Anna Mungara (seated, short hair), a midwife in training, who attends the midwifery school at Masvingo Provincial Hospital, Zimbabwe treats a newborn baby in the neonatal ward. Courtesy: Jordi Matas/UNICEF

A newborn baby lets out a feeble cry as midwife Anna Mungara tends to a small wound on its head, at the provincial hospital in Masvingo, a town in southeast Zimbabwe.

With utmost care, Mungara cleans the cut, wraps the baby in two sets of warm blankets and makes cooing sounds to soothe him. When the infant calms down, she gently places him into an incubator.

Mungara, a trainee at the hospital’s midwifery school in Masvingo Province, is part of a new intake of nurses receiving additional skills to bring down skyrocketing maternal and infant mortality rates in this southern African nation.

Every day, eight women and 100 children die from pregnancy- and delivery-related complications in Zimbabwe, according to the United Nations Children’s Fund (UNICEF). Most of them die of easily preventable causes and illnesses.

Zimbabwe’s health sector, once among the best in sub-Saharan Africa, collapsed during the nation’s 2008 economic crisis, when hyperinflation of 231 million percent caused public hospitals to temporarily close down as they ran out of medicines, while skilled health workers left the country in droves to pursue better opportunities elsewhere.

The health system has been struggling to recover ever since, causing maternal mortality to shoot up to 790 deaths per 100,000 live births in 2012, from 390 deaths in 1990. Mortality of children under five increased from 78 deaths per 1,000 live births to 94 deaths per 1,000 in the same timeframe.

A 435-million-dollar Health Transition Fund (HTF), sponsored by several European Union members and managed by UNICEF, hopes to reverse these figures by 2015. The money goes towards a retention and training scheme for health workers. It also goes to the supply of essential drugs and vaccines, the training of community health workers, and the planning and financing of health policy.

UNICEF Zimbabwe’s chief of young child survival and development, Aboubacar Kampo, tells IPS that one of the fund’s goals is to have at least one midwife per 5,000 people and three doctors in each of Zimbabwe’s 62 districts. Another aim is to achieve a more equitable distribution of health professionals between urban and rural areas.

“When we started to roll out the fund, Zimbabwe had 76 doctors countrywide. Most of them were working in Harare and Bulawayo (the two main cities). Today, the number of doctors has increased to 116, with most of the new recruits working in rural areas,” says Kampo.

At Masvingo Provincial Hospital, senior tutor Catherine Sithole and her team train 60 new midwives per year. The midwifery school is one of several in the country, aimed at undoing the dramatic brain drain that the national health system suffered over the past years.

In 2001, about 80 percent of midwife posts were vacant, according to the Zimbabwean Ministry of Health and Child Welfare. Especially rural areas were drained of skilled staff.

A key component of the HTF is the payment of bonuses to health workers to encourage them to stay in the country and, most importantly, take up usually less sought-after positions in rural areas, which experience the most drastic shortfalls in service delivery.

Mungara knows from experience how tough it is to provide even the most basic health care in Zimbabwe’s rural areas. Before she joined the midwifery school, the 36-year-old was employed at a clinic in Zaka, a remote village 80 km south of Masvingo town.

“We have no resources to assist women during deliveries. It is difficult to get referrals for pregnant women with issues like hypertension, or even to get transport to the nearest hospital,” she tells IPS.

Since the HTF formed in 2011, the gap has been closing, but only slowly. Sithole tells IPS: “Having more trained midwives is really making a difference to the health of mothers and small children. The training enables them to make better decisions with regard to their patients.”

But external funding alone will not be enough to resolve Zimbabwe’s health crisis in the long run. The government will have to substantially increase its spending on health to help rebuild the health system and ensure sustainability beyond 2015. The current health budget of 380 million dollars will not be enough to achieve this, experts say.

“The government is only spending 26 dollars per person on health, less than half of what they should allocate,” says Kampo. “At the moment, the health system is 70 percent donor-funded.”

Given Zimbabwe’s dire economic situation – the cash-strapped country is 10.7 billion dollars in external debt – the health budget is unlikely to receive a substantial increase any time soon.

“We don’t have much money in the country and can’t get credit. Although long-term prospects of recovery are good, given the richness of natural resources, recovery hasn’t even started yet,” independent economist John Robertson, from Robertson Economic Information Services in Harare, tells IPS.

