enable Washington to easily re-embrace the essentially US-drafted 6500-page TPP Agreement.

The CPTPP will include several changes to the TPP, but will otherwise incorporate it. Besides the investment agreement, several onerous intellectual property and other provisions will be suspended. Some ‘side letters’ can exempt some TPP11 countries on some matters. But otherwise, many of the most onerous TPP provisions remain.

The TPP11 countries are likely to give in to US demands. With very modest prospective trade gains from the original TPP, US withdrawal has made the gains from the CPTPP even more paltry, making the TPP11 desperate for US participation. For Japan’s government and some others, the TPP will draw the US back into a stronger anti-China regional coalition.
The CPTPP Preamble can guide interpretation of, but not contradict, let alone override problematic TPP provisions. Meanwhile, some countries will remove all their tariffs on products from other CPTPP parties while others, such as Japan and Canada, will not.

Taking the widely criticized secrecy of such negotiations to a new extreme, no details of the ‘zombie agreement’ will be released until after its signing. Despite promises to “engage with various stakeholders to get their views and feedback”, most signatory governments have not conducted inclusive public consultations about the new agreement.

Already, TPP11 proponents have resumed chanting the mantra that the US-drafted TPP is a ‘model trade deal for the 21st century’, seemingly oblivious of global economic transformations of recent decades and their implications.


Privileging foreign investment

Meanwhile, CPTPP privileging of foreign investment from TPP11 countries may well perversely encourage businesses to incorporate abroad as they will be better able to make demands on the government than they can currently do as nationals.

The CPTPP enables non-TPP11 firms with branches in TPP11 countries to use it to their advantage, e.g., investor-state dispute settlement (ISDS) provisions will allow investors from other TPP11 countries to sue the host government, in a special international tribunal, for unlimited compensation and compound interest.

As firms incorporated in other TPP11 countries may also enjoy lower taxes and other incentives, the recent trends of greater outward than inward FDI may well accelerate. China, India and other emerging market economies are already struggling to cope with such ‘roundtrip’ FDI through offshore tax havens, and there is little reason to believe smaller TPP11 developing countries will fare better.

Lower interest rates abroad in recent years due to unconventional monetary policies, such as ‘quantitative easing’, have enabled highly leveraged foreign portfolio investors to increase their ownership of the corporate sector in many emerging market economies.

Capital account liberalization has enabled net capital outflows despite sometimes inducing temporary episodes of massive inflows into emerging market economies. With greater external vulnerability the inevitable consequence, when such portfolio investment inflows are inevitably reversed, capital account management measures may be needed, but disallowed by the CPTPP.

 

Begging for US participation

In their efforts to justify it, CPTPP proponents have again greatly exaggerated trade benefits while ignoring the two US government studies — by the Department of Agriculture’s Economic Research Service and the International Trade Council – both projecting very modest gains from the TPP, despite including the US then.

After the ‘Brexit’ referendum and Trump’s election in 2016, the mixed consequences of trade liberalization are increasingly recognized, replacing the naive claim that globalization would lift all boats. Nevertheless, CPTPP advocates still dismiss research doubting the problematic assumptions of the modelling projections they rely on.

Meanwhile, US President Trump has already announced that he “would do TPP if we were able to make a substantially better deal”. Judging by his administration’s new demands in the ongoing North American Free Trade Area (NAFTA) renegotiations, this would presumably involve even stronger pharmaceutical patent protection and greater US corporate control of international e-commerce.

The TPP11 countries are likely to give in to US demands. With very modest prospective trade gains from the original TPP, US withdrawal has made the gains from the CPTPP even more paltry, making the TPP11 desperate for US participation. For Japan’s government and some others, the TPP will draw the US back into a stronger anti-China regional coalition.

Hence, the TPP11 are so keen to bring the US back into the TPP that they are likely to accede to Trump administration demands. By joining the TPP on revised terms, ostensibly ‘putting America first’, Trump can thus ‘prove’ that he is a much better negotiator than his predecessors, especially Obama.

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Intellectual Property Regime Undermines Equity, Progresshttp://www.ipsnews.net/2018/02/intellectual-property-regime-undermines-equity-progress/?utm_source=rss&utm_medium=rss&utm_campaign=intellectual-property-regime-undermines-equity-progress http://www.ipsnews.net/2018/02/intellectual-property-regime-undermines-equity-progress/#comments Tue, 13 Feb 2018 15:04:30 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=154288 Developing countries must reject the intellectual property rights regime imposed on them by powerful foreign monopolies in recent decades.

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Intellectual Property Regime Undermines Equity, Progress

By Jomo Kwame Sundaram
KUALA LUMPUR , Feb 13 2018 (IPS)

Over the last few decades, people in the developing world have been rejecting the intellectual property (IP) regime as it has been increasingly imposed on them following the establishment of the World Trade Organization (WTO) including its trade-related intellectual property rights (TRIPs) regime. IP rights (IPRs) have been further enforced through ostensible free trade agreements (FTAs) and investment treaties among two (bilateral) or more (plurilateral) partners.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

Despite their ostensible rationale, the IP standards rich country governments insist on have never been intended to maximize scientific progress and technological innovation. Rather, the IPR regime serves to maximize the profits of influential pharmaceutical and other companies by conferring them with exclusive monopoly rights.

In the pushback, initially led by Nelson Mandela soon after he became South African President under the new dispensation in 1994, developing countries have targeted access to essential medicines. Thus, the 2005 Indian law to conform to the WTO’s TRIPs safeguarded access to generic equivalents, as allowed for by the public health exception to TRIPs.

However, the WTO rules disallow Indian generic manufacturers from exporting their medicines to Africa and other poor countries lacking the necessary pharmaceutical manufacturing capacities and capabilities. Even if the African countries could produce the drugs domestically, they would be more expensive as they would lack the economies of scale required to lower costs in their relatively small economies.

