Inter Press Service » Financial Crisis http://www.ipsnews.net Journalism and Communication for Global Change Mon, 21 Apr 2014 09:53:04 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.3 Q&A: Agriculture Needs a ‘New Revolution’ http://www.ipsnews.net/2014/04/agriculture-needs-new-revolution/?utm_source=rss&utm_medium=rss&utm_campaign=agriculture-needs-new-revolution http://www.ipsnews.net/2014/04/agriculture-needs-new-revolution/#comments Wed, 16 Apr 2014 07:32:27 +0000 Silvia Giannelli http://www.ipsnews.net/?p=133705 IPS correspondent Silvia Giannelli interviewed KANAYO F. NWANZE, president of IFAD

The post Q&A: Agriculture Needs a ‘New Revolution’ appeared first on Inter Press Service.

]]>
Judith Mwikali Musau has successfully introduced the use of grafted plants for crop and fruit harvesting. IFAD says it is clear that a new revolution in agriculture is needed to transform the sector. Credit:Isaiah Esipisu/IPS

Judith Mwikali Musau has successfully introduced the use of grafted plants for crop and fruit harvesting. IFAD says it is clear that a new revolution in agriculture is needed to transform the sector. Credit:Isaiah Esipisu/IPS

By Silvia Giannelli
ROME, Apr 16 2014 (IPS)

The Millennium Development Goals deadline of 2015 is fast approaching, but according to the International Fund for Agricultural Development (IFAD), poverty still afflicts one in seven people — and one in eight still goes to bed hungry.

Together with the United Nations Food and Agriculture Organisation (FAO) and the World Food Programme (WFP), IFAD unveiled the results of their joint work Apr. 3 to develop five targets to be incorporated in the post-2015 development agenda."We have a growing global population and a deteriorating natural resource base." -- Kanayo F. Nwanze, president of IFAD

These targets include access to adequate food all year round for all people; ending malnutrition in all its forms with special attention to stunting; making all food production systems more productive, sustainable, resilient and efficient; securing access for all small food producers, especially women, to inputs, knowledge and resources to increase their productivity; and more efficient post-production food systems that reduce the global rate of food loss and waste by 50 percent.

IPS correspondent Silvia Giannelli interviewed Kanayo F. Nwanze, president of IFAD, on the role of rural poverty and food security in shaping the current debate on the definition of a new development agenda.

Q: Do you think it is time to rethink the strategies to achieve the Millennium Development Goals?

A: It’s not only that I think, I know it. And that is why we have Sustainable Development Goals (SDGs) that are being fashioned. The SDGs are an idea that was born in the Rio Conference on Sustainable Development in 2012. The crafting of a new global development agenda is a unique opportunity to refocus policy, investments and partnerships on inclusive and sustainable rural transformation.

The intent is to produce a new, more inclusive and more sustainable set of global development objectives that have application to all countries. These goals – once agreed by governments – would take effect after the current MDGs expire in 2015.

And measurement will be crucial if we are to achieve what we set out. This is why we are talking about universality but in a local context. The SDGs will be for all countries, developing and developed alike. But their application will need to respond to the reality on the ground, which will vary from country to country.

Q: How do the five targets revealed this month fit in this discussion on the post-2015 development goals?

A: The proposed targets and indicators are intended to provide governments with an informed tool that they use when discussing the precise nature and make-up of the SDGs related to sustainable agriculture, food security and nutrition.

These are five critical issues for a universal, transformative agenda that is ambitious but also realistic and adaptable to different country and regional contexts. The targets can fit under a possible dedicated goal but also under other goals. So, it is for governments to decide whether or not they wish to include these targets in the SDGs.

Kanayo F. Nwanze, president of IFAD, says it is clear that a new revolution in agriculture is needed to transform the sector so it can fully live up to its potential to drive sustainable development. Credit: Juan Manuel Barrero/IPS

Kanayo F. Nwanze, president of IFAD, says it is clear that a new revolution in agriculture is needed to transform the sector so it can fully live up to its potential to drive sustainable development. Credit: Juan Manuel Barrero/IPS

Q: Why does agriculture represent such a critical aspect within the post-2015 development agenda?

A: We have a growing global population and a deteriorating natural resource base, which means more people to feed with less water and farmland. And climate change threatens to alter the whole geography of agriculture and food systems on a global scale.

It is clear that we need a new revolution in agriculture, to transform the sector so it can fully live up to its potential to drive sustainable development. Target areas should address universal and context-specific challenges, but context-adapted approaches and agendas are the building blocks for any effort to feed the world.

Q: Why is the focus on rural areas so important in order to overcome inequality?

A: The world is becoming increasingly urban, yet cities are still fed by the people working the land in rural areas. And it is in those rural areas where 76 percent of the world’s poor live.

At IFAD we see that the gap between rich and poor is primarily a gap between urban and rural. Those who migrate to urban areas, oftentimes do so in the belief that life will be better in the urban cities.

However they get caught up in the bulging slums of cities, they lose their social cohesion which is provided by rural communities and they go into slums, they become nothing but breeding ground for social turmoil and desperation. One only has to look at what is happening today in what was described as the ‘Arab spring’.

Q: But beyond the issue of exclusion and turmoil, why is key to addressing rural poverty?

A: Because the rural space is basically where the food is produced: in the developing world 80 percent in some cases 90 percent of all food that is consumed domestically is produced in rural areas.

Food agriculture does not grow in cities, it grows in rural areas, and the livelihoods of the majority of the rural population provide not only food, it provides employment, it provides economic empowerment,[…] and social cohesion.

Essentially, if we do not invest in rural areas through agricultural development we are dismantling the foundations for national security, not just only food security. And that translates into not just national security but also global security and global peace.

Q: What risks are we facing in terms of global security, if we don’t face and take concrete action to ensure food security?

A: We just need to go back to what happened in 2007 and 2008: the global food price crisis, as it is said, and how circumstances culminated in what happened in 40 countries around the world where there were food riots.

Those riots were the results of inaction that occurred in some 25-30 years due to these investments in agriculture and the imbalances in trade, across countries and across continents. Forty countries experienced serious problems with food riots, and they brought down two governments, one in Haiti and another one in Madagascar. […] We’ve seen it, [and] it continues to repeat itself.

Q: What role are developed countries expected to play in the achievement of these five targets?

A: All countries will have an essential role to play in achieving the SDGs – whatever they end up looking like. Countries have agreed that this is a “universal” agenda and developed countries’ commitment will have to extend beyond ODA [Official Development Assistance] alone.

At IFAD we [are] seeing that development is moving beyond aid to achieve self-sustaining, private sector-led inclusive growth and development. For example, in Africa, generated revenue shot up from 141 billion dollars in 2002 to 520 billion dollars in 2011. This is truly a universal challenge, but it also requires local and country-level ownership and international collaboration at all levels.

 

The post Q&A: Agriculture Needs a ‘New Revolution’ appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/04/agriculture-needs-new-revolution/feed/ 0
Is Puerto Rico Going the Way of Greece and Detroit? http://www.ipsnews.net/2014/04/puerto-rico-going-way-greece-detroit/?utm_source=rss&utm_medium=rss&utm_campaign=puerto-rico-going-way-greece-detroit http://www.ipsnews.net/2014/04/puerto-rico-going-way-greece-detroit/#comments Tue, 15 Apr 2014 12:28:42 +0000 Carmelo Ruiz-Marrero http://www.ipsnews.net/?p=133680 Puerto Rican society has been shaken to its foundations by the announcement in February by Standard & Poor’s and Moody’s credit rating agencies that they had downgraded the island’s creditworthiness to junk status. “The problems that confront the commonwealth are many years in the making, and include years of deficit financing, pension underfunding, and budgetary […]

The post Is Puerto Rico Going the Way of Greece and Detroit? appeared first on Inter Press Service.

]]>
Electric utility workers of the UTIER labour union protest for safer workplace conditions. UTIER spearheads the fight against privatisation and against the Puerto Rico government's unpopular emergency economic measures. Courtesy of Photo Jam

Electric utility workers of the UTIER labour union protest for safer workplace conditions. UTIER spearheads the fight against privatisation and against the Puerto Rico government's unpopular emergency economic measures. Courtesy of Photo Jam

By Carmelo Ruiz-Marrero
SAN JUAN, Apr 15 2014 (IPS)

Puerto Rican society has been shaken to its foundations by the announcement in February by Standard & Poor’s and Moody’s credit rating agencies that they had downgraded the island’s creditworthiness to junk status.

“The problems that confront the commonwealth are many years in the making, and include years of deficit financing, pension underfunding, and budgetary imbalance, along with seven years of economic recession,” said Moody’s."Working people are faced with three choices: they can migrate, resign themselves to poverty, or go out to the street to organise and struggle for justice." -- Luis Pedraza-Leduc

Located in the Caribbean Sea, Puerto Rico has been a Commonwealth of the United States since 1952.

Moody’s added that the island’s worsening economic situation has “now put the commonwealth in a position where its debt load and fixed costs are high, its liquidity is narrow, and its market access has become constrained.”

In order to meet its debt obligations, the PR legislature has considered enacting fiscal measures that are strongly opposed by labour unions, including dipping into the public school teachers’ retirement fund. Law 160, the retirement “reform”, was approved by both House and Senate earlier this year.

Unions have headed to court to challenge the law. On Apr. 11, the Puerto Rico Supreme Court ruled some key provisions were unconstitutional because they breached teachers’ contracts.

Schoolteachers’ unions declared the ruling a triumph, although the court upheld other parts of the law that adversely affect Christmas bonuses, summer pay and medical benefits.

The current fiscal crisis is the result of the commonwealth economic model’s failure, according to union official Luis Pedraza-Leduc.

“Our economic model, based on providing cheap labour to the pharmaceutical and petrochemical industries and light manufacturing, has exhausted itself,” said Pedraza-Leduc, who runs the UTIER utility workers union’s Solidarity Programme (PROSOL) and is spokesperson of the Coordinadora Sindical, a coalition of over a dozen unions.

“In recent decades there has been a worldwide trend towards reducing state involvement in the economy to a minimum,” he told IPS.

“Things that were considered basic services provided by the state are now turned into commodities as private enterprise moves in to fill those spaces. Rather than reducing these essential services, the government went into debt.”

According to a chart provided by the office of PR Governor Alejandro Garcia-Padilla, the commonwealth’s public debt reached 10 billion dollars in 1987, when the Popular Democratic Party (PDP) ruled, and passed the 20-billion-dollar mark in 1998 under governor Pedro Rossello, of the New Progressive Party.

Under PDP governor Sila M. Calderon (2001-2004) the debt went over 30 billion dollars. And at the end of his 2009-2012 mandate, NPP governor Luis Fortuño left the country with more than 60 billion in debt. Garcia-Padilla belongs to the PDP.

Pedraza-Leduc recalls that successive governors undertook neoliberal measures that made matters even worse.

“Governor Rossello privatised the health sector, the phone company and the water utility. Governor Acevedo-Vila [of the PDP, 2004-2007] imposed a sales tax on retail sales [known as IVU],” he said.

Governor Fortuño laid off over 30,000 public sector workers, and introduced “public-private partnerships”, which were decried by labour unions as thinly disguised privatisation schemes. Upon beginning his mandate in early 2013, Garcia-Padilla privatised the San Juan international airport and is considering new taxes.

The Puerto Rico Constitution obligates the government to honour its debts.

“In order to pay bondholders, the government could close down schools, reduce the number of Urban Train daily trips, scale down 911 emergency phone services, and freeze the hiring of employees”, warned Pedraza-Leduc. “They are considering reducing Christmas bonuses and sick leave days.”

According to University Puerto Rico economist Martha Quiñones, “We are having here the same crisis as Greece and Detroit, but here it is broader because of our colonial situation.

“We had an economic model based on bringing foreign corporations and enticing them with cheap labour and tax incentives,” she told IPS, calling this the “exogenous” model, which is based on bringing investment from outside.

“It did not work. Not enough jobs were created, and the unemployed do not pay taxes. Locally owned businesses ended up picking up the tax burden that foreign investors were exempted from, which caused many of them to close. Local and foreign businesses were not competing in conditions of equality.”

Quiñones said that the model’s death knell was the North American Free Trade Agreement (NAFTA) and other similar trade deals that the U.S. has struck, which made even cheaper labour available in other parts of the world.

Successive Puerto Rico governments made up for these failures by requesting help from the U.S. government in the form of food stamps and unemployment benefits, and other forms of social assistance. Another way was by issuing bonds, which led to long-term debt and the current debacle.

As an alternative, Quiñones advocates an “endogenous” economic model, which strengthens local capabilities rather than looking abroad for deliverance. “The government must support locally owned businesses,” she said. “Those are the businesses that create jobs at home and pay taxes.

“The government must also collect the IVU sales tax, which most retailers simply pocketed. A progressive tax reform is needed, plus rich tax evaders must be brought to justice. Start by investigating businesses that take only cash, and individuals who are taking second mortgages. Those are pretty obvious red flags.”

She also advocates that the health system be changed to single payer, “which would be more efficient than the current inefficient and unsustainable health system we have now.

“Working people are faced with three choices: they can migrate, resign themselves to poverty, or go out to the street to organise and struggle for justice,” said Pedraza-Leduc.

But he admits that the prospects for all-out popular struggle are uncertain at best. “The lack of class consciousness complicates the outlook. Maybe we are not prepared for a confrontation,” he said.

To him, the way out of the impasse lies in education. “I propose an educational project, a Union School [Escuela Sindical] that can transcend the unions and branch out into broader issues and thus further the political struggle.

“And we need a new model for our country, we need to speak concretely about justice and a fair distribution of wealth.”

He also called for a reexamination of Puerto Rico’s relationship with the U.S. “Under our current status we are not allowed to sign trade agreements with other countries. We could be associating ourselves with other countries, and also get cheaper oil from Venezuela. But under our current status we cannot.”

The post Is Puerto Rico Going the Way of Greece and Detroit? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/04/puerto-rico-going-way-greece-detroit/feed/ 0
Soaring Child Poverty – a Blemish on Spain http://www.ipsnews.net/2014/04/soaring-child-poverty-blemish-spain/?utm_source=rss&utm_medium=rss&utm_campaign=soaring-child-poverty-blemish-spain http://www.ipsnews.net/2014/04/soaring-child-poverty-blemish-spain/#comments Wed, 09 Apr 2014 19:05:23 +0000 Ines Benitez http://www.ipsnews.net/?p=133550 “I don’t want them to grow up with the notion that they’re poor,” says Catalina González, referring to her two young sons. The family has been living in an apartment rent-free since December in exchange for fixing it up, in the southern Spanish city of Málaga. Six months ago González, 40, and her two sons, […]

The post Soaring Child Poverty – a Blemish on Spain appeared first on Inter Press Service.

]]>
Families demonstrating to demand respect for their right to a roof over their heads, before the authorities evicted 13 families, including a dozen children, from the Buenaventura “corrala” or squat in the southern Spanish city of Málaga. Credit: Inés Benítez/IPS

Families demonstrating to demand respect for their right to a roof over their heads, before the authorities evicted 13 families, including a dozen children, from the Buenaventura “corrala” or squat in the southern Spanish city of Málaga. Credit: Inés Benítez/IPS

By Inés Benítez
MALAGA, Spain, Apr 9 2014 (IPS)

“I don’t want them to grow up with the notion that they’re poor,” says Catalina González, referring to her two young sons. The family has been living in an apartment rent-free since December in exchange for fixing it up, in the southern Spanish city of Málaga.

Six months ago González, 40, and her two sons, Manuel and Leónidas, 4 and 5, were evicted by the local authorities from the Buenaventura “corrala” or squat – an old apartment building with a common courtyard that had been occupied by 13 families who couldn’t afford to pay rent. The evicted families included a dozen children.