Health department officials admit that more needs to be done to give the national health system a sustainable boost. Dr. Robert Mudyiradima, the provincial medical director of Masvingo Province, tells IPS: “There is not enough budget support. Whatever finances come through the HTF have to fill a very big hole.

“There are still weaknesses in the general drug supply. Service delivery is not what it is supposed to be. Until the Zimbabwean government’s budget support for health services is adequate, the demand for services will be overwhelmed by the need,” Mudyiradima says.

A walk through the Chivi District Hospital, which services a population of 174,000 in Chivi, a small town in Masvingo province, illustrates Mudyiradima’s point. Most days there is no running water here, the hospital kitchen is out of order, washing machines and the incinerator are not operational, and power outages are frequent.

“We are often running out of basics, like surgical gloves,” district medical officer Dr. Emmanuel Chagondah tells IPS.

When Chagondah started working here 11 months ago, the facility had been without a doctor for more than four years. Due to the HTF retention scheme, two other doctors recently joined him, while numerous vacant nursing positions have been filled.

“The quality of services has improved a lot due to an increase in personnel, but drug supply and technical equipment remain big challenges,” the young doctor says.

He has set his hopes on the government keeping its promises to increase the national health budget.

“Donor funding is great, but we need our own financing as well to make programmes sustainable.”

Although the United States did unveil important new pledges Tuesday to crack down on anonymous “shell” corporations, used by money launderers and tax evaders, critics point out that Washington has not outlined how it will implement these commitments. They also warn that the commitments will not put corporate ownership information into the public domain, a criticism also levelled at the G8 declaration overall.

The G8 met Monday and Tuesday at a summit in Northern Ireland, during which tax evasion and corporate transparency were given top billing. While Cameron had hoped other countries would back his call for the creation of public registries, none did so.

Even as the G8 countries decided on a more incremental approach to financial transparency than some had hoped, however, they did arrive at a host of important agreements, including for countries to begin sharing tax information.

“The G8′s declaration is absolutely historic,” Eric LeCompte, executive director of Jubilee USA Network, a religious antipoverty group, said Tuesday. “We would like to see even greater moves for corporate transparency, but the foundation the G8 built will take us into a more accountable corporate world then we’ve seen before.”

Christine Lagarde, managing director of the International Monetary Fund, the Washington-based multilateral lender, similarly issued congratulations, noting, “International tax avoidance and evasion have emerged as major risks to government revenue and as threats to the credibility of tax systems in the eyes of citizens – in both advanced and developing countries.”

Others are offering more tempered reactions, however, particularly over the failure of the G8 to explicitly call for the creation of public registries detailing the “beneficial” (or final) ownership of all companies, including shell corporations.

While the United States has now said it will be creating these registries on its own, these will apparently be available only to law enforcement and tax authorities. Critics urge these databases to be made open to the public from the beginning.

“It is important that the United States has committed to creating registries of beneficial information, because this does go beyond the G8 declaration,” Stefanie Ostfeld, a senior policy advisor with Global Witness, an advocacy group and member of the Financial Transparency Coalition, told IPS.

“But it’s not putting that information in the public domain, as the United Kingdom is saying it will do. Without such a commitment, these moves will not live up to their potential impact.”

Shell companies

“We’re very pleased to see the G8 as a whole recognise that anonymous shell companies around the world are a massive problem,” Heather Lowe, legal counsel and director of government affairs at Global Financial Integrity (GFI), a Washington watchdog group, told IPS.

“But then it comes down to the individual national action plans to achieve meaningful progress. In this, the United States is particularly significant in part because of the very high number of companies created here in the first place.”

In recent years, the United States has increasingly spoken out on international tax evasion and money laundering, with a domestic political debate progressing on related reforms to the tax code. At the same time, the United States is widely thought to shelter a huge number of these shell corporations, used to launder corrupt earnings or hide income of foreign citizens.

“It’s very hard to tell how many of these shell companies are incorporated here, as the U.S. doesn’t require information on the ultimate beneficial controller of each company,” Lowe said.

“However, we do know that the potential for a large number of anonymous corporations existing under U.S. law is very high. We also know that those who want to create such a company know this is a good place to do it.”