 

Privatizing knowledge

In Innovation, Intellectual Property and Development, Joseph Stiglitz, Dean Baker and Arjun Jayadev have shown that the economic institutions and laws protecting knowledge in OECD economies not only poorly govern economic activity, but are also especially ill-suited to developing countries’ needs, especially the global commitment to achieving universal health care of Agenda 2030, the Sustainable Development Goals.

Ironically, while the case for more openness in sharing knowledge is compelling, ‘neo-liberals’ -- who typically claim the moral high ground in opposing monopolies and related market distortions -- have effectively served to extend and strengthen property rights and attendant monopolies.
From an economic perspective, knowledge is considered a global public good, as the marginal cost of anyone using it is zero. Growth of knowledge can presumably improve wellbeing.

Despite lack of evidence, the IP advocacy argument has been that market forces ‘undersupply’ knowledge owing to the poor incentives for research and innovation. The usual claim is that this ‘market failure’ is best corrected by providing a private monopoly through property rights for new knowledge, e.g., through enforceable patent rights. Private IP protection is presumed to be the only one way to reward, and thus encourage research and innovation.

The trio argue that the IP regime has been much more problematic than expected, even in rich countries. They show how the 2013 US Supreme Court decision that naturally occurring genes cannot be patented has shown that the IP regime impedes, rather than stimulates research by limiting access to knowledge. Following the ruling, innovation accelerated, leading to better diagnostic tests (e.g., for genes related to breast cancer) at much lower cost.

 

Alternatives

Stiglitz, Baker and Jayadev focus on three alternatives to motivate and finance research in the US context. First, through centralized mechanisms to directly support research. Second, by decentralizing direct funding, e.g., via tax credits; government bodies or research foundations or institutions can reward successful innovations or findings.

The patent system rewards legal ownership of innovation, but effectively impedes the use of that knowledge by others, thus reducing its potential benefits. Having a creative commons, e.g., open-source software, would maximize the flow of knowledge.

The trio recommend that developing economies use all these approaches to promote learning and innovation. They view the gap between developing and developed countries as involving a gap in knowledge comparable to the gap in resources.

Hence, to improve economic welfare in the world, they urge diffusion of knowledge from developed to developing countries, as conventional social scientists have urged as part of modernization theory for more than half a century.

Often dense ‘patent thickets’, requiring many patents, are increasingly stifling innovation. Payments to lawyers and patent investigators typically exceed those to scientific researchers in such cases, with research often oriented to extend, broaden and leverage monopoly rights due to patents.

One perverse consequence has been patent ‘trolling’ by speculators who buy up patents which they think has a chance of being necessary for any product or process innovation. Thus becoming gatekeepers like the mythical trolls, they effectively block innovation unless their price is met.

 

Neo-liberal monopolies

Ironically, while the case for more openness in sharing knowledge is compelling, ‘neo-liberals’ — who typically claim the moral high ground in opposing monopolies and related market distortions — have effectively served to extend and strengthen property rights and attendant monopolies.

Powerful corporate and developed economy government lobbies have influenced the IP regime, e.g., by opposing competing rights associated with nature, biodiversity or even traditional knowledge.

Hence, recent ostensible FTAs have extended IPRs to cover ‘biologics’, i.e., naturally occurring substances, such as insulin for those suffering from diabetes, which is derived from mammals.

Thus, over the last few decades, the evolving IP regime has erected more and more barriers to widespread use of new knowledge. The current IP regime serves to maximize profits for a few monopolies, e.g., ‘Big Pharma’, rather than the progress and welfare of the many.

Widespread strictly enforced IP protection is historically new. IP protections came very late to the early industrializing economies, typically delayed to enable rapid ‘catch-up’ industrialization and technological change.

The ‘weightless economy’ of data, information and knowledge is accounting for a growing share of economic value in the world. Stiglitz, Baker and Jayadev argue that existing rules governing global knowledge serve as fetters that must be broken to reflect these realities.

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Excerpt:

Developing countries must reject the intellectual property rights regime imposed on them by powerful foreign monopolies in recent decades.

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Stock Market Turmoil May Expose Flaws in Global Financehttp://www.ipsnews.net/2018/02/stock-market-turmoil-may-expose-flaws-global-finance/?utm_source=rss&utm_medium=rss&utm_campaign=stock-market-turmoil-may-expose-flaws-global-finance http://www.ipsnews.net/2018/02/stock-market-turmoil-may-expose-flaws-global-finance/#comments Mon, 12 Feb 2018 14:35:48 +0000 Martin Khor http://www.ipsnews.net/?p=154268 Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva

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Stock market turmoil may expose flaws in global finance

By Martin Khor
PENANG, Malaysia, Feb 12 2018 (IPS)

Was last week’s global stock market sell-off only a “correction” or does it signify a new period of financial instability, caused by major flaws in the world financial system?

The stock market turmoil has sparked concerns that the relatively good economic times in the past couple of years, at least in the developed countries, could be ending.

It is too early yet to understand what has just taken place or predict what comes next.  It is widely agreed that a “correction” has taken place in the US stock market.   But whether this is just a blip, or will progress to a crash, remains to be seen.

Some analysts say there is nothing to worry about as such corrections to over-valued markets are normal and soon there will be business as usual. Others are more pessimistic, with a few even predicting it is the start of the worst bear market ever.

The immediate trigger was the positive news on US jobs, prompting fears of wage increases and higher inflation that would pressurise the Federal Reserve to raise interest rates more rapidly.  Higher interest has a negative effect on stock markets as they give an incentive to investors to put their money in alternatives, especially bonds.

In good times, a lot of short-term speculative funds flow from the developed countries to the developing countries in search of higher yield. But in times of global uncertainty, or if interest rates rise in the US thus providing higher returns to investors, the funds can rapidly flow back, often causing significant damage or even devastation to the host developing economies.