Since then, she told IPS, her sons “don’t like the police because they think they stole their house.”

Spain has the second-highest child poverty rate in the European Union, following Romania, according to the report “The European Crisis and its Human Cost – A Call for Fair Alternatives and Solutions” released Mar. 27 in Athens by Caritas Europa.

Bulgaria is in third place and Greece in fourth, according to the Roman Catholic relief, development and social service organisation.

The austerity measures imposed in Europe, aggravated by the foreign debt, “have failed to solve problems and create growth,” said Caritas Europa’s Secretary General Jorge Nuño at the launch of the report.

“We’re doing ok. The kids are already pre-enrolled in school for the next school year,” said González, a native of Barcelona, who left the father of her sons in Italy when she discovered that “he mistreated them.”

She started over from scratch in Málaga, with no family, job or income, meeting basic needs thanks to the solidarity of social organisations and mutual support networks.

According to a report published this year by the United Nations children’s fund UNICEF, in 2012 more than 2.5 million children in Spain lived in families below the poverty line – 30 percent of all children.

UNICEF reported that 19 percent of children in Spain lived in households with annual incomes of less than 15,000 dollars.

“Child poverty is a reality in Spain, although politicians want to gloss over it and they don’t like us to talk about it because it’s associated with Third World countries,” the founder and president of the NGO Mensajeros de la Paz (Messengers of Peace), Catholic priest Ángel García, told IPS.

Spain’s finance minister Cristóbal Montoro said on Mar. 28 that the information released by Caritas Europa “does not fully reflect reality” because it is based solely on “statistical measurements.”

But in Málaga “there are more and more mothers lining up to get food,” Ángel Meléndez, the president of Ángeles Malagueños de la Noche, told IPS.

Every day, his organisation provides 500 breakfasts, 1,600 lunches and 600 dinners to the poor.

For months, González and her sons have been taking their meals at the “Er Banco Güeno”, a community-run soup kitchen in the low-income Málaga neighbourhood of Palma-Palmilla, which operates out of a closed-down bank branch.

According to Father Ángel, child poverty “isn’t just about not being able to afford food, but also about not being able to buy school books or not buying new clothes in the last two years.”

“It’s about unequal opportunity among children,” he said.

The crisis in Spain is still severe. The country’s unemployment rate is the highest in the EU: 25.6 percent in February, after Greece’s 27.5 percent.

In 2013, the government of right-wing Prime Minister Mariano Rajoy approved a National Action Plan for Social Inclusion 2013-2016, which includes the aim of reducing child poverty.

Caritas Europa reports that at least one and a half million households in Spain are suffering from severe social inclusion – 70 percent more than in 2007, the year before the global financial crisis broke out.

“Entire families end up on the street because they can’t afford to pay rent,” Rosa Martínez, the director of the Centro de Acogida Municipal, told IPS during a visit to the municipal shelter. “More people are asking for food. They’re even asking for diapers for newborns because they are in such a difficult situation.”

Of the nearly 26 percent of the economically active population out of jobs, half are young people, according to the National Statistics Institute, while the gap between rich and poor is growing.

As of late March, 4.8 million people were unemployed, according to official statistics. The figures also show that the proportion of jobless people with no source of income whatsoever has grown to four out of 10.

Social discontent has been fuelled by austerity measures that have entailed cutbacks in health, education and social protection.

A report on the Housing Emergency in the Spanish State, by the Platform for Mortgage Victims (PAH) and the DESC Observatory, estimates that 70 percent of the families who have been, or are about to be, evicted include at least one minor.

“The right to equal opportunities is dead letter if children are ending up on the street,” José Cosín, a lawyer and activist with PAH Málaga, told IPS.

Cosín denounced the vulnerable situation of the children who were evicted along with their families from the Buenaventura corrala on Oct. 3, 2013.

Fifteen of the people who were evicted filed a lawsuit demanding respect of the children’s basic rights, as outlined by the United Nations Convention on the Rights of the Child, which went into effect in 1990.

The Convention establishes that states parties “shall in case of need provide material assistance and support programmes, particularly with regard to nutrition, clothing and housing.”

The number of families in Spain with no source of income at all grew from 300,000 in mid-2007 to nearly 700,000 by late 2013, according to the report Precariedad y Cohesión Social; Análisis y Perspectivas 2014 (Precariousness and Social Cohesion; Analysis and Perspectives 2014), by Cáritas Española and the Fundación Foessa.

And 27 percent of households in Spain are supported by pensioners. Grown-up sons and daughters are moving back into their parents’ homes with their families, or retired grandparents are helping support their children and grandchildren, with their often meagre pensions.

“When times get rough, the social fabric is strengthened,” said González. She stressed the solidarity of different groups in Málaga who for three months helped her clean up and repair the apartment she is living in now, which is on the tenth floor of a building with no elevator, and was full of garbage and had no door, window panes or piped water.

González complained that government social services are underfunded and inefficient, and said she receives no assistance from them.

Like all young children, her sons ask her for things. But she explains to them that it is more important to spend eight euros on food than on two plastic fishes. It took her several weeks to save up money to buy the toys. Last Christmas she took them to a movie for the first time.

The post Soaring Child Poverty – a Blemish on Spain appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/04/soaring-child-poverty-blemish-spain/feed/ 0
Colombia’s Breadbasket Feels the Pinch of Free Trade http://www.ipsnews.net/2014/04/colombias-breadbasket-feels-pinch-free-trade/?utm_source=rss&utm_medium=rss&utm_campaign=colombias-breadbasket-feels-pinch-free-trade http://www.ipsnews.net/2014/04/colombias-breadbasket-feels-pinch-free-trade/#comments Tue, 08 Apr 2014 18:11:21 +0000 Helda Martinez http://www.ipsnews.net/?p=133521 “Things are getting worse and worse,” Enrique Muñoz, a 67-year-old farmer from the municipality of Cajamarca in the central Colombian department of Tolima, once known as the country’s breadbasket, said sadly. “Over the past five decades, the situation took a radical turn for the worse,” activist Miguel Gordillo commented to IPS, referring to what is […]

The post Colombia’s Breadbasket Feels the Pinch of Free Trade appeared first on Inter Press Service.

]]>
The home of a poor farming family in the mountains of Cajamarca, in the central Colombian department of Tolima. Credit: Helda Martínez/IPS

The home of a poor farming family in the mountains of Cajamarca, in the central Colombian department of Tolima. Credit: Helda Martínez/IPS

By Helda Martínez
IBAGUÉ, Colombia , Apr 8 2014 (IPS)

“Things are getting worse and worse,” Enrique Muñoz, a 67-year-old farmer from the municipality of Cajamarca in the central Colombian department of Tolima, once known as the country’s breadbasket, said sadly.

“Over the past five decades, the situation took a radical turn for the worse,” activist Miguel Gordillo commented to IPS, referring to what is happening in Tolima, whose capital is Ibagué, 195 km southwest of Bogotá.

“Fifty years ago, Ibagué was a small city surrounded by crops – vast fields of cotton that looked from far away like a big white sheet,” said Gordillo, head of the non-governmental Asociación Nacional por la Salvación Agropecuaria (National Association to Save Agriculture).

Seeds, also victims of the FTAs

Miguel Gordillo mentioned another problem created by the FTAs: seeds.

In 2010, the Colombian Agricultural Institute (ICA), a government institution, prohibited farmers from saving their own seeds for future harvests, the expert pointed out.

ICA established in Resolution 970 that only certified seeds produced by biotech giants like Monsanto, Syngenta and DuPont, the world leaders in transgenic seeds, could be used.

The measure “ignores a centuries-old tradition that started with indigenous peoples, who always selected the best seeds for planting in the next season. Today, in the areas of seeds, fertilisers, agrochemicals, we are at the mercy of the international market,” Gordillo said.

“In Tolima we planted maize, tobacco, soy, sorghum and fruit trees, and the mountains that surrounded Cajamarca were covered with green coffee bushes protected by orange trees, maize and plantain, and surrounded by celery,” Muñoz said.

His voice lost in the past, he said the farms in the area also had “piggies, chickens, mules, cows; everything was so different.”

Gordillo said, “In the north of the department we had fruit trees of all kinds, and the rivers were chock full of fish. There’s still rice, some maize, coffee…but even the fish have disappeared.

“In short, in five decades the look of this agricultural region has changed, and today it’s all freeways, residential complexes, gas stations, and here and there the odd field with crops,” he complained.

As a result, everything changed for Muñoz. “My wife and I are now supported by our kids who work, one in Ibagué and two in Bogotá. On the farm we have a cow, whose milk we use to make cheese that we sell, and we plant food for our own consumption.”

Muñoz plans to take part in the second national farmers’ strike, on Apr. 27, which the government is trying to head off.

The first, which lasted from Aug. 19 to Sep. 9, 2013, was held by coffee, rice, cotton, sugar cane, potato and cacao farmers, who demanded that the government of Juan Manuel Santos revise the chapters on agriculture in the free trade agreements (FTAs) signed by Colombia, especially the accord reached with the United States.

The national protest was joined by artisanal miners, transport and health workers, teachers and students, and included massive demonstrations in Bogotá and 30 other cities.

Clashes with the security forces left 12 dead, nearly 500 injured and four missing.

Colombia has signed over 50 FTAs, according to the ministry for economic development.

The highest profile are the FTA signed in 2006 with the United States, which went into effect in May 2012, and the agreement with the European Union, that entered into force in August 2013, besides the FTAs with Canada and Switzerland. Another is currently being negotiated with Japan.

In 2011, Colombia founded the Pacific Alliance with Chile, Mexico and Peru, and Panama as an observer. It also belongs to other regional integration blocs.

“Colombia’s governments, which since the 1990s have had the motto ‘Welcome to the future’, lived up to it: that future has been terrible for Tolima and the entire country,” Gordillo said.

In the last four years, coffee farmers have held strikes until achieving subsidies of 80 dollars per truckload of coffee.

In this South American country of 48.2 million people, agriculture accounts for 6.5 percent of GDP, led by coffee, cut flowers, rice and bananas. But that is down from 14 percent of GDP in 2000 and 20 percent in 1975.

“Agriculture is doing poorly everywhere, and Tolima is no exception,” the department’secretary of agricultural development, Carlos Alberto Cabrera, told IPS.

“Rice, which is strong in our department, is having a rough time,” he said. “In coffee, we are the third-largest producers in the country, and we hope to become the first. There’s not much cotton left. In sorghum we are the second-largest producers. Soy is disappearing, tobacco too, and many products are now just grown for the food security of our farmers.”

In the search for solutions, “we have invited ministers and deputy ministers to the region, but their response has been that we should plant what sells, to stay in the market of supply and demand,” he said.

But Cabrera said that in the case of Tolima, the FTAs weren’t a problem. “We haven’t felt any effect, because the only thing we export is coffee. Rice is for national consumption, and sorghum goes to industry,” he said.

Gordillo, meanwhile, criticised that when ministers visit the department, “they say farmers should plant what other countries don’t produce, what they can’t sell to us. In other words, they insist on favouring others. They forget that the first priority should be the food security of our people, and not the other way around.”

Because of this misguided way of looking at things, he said, “our farmers will hold another national strike. People from Tolima and from many other regions of the country will take part, because the government isn’t living up to its promises, and all this poverty means they have to open their eyes.”

The government says it has fulfilled at least 70 of the 183 commitments it made to the country’s farmers after last year’s agriculture strike.

The farmers were demanding solutions such as land tenure, social investment in rural areas, protection from growing industries like mining and oil, and a fuel subsidy for agricultural producers.

The government says it earmarked 500 million dollars in support for agriculture in the 2014 budget.

In the last few weeks, the ministry of agriculture and rural development has stepped up a campaign showing off its results, and President Santos has insisted in public speeches that “a new farmers’ strike is not justified.”

The authorities are also pressing for dialogue to reach a national pact with farmers, as part of their efforts to ward off the strike scheduled for less than a month ahead of the May 25 presidential elections, when Santos will run for a second term.

Small farmers and other participants in a Mar. 15-17 “agricultural summit” agreed on eight points that should be discussed in a dialogue, including agrarian reform, access to land, the establishment of peasant reserve zones, prior consultation on projects in farming and indigenous areas, protection from FTAs, and restrictions on mining and oil industry activities.

The post Colombia’s Breadbasket Feels the Pinch of Free Trade appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/04/colombias-breadbasket-feels-pinch-free-trade/feed/ 1
Wanted: Foreign Investment in Cuba http://www.ipsnews.net/2014/04/wanted-foreign-investment-cuba/?utm_source=rss&utm_medium=rss&utm_campaign=wanted-foreign-investment-cuba http://www.ipsnews.net/2014/04/wanted-foreign-investment-cuba/#comments Tue, 01 Apr 2014 01:39:32 +0000 Patricia Grogg http://www.ipsnews.net/?p=133335 A new law opening Cuba up to foreign investment and a shift in the country’s relations with the European Union are aimed at seeking outside support to overcome the chronic crisis plaguing the country since the early 1990s. The new legislation could also facilitate the return – at least financial – of Cubans living abroad. […]

The post Wanted: Foreign Investment in Cuba appeared first on Inter Press Service.

]]>
Construction of a railway running to the special development zone in the port of Mariel. Credit: Jorge Luis Baños/IPS

Construction of a railway running to the special development zone in the port of Mariel. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Apr 1 2014 (IPS)

A new law opening Cuba up to foreign investment and a shift in the country’s relations with the European Union are aimed at seeking outside support to overcome the chronic crisis plaguing the country since the early 1990s.

The new legislation could also facilitate the return – at least financial – of Cubans living abroad.

The new foreign investment law, which received unanimous approval in the legislature Saturday Mar. 29, invites foreign investors to operate in all sectors of Cuba’s planned economy, with the exception of four strategic areas: health, education, the media and the military.

The objective, according to the minister of foreign trade and investment, Rodrigo Malmierca, is to draw some 2.5 billion dollars a year in foreign direct investment.

The vice president of the Council of Ministers, Marino Murillo, said more FDI was needed in order for the economy to grow at an annual rate of around seven percent.

A 46-year-old schoolteacher who wished to remain anonymous told IPS that she hoped the economy would improve now. But she also said her late father, who worked in a sugar mill, used to tell her that before the 1959 revolution, wealthy foreigners would come to Cuba, set up companies, and take all the profits back to their own countries.

“But I understand that the law passed now is for the good of the country,” she added.

Like her, other people consulted by IPS said they hoped the opening to foreign investment would bring better living conditions for Cuba’s population of 11.2 million.

“Foreign investment is a necessary step for leaving the crisis behind as well as for the development of any nation,” said ecologist Isbel Díaz.

The new law, which will go into force 90 days after it is published in the Official Gazette, replaces a 1995 decree.

FDI in Cuba grew steadily from 1995 to 2002, to a peak of 403 joint ventures – a number that shrank to 218 in 2009.

Former economy minister José Luis Rodríguez wrote in an article that the sharp drop in investment was due to the expiration of contracts, breach of terms, and negative economic results from some of the ventures.

Other sources point to additional reasons like excessive red tape, non-payments and cases of corruption.

Spain heads the list of 15 countries doing business in Cuba, followed by Italy, Canada, Venezuela, France, the United Kingdom, the Netherlands, China, Mexico, Angola, Germany, Panama, Brazil, Chile and Russia, in that order.

Brazil’s participation will grow in the near future, mainly in the special development zone in Mariel, which is being built with financial support from South America’s giant.

That megaproject under construction 45 km west of Havana is to become a pillar of Cuban development due to the geographic location of the port, remodelled to equip the terminal to receive deeper-draft ships.

The project will also attract investment in biotechnology, the pharmaceutical industry, renewable energy, agribusiness, tourism and real estate.