U.S. shell companies are estimated to have facilitated some 18 billion dollars in illicit transactions in 2005 alone, according to the Treasury Department. Advocates say this legal laxity is directly affecting developing economies, allowing corrupt officials or cronies in resource-rich countries to siphon billions of dollars out of their countries.

According to a recent report by GFI, such abuse could be resulting in losses for developing countries as high as a trillion dollars a year – 10 times the amount those countries receive annually in foreign aid.

For this reason, activists had increased pressure substantially in recent months on President Obama, calling on him to back Cameron’s plan to create a public registry on corporate ownership.

Yet the final pledge fell short of this goal. In a fact sheet released Tuesday, the White House said simply that “The Treasury Department, along with other federal agencies, will continue to advocate for comprehensive legislation on beneficial ownership.”

Recommitment

Simply pushing for such legislation is in line with a commitment the Obama administration made nearly two years ago. According to Lowe, little progress has been made since then.

“While this is a step forward, it’s certainly not a change in U.S. government policy,” she said.

“This [G8 announcement] is really just a recommitment to the issue. That’s fine, but what we really wanted to see was a plan for how the government would advocate for new legislation, which we haven’t been able to obtain.”

In the past, U.S. legislation to require the collection of “beneficial ownership” information has been difficult to advance. One proposal has been introduced (and rejected) in the Senate at least three times over the past decade, at one point being co-sponsored by then-Senator Obama.

On Tuesday, Senator Carl Levin, a primary sponsor of a bill that would require such disclosure, lauded the new G8 commitments: “I said before the summit that the G8 nations were poised to strike a hammer blow against offshore corporate tax avoidance. The G8 commitments made today, if carried out, can bring that hammer down.”

Levin’s legislation, as well as a similar bill in the House of Representatives, is expected to be reintroduced in the coming weeks. Meanwhile, it is currently unclear whether regulatory or executive action on this issue could allow the administration to work around Congress, but advocates suggest they see some opportunities for doing so.

Workshops for budding entrepreneurs are mushrooming in Spain, like this one in Benalmádena, Málaga. Credit: Inés Benítez/IPS

The people in the textile factory where Lourdes Soler presented the design of her skirts had never seen such detailed “blueprints” of a garment. Spain’s depressed labour market forced the technical architect to reinvent herself and create her own job – a growing trend in this crisis-stricken country.

“We were educated with the idea of having the same career for our entire lives, and when a crisis hits and jobs are scarce, we find ourselves paralysed and we don’t know what to do,” the 41-year-old mother of three children between the ages of seven and 11, with 15 years of professional work experience, told IPS.

María Jesús González, 38, says she doesn’t “know how to do anything else,” after 13 years in positions of responsibility in the Newco airport services and Spanair airline companies.

Laid off in 2012, shortly before she gave birth to her son, she is still waiting for her severance pay, which she hopes to use to open a café-indoor playground, with two other partners, in the southern Spanish city of Málaga.

May 2013 saw the largest month-on-month rise in the number of self-employed workers since the start of the crisis in 2009, with 12,532 newly registered that month. The number of people registered as self-employed with the social security system totalled 3,029,843 in May, according to the Ministry of Employment and Social Security.

But the number of self-employed workers has actually dropped from year to year since 2009, and in May there were 34,651 fewer than in May 2012.

“Since 2009 we have lost 200,000 self-employed workers,” María José Landaburu, secretary general of the Union of Associations of Self-Employed Workers and Entrepreneurs (UATAE), told IPS. She said “the hikes in the high season (May-September) do not compensate for the drops in the low season.”

Landaburu attributed the increase in May “mainly to the lack of alternatives for the millions of unemployed people, who see self-employment as a solution.” But it was also due to “measures adopted by the government to foment self-employment,” she added.

“This is the first time I am setting out on my own,” Giselle Rocha, a 36-year-old administrative employee from Brazil told IPS. She was left without work along with 5,000 other people when Orizonia, one of Spain’s largest tour operators, went under.

Rocha, who has lived in Spain for five years, is now getting ready to open a small business selling natural juice and vegetarian food, along with a fellow Brazilian, in this city in the southern province of Andalusía.