But the larger reason for the sell-off is the jump in equity prices to record levels, caused by  speculative investments not backed by fundamentals, and fuelled by the easy money policy that the US government pursued in the hope of stimulating economic growth.  Some of the trillions of dollars pumped into the banking system by “quantitative easing” contributed to the stock market bubble.

Even though quantitative easing has ended and is being reversed, US stock prices continued to rise rapidly in January. It was a matter of time before a downturn occurred.

The stock market sell-off, if it continues, can have large repercussions on developing countries.

There is the domestic effect. Affected investors feeling they have less wealth will decrease their spending, affecting demand for goods and reducing GDP growth. Those that borrowed to speculate in the stock market may have debt-repayment problems.  Companies may see their market capitalisation and asset values reduced as the prices of their shares go down.  If the sell-off becomes more prolonged, banks start worrying about non-performing loans.

Then there is a complex of issues related to the interaction between developing economies with the global financial markets.  The stock-market turbulence could affect global investor confidence in emerging economies, which are seen as riskier than the US.

In good times, a lot of short-term speculative funds flow from the developed countries to the developing countries in search of higher yield.  But in times of global uncertainty, or if interest rates rise in the US thus providing higher returns to investors, the funds can rapidly flow back, often causing significant damage or even devastation to the host developing economies.

This boom-bust cycle of capital flows has been played out several times over the years. The boom in funds going to developing countries in the 1970s ended in 1982 with the Latin American debt crisis.  The boom in the early 1990s ended in crises in East Asia, Brazil, Russia and Argentina.

The boom in the early 2000s temporarily stopped with the global crisis in 2008-9 but resumed and has continued to now, with some sharp outflows in 2016 and early 2017 and a return of inflows since then.

It remains to be seen what effect the current stock market turmoil will have on capital flows.

A quite balanced view was given by Tokyo-based Mitsubishi UFJ Kokusai Asset Management, which oversees US$119 bil in assets.  “We’re not going to see the type of euphoria we saw in emerging markets anymore,” said its chief fund manager Hideo Shimomura in an interview with Bloomberg agency. “We’re in a phase where investors are being given a reality check after a great run.  That’s not to say inflows to emerging markets will reverse completely.”

In recent years the developing economies have become more open to external capital flows.  This has resulted in new vulnerabilities and heightened their exposure to external financial shocks, according to several papers published by the South Centre and written by its chief economist Yilmaz Akyuz.

There has been a massive build-up of debt by their non-financial corporations since the 2008 crisis, reaching $25 trillion or 95 per cent of their GDP.  The dollar-denominated debt securities issued by emerging economies increased from some $500 billion in 2008 to $1.25 trillion in 2016, according to the Bank of International Settlements.

Moreover, the foreign presence in local financial markets has reached unprecedented levels, increasing their susceptibility to global financial boom-bust cycles. Foreigners now own a much larger share of government bonds and of the equities in the stock market of many developing economies.  For example, in Malaysia, foreigners own about a quarter to a third of the value of government bonds and about a quarter the value of equities in the Kuala Lumpur stock exchange.

Should there be net capital outflows from developing economies, their currencies may depreciate.  When this happens, or when there is anticipation of this, the capital outflows may increase, in a vicious cycle. The depreciation will also make it more costly to service debt, and add to inflationary pressures.

While their vulnerabilities have grown, the countries have less resilience or capacity to prevent or counter a crisis if it happens, due to two reasons, according to the South Centre.

First, many of the countries have seen a significant deterioration in their current account balances and net foreign asset positions since the 2008-9 crisis. In most countries international reserves built up in recent years came from capital inflows rather than current account surpluses. The reserves could decrease significantly if foreigners decide to take their funds back, and they could be  inadequate to meet large and sustained outflows of capital.

Second, the developing countries have limited economic policy options in responding to deflationary and destabilizing impulses from abroad.

Their fiscal space for countercyclical policy response to deflationary shocks is much more limited today than in 2009. There is also a significant loss of monetary policy autonomy and loss of control over interest rates as a result of their deepened global financial integration. Flexible exchange rate regimes adopted in many emerging economies since the last bouts of crises are no panacea in the face of severe and sustained financial shocks, particularly in view of currency risks assumed by their corporations.

“Most developing economies have not only lost their growth momentum but find themselves in a tenuous position with an uncanny similarity to the 1970s and 1980s when the combined booms in capital flows and commodity prices that had started in the second half of the 1970s ended with a debt crisis as a result of a sharp turnaround in the US monetary policy, costing them a decade in development,”  says a South Centre paper by Akyuz.

“It would now be difficult for some of them to avoid international liquidity crises and even debt crises and significant loss of growth in the event of severe financial and trade shocks.”

In light of the South Centre analysis, the stock market turbulence could only be the tip of an iceberg of financial instability and vulnerability, with the developing countries in danger of being trapped in the grip of the flawed global system.

Ironically, this instability increased in recent years due to efforts by the developed countries to counter the effects of the 2008-9 crisis through easy money policies that fuelled more debt and bigger financial bubbles.  These initiatives may have the unintended consequence of building up a new and perhaps bigger crisis.

The post Stock Market Turmoil May Expose Flaws in Global Finance appeared first on Inter Press Service.

Excerpt:

Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva

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Tackling Inequality Talk Is Easyhttp://www.ipsnews.net/2018/01/tackling-inequality-talk-easy/?utm_source=rss&utm_medium=rss&utm_campaign=tackling-inequality-talk-easy http://www.ipsnews.net/2018/01/tackling-inequality-talk-easy/#respond Tue, 30 Jan 2018 15:30:53 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=154067 At this year’s Davos World Economic Forum (WEF), Canada’s Prime Minister, Justin Trudeau warned the world’s business leaders and fellow politicians, “tackle inequality or risk failure”. Five years ago WEF founder Klaus Schwab had observed, ‘We have too large a disparity in the world; we need more inclusiveness… If we continue to have un-inclusive growth […]

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Men line up to receive food distributed by Coalition for the Homeless volunteers at 35th St, FDR Drive, in New York City. Credit: IPS

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY & KUALA LUMPUR , Jan 30 2018 (IPS)

At this year’s Davos World Economic Forum (WEF), Canada’s Prime Minister, Justin Trudeau warned the world’s business leaders and fellow politicians, “tackle inequality or risk failure”.