At the same time, the start of negotiations of a new political accord with the European Union, which would normalise relations between Cuba and the European bloc’s 27 member countries, will put the bloc in a good position to do business with this Caribbean island nation as it opens up to foreign investment, analysts told IPS.

The talks are set to begin in April, and analysts say the likelihood of an agreement could be fuelled by the new law on investment.

European representatives have indicated that the aim of the negotiations is to reach an agreement that supports “reform and modernisation” in Cuba, while promoting human rights.

“Europe already has strategic and economic interests on the island, cultivated for decades, and linked with the presence of its companies and networks of influence in Cuba,” Arturo López-Levy, a Cuban political scientist living in the United States, told IPS via email.

But López-Levy, a lecturer at the University of Denver, Colorado, said Europe had a limited window of time to jockey for position in Cuba “before the onslaught of business from the United States.”

In his view, the reform of the Cuban economy, which began to be implemented in 2008, has begun to “whet the appetites” of members of the U.S. business community and of Cubans living in the United States, despite Washington’s 52-year-old trade embargo against Cuba.

The embargo keeps companies in the United States from competing for space in the Cuban market, and puts the EU in a “privileged position,” said López-Levy.

He said the opening to foreign investment makes it more likely that “the United States will replace the current policy of self-isolation with one more in line with its democratic values and economic and strategic interests.”

In 2013, Cuba’s GDP grew only 2.7 percent, below the target of 3.6 percent, while it grew just 3.1 percent in 2012. For 2014, the forecast is for 2.2 percent growth.

Foreign investment in Cuba would be focused on the diversification and expansion of export markets, access to state-of-the-art technologies, and import substitution, with a priority on food.

To encourage the influx of foreign capital, the new law offers investors significant facilities and tax exemptions.

It also guarantees that property will not be expropriated “except for reasons of social interest or public utility previously declared by the Council of Ministers and with due compensation,” said the president of the parliamentary commission on constitutional and legal affairs, José Luis Toledo.

The new law will allow companies funded entirely by foreign capital in cases where the complexity or importance of the endeavour requires it, especially in the development of industrial infrastructure. The 1995 law also permitted this, although in practice the state maintained control of a 51 percent share in all joint ventures.

One of the touchiest aspects is employment, because foreign-owned companies would be required to hire local labour through a state agency, which would receive the wages in convertible hard currency and pay workers in the weakened peso.

“It is worrisome; investors would find cheap labour in Cuba,” said Díaz, the environmentalist.

Analysts say that from the definition of foreign investor, it can be inferred that Cubans living abroad could invest here.

“Many Cubans who live in the United States and have enough money are interested in investing in the fatherland,” Cuban nurse José Enrique Romero, who has lived in the United States for 35 years, commented to IPS. “But independently of the limitations of the embargo, they are worried about changes that will affect them.”

* With additional reporting by Ivet González.

The post Wanted: Foreign Investment in Cuba appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/04/wanted-foreign-investment-cuba/feed/ 0
U.S. Ukraine Aid Frustrated by IMF Reform Debate http://www.ipsnews.net/2014/03/u-s-ukraine-aid-frustrated-imf-reform-debate/?utm_source=rss&utm_medium=rss&utm_campaign=u-s-ukraine-aid-frustrated-imf-reform-debate http://www.ipsnews.net/2014/03/u-s-ukraine-aid-frustrated-imf-reform-debate/#comments Sat, 15 Mar 2014 00:21:09 +0000 Jim Lobe http://www.ipsnews.net/?p=132902 Despite pressure from the Barack Obama administration, Ukraine’s new prime minister, and a veritable who’s who in Washington’s foreign policy and financial establishment, Congress adjourned Friday for a 10-day recess without approving emergency assistance for an increasingly beleaguered and economically bereft Ukraine. The failure to pass a billion-dollar package of loan guarantees – just two […]

The post U.S. Ukraine Aid Frustrated by IMF Reform Debate appeared first on Inter Press Service.

]]>
By Jim Lobe
WASHINGTON, Mar 15 2014 (IPS)

Despite pressure from the Barack Obama administration, Ukraine’s new prime minister, and a veritable who’s who in Washington’s foreign policy and financial establishment, Congress adjourned Friday for a 10-day recess without approving emergency assistance for an increasingly beleaguered and economically bereft Ukraine.

The failure to pass a billion-dollar package of loan guarantees – just two days before a Moscow-backed plebiscite in Crimea is expected to endorse secession from Ukraine and integration with Russia – resulted largely from Republican opposition to reforming the International Monetary Fund (IMF), the Washington-based multilateral agency that is expected to take the lead in any rescue of Kiev’s debt-ridden economy.The reform is part of a larger movement to make the governance of major international institutions more representative by providing a stronger voice for middle-income countries, in particular.

While the Democrat-led Senate Foreign Relations Committee combined both the aid and the IMF reform package, Republican leaders in the House, which passed the aid package as a stand-alone measure last week, said they opposed adding the IMF provisions, which, among other measures, would permit the Fund to lend more money to needy clients, including Ukraine.

“I understand the administration wants the IMF money, but it has nothing at all to do with Ukraine,” said House Speaker John Boehner just as the Senate was poised to pass its version of the emergency bill.

He spoke after Secretary of State John Kerry exhorted lawmakers to approve the Senate package during a hearing Thursday before flying off for his latest – and apparently inconclusive – meeting on the Ukraine crisis with Russian Foreign Minister Sergei Lavrov in London Friday.

“We must have IMF reform, we must have the quota,” he said in a reference to the increase in Ukraine’s ability to borrow more from the Fund if the package goes through. “It would be a terrible message to Ukraine for everybody to be standing up talking, appropriately, about what’s at stake and not to be able to follow through.”

He was backed up by a letter sent to the Congressional leadership by more than two dozen former cabinet officials, including former national security advisers Henry Kissinger, Brent Scowcroft, Zbigniew Brzezinski, and Condoleezza Rice, and former Treasury Secretaries Robert Rubin, Larry Summers, and Robert Zoellick, among many others.

“The immediate importance of a strong IMF role for countries in crisis is apparent now in Ukraine, which seeks help from the U.S. and IMF to maintain its independence and economic health,” according to the letter. “Implementation of IMF quota reform would mean Ukraine would be able to borrow 60 percent more in rapid IMF financing (from one billion dollars to 1.6 billion dollars) than is possible today.”

Coupled with other aid, the letter, which was coordinated by the Bretton Woods Committee, asserted, the “geopolitical position” of its government in dealing with the current crisis with Russia should be enhanced.

The IMF reform package, which was adopted by the Fund’s governing board in 2010, cannot take formal effect until the U.S. approves it given the effective veto power Washington wields in the agency.

In addition to providing the Fund with additional lending resources, its main effect would be to reallocate countries’ quotas to increase the currently underweighted influence of emerging economies, such as Brazil, China, India, and Turkey, while decreasing the cumulative share of European members whose representation on the board – and whose access to the IMF’s lending facilities, especially in the wake of the eurocrisis — far exceeds their actual share of the global economy.

Spain, for instance, has voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds of Brazil’s. Of the 24 seats on the IMF’s executive board, at least eight are held by European governments at any one time.

The reform is thus part of a larger movement to make the governance of major international institutions more representative by providing a stronger voice for middle-income countries, in particular.

The Obama administration has played a significant role in this effort, heralding it as the kind of governance reform of global institutions that is essential for the international system of the 21st century, as the legacies of imperialism and colonialism of the previous two centuries fade into history.

Administration officials have applied some of the same reasoning in response to Russia’s de facto occupation of Crimea.

“You just don’t in the 21st century behave in 19th century fashion by invading another country on (a) completely trumped up pretext,” Kerry said earlier this month as the crisis unfolded.

But most Republican lawmakers have resisted Obama’s version of 21st century global governance, particularly when it comes to the reform of international institutions like the IMF, preferring instead to maintain the status quo ante, even if it results in delays at a critical moment in desperately needed financial aid to Ukraine.

Two senators who voted against the bill in the Foreign Relations Committee, including two likely 2016 Republican presidential candidates, Rand Paul and Marco Rubio, noted that Russia’s IMF quota would be increased – if only from 2.5 percent to 2.7 percent – if the reform took effect.

“This legislation is supposed to be about assisting Ukraine and punishing Russia, and the IMF measure completely undercuts both of these goals by giving Putin’s Russia something it wants,” Rubio argued. Paul noted that any loans provided to Ukraine would probably be used to repay Moscow for billions of dollars in debts it accumulated by importing Russian gas.

House Republicans have also objected to the reforms because they would double Washington’s contribution quota to 63 billion dollars, although that amount would have no direct budgetary impact because it would be shifted from Washington’s share of an emergency fund created by the IMF to cope with the 2008 financial crisis to the agency’s general fund.

Republicans, however, counter that the U.S. won’t be able to exercise as much influence over loans from the general fund and have expressed concern that some of the U.S. funding could be on the hook if European countries to which the IMF has lent many times their quota default.

But the Bretton Woods letter stressed that Washington’s clout – both in financial and foreign-policy terms – in dealing with Ukraine and other hot spots would be enhanced by approval of the reforms, pointing out that when Russia went to war with George in 2008, the IMF helped prevent an economic collapse in Tbilisi, just as it supported Easter European countries after the fall of the Berlin Wall.

“An undeniable fact is that the IMF has been a vital tool in every administration’s foreign policy arsenal since the Fund’s inception,” said the Committee’s director, Randy Rodgers.

In another letter sent to Boehner earlier in the week by the Committee and the activist New Rules for Global Finance Coalition, nearly 200 policy experts, business and academic leaders, and former U.S. officials also called for passage of the IMF reform provisions.

In addition to the New Rules Coalition, officials from a number of anti-poverty groups that have been critical of IMF austerity programmes, such as Oxfam America, a dozen church groups, and Jubilee USA network, signed the letter, calling the quota reform a step toward greater democratisation of the Fund.

“We know we can’t do anything additional in terms of governance reform until this passes,” New Rules’ director Jo Marie Griesgraber told IPS. “This begins to wear down the European over-representation …and enables Ukraine to double its quota.”

Several Republicans on the Senate Foreign Relations Committee also deplored the failure of their House colleagues to support the bill.

The IMF “can provide stability at a time we need it,” said Sen. Lindsey Graham, one of the most prominent anti-Moscow hawks in the Senate. Calling it a “strategic tool” for U.S. foreign policy, he said, “We would be short-sighted to not embrace this reform.”

Jim Lobe’s blog on U.S. foreign policy can be read at Lobelog.com.

The post U.S. Ukraine Aid Frustrated by IMF Reform Debate appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/03/u-s-ukraine-aid-frustrated-imf-reform-debate/feed/ 1
The Rich Complain That we do not Love Them http://www.ipsnews.net/2014/03/rich-complain-love/?utm_source=rss&utm_medium=rss&utm_campaign=rich-complain-love http://www.ipsnews.net/2014/03/rich-complain-love/#comments Tue, 11 Mar 2014 09:24:56 +0000 Roberto Savio http://www.ipsnews.net/?p=132663 Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, writes on rich new ways.

The post The Rich Complain That we do not Love Them appeared first on Inter Press Service.

]]>

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, writes on rich new ways.

By Roberto Savio
ROME, Mar 11 2014 (IPS)

F. Scott Fitzgerald famously said “The rich are different from you or me”, yet in his days, in the early years of the 20th century, the rich were not subject to public scrutiny, and were generally an object of envy, not resentment.

Fast forward to the 21st century and the Occupy Wall Street movement, which first took to the streets in September 2011  in New York’s Wall Street financial district, on behalf of the 99 percent of Americans (who possess 60 percent of the national wealth) against the one percent that possess 40 percent, to denounce growing social inequality. The success of the movement’s popular action resonated throughout the world and so now the rich are striking back.

Tom Perkins is their leader, an 82-year-old with a net worth of 8 billion dollars. He owns a 1,600 square metre penthouse in San Francisco and has just bought a yacht worth 110 million dollars. In a letter to the Wall Street Journal in January this year, Perkins compared the “progressive war on the American one percent” of wealthiest Americans to the Holocaust, comparing the Occupy Wall Street movement’s “demonisation of the rich” to Nazi Germany’s anti-Semitism.So, the rich really are different from you and me, and they are growing so much that it would be a pity not to join them.

A month later, Perkins publicly stated that in elections the number of votes a person can cast should be proportional to the amount of taxes that that person pays. And he is stirring his peers to “come out”.

Bud Konheim, CEO of luxury fashion company Nicole Miller, has done just that with his message to the 99 percent – stop complaining. “Our 99 percent  are the one percent in the rest of the world … The guy that’s making, oh my God, he’s making 35,000 dollars a year … Why don’t we try that out in India or some countries we can’t even name. China, any place the guy is wealthy.”

John Mark, the former CEO of Morgan Stanley, which was rescued with public funds, is defending the extravagant salaries of corporation executives. He has just made a statement in favour of James Dimon, the CEO of JP Morgan Chase who received 20 million dollars at a time when his bank had lost several million in wrong investments in sovereign funds and paid a penalty close to 12 billion dollars for fraudulent practices.

According to financial sources, Wall Street has spent 600 million dollars in lobbies, to try to deter the action of the regulator in implementing the rules approved by the U.S. Congress for a somewhat stricter control, hoping to avoid a repetition of the financial meltdown of 2008 which, combined with the European crisis of sovereign funds, has brought unemployment to young generations everywhere.

For those who think that in reality the vote of a billionaire is equal to the vote of an unemployed person, this counterattack by the one percent is legitimate. The only problem is that, apart from their different weight in politics, I wonder it the same naïve persons would also believe that rich and poor pay taxes in the same proportion. According to Tax Justice Network (TJN), an organisation that campaigns to curb tax avoidance, fiscal paradises now hold close to eight percent of the gross world product (the U.S. has a gross domestic product close to half of that), and TJN underlines how big capital spurs corruption.

What is corruption? According to the Oxford English Dictionary, corruption is “dishonesty or fraudulent conduct by those in power”. And financial institutions and the one percent are certainly in power. According to TJN, the amount embezzled over the last 15 years is a staggering 30 trillion dollars, or half of the world’s annual gross product. In China, four trillion is thought to have disappeared between 2000 and 2011, much of it funnelled to fiscal paradises. In Russia, the figure is around one trillion and in the European Union 1.2 trillion.

All over the world, banks have been fined at unprecedented levels for fraud and corruption. Reading the U.S. Senate report (2009) on the level of corruption in UBS, Switzerland’s largest bank, is like entering the world of crime novels. The 176-page report details the extent UBS went to in helping U.S. clients hide billions in assets.

UBS paid a fine of 780 million dollars, and more has to come. In an appeal for a world corruption police force published in the New York Times last month, Alexander Lebedev reported the theft of five billion dollars from Bank of Moscow, four billion from BTA Bank and AMT Bank, four billion from Rosukrenergo, three billion from Globex and Sviaz Bank, two billion from Russian Agricultural Bank, one billion from Rosagroleasing, and one billion from VEFK Bank. According to Lebedev, a former senior KGB official and now businessman, and owner of the London Evening Standard and the Independent, “if someone steals one billion dollars, and heads for an offshore haven, it is practically impossible to take legal action.” Like all Russian oligarchs, he certainly has considerable inside knowledge!

Anyhow, there is no need for the one percent to be concerned. In spite of their complaints, they are doing better than ever. Just read this year’s Wealth Report, the annual compendium of all things rich from Knight Frank, the property management firm. Over the past decade, the

super-rich have swelled by 59 percent, and billionaires by 80 percent: they now stand at 1,682. Those with assets of more than 30 million dollars number around 167,000, equivalent to the population of a sizable town. In a recent poll, 75 percent of the famous 0.1 percent said that they increased their wealth in the last year.