She complained that because of her age she is not eligible for most of the options of government support for entrepreneurs. “The aid is for the young, but it should be made available to everyone, or to no one,” said Rocha, the mother of a seven-year-old boy.

On May 24, the government approved a bill on support for entrepreneurs, aimed at facilitating the creation and financing of businesses and encouraging an entrepreneurial spirit, in educational plans in schools.

“The lack of financing is the entrepreneur’s main problem,” rightwing Prime Minister Mariano Rajoy said on Jun. 11 during a ceremony in the seat of government where he presented the bill to some 50 entrepreneurs and small businesspersons.

Rajoy urged banks to support the initiative, saying “those who grant loans must rise to this challenge.”

Spain’s unemployment rate of 27 percent is the highest in the European Union after Greece’s. And half of the 4.9 million jobless people in this country of 47 million are 25 or younger.

Landaburu said the bill “does not strongly address major needs, especially the need for credit.”

But she said it does contain “interesting measures, like ones that foment business ventures or that stipulate that a person’s home cannot be foreclosed on for private debts up to 300,000 euros (just under 400,000 dollars).”

Among the novel aspects of the new law, expected to pass this month, is a special Value Added Tax (VAT) measure that would prevent self-employed workers and small businesses from having to pay the tax until they are paid.

It also creates a special VAT for young people, which would cut costs for entrepreneurs under 30.

Sources at the Centre of Support for Business Development (CADE), a government agency, in Málaga told IPS that the main concern of entrepreneurs who visit their offices is the lack of financing.

“They run into negative answers when they ask for loans in banks, which require more and more guarantees,” said Susana Benítez, with CADE.

According to the Financial Stability Report, published May 7 by the Banco de España –Spain’s central bank – “the rates of acceptance of loan requests from non-financial companies have gone down, from levels of around 45 percent in 2006 to around 30 percent during the crisis.”

Rocha and her partner were able to set up their small business with minimal seed capital, and without having to apply for a bank loan.

But González plans to seek credit, and complains that “the banks aren’t lending.”

Entrepreneurial activity is growing above all among groups that have been hit hardest by soaring unemployment: people over 55, young people, women and immigrants, said
Landaburu.

Sales and the hotel industry are the areas most frequently chosen by entrepreneurs, although the number of self-employed people and small businesses has gone up in scientific, technical and health-related fields.

But while the number of new entrepreneurs shot up in May, “the percent that survive is much smaller than what would be desirable due to the credit shutdown, the consumption slowdown, and the lack of advice,” said the UATAE spokeswoman. She added that helping these initiatives stay above water “is our real collective challenge.”

“I am self-taught,” said Soler, who believes the biggest obstacle for entrepreneurs is often themselves. “I find my own raw materials, I make my designs, and I learn about making clothes along the way. I’m building my own future. You have to know yourself, and discover where your talents lie.”

In April 2013, 8,938 new businesses were created in Spain, 23 percent more than in April 2012, according to the National Statistics Institute. But 2,090 businesses went under in April, compared to 1,414 in the same month of 2012.

According to the World Bank’s Doing Business 2013 report, Spain ranks 136th out of 185 countries on the “ease of doing business” index. In this country, it takes 10 steps and 28 days to set up a company, the report says.

Up to 1 million unpaid internships are offered each year. Credit: Joel Gillman/CC by 2.0

A landmark court decision this week has challenged the controversial existence of unpaid internships, highlighting calls for greater clarity on the legal definition of an internship.

The judge, William Pauley, ruled that Fox Searchlight Pictures, a movie studio, violated U.S. and New York minimum wage laws by not paying two of its interns during the production of a 2010 movie, “Black Swan”.

“Just like someone that has an entry-level position, interns receive benefits and contacts, but they don’t get paid,” Maurice Pianko, director and lead attorney of Intern Justice, an advocacy group, told IPS. “Just because somebody is receiving experience doesn’t mean they shouldn’t get paid.”

In the “Black Swan” case, plaintiff Eric Glatt, a law student and former accounting intern during the movie’s production, called unpaid internships “a form of institutionalised wage theft”.

According to a report by the National Association of Colleges and Employers, 55 percent of the class of 2012 in the United States had an internship sometime during their time at school, and 47 percent of those were unpaid.