Five years ago WEF founder Klaus Schwab had observed, ‘We have too large a disparity in the world; we need more inclusiveness… If we continue to have un-inclusive growth and we continue with the unemployment situation, particularly youth unemployment, our global society is not sustainable.’ In 2014, the WEF released a 60-page report suggesting that income inequality, ranked first among the major global risks facing societies and economies.

Christine Lagarde, IMF Managing Director, told the 2014 WEF, “in far too many countries the benefits of growth are being enjoyed by far too few people. This is not a recipe for stability and sustainability”.

Similarly, in an interview ahead of the Spring 2014 Joint IMF-World Bank meeting, World Bank President Jim Yong Kim warned that failure to tackle inequality risked causing social unrest, “the next huge social movement is going to erupt…to a great extent because of these inequalities.”

Inequality still growing

Yet, inequality of wealth and income continues to grow unabated, and has even accelerated from time to time. Two recent reports – the Paris-based Inequality Lab’s World Inequality Report 2018 and Oxfam International’s Reward Work, Not Wealth – highlight how global inequality has worsened in recent years, especially since the 2008-2009 global financial crisis (GFC).

Despite difficulties in estimating wealth, other recent reports, such as the Bloomberg Billionaires Index, UBS/PwC Billionaires Report, Allianz Global Wealth Report and Credit Suisse Report, highlight similar or related trends.

Meanwhile, the rich and wealthy describe themselves as wealth creators; they justify their wealth accumulation by arguing that they employ millions of people even as they suppress wages through labour market reforms and other means, and jack up already already astronomical executive rewards.

They point to their philanthropy and support for the arts and sports, often used for money-laundering. Meanwhile, tax dodging grows, both through illegal tax evasion and legal tax avoidance even as their champions induce a ‘race to the bottom’ as tax competition cuts top marginal tax rates.

As the World Inequality Report 2018 and Reward Work, Not Wealth reveal, the super-rich are at the root of the problem. They deprive governments of billions of dollars, forcing governments to cut essential services and provision of public and social goods, aggravating the hardships of the majority as their earnings stagnate or even fall.

It is thus no wonder that while global wealth races ahead, global household debts increased by 5.5% in 2016, the highest growth since 2007. Global debt rose faster than nominal economic output for the first time since 2009, and the global debt-income ratio increased by almost one percentage point to 64.6%, despite total global wealth increasing by US$16.7 trillion, or 6.4%, in 2017.

Inequality social, not natural
In fact, growing inequality is not inevitable; it is created socially, the result of dismantling regulations restraining market excesses, transfers of public assets to private hands through privatization since the early 1980s, transnational corporation (TNC)-led globalization that required weakening of labour’s bargaining power.

Decisive actions can reverse growing inequality, as was done after the Second World War (WW II). Asset or wealth redistribution through actions such as radical land reform, inheritance and wealth taxes. Regulations, such as anti-trust laws and protection of labour rights, as well as public policy actions, e.g., universal access to education, health and social protection, helped check the vicious circle of growing inequality created by the wealthy.

There seems to be a growing consensus about core policy measures to tackle widening inequality. For example, the OECD suggests three main ways to tackle mounting inequality: promoting employment for all; enhancing access and performance in education and training at every level by investing in people’s skills; and reforming tax/benefit systems for fairer economic distribution while fostering growth.

Even IMF research agrees that fiscal policy can be a powerful redistributive instrument, and suggests enhancing the progressivity of taxation, universal basic income for emerging and developing countries, and the reduction of gaps in education and health.

The Oxfam report has a long list of recommendations for governments and international institutions to tackle growing inequality, including: limiting returns to shareholders; eliminating the gender pay gap; eliminating slave labour and poverty pay; enhancing labour’s bargaining power by allowing them to organize; regulating TNCs; promoting fairness; progressive taxation; progressive public spending including universal health and education; a universal social protection floor; and eradicating tax havens.

But who will act?
Missing from the discussion is agency, typically requiring state capacity to do the necessary, as the history of such reforms clearly shows. While the state has the mandate and legitimacy to redistribute wealth and resources through progressive taxation and social provisioning, the relentless attack on the state by neo-liberals has significantly diminished needed capabilities over the last four decades.

Rebuilding state capabilities needs much more than ‘good governance’ reforms or anti-corruption legislation as touted by international organizations and donors. Developing country governments must be enabled to develop the capacity to address critical obstacles to development and to overcome resistance from vested interests or established elites.

Rebuilding capabilities requires fiscal resources. Tax evasion and international tax competition, used by the rich to accelerate wealth accumulation, are two of the most critical obstacles to enhancing fiscal space.

If elites are at all serious about tackling the growing gap between the super rich and the rest of us, they know what they have to do. And it certainly is not more of the same.

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Tackling Inequality – The Myth that Davos Can Change the Worldhttp://www.ipsnews.net/2018/01/myth-davos-can-change-world/?utm_source=rss&utm_medium=rss&utm_campaign=myth-davos-can-change-world http://www.ipsnews.net/2018/01/myth-davos-can-change-world/#comments Mon, 29 Jan 2018 18:00:58 +0000 Thalif Deen http://www.ipsnews.net/?p=154041 When the World Economic Forum (WEF) concluded in Davos, Switzerland last week, the outcome of the annual talk-fest was seemingly predictable—plenty of unrestrained platitudes but, surprisingly, less of the American populist, protectionist rhetoric. The presence of President Donald Trump was a political side-show as he proudly declared that America was “open for business”— even as […]

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For years now, Davos has listed inequality as a major concern, and yet has also noted that it keeps increasing. (Don’t these leaders have any influence?)