By 2030, China is expected to have 322 billionaires, more than Britain, Russia, France and Switzerland combined: finally proof that socialism, albeit in its Chinese version, is superior to capitalism. Sovereign countries take note. Malta is proposing to offer its passport to those who give 650,000 euros, with no residency requirement. Malta is part of the European Union, so with its passport you can go everywhere. Spain and Portugal are offering residency, even with limited time, in their country if you make substantial investments, and Latvia and Estonia are now following. The U.S. gave 7,641 investors an immigrant visa in 2012, and 80 percent of these went to Chinese investors.

So, the rich really are different from you and me, and they are growing so much that it would be a pity not to join them. The market is now the basis for democracy – anybody can make it, it’s just a lack of will if we’re still part of the 99 percent!

The post The Rich Complain That we do not Love Them appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/03/rich-complain-love/feed/ 1
New Economic Crisis Engulfing Developing Countries http://www.ipsnews.net/2014/03/new-economic-crisis-engulfing-developing-countries/?utm_source=rss&utm_medium=rss&utm_campaign=new-economic-crisis-engulfing-developing-countries http://www.ipsnews.net/2014/03/new-economic-crisis-engulfing-developing-countries/#comments Thu, 06 Mar 2014 18:33:09 +0000 Martin Khor http://www.ipsnews.net/?p=132511 Martin Khor, executive director of the South Centre, spotlights the economic crisis that emerging economies find themselves in.

The post New Economic Crisis Engulfing Developing Countries appeared first on Inter Press Service.

]]>

Martin Khor, executive director of the South Centre, spotlights the economic crisis that emerging economies find themselves in.

By Martin Khor
GENEVA, Mar 6 2014 (IPS)

Several developing countries are now being engulfed in new economic crises as their currency and stock markets are experiencing sharp falls, and the end is not yet in sight.

The “sell-off” in emerging economies has also spilled over to the American and European stock markets, thus causing global turmoil.

Countries whose currencies were affected in the second half of January  include Argentina, Turkey, South Africa, Russia, Brazil and Chile.

A hike in interest rates by Turkey and South Africa has so far failed to stem the depreciation of their currencies.

An America market analyst termed it an “emerging market flu” and several global media reports tend to focus on weaknesses in individual developing countries.

However, the broad sell-off is a general response to the “tapering” of purchase of bonds by the U.S. Federal Reserve, which marks the slowdown of its easy-money policy that has been pumping many hundreds of billions of dollars into the banking system.

On Jan. 29, the Federal Reserve reduced its monthly asset purchase by another 10 billion dollars to 65 billion dollars, following the 10 billion reduction in December. It gave a new boost to the weakening of emerging market currencies.

A lot of the Federal Reserve money pumping had earlier been taken up by American investors and placed in emerging economies as they searched for higher yield.

With the tapering expected to raise yields in the U.S., money is flowing out from bonds and stocks in the emerging economies, putting pressure on their currencies. The capital flows have reversed direction.

The current “emerging markets sell-off” thus cannot be explained by ad hoc events. It is a predictable and even inevitable part of a boom-bust cycle in capital flows to and from the developing countries, which originates from the monetary policies of developed countries and the behaviour of their investment funds.

This cycle, which has been very destabilising to the developing economies, has been facilitated by the deregulation of financial markets and the liberalisation of capital flows which in the past had been carefully regulated.

This prompted massive and increasing bouts of speculative international flows by Western investment funds, motivated by the search for higher yields. Emerging economies, having higher economic growth and interest rates, attracted the investors.

Yilmaz Akyuz, chief economist at South Centre, analysed the most recent boom-bust cycles in his paper Waving or Drowning?

A boom of private capital flows to developing countries began in the early years of the 2000s  but came to an end with the flight to safety triggered by the Lehman collapse in September 2008. However, the flows recovered quickly. By 2010-12, net flows to Asia and Latin America exceeded the peaks reached before the crisis.

This recovery was largely caused by the easy-money policies and near zero interest rates in the U.S. and Europe.

In the U.S., the Federal Reserve pumped 85 billion dollars a month into the banking system by buying bonds. It was hoped the banks would lend this to businesses to generate recovery, but in fact investors placed much of the funds in the Western stock markets and in bonds and shares in developing countries.

The surge in capital inflows led to a strong recovery in currency, equity and bond markets of major developing countries. Some of these countries welcomed the new capital inflows and the boom in asset prices.

But others were upset that the inflows caused their currencies to appreciate (thus making their exports less competitive) and that the ultra-easy monetary policies of developed countries were part of a “currency war” to make the latter more competitive.

In 2013, the capital inflows into developing countries weakened due to the European crisis and the prospect of the Federal Reserve “tapering”.

This weakening took place at a bad time – just as many of the emerging economies saw their current account deficits widen. Thus, their need for foreign capital increased just as inflows became weaker and unstable.

In May-June 2013 there was a preview of the current sell-off when the Federal Reserve announced it could soon start “tapering”. This led to sudden sharp currency falls including in India and Indonesia.

However, the Federal Reserve  postponed the taper, but in December it finally announced  a reduction of its monthly bond purchase from 85 to 75 billion dollars, with more to come.

There was then no sudden sell off in emerging economies, as the markets had already anticipated it and the Federal Reserve also announced that interest rates would be kept at current low levels until the end of 2015.

By now, however, the investment mood had already turned against the emerging economies. Many of them were now termed “fragile”, especially those with current account deficits and dependent on capital inflows.

Many of the so-called fragile countries are in fact members of the BRICS (Brazil, Russia, India, China and South Africa) that had been viewed just a few years before as the most powerful emerging economies driving global growth.

In this atmosphere of deepening concerns, it just required a “trigger” to cause a simultaneous sell-off in currencies and markets of developing countries.

Several factors were to emerge which together constituted a trigger. These were a “flash” report indicating contraction of manufacturing in China; the sudden fall in the Argentinian peso; and expectations of further tapering by the Federal Reserve.

For two days (Jan. 23 and 24) the currencies and stock markets of several developing countries were in turmoil, which spilled over to the U.S. and European stock markets.

The turmoil continued into the following week, seeming to confirm investor disenchantment with emerging economies, and a reversal of capital flows.

The depreciation in currency and the capital outflows could put strains on the affected countries’ foreign reserves and weaken their balance of payments.

The accompanying fall in currency would have positive effects on export competitiveness, but negative impacts in accelerating inflation (as import prices go up) and debt servicing (as more local currency is needed to repay the same amount of debt denominated in foreign currencies).

 

The post New Economic Crisis Engulfing Developing Countries appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/03/new-economic-crisis-engulfing-developing-countries/feed/ 0
Emerging Economies – From Easy Money to Hard Landing? http://www.ipsnews.net/2014/03/emerging-economies-easy-money-hard-landing/?utm_source=rss&utm_medium=rss&utm_campaign=emerging-economies-easy-money-hard-landing http://www.ipsnews.net/2014/03/emerging-economies-easy-money-hard-landing/#comments Sat, 01 Mar 2014 19:43:12 +0000 Yilmaz Akyuz http://www.ipsnews.net/?p=132329 Yilmaz Akyuz, chief economist of the South Centre, Geneva, argues urgent steps to deal with an economic crisis in the emerging economies that the centre had warned of earlier.

The post Emerging Economies – From Easy Money to Hard Landing? appeared first on Inter Press Service.

]]>

Yilmaz Akyuz, chief economist of the South Centre, Geneva, argues urgent steps to deal with an economic crisis in the emerging economies that the centre had warned of earlier.

By Yilmaz Akyuz
GENEVA, Mar 1 2014 (IPS)

Before the world economy has been able to fully recover from the crisis that began more than five years ago, there is a widespread fear that we may be poised for yet another crisis, this time in emerging economies.

The signs of external financial fragility in several emerging economies have been visible since the beginning of the financial crisis in the U.S. and Europe. The South Centre has constantly warned that the boom in capital flows that had started in the first half of the 2000s and continued even after the Lehman bank collapse is generating serious imbalances in the developing world along with the danger of a sudden stop and reversal.

Policy choices in advanced economies, notably in the U.S. as the issuer of the main reserve currency, in response to the crisis are key to understanding what is going on. Reluctance to remove the debt overhang caused by the financial crisis through timely, orderly and comprehensive restructuring, and an abrupt turn to fiscal austerity after an initial expansion, has meant an excessive reliance on monetary means to fight the Great Recession, with central banks entering uncharted policy waters, including zero-bound policy interest rates and the acquisition of long-term public and private bonds (quantitative easing).

This ultra-easy monetary policy has not been very effective in reducing the debt overhang or stimulating spending. It has, however, generated financial fragility, at home and abroad, notably in emerging economies.

In several emerging economies, policies pursued in recent years have no doubt made a significant contribution to the build-up of external vulnerability. Many commodity-dependent economies have failed to manage the twin booms in commodity prices and capital flows that started in the early years of the millennium and continued until recently, after a brief interruption in 2008-09.

These countries, and several others, have stood passively by as their industries have been undermined by the foreign exchange bonanza, choosing, instead, to ride a consumption boom driven by short-term financial inflows and foreign borrowing by their private sectors and allowing their currencies to appreciate and external deficits to mount. Hastily erected walls against destabilizing inflows have been too little and too late.

The International Monetary Fund (IMF), the organization responsible for safeguarding international monetary and financial stability, has also failed to promote judicious policies not only in major advanced economies, but also in the South. It has been unable to correctly identify the forces driving expansion in emerging economics and joined, until its recent U-turns, the hype about the “Rise of the South”, arguing that major emerging economies are largely decoupled from the economic vagaries of the North and have become new engines of growth, thereby underestimating their vulnerability to shifts in policies and conditions in the North, notably the U.S.

Even when it became clear that capital inflows posed a serious threat to macroeconomic and financial stability in these economies, its advice was to avoid capital controls to the extent possible and introduce them only as a last resort and on a temporary basis.

Policy response to a deepening of the financial turbulence in the South and tightened balance of payments should be similar in many respects to that recommended by the South Centre in the early days of the Great Recession. The principal objective should be to safeguard income and employment. Developing countries should not be denied the right to use legitimate trade measures to rationalize imports through selective restrictions in order to allocate scarce foreign exchange to areas most needed, particularly for the import of intermediate and investment goods and food.

Emerging economies should also avoid using their reserves to finance large and persistent capital outflows. Experience suggests that when global financial conditions are tightening, countries with large external debt and deficits find it extremely difficult to restore “confidence” and regain macroeconomic control simply by allowing their currencies to freely float and/or hiking interest rates. Nor should they rely on borrowing from official sources to maintain an open capital account and to remain current on their obligations to foreign creditors and investors.

They should, instead, seek to involve private lenders and investors in the resolution of balance-of-payments and debt crises and this may call for, inter alia, exchange restrictions and temporary debt standstills. These measures should be supported by the IMF, where necessary, through lending into arrears.

The IMF currently lacks the resources to effectively address any sharp contraction in international liquidity resulting from a shift to monetary tightening in the U.S. A very large special drawing rights (SDR) allocation, to be made available to countries according to needs rather than quotas, would help. (SDR is a weighted currency basket of major currencies defined by the IMF).

But a greater responsibility falls on central banks in advanced economies, notably the U.S. Federal Reserve, which can and should – as the originators of destabilizing impulses that now threaten the South – act as a quasi-international lender of last resort to emerging economies facing severe liquidity problems through swaps or outright purchase of their sovereign bonds.

The Federal Reserve could buy internationally issued bonds of these economies to shore up their prices and local bonds to provide liquidity; and there is no reason why other major central banks should not join this undertaking.

The extent to which these tools – exchange restrictions and temporary debt standstills, IMF lending into arrears, a sizeable SDR allocation and provision of market support and liquidity by major central banks – should be used would depend on the specific circumstances of individual emerging economies.

The world is facing bleak prospects largely because the systemic shortcomings in the global economic and financial architecture that gave rise to the most serious post-war crisis remain unabated.

The Outcome Document of the 2009 UN Conference on the “World Financial Crisis and Economic Crisis and Its Impact on Development” had clearly recognized that “longstanding systemic fragilities and imbalances” were among the principal causes of the crisis and proposed “to reform and strengthen international financial system and architecture” so as to reduce the likelihood of the occurrence of such crises.

It pointed to many areas where systemic reforms are needed including regulation of “major financial centres, international capital flows, and financial markets”, the international reserves system including the role of the SDR, the international approach to the debt problems of developing countries, and the mandates, policies and governance of international financial institutions. So far the international community has failed to address any of these issues in a significant way. They need to be put back on the agenda if recurrent financial crises with severe international repercussions are to be averted.

The post Emerging Economies – From Easy Money to Hard Landing? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/03/emerging-economies-easy-money-hard-landing/feed/ 0
Arab NGOs Warn IMF Against Sharp Cuts to Subsidies http://www.ipsnews.net/2014/02/arab-ngos-warn-imf-sharp-cuts-subsidies/?utm_source=rss&utm_medium=rss&utm_campaign=arab-ngos-warn-imf-sharp-cuts-subsidies http://www.ipsnews.net/2014/02/arab-ngos-warn-imf-sharp-cuts-subsidies/#comments Fri, 28 Feb 2014 16:06:56 +0000 Jim Lobe http://www.ipsnews.net/?p=132294 Civil society activists from five Arab countries are urging the International Monetary Fund (IMF) to ease pressure on their governments to reduce food and fuel subsidies until stronger social-protection schemes and other basic reforms are implemented. In a new report, the Arab NGO Network for Development (ANND) and the Egyptian Center for Economic and Social […]

The post Arab NGOs Warn IMF Against Sharp Cuts to Subsidies appeared first on Inter Press Service.

]]>
By Jim Lobe
WASHINGTON, Feb 28 2014 (IPS)

Civil society activists from five Arab countries are urging the International Monetary Fund (IMF) to ease pressure on their governments to reduce food and fuel subsidies until stronger social-protection schemes and other basic reforms are implemented.

In a new report, the Arab NGO Network for Development (ANND) and the Egyptian Center for Economic and Social Rights (ECESR) argue that social safety nets in Egypt, Jordan, Morocco, Tunisia, and Yemen are inadequate – or, in some cases, too corrupt — to compensate for the loss of critical subsidies on which the poor and even the middle class depend."The pressure should be on the global community that is pushing these austerity measures without considering the actual context or impact on low-income people." -- Leila Hilal

Indeed, in the absence of stronger safety nets, even the gradual removal of subsidies for key commodities may contribute to continuing unrest across the region as the three-year-old “Arab Awakening” plays out, according to the 20-page report.

“In the near term, the unwinding of subsidies cannot serve as the panacea for the serious budgetary and fiscal difficulties facing most Arab states,” according to the report, which was released here Thursday by the Middle East Task Force of the New America Foundation (NAF), a non-partisan think tank.

“By continuing to press Arab governments to remove subsidies, the IMF has inadequately responded to the sweeping social and political changes stemming from the 2011 uprisings and subsequent period of unrest,” it said.

The report also called on the IMF to urge national governments to take other measures, notably instituting progressive tax systems and cutting the military budget, in order to increase revenues and cut spending. Governments must also be encouraged to consult more with civil-society organisation (CSOs), labour unions, and local authorities regarding economic-reform programmes, according to the report.

Jo Marie Griesgraber, who directs New Rules for Global Finance Coalition, welcomed the report, saying it was the latest indication of growing interest by grassroots groups both in the Arab world and in other countries in transition, such as Ukraine and Burma, in the IMF and of their understanding that national economic problems need to be addressed at the global level.

At the same time, she noted that the authors may be overstating the leverage the IMF enjoys over national governments with which it is required under its charter to negotiate agreements.