Up to 1 million unpaid internships are offered each year, according to estimates by Ross Eisenbrey, vice-president of the Economic Policy Institute, a Washington think tank. Further, he said the number of unpaid positions has increased in the aftermath of the 2008 economic downturn.

Eisenbrey also blamed unpaid internships for bringing down overall wages.

“The return on a college investment has fallen,” he recently told the media. “Students are facing higher and higher debt burdens, and the reaction of employers is to make matters worse for them by hiring more and more people without paying them.”

Benefiting the intern

Under the Fair Labour Standards Act, the U.S. Department of Labour has outlined six criteria for a position to be considered an internship and thus be legally unpaid in the private sector.

Among them are requirements that the experience must be for the benefit of the intern and the employer cannot derive any immediate advantage from the intern’s work.

If the six criteria are not met, interns must be paid according the minimum wage or more. This week, Pauley ruled that the “Black Swan” interns did not receive any training similar to that of an educational setting, one of the criteria given by the Department of Labour.

“The benefits they may have received – such as knowledge of how a production or accounting office functions or references for future jobs – are the results of simply having worked as any other employee works,” the judge stated in the ruling.

20th Century Fox, the parent company of Fox Searchlight Pictures, issued a statement expressing its disappointment with the ruling, calling it “erroneous” and saying it would appeal.

“I hope this sends a shockwave through employers who think, ‘If I call someone an intern, I don’t have to pay them,’” Glatt said.

Corporate liability

Last month, another federal judge in New York declined to allow a class action lawsuit proceed against the Hearst Corporation, a publisher, challenging unpaid internships at Harper’s Bazaar, one of the publisher’s magazines.

In that case, Diana Wang, a former Harper’s Bazaar intern, filed the lawsuit on behalf of all Hearst Corporation interns. But a judge denied the class action status because Wang couldn’t prove that all Hearst interns had faced similar conditions.

On Thursday, two previous magazine interns filed a lawsuit against another U.S. publisher, Conde Nast Publications, for failing to pay them minimum wage. The lawsuit is currently waiting to receive class action status.

For some advocates of changes to U.S. labour policy regarding internships, the overall goal needs to be to turn those unpaid positions into entry-level positions.

“Employers need workers to help them produce that product,” Intern Justice’s Pianko said. “What that means is that if there are no interns, those positions will be transitioned into paid entry-level positions.”

Still, others say achieving this goal would be very difficult. Brantley Davis, of the advocacy group Coalition for the Future American Worker, estimated that eliminating unpaid internships stands just a 10 percent chance.

“Experience is experience,” he told IPS, “and you need it for the workforce.”

In 2010, federal and state labour official did indeed move to crack down on illegal internships. But at the time, few plaintiffs came forward.

That now appears to be changing. Over the past two years, six lawsuits have been filed demanding minimum wage compensation for activities performed as interns.

According to Pianko, “All we need is one former unpaid intern to come forward and they [corporations] could be facing a four-, five- or six-figure liability.”

John Hendra. Credit: UN Women/Catianne Tijerina

The widespread financial crisis in Europe, and its negative fallout in the developing world, has triggered severe austerity measures worldwide.

At least nine countries – Belgium, Greece, Ireland, Italy, the Netherlands, Portugal, Romania, Slovak Republic and Spain – are reportedly phasing out or eliminating subsidies.

The austerity measures include cutting/capping public sector wages, increasing consumption taxes, pension reforms, further targeting safety nets, and reforms of both the healthcare system and the labour market.

But women are the prime victims of these austerity measures being imposed by financially-troubled governments worldwide.

Asked how specific these constraints are on women, John Hendra, U.N. assistant secretary-general and deputy executive director, Policy and Programme Bureau at U.N. Women, told IPS, “There’s no doubt that the poorest and most vulnerable, the majority of whom are women, are hardest hit by austerity.”

He said this is the case in both developed and developing countries alike.

The poorest and most vulnerable households have already been adjusting to crisis, including higher food and fuel prices, for many years, and their capacity for resilience is limited, said Hendra, who served as resident representative of the U.N. Development Programme (UNDP) in several countries, including Viet Nam, Tanzania and Latvia.

In August 2012, according to the latest statistics, women’s unemployment was higher than men in 10 European Union member states (Spain, Greece, Slovakia, Italy, France, Poland, Slovenia, Czech Republic, Malta and Luxembourg).