US President Donald Trump at the Davos Forum

By Thalif Deen
UNITED NATIONS, Jan 29 2018 (IPS)

When the World Economic Forum (WEF) concluded in Davos, Switzerland last week, the outcome of the annual talk-fest was seemingly predictable—plenty of unrestrained platitudes but, surprisingly, less of the American populist, protectionist rhetoric.

The presence of President Donald Trump was a political side-show as he proudly declared that America was “open for business”— even as standup comedian Jimmy Kimmel wisecracked: “And who better to make that declaration than a man who declared bankruptcy six different times” (when he was a self-declared “billionaire” businessman before he ran for the US presidency.)

Trump, who has increasingly opted for bilateralism over multilateralism — while pulling out of the 11-member Trans-Pacific Partnership (TPP) and threatening to do the same with the North American Free Trade Agreement (NAFTA) with Mexico and Canada– appeared more restrained before the world’s business elites, even though he arrived in Davos immediately after he slapped tariffs on imported solar panels and washing machines.

But then appearances, as they say, can be frighteningly deceptive.

Implicitly taking a shot at Trump, Indian Prime Minister Narendra Modi told the Davos Forum that “forces of protectionism are raising their heads against globalization.” Their intention is not only to avoid globalisation but also reverse its natural flow, he warned.

Ben Phillips, Launch Director at the Nairobi-based Fight Inequality Alliance, told IPS: “Davos is over. This is not merely to say that the private helicopters have taken their charges back to private airstrips for their onward journey home. This year, 2018, was the nail in the coffin for the idea that Davos could change the world.”

He described the Davos Forum as a “speed-dating club for plutocrats and politicians”. But the idea that it will be a force for a more equal society is dead, he added.

Last week, WEF boss Klaus Schwab embraced Trump, complaining that Trump’s “strong leadership” had suffered “misconceptions and biased interpretations”.

Schwab, went further, praising Trump’s rushed and irresponsible tax giveaway to billionaires that is cutting services, increasing debt and widening inequality: “On behalf of the business leaders here in this room, let me particularly congratulate you for the historic tax reform package passed last month, greatly reducing the tax burden of US companies”.

According to the New York Times, some in the audience booed at Schwab’s remarks praising Trump.

Davos is now Trump-Davos: the racism and cruelty of Trump is forgiven, said Phillips.

“And Trump became Davos-Trump: his claimed revolt against globalization is now exposed as merely an attack on poor migrants and not a challenge to the global elite. Goldman Sachs – once the target of Trump’s rhetoric but now the source of his key cabinet picks, was clear. They “really like what he’s done for the economy”, Phillips added.

Jennifer Morgan, Executive Director, Greenpeace International, told IPS she saw no evidence that the corporate or government leaders in Davos really understood the urgent need to provide justice for the people or the planet.

“While they speak of inclusive growth and climate action, they fail to investigate or challenge their own role in propping up and benefitting from the underlying system that has created the fractured world we live in,” she added.

However, she said, she was inspired by many of the young global shapers, particularly women, whom she met, leading the way with big ideas and collective leadership.

Morgan pointed out that climate risk and climate action were more present in discussions at Davos this year, but not at the speed or scale required when measured against the scale of the challenge we face.

“Climate disruption is the new norm, which means a transformation of our energy and land-use systems is the only way forward,” she noted.

Phillips told IPS it has not just the embrace of Trump, however, that has ended the myth of Davos as an equalizing force. It is the consistent failure of Davos to deliver.

“For years now, Davos has listed inequality as a major concern, and yet has also noted that it keeps increasing. (Don’t these leaders have any influence?)”, he asked.

As the world’s foremost expert on inequality trends, former World Bank economist Branko Milanovic, concluded last week, Davos has “produced 0 results” in lessening inequality – while the economy has been further adjusted by inequality-exacerbating policies that have returned us to the “early 19thcentury”.

For students of history, noted Phillips, this should all be unsurprising: never, at any time or place, have great strides been made in tackling the concentration of power and wealth by a few by literally concentrating together those powerful and wealthy few.


"All major equalizing change has involved a process of those outside the elite gathering together, building confidence and strength, and pushing for a fairer share. Greater equality has never been freely given, it has always been won through collective struggle."

Ben Phillips, Fight Inequality Alliance

Indeed, all major equalizing change has involved a process of those outside the elite gathering together, building confidence and strength, and pushing for a fairer share.

Greater equality has never been freely given, it has always been won through collective struggle, declared Phillips.

Even the usually-restrained United Nations expressed concern over Trump’s call for countries to pursue their own self-interest – in this age of globalisation and multilateralism.

The UN High Commissioner for Human Rights, the outspoken Zeid Raad al-Hussein, declared: “It’s the script of the 20th century. He urged all countries to pursue their own interest, almost without reference to the fact that if you do all of that, if each country is narrowly pursuing its agenda, it will clash with the agendas of others and we will take the world back to 1913 once again.”

Striking a different perspective to Davos, Phillips said “happily, last week was a week when that process of people organizing together for change also took a step forward. But not on the Davos mountain, but on very different mountains.”

As the media summarized it “Forget Davos – Dandora is the key to tackling inequality.”

Dandora in Nairobi is a slum situated on top of a garbage mountain, and it was there, not at the World Economic Forum, that NGOs, social movements and trade unions who have come together in the global Fight Inequality Alliance centred their organizing.

Dandora played host to an Usawa Festival (“Equality Festival”) pulled together by Kenya’s greatest hiphop star Juliani along with grassroots groups working to build up strength from the ground up.