Bakeries struggled to produce bread in the face of Egypt's 2011 wheat shortage. Credit: Emad Mekay/IPS

Bakeries struggled to produce bread in the face of Egypt’s 2011 wheat shortage. Credit: Emad Mekay/IPS

“I’m sure, if given a choice, the IMF would prefer that reducing subsidies would not be the first policy option they would want to implement to reduce deficits,” she told IPS. “It’s a government policy, and the government is going to agree to cut subsidies to the poor before it agrees to cut military expenditures.”

“The IMF can’t do everything; you need the World Bank; you need regional banks; you need an international court to throw corrupt officials in jail; you need a national political commitment for people to pay taxes,” she said. “The IMF is too limited in what it alone can do, although it serves as a convenient scapegoat for governments.”

Leila Hilal, NAF’s Middle East task force director, agreed that states “are engaging the IMF bilaterally without consulting the affected populations.”

With the recent uprisings, she told IPS in an interview from Jordan, “people feel that their voices are more valuable, that they have more agency, and that there’s much more at stake in terms of policy, and they want to be heard.

“So the idea is that the pressure should be on the global community that is pushing these austerity measures without considering the actual context or impact on low-income people,” she said.

While the mass demonstrations, violence, and political upheavals across the Arab world continue to capture the headlines, relatively little attention has been paid to the underlying economic problems that many analysts believe lie at the root of the continuing regional turbulence.

The Washington-based IMF, which is dominated by the wealthy Western nations, has long been involved in the Middle East/North Africa (MENA) region, particularly in the five low- and middle-income countries that are the subject of the report.

The lender of last resort for failing economies, it provides short-term loans that are subject to recipient governments’ compliance with conditions designed to reduce, if not eliminate their fiscal deficits.

Over much of its history, it acquired a controversial reputation for pushing severe austerity on governments as part of “structural adjustment” programmes which hit the poor and most vulnerable sectors of society the hardest, often as a result of cuts to food and fuel subsidies, as well as social services, including health and education.

The IMF said it was unable to comment before deadline.

Cuts in subsidies have been particularly controversial because of their immediate impact on the population. In 1977, for example, a cut in bread subsidies in Egypt provoked widespread unrest, as did Jordan’s attempts cut subsidies in 1989 and again in 1996. When the IMF sent a mission to Egypt in April last year, it was greeted with protests by civil-society groups, labour unions, and political parties anticipating that the agency would demand similar cuts as a condition for much-needed loans.

In much of the region, food and fuel subsidies make up a large percentage of government spending; in 2012, for example, they accounted for 10 percent of the Egyptian budget.

As the report itself notes, the Fund – as well as its development sister agency, the World Bank — has become increasingly sensitive to these criticisms and sought to persuade governments with which it negotiates the loan conditions to mitigate the impact on the poor by reducing subsidies more gradually and, with the Bank’s help,  strengthening social-safety nets for the most vulnerable.

But the report, which was based on interviews with more than a dozen prominent civil-society activists from the five countries, as well as analyses of IMF staff reports and other IMF documents, argues that these efforts are sometimes based on faulty assumptions.

“Theoretically, the IMF proposes the expansion of social safety nets as a way to offset the negative impact of subsidy removal on the poor,” it said. “In practice, however, social protection schemes are underdeveloped and often nonexistent in Arab countries, and are thus incapable of cushioning the poor against rising prices. In many instances, corruption and the absence of transparency mechanisms further complicate the task of distribution social welfare benefits.”

“Subsidy reform should only occur upon the establishment of sustainable and comprehensive social protection schemes, and can only proceed with broad support from a variety of stakeholders,” according to the report.

“Our analysis highlights the need for the IMF and the G8 countries to adapt their advice to the changing political and socio-economic conditions in the Arab region,” said NAF’s Abdulla Zaid, one of four the report’s co-authors. “The Fund’s one-size-fits-all advice prioritising fiscal austerity measures over social and economic rights fails to account for the harmful impact subsidy removal would have on low and middle-income individuals, and thus, stability.”

The post Arab NGOs Warn IMF Against Sharp Cuts to Subsidies appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/02/arab-ngos-warn-imf-sharp-cuts-subsidies/feed/ 0
New Discontent Surfaces in Bosnia http://www.ipsnews.net/2014/02/new-discontent-arises-bosnia/?utm_source=rss&utm_medium=rss&utm_campaign=new-discontent-arises-bosnia http://www.ipsnews.net/2014/02/new-discontent-arises-bosnia/#comments Sat, 22 Feb 2014 10:05:51 +0000 Vesna Peric Zimonjic http://www.ipsnews.net/?p=131903 Thousands of people have rallied in streets of major Bosnian cities since last week, demanding social justice, decent living conditions and resignation of top officials who they openly blame for unprecedented poverty and the country’s economic decline. The first protest rallies since the end of the bloody 1992-95 war began earlier this month in the […]

The post New Discontent Surfaces in Bosnia appeared first on Inter Press Service.

]]>
By Vesna Peric Zimonjic
BELGRADE, Feb 22 2014 (IPS)

Thousands of people have rallied in streets of major Bosnian cities since last week, demanding social justice, decent living conditions and resignation of top officials who they openly blame for unprecedented poverty and the country’s economic decline.

The first protest rallies since the end of the bloody 1992-95 war began earlier this month in the north-eastern town of Tuzla, where thousands of workers from five major privatised companies had received no payments in years. They were joined in following weeks by thousands of unemployed young people and pensioners."The biggest fear of ruling elites all over and their nightmare is for ordinary people (of all ethnicities) to unite."

Backed by social networks and informal groups, the protests spread to capital Sarajevo and to Zenica, Kakanj, Travnik, Jajce, Brcko, Bihac, Mostar and several other towns. International media immediately dubbed the protests, some of them turning violent, the “Bosnian spring”. Some call it “the winter of Bosnian discontent”.

“It’s still winter here and we’d rather describe the events as an expression of widespread discontent and an introduction to ending the arrogant, unemotional and even scornful behaviour of authorities towards most people, who live in poverty,” Kemal Kurspahic, co-founder of the Media in Democracy Institute in Bosnia, told IPS.

Data from the central Bosnian statistics office puts the unemployment rate at 44 percent. It says that one in five out of 3.8 million people in Bosnia live below the poverty line. For the employed, the average monthly salary is 570 dollars.

“More and more people live in misery and poverty. They are hungry,” Vahid Sehic from the NGO Forum of Tuzla Citizens told IPS.

After the bloody war of the nineties ended with the loss of some 100,000 lives, the country’s industry came to a standstill. It seemed at first that recovery could be at hand, but the slow transition into a market economy entailed a complete change from what used to be former Yugoslavia with its deeply rooted social benefits.

“There are practically two decades of economic devastation, where private interests of the ruling elite, masked as ‘protection of national interest’ served as an excuse for unfair distribution of wealth among the privileged,” said Kurspahic.

The complicated regulation of the internationally sponsored Dayton Peace Accords, that defined the power structure for former warring ethnicities – Bosniak Muslims, Croats and Serbs – had a devastating effect on any possibility of creating an efficient state with a positive investment climate.

Bosnia-Herzegovina is divided into two entities – the Bosnian Serb Republic of Srpska (RS) and the Muslim-Croat Federation, both topped with a Sarajevo-based central authority. Vetoing decisions at the central level have often blocked any initiatives for reforms.

Both entities have their own governments and parliaments, plus a central one in Sarajevo. The Federation is divided into 11 cantons created on ethnic lines for areas with a Muslim or Croat majority. This in practice means that the Muslim-Croat Federation area has 11 local governments with 11 prime ministers.

Most political leaders now are those who were leaders of major national parties during the 1992-95 war. That is “about 80 percent,” said Kurspahic. “Approximately half of Bosnia’s budget goes to salaries in administration.”

Privatisation of major industrial complexes was mostly hasty. It enabled newly born tycoons, close to people in power, to size down or even shut dozens of companies and make quick profits by selling their assets before declaring bankruptcy. Bosnian media has widely reported that new owners often failed to comply with privatisation contracts and failed to pay workers for years.

One of the worst instances is the Sodaso factory in Tuzla. It produced 80 percent of the table salt consumed in former Yugoslavia, amounting to 208,000 tonnes in 1991. In 1999, it produced 21,000 tonnes.

Besides, Tuzla had an additional burden to cope with. After the fall of the Muslim enclave of Srebrenica in July 1995, when Bosnian Serb forces executed some 7,000 men and boys, their family members adding up to some 35,000 children, women and the elderly were transported to Tuzla.

Since protests began, several cantonal prime ministers, including Tuzla’s, have resigned. Sarajevo protestors have been offered negotiations by authorities over the modifications of certain laws, and new elections. The authorities have agreed to create ‘plenums’ in major cities such as Sarajevo that include representatives of political parties and leading civil society organisations in order to negotiate possibilities of fresh elections or other peaceful means for ending the protests.

“This is the first time we saw fear in people in power,” Sehic said. “They worry that the social unrest will spread, and that the story of ‘endangered ethnicity’ will go down the drain; this means they go down the drain as well.”

Several analysts point out that the protests in Bosnia carried no ethnic dimension. “It was more solidarity of people with no rights, the poor and unemployed, regardless of their nation,” said Zarko Papic from the Sarajevo-based NGO, the Initiative for Better and Humane Inclusion.

Svetlana Cenic who teaches economics at the University of Banjaluka in the Republic of Srpska says there can be no serious changes in Bosnia Herzegovina without the social unity of all ethnicities.

“The hungry belly is mine as well as yours, it does not differ between ethnicities,” she said. “The biggest fear of ruling elites all over and their nightmare is for ordinary people (of all ethnicities) to unite.”

That does not seem very likely. Bosnian Serb leader Milorad Dodik visited Belgrade almost immediately after the unrest in the Federation began, and told journalists after his meeting with first Vice Prime Minister Aleksandar Vucic that there were no reasons for Bosnian Serbs to join the protest, claiming that “the RS will remain calm” as “some forces from the Federation want escalation of unrest into the RS.”

The post New Discontent Surfaces in Bosnia appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/02/new-discontent-arises-bosnia/feed/ 0
Recession and Repression Fuel Anger http://www.ipsnews.net/2014/02/recession-repression-fuel-anger/?utm_source=rss&utm_medium=rss&utm_campaign=recession-repression-fuel-anger http://www.ipsnews.net/2014/02/recession-repression-fuel-anger/#comments Fri, 21 Feb 2014 09:09:29 +0000 Pavol Stracansky http://www.ipsnews.net/?p=131881 As Ukraine’s capital experiences the worst violence in its post-Soviet history, some protestors are warning that the festering discontent with the regime which led to the current crisis is unlikely to disappear overnight even if a solution to the current impasse is found. When the anti-government protests began in November they were ostensibly a mass […]

The post Recession and Repression Fuel Anger appeared first on Inter Press Service.

]]>
The police battling protesters in Kiev. Concerns continue about unrest even if the violence dies down. Credit: Natalia Kravchuk/IPS.

The police battling protesters in Kiev. Concerns continue about unrest even if the violence dies down. Credit: Natalia Kravchuk/IPS.

By Pavol Stracansky
KIEV, Feb 21 2014 (IPS)

As Ukraine’s capital experiences the worst violence in its post-Soviet history, some protestors are warning that the festering discontent with the regime which led to the current crisis is unlikely to disappear overnight even if a solution to the current impasse is found.

When the anti-government protests began in November they were ostensibly a mass reaction to the decision by President Viktor Yanukovych to turn his back on the first stage of EU accession.“People having had enough of Yanukovych, the corruption and the economic situation have all aroused the anger that has brought people onto the streets." -- Masha Kostishyn, an unemployed economist

But they soon became as much an expression of distaste and frustration with the ruling regime as any single political decision.

“This all started with the abrupt decision not to sign the agreement with the EU, but there was more to it than that. Everyone was completely fed up with Yanukovych’s regime,” Valerii Drotenko, a 45-year-old protestor told IPS.

Since coming to power in 2010, civil liberties have been eroded, political opponents have faced severe repression, and the independence and integrity of law enforcement agencies has all but disappeared, local and international rights groups say.

At the same time the perception of massive corruption, cronyism and nepotism within the regime has grown among the general population. Critics have pointed to Yanukovych concentrating political power in his own office and at the same time building his own family into a wealthy and socially dominant force.

On top of all this, Ukraine’s economy has struggled desperately since the financial crisis in 2008. Its currency is close to collapse, trade and budget deficits have ballooned and the country has been stuck in a recession for the last 18 months.

Masha Kostishyn, 34, an unemployed economist who lives in Kiev, told IPS: “People having had enough of Yanukovych, the corruption and the economic situation have all aroused the anger that has brought people onto the streets. But this would all be more civilised if the economic situation was better. As it is, at the moment it only helps to create chaos and anger.”

Ukraine’s dire economic situation and an accompanying inability to attract foreign investment has pushed it to be more and more reliant on trade with Russia, especially in the east of the country where much of Ukraine’s heavy industry is concentrated.

Already culturally close – one-sixth of the Ukrainian population is ethnic Russian – this has given the Kremlin an extra lever to strengthen its political influence on Kiev.

But, experts say, this has only pushed more of the population away from the government, especially in Western Ukraine which has traditionally been seen as more pro-European.

The sudden U-turn in late November when Yanukovych backed out of the deal and appeared to pledge the country’s future direction to its Eastern neighbour was the breaking point for many who feared Ukraine would become little more than a Kremlin puppet state embracing Russia’s model of state capitalism, and political and social repression.

Violence and killings over the past month, particularly the horrendous bloodshed of the past few days, has only deepened the general resentment towards the regime.

But while the opposition sticks to its calls for Yanukovych to go, even if they succeed in their demands eventually, many protestors say they hold little faith in the potential replacements.

The main opposition party, The Fatherland, is viewed by some as little more than another corrupt part of the political establishment.

Drotenko told IPS: “The authorities are criminal by their nature [but the] opposition is just another side of the same coin.

“They were pretty comfortable in their role as a ‘puppet’ or ‘decorative’ opposition, being paid by the same oligarchs as the ruling party and ignoring the voices of the people in the same way as Yanukovych has.”

He added: “Most of the people out protesting in Kiev are far from zealous backers of the opposition.”

Others have pointed to the radical far-right politics of the Svoboda party which is one of the major opposition movements involved in the protests.

Some protestors have blamed a lack of cohesion and inaction among opposition leaders in the past months for not bringing a swift end to the crisis in the early weeks of the protests.

“Yanukovych is certainly stupid and is to blame because of his criminal actions, but the opposition is also culpable for its not taking action quickly and decisively in the weeks after the protests began,” said Drotenko.

The horrific violence of the last few days has prompted a flurry of diplomatic action from the EU, the U.S. and Russia and early Friday a deal was agreed between the opposition, Yanukovych’s administration and Russian and EU diplomats to bring an end to the crisis. A key element of that deal is an early election.

But there is disappointment among some in Kiev that diplomatic efforts have come only now, and there is continuing unease over the underlying tensions.

Olga Kovalchuk, 37, a teacher in Kiev, told IPS: “Perhaps while this was a purely political conflict, before it escalated into violence, some form of action from the EU or Russia might have worked, but not any more. They missed their chance.”

The post Recession and Repression Fuel Anger appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/02/recession-repression-fuel-anger/feed/ 0
Troika Becomes the Villain in a Greek Tragedy http://www.ipsnews.net/2014/02/troika-becomes-villain-greek-tragedy/?utm_source=rss&utm_medium=rss&utm_campaign=troika-becomes-villain-greek-tragedy http://www.ipsnews.net/2014/02/troika-becomes-villain-greek-tragedy/#comments Wed, 19 Feb 2014 09:52:29 +0000 Apostolis Fotiadis http://www.ipsnews.net/?p=131783 A humanitarian crisis is unfolding in Greece and other recession-hit European countries as they undergo harsh austerity measures in exchange for a bailout. At the heart of it is the Troika, say trade unions, civil society and rights activists. The Troika – as the International Monetary Fund (IMF), the European Central Bank (ECB) and the […]

The post Troika Becomes the Villain in a Greek Tragedy appeared first on Inter Press Service.