In Greece and Spain, more than one-quarter of the female labour force was unemployed in 2012.

The gender pay gap has also widened in a number of countries, notably Latvia, Romania and Bulgaria.

According to the International Labour Organisation (ILO), the proportion of women in vulnerable employment is higher than for men globally, and in some regions, significantly so: in North Africa 55 percent of women compared to 32 percent of men are in vulnerable employment.

In the Middle East, the numbers are 42 percent compared to 27 percent, and in Sub-Saharan Africa 85 percent compared to 70 percent in 2012.

In an interview with IPS, Hendra said, “In addition, austerity measures such as wage and pension cuts, increased consumption taxes and cuts to social safety nets and services disproportionately impact women due to their vulnerable position in the labour market, lower average incomes than men, greater reliance on social protection and basic services, and primary responsibility for care work in the household.”

And funding for gender equality and women’s organisations has been significantly cut, including vital services for survivors of domestic violence, he pointed out.

Excerpts from the interview follow.

Q: Will the widespread financial crisis, both in the developed and developing world, undermine some of the gains made by women over the last decade?

A: I very much believe so. For example, the crisis and austerity measures have had a negative impact on women’s labour force participation.

In Europe, female workforce participation has declined, women’s unemployment rate is higher than that of men in many countries, and the gender pay gap has increased.

In developing countries, crisis and austerity have pushed many more women into informal and vulnerable work. Because women tend to be employed on fragile, non-permanent contracts, they are more vulnerable to being laid off during recessions.

Women faced disproportionate job losses during the Asian financial crisis (1997-1998) and the 2008-2009 global crisis. Austerity has also undermined progress towards a more equal division of care responsibilities. Cuts in public care and health services have led to a re-privatisation of care work and a return to traditional gender roles.

Austerity pushes the responsibility for, and cost of, social and public goods back onto households, and in effect, onto women.

Q: And how severe is this setback in reaching the U.N.’s Millennium Development Goals (MDGs) relating to gender empowerment, maternal health and infant mortality by 2015? Can these be rectified in the UN’s post-2015 agenda? If so, how?

A: There’s a real risk that austerity will slow progress towards achieving the MDGs. As the Organisation for Economic Cooperation and Development (OECD) recently highlighted, austerity measures are likely to slow growth and poverty reduction, and exacerbate inequalities.

According to the Overseas Development Institute (ODI) and Plan International, a one percent fall in gross domestic product (GDP) increases infant mortality by 7.4 deaths per 1,000 for girls versus 1.5 for boys.

Primary school completion rates fall during recession, with girls experiencing a 29 percent decrease versus 22 percent for boys.

During economic downturns, more women in developing countries give birth at home, and their nutritional status and the number of anti-natal and post-natal check-ups have declined. Clearly this will significantly hinder achievement of the MDGs.

The U.N.’s post-2015 development agenda can help by squarely addressing inequality, advancing human rights, and ensuring all countries commit to a universal agenda for sustainability, equality and poverty eradication.

Most critical is to ensure gender equality is central to the new development agenda through a standalone goal on gender equality and substantive integration of gender equality into all other goals and targets. Also critical will be to take a hard look at the current growth model and austerity policies.

Over the past few weeks I think we’ve reached a tipping point in the debate on austerity as a flawed policy, with the International Monetary Fund (IMF) admitting the recessionary impact of austerity has been more severe than anticipated, and mistakes identified in the data and analysis on public debt that supported the adoption of austerity measures in many countries.

As (British economist) J.M. Keynes said, “the boom, not the slump is the time for austerity.” Nevertheless austerity policies continue to affect millions of people in the developed and developing world.

Macroeconomic policies must do more than promote growth, they must also promote people’s wellbeing and rights.

Maintaining or even scaling up social investments, including in gender equality and ending violence against women, is key to ensure resilience and promote recovery.

Developed countries must support more effective mitigation in all countries where emissions are either high or growing. Credit: Cam McGrath/IPS

Developed countries report that they delivered more than 33 billion dollars in Fast Start Finance (known as FSF), beyond the pledges they made at COP 15 in Copenhagen in 2009. Recent analysis suggests that the funding delivered may have exceeded 38 billion dollars.  But that is not the whole story.