Across the world, similar festivals and rallies brought people together to demand change and build their power. Attendees at Davos complained of being trapped in fog, stuck in ditches, and almost buried by heavy snow.

At the Dandora garbage mountain, in contrast, the sun shone, the participants sang in joyful defiance and people took the initiative for change into their own hands, said Phillips.

“We are the people we’ve been waiting for!” they shouted.

It will take time, they said, but from the garbage mountain top they felt, in an echo of Dr King and of the captives who ran from the Pharaoh, that they could see the promised land, declared Phillips.

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Aid Group Shines Spotlight on the Neglectedhttp://www.ipsnews.net/2018/01/aid-group-shines-spotlight-neglected/?utm_source=rss&utm_medium=rss&utm_campaign=aid-group-shines-spotlight-neglected http://www.ipsnews.net/2018/01/aid-group-shines-spotlight-neglected/#respond Wed, 24 Jan 2018 20:06:15 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=153995 Though 2017 was marked by stories of humanitarian disasters around the world, many crises remain under the radar with devastating consequences for those affected, a new report says. While crises from the United States to Myanmar made global headlines, a report by the international aid organization CARE aims to shine a spotlight on the humanitarian […]

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Families queue up to receive food rations in Goma, Democratic Republic of Congo on the 25th November 2012. Rebels claimed control of Goma in eastern DRC, causing thousands of people to flee, many of whom had already been displaced by years of fighting. Credit: CARE/Kate Holt

By Tharanga Yakupitiyage
UNITED NATIONS, Jan 24 2018 (IPS)

Though 2017 was marked by stories of humanitarian disasters around the world, many crises remain under the radar with devastating consequences for those affected, a new report says.

While crises from the United States to Myanmar made global headlines, a report by the international aid organization CARE aims to shine a spotlight on the humanitarian crises that have been largely neglected by the international community.

“We all know that a single photo can make the world turn its attention to an issue. But the people in the countries featured in CARE’s report are far away from the cameras and microphones of this world,” said CARE International’s Interim Secretary General Laurie Lee.

“We rarely hear about people suffering in parts of the world that are not popular tourist destinations, considered a low priority for global security or simply too hard to reach,” CARE’s global humanitarian communications coordinator Johanna Mitscherlich added to IPS.

Though news media face daunting challenges from dwindling funds to a rapid news cycle, she pointed to the importance of telling the stories of people “facing their darkest hours.”

While much of the focus has been on nuclear tensions, the report ‘Suffering in Silence’ found that North Korea’s humanitarian situation has been overlooked by the media.

The UN estimates that 18 million North Koreans, or 70 percent of the population, are food-insecure and are dependent on food aid while two in five people are undernourished.

Coupled with the country’s political regime is its frequent natural disasters such as prolonged droughts which have exacerbated the humanitarian situation.

In July 2017, North Korea experienced the worst drought since 2001, affecting crop production and food security.

Among the most vulnerable are women and children. Nearly one-third of all pregnant and lactating mothers and more than 200,000 children are estimated to suffer from severe acute malnutrition.

Out of the 10 crises that the report highlights, seven of them are in Africa and among them is the Democratic Republic of the Congo (DRC) which has seen a surge in violence and a dramatic deterioration of humanitarian situation.

“What we have now are all the ingredients for a humanitarian catastrophe,” said CARE’s DRC Country Director Pierre Bry. “If the international community doesn’t react quickly, it will be too late.”

Over four million Congolese are displaced, two million of which fled their homes in 2017 alone.

The conflict has destroyed schools, clinics, water infrastructure, and farms and has left almost nine million people in need of humanitarian assistance, a figure that is expected to increase to over 13 million in 2018.

Almost two million children also suffer from severe malnutrition, making up 12 percent of the world’s acutely malnourished children.

The lack of crisis coverage not only affects public awareness, but it also directly impacts the level of humanitarian funding and thus the lives of those affected, Mitscherlich told IPS.

Of the 10 most under-reported crises this year, six are also on the UN’s list of most underfunded emergencies in 2017.

For instance, Central African Republic received just 39 percent of its funding appeal while North Korea received 31 percent.

“When we speak about forgotten crises, we speak about forgotten people…those with a voice in public, from media representatives to politicians and organizations like CARE, have a social and moral responsibility to shine a light on crises that are mostly off the radar,” Mitscherlich said.

With a global humanitarian appeal of nearly 23 billion dollars to assist 91 million people around the world, CARE noted that media attention can help focus public support for those needs.

However, the responsibility of improving crises coverage not only lies on the media but also on aid actors, governments, and other actors working to facilitate media access.

Among the report’s recommendations are for NGOs to invest in trained communications and media specialists to tell the media and thus the public of the realities on the ground and to call for action.

By keeping media informed, a crisis is less likely to be forgotten and facilitate a push for political change.

“It is important for all actors – including the media, aid agencies, donors and other institutions – to continue to work together and make sure that humanitarian crises globally receive the attention they need,” Mitscherlich concluded.

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Wealth Concentration Continues to Increasehttp://www.ipsnews.net/2018/01/wealth-concentration-continues-increase/?utm_source=rss&utm_medium=rss&utm_campaign=wealth-concentration-continues-increase http://www.ipsnews.net/2018/01/wealth-concentration-continues-increase/#comments Tue, 23 Jan 2018 10:10:43 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=153974 As the ‘masters of the universe’ gather for their annual retreat at Davos, the World Economic Forum (WEF) has just published its Inclusive Development Index (IDI) for the second time. After moderating from the 1920s until the 1970s, inequality has grown with a vengeance from the 1980s as neoliberal ascendance unleashing regressive reforms on various […]

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A man pushes a cartful of garbage near a busy intersection in Yangon. The 56-billion-dollar economy is growing at a steady clip of 8.5 percent per annum, but the riches are obviously not being shared equally. Credit: IPS

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Jan 23 2018 (IPS)

As the ‘masters of the universe’ gather for their annual retreat at Davos, the World Economic Forum (WEF) has just published its Inclusive Development Index (IDI) for the second time.