]]>
A Greek protester takes a step against austerity measures at a barricade in Athens. Credit: Infowar Productions/IPS.

A Greek protester takes a step against austerity measures at a barricade in Athens. Credit: Infowar Productions/IPS.

By Apostolis Fotiadis
ATHENS, Feb 19 2014 (IPS)

A humanitarian crisis is unfolding in Greece and other recession-hit European countries as they undergo harsh austerity measures in exchange for a bailout. At the heart of it is the Troika, say trade unions, civil society and rights activists.

The Troika – as the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) have together come to be dubbed – represents international creditors.“The Troika ought to know now that they can’t hide any more behind their immunity in order to avoid Greek courts for the violations of human right in this country.”

It is increasingly being accused of demanding economic reforms that have driven insolvent countries in South-Eastern Europe into deep recession while undermining human rights.

The International Federation for Human Rights has completed a fact-finding mission in Greece aiming to assess the impact of the crisis on human rights and outline the need to hold accountable those responsible for violations.

“Our visit was aimed at collecting evidence that the austerity measures and structural reforms which the government has had to implement as a condition for bailout have led to a situation where not only economic and social but also civil and political rights and the very democratic foundations on which the state is built are under threat,” Elena Crespi, Western Europe programme officer with the Federation, told IPS.

“Our ultimate goal is also to warn against the risk that what started as a global economic crisis would turn into a global human rights crisis, whose effects can easily be foreseen but might be very hard to contain,” she said.

On Jan. 21, 20 trade unions, human rights and civil society organisations throughout Europe addressed Martin Schultz, President of the European Parliament, asking him to commission a report on the situation of human rights, the rule of law, and democracy in Greece.

“Reading the Charter of Fundamental Rights of the EU, it is hard to find a single article that has not been violated by the Greek government during the last three years as part of the policies it has implemented against its own people,” the letter said.

Greece has borrowed about 230 billion euros (315 billion dollars) in the last four years in exchange for a massive austerity programme overseen by the Troika. The policy has backfired, with the economy sinking into unprecedented recession and unemployment soaring to 30 percent.

Signatories to the letter included the European Association for the Defence of Human Rights (AEDH), an umbrella organisation of 30 groups in 22 EU member states, major Greek trade unions, the 167,000-strong Belgian private sector union CNE as well as smaller political and civil society organisations, including the European Attack Network and the Corporate Europe Observatory (CEO).

CEO has launched a new project called Troika-Watch, which aims to create a network of citizens to monitor the body that represents creditors in counties implementing austerity programmes. This will produce a monthly newsletter in nine different European languages.

A resolution proposed by the Committee of Legal Affairs and Human Rights (PACE) was adopted on Jan. 31 by the Parliamentary Assembly of the Council of Europe.

Its draft recommendations on the “Accountability of international organisations for human rights violations” proposed that “international organisations should be subject to binding accountability mechanisms and that their immunity should be limited.”

According to the Assembly, “member states should also be held responsible for the role they play in international organisations and by assisting them in implementing their decisions.”

Greek MP Notis Marias, a representative of the Anti-Federalist Democrats group in the Council of Europe, who has proposed some of the amendments, said, “The Troika ought to know now that they can’t hide any more behind their immunity in order to avoid Greek courts for the violations of human right in this country.”

Basic wages have reportedly gone down 22 percent since the austerity measures began, unemployment among the youth is over 60 percent and over one million people do not have any kind of medical insurance any more.

In June 2013, the IMF admitted mistakes in handling the Greek debt crisis that caused the recession scenario to deteriorate. But the Troika never produced an impact assessment report prior to requesting social reforms and fiscal measures.

Andreas Fischer-Lescano, professor of European law and politics at the University of Bremen, was appointed by the European Trade Union Confederation to examine the legality of memorandums of understanding (MoUs) signed between bailed out countries and their lenders. His conclusions came out at the end of January.

In a draft document, seen by IPS, Fischer-Lescano argued that “it is the Commission and the ECB which on behalf of Europe lay down the conditions that are driving millions of Europeans to despair.

“MoUs have to be de-legitimised. There is no obligation to implement illegal provisions. National courts and also international courts such as the European Court of Justice and the European Court for Human Rights and human rights committees will have to clarify this,” he told IPS.

“The legal struggle against austerity is just beginning. The aim must be to defend core principles of social justice in Europe.”

The Greek Council of State has already found unconstitutional an emergency property tax passed in Greece in 2011.

On Jan. 28, the special committee of inquiry appointed by the Economic and Monetary Affairs Committee of the European Parliament to evaluate the role the Troika played in bailed out countries visited the Greek parliament. It had previously stopped by in Cyprus, Portugal and Ireland.

In Greece, the head of the committee admitted the Troika had committed mistakes but said it fulfilled its role to save the country from bankruptcy. The committee will publish its findings before the European elections in May.

By then a new strong brinkmanship is expected to evolve around the future of Greece’s fiscal consolidation programme, given that the credit put aside for the country is almost used up.

An extra 15 to 20 billion euros (20 to 27 billion dollars) will be necessary to keep the country afloat but many believe this will not come in the form of a new MoU.

Already a German proposal is taking shape that aims to lower interest rates and extend repayment terms for over 50 years.

Economists say through such measures the political elite are hoping to tame public opinion, which in creditor countries is unlikely to tolerate a new loan for bankrupt Greece and which in Greece is steadily moving towards anti-MoU and extreme right-wing parties.

The post Troika Becomes the Villain in a Greek Tragedy appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/02/troika-becomes-villain-greek-tragedy/feed/ 2
Elites Will ‘Consider Inequality’ http://www.ipsnews.net/2014/01/elites-will-consider-inequality/?utm_source=rss&utm_medium=rss&utm_campaign=elites-will-consider-inequality http://www.ipsnews.net/2014/01/elites-will-consider-inequality/#comments Wed, 22 Jan 2014 04:43:18 +0000 Ray Smith http://www.ipsnews.net/?p=130532 With no acute crisis on the radar, this year’s Annual Meeting of the World Economic Forum (WEF) will move away from the response mode of the past years and “look for solutions for the really fundamental issues,” its founder Klaus Schwab said at the pre-meeting press conference. “We cannot afford to allow the next era […]

The post Elites Will ‘Consider Inequality’ appeared first on Inter Press Service.

]]>
Development issues find little place in Davos. Credit: Ray Smith/IPS.

Development issues find little place in Davos. Credit: Ray Smith/IPS.

By Ray Smith
DAVOS, Switzerland, Jan 22 2014 (IPS)

With no acute crisis on the radar, this year’s Annual Meeting of the World Economic Forum (WEF) will move away from the response mode of the past years and “look for solutions for the really fundamental issues,” its founder Klaus Schwab said at the pre-meeting press conference.

“We cannot afford to allow the next era of globalisation to create as many risks and inequities as it does opportunities,” Schwab wrote in a blog post a few days earlier. “Today we face a situation where the number of potential flashpoints are many and are likely to grow.”Hardly any of the workshops scheduled specifically address developing countries.

Even Schwab and his organisation have finally realised that globalisation has increased global inequality and that its consequences have not been managed and mitigated well on the global level.

According to Schwab, the WEF is the “biggest assembly of political, business and civil society leaders in the world.” For decades, he has been gathering the world’s richest and most powerful people and companies once a year in the mountain resort of Davos under the banner of “improving the state of the world”.

This year, the annual meeting beginning Wednesday takes place for the 44th time. Schwab welcomes around 2,500 participants, among them more than half of the CEOs of the 1,000 largest companies of the world, over 30 heads of state, and numerous leaders of international institutions.

A report published by the WEF has spoken of widening income disparities. The report states that increasing inequality impacts social stability within countries and threatens security on a global scale.

“It’s essential that we devise innovative solutions to the causes and consequences of a world becoming ever more unequal,” its authors wrote.

With a well-timed report, the renowned aid and development charity Oxfam International picked the issue up this week. According to Oxfam, the world’s richest 85 people own the wealth of half of the world’s population – a fact that the charity’s executive director Winnie Byanyima called staggering.

“We cannot hope to win the fight against poverty without tackling inequality,” she said. Oxfam locates the roots of the widening gap in fiscal deregulation, tax havens and secrecy, anti-competitive business practice, lower tax rates on high incomes and investments and cuts or underinvestment in public services for the majority.

According to Oxfam, the richest individuals and companies hide trillions of dollars in tax havens around the world. “In Africa”, the report says, “global corporations – particularly those in extractive industries – exploit their influence to avoid taxes and royalties, reducing the resources available to governments to fight poverty.”

Over the last years, tax avoidance has become a major focus of non-governmental organisations especially in countries like Switzerland, where some of the world’s biggest companies involved in raw materials mining and trade have their headquarters.

“Tax avoidance and harmful tax incentives are strongly linked with inequality,” said Martin Hojsik, tax campaign manager of ActionAid International, an international coalition fighting poverty across the globe. “With a lack of revenue caused by tax dodging, developing countries in particular have very little resources to finance essential services like education and health care,” he told IPS.

ActionAid doesn’t participate at the WEF, which Hojsik calls a talking shop for elites in a fancy resort. “Real progress requires commitment from governments and processes that are inclusive of all stakeholders including people living in poverty,” he said.

Hojsik has no illusions about Davos: “This year, Deloitte, a company among other things advising companies how to avoid taxes when investing in Africa, is tweeting about income disparity on their #DeloitteDavosLife event, clearly showing some of the absurdity.”

Unlike ActionAid, Oxfam will take part at the global leaders’ meeting. The charity is asking participants to pledge to supporting progressive taxation, to making public all the investments in companies and trusts, to demanding a living wage in their companies and to challenging governments to use tax revenue to provide universal healthcare, education and social protection for citizens.

Oxfam’s effort is doomed to fail. A look at the WEF’s more than 260 sessions shows that hot potatoes like tax avoidance won’t be addressed. Even though there is a workshop specifically on the extractive industry, it aims only to discuss how the industry may drive growth in the future in the light of rising concerns over scarcity and environmental deprivation.

Hardly any of the workshops scheduled specifically address developing countries. There’s a session on the post-2015 development goals, however. It asks how a new spirit of solidarity, cooperation and mutual accountability may carry those goals from vision to action.

Peter Niggli, director of Alliance Sud, an alliance of the six biggest Swiss charities, isn’t attracted by such debates. Alliance Sud doesn’t go to Davos.

“We lobby at the Swiss government which makes more sense,” he told IPS. As a discussion forum, the WEF in Niggli’s opinion doesn’t have any influence at all on defining the post-2015 development agenda.

Niggli said that it is in any case not the WEF’s official programme with all the debates and workshops that draws businessmen and politicians, but the opportunity they have to meet others informally or set up new projects behind closed doors.

Surely it also isn’t the fake refugee camp the WEF has set up in Davos that draws the global elite. “We are simulating the experience of a Syrian refugee in a Jordanian refugee camp,” Schwab said. “It is so important that people can really imagine what it means to be a refugee.”

The United Nations Refugee Agency has appealed for 6.5 billion dollars for Syrian refugees. International donors have pledged 2.4 billion dollars so far. If the WEF is serious about “improving the state of the world”, its wealthy members could come up with the lacking sum.

The post Elites Will ‘Consider Inequality’ appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/01/elites-will-consider-inequality/feed/ 2
Zimbabwe’s Rocky Economic Start to 2014 http://www.ipsnews.net/2014/01/zimbabwes-rocky-economic-start-2014/?utm_source=rss&utm_medium=rss&utm_campaign=zimbabwes-rocky-economic-start-2014 http://www.ipsnews.net/2014/01/zimbabwes-rocky-economic-start-2014/#comments Tue, 14 Jan 2014 17:16:28 +0000 Jeffrey Moyo http://www.ipsnews.net/?p=130186 Evelyn Mhasi, a qualified nurse, has not worked in her profession for the last seven years. Hiring in several Zimbabwean government sectors, including nursing, remains frozen despite colleges churning out skilled professionals each year.  For many in this southern African nation, the passing of another year only brings with it a deepening dread of the […]

The post Zimbabwe’s Rocky Economic Start to 2014 appeared first on Inter Press Service.

]]>
Tichaona Mhundu from Zimbabwe's Mashonaland East province. Millions of Zimbabweans say they are unsure about what 2014 holds for them. Credit: Jeffrey Moyo/IPS

Tichaona Mhundu from Zimbabwe's Mashonaland East province. Millions of Zimbabweans say they are unsure about what 2014 holds for them. Credit: Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Jan 14 2014 (IPS)

Evelyn Mhasi, a qualified nurse, has not worked in her profession for the last seven years. Hiring in several Zimbabwean government sectors, including nursing, remains frozen despite colleges churning out skilled professionals each year. 

For many in this southern African nation, the passing of another year only brings with it a deepening dread of the future as many struggle without jobs. According to the Reserve Bank of Zimbabwe, the country’s unemployment rate increased to 10.70 percent in 2011 from 4.20 percent in 2004.

However, the United Nations World Food Programme estimates that Zimbabwe’s unemployment rate is about 60 percent. While solid statistics are hard to come by, the vast majority of the country’s workforce is involved in the informal sector.

 

According to the National Statistics Office, Zimbabwe produces about 36,000 higher education graduates annually.

Mhasi, 29, closely followed the 2014 national budget announcement by Zimbabwe’s Finance Minister Patrick Chinamasa in December.“Zimbabwe faces both a crisis in the economy and in leadership after the rigged 2013 polls." -- Zimbabwe’s former finance minister, Tendai Biti

“I followed the proceedings optimistically, thinking that the government was going to unfreeze some posts for skilled people like me, but to no avail,” Mhasi told IPS.

“Another election may come in 2018 to find me still unemployed,” said Mhasi. “For me, 2014 already looks bleak and my hopes of finding employment are fast fading.”

Former finance minister and member of the opposition Movement for Democratic Change-Tsvangirai, Tendai Biti, told IPS: “Zimbabwe faces both a crisis in the economy and in leadership after the rigged 2013 polls. It’s easy to rig elections, but the economy is a totally different game. Sadly, we are on auto cruise back to the 2008 scenario.”

During 2008, when the country’s disputed election results resulted in a power-sharing government, Zimbabwe experienced an economic meltdown, with hyperinflation reaching 231 million percent.

The Confederation of Zimbabwe Industries, an organisation that develops and promotes business activities, says that a number of industries have already failed to re-open this year because of financial difficulties. However, it was unable to provide any figures.

Independent economist Kingston Nyakurukwa said ordinary people were surviving on shoestring budgets with many unsure about what 2014 held for them.

“Remember that last year’s bonuses for civil servants came in batches, which obviously rendered the entire civil service doubtful about what the future held for them in 2014, and even now people fear how they shall fare in the new year,” Nyakurukwa told IPS.

“With a 2014 national budget of over four billion dollars, but devoid of adequate revenue collections to meet the target, Zimbabwe heads towards an economic plunge this year,” Nyakurukwa added.

For Nyson Chimukwere, a fruit and vegetable vendor from Marondera, a town 80 kilometres east of Zimbabwe’s capital Harare, the year ahead looks gloomy.

“People no longer have enough money to spend,” Chimukwere, 44, told IPS. “These days I’m returning home with my pushcart laden with fruits and vegetables, which now rot at home.”

Chimukwere, a father of four, said his earnings have reduced by almost 75 percent.

“I’m afraid this year I may end up making nothing from my business. I used to take home about 50 dollars daily from my sales, but now things have taken a nasty turn – I take home 15 dollars or even far less,” said Chimukwere.