The story behind the headline lies in how this money has been allocated. What has it supported, and how much of it represents new funding to support the additional challenges that climate change poses for development?

My colleagues at ODI in the United Kingdom, the World Resources Institute (WRI) in the United States, the Institute for Global Environmental Strategies (IGES) in Japan, Germanwatch in Germany and Cicero in Norway have analysed our countries’ FSF contributions to try and answer these questions. These countries’ climate finance contributions are among the largest.

In Copenhagen, four years ago, these and other developed countries promised to deliver 30 billion dollars from 2010 to 2012 as Fast Start Finance. This would kick-start the delivery of 100 billion dollars per year by 2020. A substantial share of this finance may flow through the Green Climate Fund, a new mechanism to deliver money to developing countries so they can mitigate and adapt to climate change. Now, what does all this mean in reality?

Climate finance contributions have increased

Our first message is a positive one: finance for climate-related activities in developing countries has increased significantly during the FSF period, despite unprecedented economic difficulties and austerity measures in developed countries brought on by the 2008 financial crisis. Indeed, this trend applies to all of the countries we reviewed. The UK, for example, appears to have increased its climate finance four-fold relative to environment-related spending before the FSF period.

A challenge, however, is that countries counted very different forms of finance, resulting in major differences between the scale and objectives of different contributions.

A large share of Germany’s 1.6-billion-dollar FSF contribution is directed through its International Climate Initiative, which is indirectly financed through revenues from emission trading. With the exception of its 615-million-dollar contribution to the Climate Investment Fund, Germany counts only grants towards its FSF. By contrast, Japan and the United States include as FSF a large share of export credit and development finance for low-carbon infrastructure. In Japan’s case, some efficient fossil fuel options are also counted. Japan has also reported on leveraged private finance in its total.

Many countries also seek FSF “credit” for projects and programmes that they were already supporting prior to the FSF period.

For instance, the United States counts its contribution to the Montreal Protocol Fund, which it has been supporting since the early 1990s, as FSF. A significant share of Japanese FSF was pledged prior to 2010 through initiatives such as the Cool Earth Partnership. All five countries count contributions to the Climate Investment Funds (CIFs) since 2010, although countries pledged to fund the CIFs at a cumulative level of at least 6.1 billion dollars in 2008.

These pledges were made in the context of efforts to scale up climate related finance in the lead up to Copenhagen. But while these are important programmes, for which sustained support is essential, the pledges are not technically “new” during the FSF period.

Of the five countries we studied, only Norway has met the international commitment to deliver 0.7 percent of its gross national income (GNI) as official development assistance (ODA) and can claim that its contribution was additional by this standard during the FSF period (although it has ramped up its domestic ODA commitment to one percent of GNI). Only Germany and Norway have clearly spelled out how they define “new and additional” in their self-reporting on climate finance.

Using climate finance effectively

There has been a strong focus on funding activities that can help developing countries reduce greenhouse gas emissions. This includes financing clean electricity from renewable energy, the use of more efficient technologies, and better public transport systems.

Such programmes can play a vital role in supporting countries to meet their basic infrastructure and energy needs without the emissions. Such finance is essential.

Emissions in many rapidly growing developing countries are rising fast. While they may bear less historical responsibility for climate change, today some of the largest emitters in the world are developing countries. There are abundant opportunities to take more climate compatible approaches to development – but they often pose additional costs or risks. International public finance can help countries seize such opportunities.

But the truth is that we are already feeling the impacts of climate change. These impacts will be particularly severe in poor countries. And global efforts to address climate change so far have been inadequate.

This reinforces the imperative to support more effective mitigation in all countries where emissions are either high or growing. But it also strengthens the case to scale up adaptation finance.

During the FSF period countries committed to scale up adaptation finance. Adaptation finance would focus on the developing countries that are most vulnerable to the impacts of climate change, including Least Developed Countries (LDCs), Small Island Developing States (SIDS), and African countries. About 12 percent of the total FSF contribution of the five countries we studied supported adaptation, with the share ranging from about seven percent in Norway to about 35 percent in the UK and Germany.