After moderating from the 1920s until the 1970s, inequality has grown with a vengeance from the 1980s as neoliberal ascendance unleashing regressive reforms on various fronts.

Sensing the growing outrage at earlier neo-liberal reforms and their consequences, as well as the financial sector bail-outs and fiscal austerity after the 2008-2009 global financial crisis, politicians and business leaders have expressed concerns about inequality’s resurgence.

The record is more nuanced. While national level inequalities have grown in most economies over the last four decades, international income disparities between North and South have actually narrowed, largely due to growth accelerations in much of the latter.

But while income inequality trends have been mixed, wealth concentration has picked up steam, recently enabled by the low cost of credit, thanks to ‘unconventional monetary policies’ in the North.

According to the World Inequality Report 2018, the top 1% in the world had twice as much income growth as the bottom half since 1980. Meanwhile, income growth has been sluggish or even flat for those with incomes between the bottom half and the top 1%. Oxfam’s new Reward Work, Not Wealth report reveals that the world’s wealthiest 1% got 82% of the wealth generated in 2017, while the bottom 50% saw no increase at all!

The world’s 500 richest, according to Bloomberg Billionaires Index, became US$1 trillion richer during 2017, “more than four times” the gain in 2016, as their wealth increased by 23%, taking their combined fortunes to US$5.3 trillion. According to the UBS/PwC Billionaires Report 2017, there are now 1,542 US dollar billionaires in the world, after 145 more joined their ranks in 2016.

Mozambique’s capital city Maputo has street names after socialist and communist leaders, however, the country has a huge wealth disparity. Credit: IPS


Worsening wealth inequality

Meanwhile, the latest Credit Suisse Report found that the world’s richest 1% increased their share of total wealth from 42.5% at the height of the 2008-2009 global financial crisis to 50.1% in 2017, or US$140 trillion.

It shows that the bottom half together owned less than 1% of global wealth, while the richest 10% owned 88% of all wealth, and the top 1% alone accounted for half of all assets. Thus, global household debt rose by nearly 5% in 2017 despite total wealth increasing by US$16.7 trillion, or 6.4%.

The Report attributes this to uneven asset price inflation with financial asset prices growing much faster than non-financial asset values. Recent unconventional monetary policies of the world’s major central banks contributed to such asset price inflation.

The European Central Bank has acknowledged that quantitative easing (QE) has fuelled asset price inflation. Kevin Warsh, a former US Federal Reserve Board member, has argued that QE has only worked through the ‘asset price channel’, enriching those who own financial assets, not the 96% who mainly rely on income from labour.

An IMF study found that ‘fiscal consolidation’, typically involving austerity, has significantly worsened inequality, depressed labour income shares and increased long-term unemployment.

Another IMF research report shows that capital account liberalization — typically recommended to attract foreign capital inflows without due attention to the consequences of sudden outflows — has generally significantly and persistently increased national-level inequalities.

The World Inequality Report 2018 also observed that rising income inequality has largely been driven by unequal wealth ownership. Privatization in most countries since the 1980s has resulted in negative ‘public wealth’ — public assets minus public debt — in rich countries, even as national wealth has grown substantially. Over recent decades, countries have become richer as governments have become poorer, constraining governments’ ability to address inequality by increasing public provisioning of essential services.

An earlier IMF study also noted that the neoliberal reforms — promoting privatization, cutting government spending, and strictly limiting fiscal deficits and government debt — have also increased economic inequality.

On average, net private wealth in most rich countries rose from 200–350% of national income in 1970 to 400-700% recently as marginal tax rates for the rich and super-rich have fallen. The Oxfam report identifies tax evasion, corporate capture of public policy, erosion of workers’ rights and cost cutting as major contributors to widening inequalities.

The IMF’s recent Fiscal Monitor acknowledges that regressive tax reforms have caused tax incidence to be far less progressive, if not regressive, while failure to tax the rich more has increased inequality. Besides new tax evasion opportunities and much lower marginal income tax rates, capital gains are hardly taxed, encouraging top executives to pay themselves with stock options.

Misleading

It is quite remarkable how increasing wealth concentration has been described and presented to the public. For example, the Allianz Global Wealth Report 2016 has described the trends as ‘inclusive inequality’, claiming a growing global middle class even as inequality has been rising.

Similarly, the Credit Suisse Report argues that wealth distribution is shifting as the world becomes wealthier, thus lowering barriers to wealth acquisition. Increasing wealth and income inequality are thus merely reflecting faster asset accumulation, including the pace at which new millionaires are being created.

Josef Stadler, UBS head of global ultra-high net worth and lead author of the UBS/PwC Billionaires Report 2017, decries “the perception that billionaires make money for themselves at the expense of the wider population” as incorrect, attributing billionaires’ fortunes to the strong performance of their companies and investments.

Besides their philanthropic contributions and patronage of the arts, culture and sports, 98% of billionaires’ wealth are said by him to contribute to society as the world’s super-rich employed 27.7 million people. Rather than making money from their employees’ efforts, billionaires apparently make private welfare payments to them out of the goodness of their hearts!

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Trade Multilateralism Set Back yet Againhttp://www.ipsnews.net/2018/01/trade-multilateralism-set-back-yet/?utm_source=rss&utm_medium=rss&utm_campaign=trade-multilateralism-set-back-yet http://www.ipsnews.net/2018/01/trade-multilateralism-set-back-yet/#comments Wed, 03 Jan 2018 07:32:06 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=153713 Anis Chowdhury, Adjunct Professor, Western Sydney University and the University of New South Wales (Australia); he held senior United Nations positions in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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The International Trade Organziation (ITO) sought to make finance the servant, not the master of human desires’ the world over. Credit: IPS

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Jan 3 2018 (IPS)

As feared, the Eleventh Ministerial Conference (MC11) of the World Trade Organization (WTO) in Buenos Aires, Argentina, on 10-13 December 2017, ended in failure. It failed to even produce the customary ministerial declaration reiterating the centrality of the global trading system and the importance of trade as a driver of development.