Rik Davison, who runs the Rik-Davy Glass Company, which employs over 800 people in Zimbabwe’s oldest town Masvingo, also dreads the year ahead.

“Lately [business] declined sharply, leaving us going for several days without making any sales, evident of the uncertainties shrouding 2014,” Davison told IPS, adding that because of this he has failed to pay his employees wages on time.

Davison said that his fears were worsened by the government’s insistence on implementing the Indigenisation and Economic Empowerment Act of 2007, which forces foreign-owned companies to cede 51 percent of their shares to local black entrepreneurs. Davison, who is white, has yet to cede his shares.

But Kudakwashe Bhasikiti, a politiburo member of the ruling Zimbabwe African National Union – Patriotic Front, believes that 2014 is set to be a prosperous year.

“We have nothing to fear here with the indigenisation policy in place, we are sure to give wealth to the black people of Zimbabwe,” Bhasikiti, who is the parliamentarian for Zimbabwe’s Mwenezi East constituency, told IPS.

Some economists predict that public employees may suffer the brunt of a government payroll shortage.

“With revenue collections massively dwindling, this year the Zimbabwean government may fail to sustainably remunerate the already poorly-paid civil servants, after it turned mum on increasing their wages in the budget announcement,” economic expert Agrippa Nhumwe told IPS.

A local banker told IPS on the condition of anonymity that hard times were imminent for Zimbabwe’s local banks.

“With cash shortages rocking indigenous banks here, hard times are set to roll this year, fuelling civilians’ fear in the face of an unpredictable government, which amid such circumstances may at any time re-introduce the dreaded Zimbabwean dollar dumped in 2008,” the banker told IPS.

The Reserve Bank of Zimbabwe, which at the height of the country’s economic meltdown was forced to issue a 100 trillion Zimbabwean dollar note, was forced to stop printing money and adopt a multi-currency regime.

For millions of Zimbabweans, it remains to be seen whether or not President Robert Mugabe’s government will succeed in manoeuvring through 2014.

The post Zimbabwe’s Rocky Economic Start to 2014 appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/01/zimbabwes-rocky-economic-start-2014/feed/ 0
Europe’s Leaders Visit Athens to Celebrate Their Failure http://www.ipsnews.net/2014/01/europes-leaders-visit-athens-celebrate-failure/?utm_source=rss&utm_medium=rss&utm_campaign=europes-leaders-visit-athens-celebrate-failure http://www.ipsnews.net/2014/01/europes-leaders-visit-athens-celebrate-failure/#comments Wed, 08 Jan 2014 15:20:34 +0000 Apostolis Fotiadis http://www.ipsnews.net/?p=129963 The start of Greece’s six-month presidency of the EU was marked by a ceremony Wednesday in the Greek capital attended by the EU commissioners. But protests were banned and there was no in-depth talk about the raging controversy over the bloc’s handling of the Greek debt crisis and the renewed concerns about the vitality of […]

The post Europe’s Leaders Visit Athens to Celebrate Their Failure appeared first on Inter Press Service.

]]>
Greek PM Antonis Samaras greets European Commission President José Manuel Barroso in Athens for the ceremony marking Greece's assumption of the rotating EU presidency. Credit: Apostolis Fotiadis/IPS

Greek PM Antonis Samaras greets European Commission President José Manuel Barroso in Athens for the ceremony marking Greece's assumption of the rotating EU presidency. Credit: Apostolis Fotiadis/IPS

By Apostolis Fotiadis
ATHENS, Jan 8 2014 (IPS)

The start of Greece’s six-month presidency of the EU was marked by a ceremony Wednesday in the Greek capital attended by the EU commissioners. But protests were banned and there was no in-depth talk about the raging controversy over the bloc’s handling of the Greek debt crisis and the renewed concerns about the vitality of the Eurozone.

In May 2010, the Eurozone countries and the International Monetary Fund (IMF) agreed on a 110 billion euro bailout for Greece, conditional on compliance with severe fiscal consolidation, privatisations and economic reforms to bolster competitiveness. A second bailout of 130 billion euro with a debt restructure followed in February 2012, with additional austerity measures.

The recipe soon mutated into a scorched earth policy. Greece entered its seventh year of recession in 2014, with unemployment hitting a historical high of 28 percent and youth unemployment surpassing 65 percent – up from seven percent when the austerity measures began to be implemented.

In June 2013, the IMF – part of the so-called troika of international creditors overseeing implementation of the austerity policies in Greece, along with the European Commission and European Central Bank – admitted mistakes in handling the Greek debt crisis.

Deregulation of the labour market, severe taxation of the labour force and reforms of the health sector have cut so deeply through the social fabric that many are wondering whether austerity has caused a humanitarian crisis in Greece.

In 2012, nearly one million of the country’s 11.3 million people were living below the poverty line, according to the Greek Finance Ministry. Among them, more than 65,000 were surviving on less than three euros (four dollars) a day, while 102,000 people earned incomes ranging between 1,000 euros (1,358 dollars) and 2,000 euros (2,716 dollars) a year.

According to Greece’s statistics agency, by late 2012, austerity measures had shrunk the labour market by 20.8 percent – 870,000 jobs were lost since 2009 – and had taken more than 40 percent of the labour force out of the national insurance system.

Lee Buchheit, a globally acknowledged legal expert involved in the debt restructure accompanying the second bailout for Greece, told IPS that the Eurozone debt crisis is not over yet.

“It is worth remembering that with the single exception of Greek PSI [private sector involvement], not a single euro of the debt of the afflicted countries [Ireland, Portugal, Spain and Greece] has been written off. Each of those countries will be emerging from their bailout programmes carrying debt loads far heavier than when they entered the programmes.”

What has changed, Buchheit says, is the identity of the lenders. “The original private sector bondholders have been paid back in full and on time through new borrowings from official sector sources [the EU and IMF]. So the taxpayers of the debtor countries remain entirely on the hook for the repayment of those debts; they will just be paying them to a different set of creditors.”

Changing the identity of the creditor does not solve the debt problem, he said. “A sustainable solution would require either a reduction in the size of the debt loads or significant growth in the economy of the debtor countries, or both. Unfortunately, neither of those things has yet happened in the Eurozone periphery.”

But instead of considering a change of course to stimulus economics, European – most notably German – leaders are refusing to accept the failure of austerity. On the contrary, they have speculated that any extra help for Greece will come in the form of another bailout package.

Economist Philippe Legrain resigned last month from the Bureau of European Policy Advisers, an advisory body to the president of the European Commission. A week after his resignation he delivered a speech in Athens blaming European leaders for postponing an inevitable default at great social cost.

“I think Greece cannot pay back its debts in full. So the questions are not whether Greece’s debts will be written down, but when and how,” he told IPS in an email interview. “As of now, I think it will happen little by little and that it will take the form of lower interest rates and longer repayment terms rather than writing down the principal of the debt, to preserve the fiction that the debt is being repaid in full.”

Despite increasing concerns about society imploding, the Greek government insists on its optimistic scenario that foresees a return of the country to positive growth rates in 2014. The Finance Ministry has repeatedly reassured that Greece will mark a 0.6 percent primary surplus and will successfully return to the credit markets by the end of 2014.

Its optimism has been met with disbelief. The Organisation for Economic Cooperation and Development’s (OECD) forecast of a 0.4 percent contraction contrasts with the Greek government’s projection of 0.6 percent growth this year. The European Commission has predicted a Greek return to the markets in 2015.

In a scathing editorial this week, Germany’s Der Spiegel magazine described Greek Prime Minister Antonis Samaras as “out of touch with reality.”

Meanwhile, Samaras’ coalition government, expected to face a huge protest vote in the European elections next May, has no alternative but to carry on with a painful reform of Greece’s primary care sector, suspending 1,000 doctors and 8,000 administrative jobs, many of which will eventually be lost. This will make up the bulk of the 15,000 jobs the Greek government has to suspend in 2014, under its austerity obligations.

The reform will transform the biggest insurance fund in the country from a service provider to a purchaser in the private health market, with many accusing the government that the real aim is not the creation of a more effective system but the indirect privatisation of primary care which will exclude hundreds of thousands from any kind of medical coverage.

“Austerity politics are a mistake,” says cardiologist George Vichas, the spirit behind a major parallel grassroots health structure, the Metropolitan Community Clinic at Helliniko, that has treated 20,000 uninsured people in its 23 months of existence.

“But those who implemented them have not made a mistake. These results are exactly what they aimed at and what they believe in. They have experimented on Greece the last four years, but now the first signs of health sector deregulation have started appearing in Britain, France and Italy. This is Europe’s future.”

The post Europe’s Leaders Visit Athens to Celebrate Their Failure appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2014/01/europes-leaders-visit-athens-celebrate-failure/feed/ 0
Cuba’s Reforms Don’t Believe in Tears http://www.ipsnews.net/2013/12/cubas-reforms-dont-believe-tears/?utm_source=rss&utm_medium=rss&utm_campaign=cubas-reforms-dont-believe-tears http://www.ipsnews.net/2013/12/cubas-reforms-dont-believe-tears/#comments Mon, 30 Dec 2013 22:42:16 +0000 Patricia Grogg http://www.ipsnews.net/?p=129821 The landscape is changing in Cuba’s cities and towns, with political slogans giving way to lighted signs  advertising the best of local and international cuisine and air-conditioned lodgings – signs of an emerging private sector that was inconceivable until recently. As a result of the new migration rules that went into force in 2013, Cubans […]

The post Cuba’s Reforms Don’t Believe in Tears appeared first on Inter Press Service.

]]>
Saturday night at El Madrigal, a private bar in the upscale Havana neighbourhood of Vedado, Cuba. Credit: Jorge Luis Baños/IPS

Saturday night at El Madrigal, a private bar in the upscale Havana neighbourhood of Vedado, Cuba. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Dec 30 2013 (IPS)

The landscape is changing in Cuba’s cities and towns, with political slogans giving way to lighted signs  advertising the best of local and international cuisine and air-conditioned lodgings – signs of an emerging private sector that was inconceivable until recently.

As a result of the new migration rules that went into force in 2013, Cubans made 250,000 trips abroad between Jan. 14 and Nov. 30, according to official figures.

Since the migration policy reform scrapped the requirement for an exit visa and a letter of invitation from abroad, well-known dissidents have been able to travel overseas and return without any trouble, after decades of restrictions.

In 2011, Cubans had recovered the right to buy and sell their homes and cars, which only the state could do up to then. And on Dec. 19, the government announced that costly, difficult-to-obtain letters of approval from the Transport Ministry would no longer be required to buy a car.

Steep prices on the state market are still a hurdle, however. Many people who saved up to buy a car see no real possibility of doing so, because the new prices will be three times higher than what they could afford.

Mercedes, a retired 67-year-old office worker who draws a pension of 11 dollars a month and also cares for a disabled daughter, does not feel like the changes have improved things for her.

“I can’t survive on my income. My neighbours encourage me to rent out a room, but I would first have to fix up my apartment, and I don’t have the money to do so,” Mercedes told IPS, asking that her last name not be used.

“The problem isn’t the slow pace of the reforms, but how they are perceived and how they reach the people,” says Bélkis González, a professional who works in communications. Despite the government’s stated aim that no one will be left high and dry and that there will be no “shock therapy,” gaps and inequalities remain.

During the discussions that preceded the reforms approved in 2011 by Cuba’s governing Communist Party, experts warned that the core document should include much more explicit and far-reaching social measures than the ones outlined there.

“The text has a totally justified economic focus because otherwise social changes are not possible,” sociologist Mayra Espina admitted at the time to IPS. But she added that it was “somewhat simplistic” to believe that a preferential focus on economic measures would generate positive influences on social questions.

According to studies cited by Espina and other experts, the proportion of the urban population who are income-poor and have unmet basic needs climbed from 6.3 percent in 1988 to 20 percent in 2000.

That increase in social vulnerability was due to the impact of the economic recession that has had Cuba in its grip since the early 1990s, after the collapse of the Soviet Union and the East European socialist bloc, on which this country was fully dependent.

According to the 2012 census, 76.8 percent of the Cuban population is urban. The total number of inhabitants reached 11,167,325 – 10,418 fewer than in 2002. And two million people are over the age of 60.

In 2012, the government of Raúl Castro created a subsidy for low-income segments of the population who need to repair or build homes. The measure was seen as the start of a process to subsidise people rather than products.

Meanwhile, the government has postponed the elimination of the ration book of subsidised basic food items, a system that cost the state 2.43 billion dollars this year.

The poor are also less able to take advantage of the opportunities presented by the reforms because they have less education and training, do not have the capital or other resources to set up their own businesses, and do not receive remittances from family members abroad – a lifeline that has made it possible for many families to weather the storm. (There is no official estimate of the remittances.)

“It would be decisive to implement policies not only of assistance for the vulnerable,” under the planned reforms, but also “affirmative action” policies to reduce inequality, Espina said.

One of the most comprehensive transformations began in agriculture, in 2008. But it has not yet brought results, and food prices remain high, because the productive apparatus is still hampered by the lack of measures to facilitate its development and independence in decision-making, say experts like economist Armando Nova.

Now 70 percent of the land is in the hands of non-state producers, who account for over 75 percent of total food production.

Among them are cooperatives and private farmers, who hold 24 percent of the country’s farmland and produce over 57 percent of all food of vegetable and animal origin. “In other words, their efficiency has been demonstrated,” Nova said in an interview that circulated over the Internet.

More than 440,000 people are now self-employed ‘cuentapropistas’ in nearly 200 different economic activities in which private enterprise is permitted.

But the lack of a wholesale market for purchasing the inputs they need, the scant buying power of the great majority of potential consumers, and the heavy taxes conspire against their success.

The government apparently wants to develop non-agricultural cooperatives. A total of 270 are already operating or have permits, and 228 are awaiting authorisation.

Vice President Marino Murillo explained to parliament that the priority put on cooperatives was due to the distribution of the resources they generate and the social impact of their production.

The authorities would like 40 percent of jobs to be generated outside of the government and state enterprises by 2016, compared to just 20 percent of the workforce prior to the advent of the reforms.

Another pending issue is the convergence of Cuba’s two currencies, the peso and the Cuban convertible peso (CUC), which is pegged to the dollar.

“In no case will people’s purchasing power be affected. The financial capacity of the CUC will be respected,” said Murillo in a message that helped ease the fears of the estimated 60 percent of the population that receives dollars or other hard currency in remittances.

But the changes have not been felt in homes like Mercedes’, although like the rest of the population she and her daughter still receive free healthcare, which they could not do without.

“I know that [former president] Fidel [Castro] and Raúl [Castro] think about people like us, but they’re already over 80,” said Mercedes. “What will happen with those who follow them [in the government]? If they eliminate the ration book, what will we eat?”

The post Cuba’s Reforms Don’t Believe in Tears appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2013/12/cubas-reforms-dont-believe-tears/feed/ 1
The Legacy of 2013 http://www.ipsnews.net/2013/12/legacy-2013/?utm_source=rss&utm_medium=rss&utm_campaign=legacy-2013 http://www.ipsnews.net/2013/12/legacy-2013/#comments Fri, 27 Dec 2013 21:56:36 +0000 Roberto Savio http://www.ipsnews.net/?p=129767 In this column, Roberto Savio, founder and president emeritus of the IPS (Inter Press Service) news agency and Publisher of Other News, assesses the main events of 2013.

The post The Legacy of 2013 appeared first on Inter Press Service.

]]>

In this column, Roberto Savio, founder and president emeritus of the IPS (Inter Press Service) news agency and Publisher of Other News, assesses the main events of 2013.

By Roberto Savio
SAN SALVADOR, Bahamas , Dec 27 2013 (Columnist Service)

At this time of hope for what the new year may bring, it would be useful to look at the legacy we carry with us from the year we leave behind. It was a year full of events – wars, rising social inequality, unchecked finance, the decline of political institutions, and the erosion of global governance.

Perhaps this is nothing new, since these trends have been with us for a long time. But some events have a deeper, longer-lasting impact. And here we will present them briefly, as a list to remember and to watch. They are not offered in order of magnitude, which is always a subjective decision.

Roberto Savio. Credit: IPS

Roberto Savio. Credit: IPS

1. Collapse of the Arab Spring. The situations in Egypt and Syria have discouraged other Arab countries from following in their footsteps. The internal struggles in the large and variegated world of Islam will take a long time to settle. The real challenge is how modernism can be used as an element making Islam viable.

The coup in Egypt has given new strength to the radicals who do not believe in democracy, and we will never know if the Muslim Brotherhood could have run the country effectively, or if it would have failed (as is most likely). Outsiders cannot solve this conflict, as the case of Syria, which has become a proxy war financed by external players, clearly shows.

2. U.S. self-sufficiency in energy. In five years the exploitation of shale oil and gas will cut American oil imports in half, and if this trend continues the U.S. could actually become self-sufficient in energy supplies. The impact on the price of oil is clear, and this will affect the strategic importance of the Arab world and petrodollar countries like Russia. American industry will receive a strong boost, but incentives for the development of renewable energy will decline worldwide.

3. The inability to reach a meaningful agreement on climate change. The failure of the last climate change conference in Poland demonstrates that there is little political will to reach a global consensus on ways to tackle this issue. Yet according to most climate scientists we are fast approaching the point of no return, with the prospect of irreversible damage to the global ecosystem.

Meanwhile, French investors are buying land in the south of England to grow vineyards. And Iceland is besieged by investors (including the Chinese), who want to get their hands on a large land area where cultivation will continue to be possible. And all nations are gearing up for the exploitation of mineral reserves under the melting Arctic ice, which is also opening up new avenues for marine transportation.

This shows that the business world has a clearer appreciation of what is happening than governments. But it also shows a lack of vision of social responsibility.

4. U.S. decline. President Barack Obama had to cancel his participation in the recent Asian summit because of the U.S. budget crisis. But Russian President Vladimir Putin was able to attend, and he has managed to successfully manipulate events in Syria.

Obama’s signature healthcare reform is in jeopardy, and Edward Snowden has shown the world that the U.S. does not respect its own allies. Meanwhile, the Tea Party has been able to paralyse the U.S. government and bring the Republication Party to espouse a policy of public sector decline.

People all over the world now consider the U.S. an unreliable partner, in an irreversible crisis, with a president who makes a lot of high-sounding promises but is unable to bring them about.

Nobody has managed to bring the financial sector under control, and scandals and gigantic penalties are a continuing reality. There is no solution in sight on Palestine, and the U.S. is facing great difficulties extricating itself from Afghanistan, while Iraq is reverting to chaos, and the talks with Iran are giving a strong boost to the radical Shia section of the Islamic world. The U.S. is a country of great resilience, but the future does not look at all promising.

5. European decline. The past year was one of disunity in Europe, and the definitive ascendancy of Germany in European affairs. Only macroeconomics counts today. Ireland is held up as an example, after it brought its deficit under control. But at the microeconomic level, the damage to the social fabric can be dramatic.

The same is happening in Portugal, and Greece is the most extreme example. Greeks have lost 20 percent of their income, unemployment has climbed to 27 percent, and more cuts are being demanded.

This is not the place for an analysis of how Germany is helped by its policy, which undercuts others without any hint of solidarity. But in the May 2014 European elections, people are likely to vote in large numbers for the anti-Europe parties, which have sprouted almost everywhere, with the sole exception of Spain. The Spanish government of Mariano Rajoy, as the harsh laws on abortion and public order show, is far enough to the right to leave space to a more right-wing party.

The weakening of the European Parliament will be with us for a long time, until Europe recovers some of the appeal that it has been steadily losing among its citizens.

6. Chinese nationalism. The new president, Xi Jinping, has in a few months assumed an authority unprecedented since the time of Mao Zedong and Deng Xiaoping. He is pushing the idea of a Chinese dream, to galvanise people under his leadership. This is based on the assertion of China as a great power commanding respect around the world.

And bold steps have been taken to affirm Chinese territorial claims that have opened up conflicts with South Korea, the Philippines, Vietnam and Japan. With the Japanese government now run by nationalist politicians, many analysts are considering the possibility of a third world war beginning in Asia.

In the 16th century China had 50 percent of world GNP, and there is a strong desire among the Chinese to regain their “rightful” place in the world. The defence treaty between Japan and the United States makes this a potentially global point of conflict.

7. Changes in the Vatican. The election of Pope Francis has brought a much-needed change of direction in the Catholic Church. The Pope is binging back a focus on people rather than the market, using terms like “solidarity”, “social justice”, “exclusion” and “marginalisation”, which until recently had all but disappeared from political discourse.

President Obama has followed with a strong speech against the growing social inequalities in the U.S.

And according to the London School of Economics, in 20 years Britain will return to the level of social inequality it experienced during the times of Queen Victoria.

But Pope Francis is the only one denouncing the dismantling of the welfare system which emerged during the Cold War. Let us hope that his call will help prevent the writing of a new Das Kapital, where the victims will not be workers, but young people.

The post The Legacy of 2013 appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2013/12/legacy-2013/feed/ 2
Illicit Capital Leaving Developing Countries Up by 14 Percent http://www.ipsnews.net/2013/12/illicit-capital-leaving-developing-countries-14-percent/?utm_source=rss&utm_medium=rss&utm_campaign=illicit-capital-leaving-developing-countries-14-percent http://www.ipsnews.net/2013/12/illicit-capital-leaving-developing-countries-14-percent/#comments Thu, 12 Dec 2013 23:48:49 +0000 Carey L. Biron http://www.ipsnews.net/?p=129520 Developing countries are likely losing more than a trillion dollars a year in “illicit financial flows” stemming from crime and corruption, according to new estimates. This fast-rising figure is already 10 times the total amount of foreign aid these countries are receiving. Between 2002 and 2011, governments in the developing world are thought to have […]

The post Illicit Capital Leaving Developing Countries Up by 14 Percent appeared first on Inter Press Service.

]]>
By Carey L. Biron
WASHINGTON, Dec 12 2013 (IPS)

Developing countries are likely losing more than a trillion dollars a year in “illicit financial flows” stemming from crime and corruption, according to new estimates. This fast-rising figure is already 10 times the total amount of foreign aid these countries are receiving.

Between 2002 and 2011, governments in the developing world are thought to have lost a total of almost six trillion dollars, largely due to poor governance and lax regulation, according to Global Financial Integrity (GFI), a Washington-based watchdog. Included in its estimates are ill-gotten wealth from purposefully incorrect trade invoices, the use of shell companies and tax havens, and other accounting gimmicks.

“This gives further evidence to the notion that illicit financial flows are the most devastating economic issue impacting the global South,” Raymond W. Baker, GFI’s president, stated in the introduction to a report released Wednesday, calling the numbers a “wake-up call to world leaders on the urgency with which illicit financial flows must be addressed.”

Particularly worrying is the fact that the rate at which these outward flows have been growing appears to be increasing substantially."Illicit financial flows are the most devastating economic issue impacting the global South."
-- Raymond W. Baker

In 2002, for instance, the earliest year that GFI’s researchers have examined, illicit financial flows are thought to have been around 270.3 billion dollars. By 2011, the latest year for which estimates are available, that figure had grown to 946.7 billion dollars, and has likely increased since then.

When adjusted for inflation, this translates into an average growth of more than 10 percent a year, while the 2011 number constituted a 13.7 percent increase over 2010.

“Outflows have certainly been increasing,” Dev Kar, GFI’s chief economist and a co-author of the new report, told IPS. “During the economic crisis both imports and exports declined, but as economic activity has recovered so too have these outflows.”

Kar also cautions that the GFI estimates are likely conservative. They include neither unofficial (“hawala”) financial flows nor large-scale cash transactions, and as such are unable to offer a glimpse of broader underworld economies, including drug or human trafficking.

Asia is seen as having the most significant problems, accounting for around 40 percent of all illicit outflows from developing countries. While Africa’s share was only around seven percent in 2011, the continent did have the highest ratio of average illicit flows to gross domestic product, at around 5.7 percent.

With Africa also the world’s most aid-dependent region, an increasing concern for many is how to staunch the flow of some of this illicit capital so it can be ploughed back into public sector spending such as on health, education and public infrastructure.

Shadow systems

Major development institutions have started paying attention to such discrepancies. The humanitarian group Oxfam estimates that some 32 trillion dollars are currently sitting in tax havens around the world, for instance, and suggests that taxes on this sum could raise nearly 190 billion dollars a year.

“Governments should agree to end global hunger by 2025 and an end to tax havens, which could help pay for this and much more,” Stephen Hale, advocacy head for Oxfam, said in a statement. “Tax-dodging effectively takes food from hungry mouths.”

The past year has actually seen notable moves by the international community to close down certain avenues used to hide or shield unreported wealth from prying states. Major multilateral groupings including the Group of Eight (G8) rich countries and the Group of 20 (G20) industrialised countries, for instance, have put tax abuse at the top of their list of priorities.

This summer, a high-level United Nations panel negotiating the next phase of the Millennium Development Goals (MDGs), for which the deadline is 2015, stated that one of its highest priorities would be tackling the abuse of offshore tax havens and illicit financial flows.

The following month, nearly a dozen EU members agreed to the world’s first multilateral system of tax information exchange, based on similar bilateral U.S. requirements passed three years ago.

“The fact that illicit financial flows are being mentioned in the G20 and other international organisations – that didn’t exist before,” Brian LeBlanc, a junior economist with GFI and a co-author of the new report, told IPS. “Earlier, these issues were seen solely as a developing country problem but now we’re seeing developed countries taking action. So we’re making some progress.”

Yet transparency advocates urge that far more needs to be done, and GFI’s Kar says that he expects the moves that have been taken so far will have little impact on illicit financial flows in the near term.

“The G20 has basically not tackled the shadow financial system, which remains largely intact – there have been no moves to improve transparency, not much has been done on tax havens or blind trusts,” he says.

“Importantly, much of the conversation currently focuses on developed rather than developing countries. We believe that governance factors are the main engines of illicit flows, and in the major countries governance is simply not improving – in fact, it’s deteriorating in many countries.”

GFI has now put out research on illicit financial flows for several years in a row. Yet Kar says the startling estimates presented appear to have made little impact on government officials in many developing countries, even as state coffers in those countries continue to struggle in the aftermath of the global financial crisis.

“In most countries it’s had almost zero impact, with government officials refusing even to acknowledge that this is a problem. Malaysia, for example, will only say that our estimates are overstated,” Kar says, noting that Malaysia ranked fourth on GFI’s list of the largest exporters of illicit capital.

“There remains a powerful, corrupt nexus between politicians and business, covering the financing of elections, non-transparency of business conduct, kickbacks in government contracting,” Kar added.

“These are huge issues, and we expect a long process before countries come to accept the fact that illicit flows are a problem – and then to move to implement policies to deal with the situation.”

The post Illicit Capital Leaving Developing Countries Up by 14 Percent appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2013/12/illicit-capital-leaving-developing-countries-14-percent/feed/ 0
Cuba, What Are Your Plans for the New Year? http://www.ipsnews.net/2013/12/cuba-plans-new-year/?utm_source=rss&utm_medium=rss&utm_campaign=cuba-plans-new-year http://www.ipsnews.net/2013/12/cuba-plans-new-year/#comments Wed, 11 Dec 2013 11:29:55 +0000 Leonardo Padura http://www.ipsnews.net/?p=129466 Leonardo Padura is a Cuban writer, journalist and winner of the 2012 National Literature Award, whose novels have been translated into more than 15 languages. His most recent novel, "Herejes" (Heretics), is a reflection on individual freedom.

The post Cuba, What Are Your Plans for the New Year? appeared first on Inter Press Service.

]]>

Leonardo Padura is a Cuban writer, journalist and winner of the 2012 National Literature Award, whose novels have been translated into more than 15 languages. His most recent novel, "Herejes" (Heretics), is a reflection on individual freedom.

By Leonardo Padura
HAVANA, Dec 11 2013 (Columnist Service)

After three decades of supposedly planned socialism (1960-1990), when government plans were often only halfway fulfilled, lost in oblivion due to lack of oversight or of realism, or in the best of cases carried out any which way just to live up to the goals, Cubans got used to waiting (with or without hope) for the political leadership, financed with heavy Soviet subsidies, to come up with the next “plan”.

This reorganisation or new project came into our lives like a whirlwind, although it could later disappear with the speed and consistency of smoke.

The idealistic planning had, however, one result: people got used to receiving orders and orientations in which their individual decisions had little to no weight. If you had a telephone it was because the state let you have one; if you travelled, it was because the state allowed you to….ad nauseum.

The toughest years of the crisis and scarcities that followed the disappearance of the Soviet Union and its subsidies showed how unprepared the country was to make it on its own, because all that socialist planning had barely managed to provide the national economy with a structure capable of sustaining itself without foreign support.

Leonardo Padura. Credit: Courtesy of the author

Leonardo Padura. Credit: Courtesy of the author

In the last six or seven years, the state-government-single party, led by General Raúl Castro after Fidel Castro withdrew from power, has tried to introduce order into the economic and social structure with more realistic planning, and endorsed it with the drafting of economic and social policy guidelines, approved as a pragmatic instrument at the 2011 Communist Party Congress.

Under cover of these guidelines, the leaders have introduced numerous and important changes in the economic and social life of the nation. But between the programme and the real, day-to-day individual lives of the people of this Caribbean island nation, there is a stressful distance caused by the uncertainty about how, when and in what order the planned “updates” will occur…

I will explain myself briefly: Cubans continue to see it as impossible, despite the planning, to create their own life projects because each time they must modify them, reformulate them, or forget about them depending on what comes down to them from the heights of political decision-making, and on the form and intensity with which the planners of the updates decide, with their lofty macroeconomic or macrosocial scrutiny, on these plans or variations that often arrive without Cubans having the chance to make their own updates and new plans.

Right now Cubans who one way or another have managed to save up some capital have very little certainty about the monetary future of the country, because the dual currencies will be unified, but there is no clear idea of how or when this will take place, how much the money will be worth, etc.

Those even more fortunate who, for example, hoped to buy a new or used car sold by the state now don’t know if they will ever see that dream come true, or how it might happen.

For some reasons that have been kept quiet, car sales are still controlled, restricted or denied by the state, even though the sale of a car in Cuba is one of the most lucrative business opportunities that any salesperson in the universe could dream of (new cars are, or were, taxed at a 100 percent rate – in other words, they cost double their market price).

But these lucky few are, as it is easy to deduct in an impoverished country, a tiny portion of the population.

Most Cubans live hand to mouth by juggling subsistence household economies that are constantly altered by inflation that has grown since the 1990s to the point that the wages earned by public employees, who account for around 80 percent of those working in Cuba, fall far short.

The cost of basic articles (food, hygiene products) and of electricity, transport and other services rises steadily, according to central planning, and ruins the plans with which hundreds of thousands of families, millions of people, barely managed to get by.

As another year is coming to a close, most Cubans know that not even the cryptic and poetic predictions that the Ifá priests (of santería, a popular religion of African roots) make every January will truly shed light on their immediate future, which each person has to plan in order to live their personal life – the only one that biology (or perhaps some god) has given them.

What will the next year be like for Cuba’s 11 million people? I don’t think even the oracle of Ifá knows for sure.
(END/COPYRIGHT/IPS)

The post Cuba, What Are Your Plans for the New Year? appeared first on Inter Press Service.

]]>
http://www.ipsnews.net/2013/12/cuba-plans-new-year/feed/ 0