Driven by President Donald Trump’s ‘America First’ strategy and his preference for bilateral trade deals, instead of multilateral or even plurilateral agreements, United States Trade Representative (USTR) Robert Lighthizer was key to the outcome. The USTR also refused to engage in previously promised negotiations on a permanent solution to the use of food reserves by India and other countries. Most importantly, the failure of MC11 undermines prospects for orderly trade expansion to support robust global economic recovery.

India’s National Food Security Act, the most ambitious food security initiative in the world by far, buys food grains from small-scale farmers for distribution to some 840 million poor, two-thirds of its people. Since 2013, US and other OECD countries, all subsidizing their own farmers, have frustrated WTO acceptance of Indian efforts.

In fact, US rejection of the WTO Doha Round began much earlier. The Obama administration undermined the 2015 Nairobi WTO ministerial. Then USTR Michael Froman derailed the Doha Round of trade negotiations by demanding inclusion of previously rejected agenda items which WTO members could not agree to after 14 years of negotiation. He claimed that the then recently concluded Trans-Pacific Partnership Agreement was the new gold standard for free trade agreements (FTAs), and insisted on including corporate-promoted issues, such as broadened intellectual property rights and investor-state dispute settlement arrangements.

Following the 1999 Seattle WTO ministerial failure, Doha Round negotiations began in late 2001 after 9/11, with the OECD promising to rectify the previous Uruguay Round outcomes inimical to developing country interests. Ending the Doha Round inconclusively will enable WTO members to renege on promised concessions to keep all countries at the negotiating table. Not surprisingly, most developing countries want the Doha Round to continue, hoping to finally realize the 2001 post-9/11 promises to rectify Marrakech outcomes which have undermined food security and development prospects.

ITO stillbirth due to US corporate lobby
The US had previously killed the attempt to create a pro-growth and development International Trade Organization (ITO) after the Second World War to complement the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), better known as the World Bank. These two international financial institutions were created at the 1944 Bretton Woods conference with broad supervisory and regulatory powers to provide short- and long- term finance to stabilize the international order.

A third international multilateral economic organization was deemed necessary for the regulation of trade, including areas such as tariff reduction, business cartels, commodity agreements, economic development and foreign direct investment. The idea of such an international trade organization was first mooted in the US Congress in 1916 by Representative Cordell Hull, later Roosevelt’s first Secretary of State in 1933.

In 1946, the US proposed to the United Nations Economic and Social Council (Ecosoc) to convene a conference to draft a charter for an ITO. The US State Department prepared a draft charter for the UN Conference on Trade and Employment. US officials then made significant concessions to accommodate ‘underdeveloped’ countries. Underdeveloped countries then were generally unwilling to guarantee the security of foreign investments, widely seen as a means for foreign exploitation.

The Havana Charter’s rule that the foreign investments could not be expropriated or nationalized except with “just”, “reasonable”, or “appropriate” conditions was seen by US business as weakening the protection that US investments previously enjoyed. US concessions on the use of quantitative restrictions for economic development were also seen as undermining free trade. Thus, the Havana Charter lost crucial support from US business.

The ITO Havana Charter’s final text was signed by 53 countries, including the US, on 24 March 1948. Sceptical observers viewed such efforts as part of a grand strategy to extend US hegemony, even if at the expense of its closest ally, Great Britain.

However, by 1949, US political elites and corporations believed that American interests and investment interests were not well protected by the Havana Charter. What had begun as an American project was out of control. Thus, the Republican-dominated Congress opposed ratification. What seemed a certainty only months earlier, ended in failure by December 1950.

Thus, the ITO did not survive American trade politics despite initial US sponsorship and signing the Draft Charter in Havana. A coalition of protectionist and ‘perfectionist’ critics of the Charter convinced President Truman to withdraw the draft treaty from Congress, reneging on his administration’s undertaking to support the ITO.

Different trade order
As envisioned, the ITO was quite different from the WTO, created almost half a century later. The ITO Charter was committed to full employment and free market cornerstones for multilateralism, and ‘sought to make finance the servant, not the master of human desires’ internationally. It was much more than a defence of investor rights.

Clearly, this strong commitment to achieving full employment was the glue for the post-war global consensus underlying the new post-colonial economic multilateralism. This global new deal became the basis for the post-war Keynesian Golden Age quarter century when inequality declined among nations as well as within many economies.

Negotiators at the Conference recognized the need for domestic and international measures, including international policy coordination, for “attainment of higher living standards, full employment and conditions of economic and social progress development”, as envisaged by Article 55 of the UN Charter. Security of employment would have become a critical international benchmark for international trade promotion. Thus, the ITO’s collapse represented a significant setback to prioritizing full employment, accelerating the transition to the imperial ‘free trade’ canon.

Richard Toye, a leading economic historian, has suggested a different order had the ITO survived: “The ITO might have been a more attractive organization for underdeveloped countries to join, which might, in turn, have promoted less autarchic/anarchic trade policies among them with additional growth benefits. This development might, in its turn, have given a further boost to the impressive post-Second World War growth in world trade … At the same time, the Havana charter’s exceptions to free-trade rules, especially those made in the interests of the economic development of poorer countries, might have helped to reduce global inequalities.” Thus, the ITO could have enabled a more inclusive, productive, orderly and just world economy.

The post Trade Multilateralism Set Back yet Again appeared first on Inter Press Service.

Excerpt:

Anis Chowdhury, Adjunct Professor, Western Sydney University and the University of New South Wales (Australia); he held senior United Nations positions in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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