In practice, of course, adaptation and mitigation activities may be quite interlinked. Norway, for example, has prioritised efforts to reduce emissions from deforestation and degradation, particularly in tropical forests, which also have adaptation benefits.

Future public support for climate action, however, is highly uncertain. This is a substantial challenge. There is an urgent need for greater clarity on the level of public finance that developing countries can expect from the international community.

The FSF experience reinforces the importance of scaling up finance in order to meet the ever more urgent challenges of climate change. This will require political commitment and leadership at the national level, and enhanced global cooperation.

*This commentary is based on a joint analysis by Smita Nakhooda (ODI), and Taryn Fransen of the World Resources Institute (WRI), reflecting on the FSF experience on the occasion of the 38th sessions of the Subsidiary Body for Implementation and the Subsidiary Body for Scientific and Technological Advice, as well as the second part of the second session of the Ad Hoc Working Group on the Durban Platform for Enhanced Action, taking place from Jun. 3-14, 2013, in Bonn, Germany.

China has moved to investment-led growth, after its exports fell sharply in the aftermath of the global financial crisis. Credit: Bigstock

More than five years since the outbreak of the global financial crisis, the world economy has shown few signs of stabilising and moving towards strong and sustained growth.

While deleveraging continues to stifle private demand, economic activity is further restrained by a fiscal drag in the U.S. and Europe, as governments have turned to fiscal orthodoxy after an initial reflation. There has been excessive reliance on monetary policy, especially in the U.S., through provision of large amounts of liquidity to financial markets and institutions at close-to-zero interest rates, using unconventional means.

This has been largely ineffective in re-igniting bank lending and private spending, but has given rise to a search for yield in high-risk investments, increased leverage and boom in equity markets. It has also generated financial fragility and exchange rate instability in major developing countries.

The implications of an extended period of ultra-easy monetary policy in several reserve-currency issuers for future international financial stability remain highly uncertain since these are largely uncharted waters.

There have been strong spillovers from the crisis in advanced economies to developing countries.

Yilmaz Akyuz, chief economist of the Geneva-based South Centre.

Although conditions in international financial and commodity markets have generally remained favourable since 2009, the strong upward trends in capital flows and commodity prices that had started in the first half of the 2000s have come to an end and exports of developing countries to advanced economies have slowed considerably.

Furthermore, the one-off effects of countercyclical policies in developing countries have started fading and the policy space for further expansionary action has narrowed considerably.

Thus, growth in most major developing countries has now decelerated significantly. In Asia, the most dynamic developing region, growth in 2012 was some five percentage points below the rate achieved before the onset of the crisis; in Latin America it was reduced to almost half.

The world economy is facing under-consumption because of low and declining share of wages in national income in all major advanced economies, including the U.S., Germany and Japan, as well as China – countries that have a disproportionately large impact on global economic conditions.

There has also been an increased concentration of wealth and growing inequality in the distribution of income earned on real and financial assets. Financialisation, welfare state retrenchment and globalisation are the most important factors accounting for these trends.

In none of the major advanced economies and China is there a tendency for a significant reversal of the downward trend in the share of wages in national income and a more equitable allocation of wealth so as to allow rapid economic expansion based on income-supported, as opposed to debt-driven, household spending.

In the U.S. – where the downward trend in wage share started in the 1980s – in the past two decades consumption and property booms and economic expansions were driven primarily by asset and credit bubbles: first the dot-com bubble in the 1990s and then the subprime bubble in the 2000s.

The current crisis has led to a greater concentration of income and wealth. On current policies the U.S. cannot move to wage-led or export-led growth. Rather, it may succumb to the temptation of letting the current ultra-easy monetary policy degenerate into credit and asset bubbles in order to achieve a rapid expansion, very much in the same way as its policy response to the bursting of the dot-com bubble gave rise to the sub-prime boom, while exploiting the exorbitant privilege it enjoys as the issuer of the dominant reserve currency and running growing external deficits.

Whether or not it might help generate a strong expansion, such a return to business-as-usual could produce yet another boom-bust cycle. It could be more damaging than the present crisis, not only for the U.S. but the world economy at large.

If, on the other hand, asset and credit bubbles are not allowed to develop and boost aggregate spending, the outcome could be sluggish growth, sharply increased interest rates and a stronger dollar, a combination that often breeds problems for developing countries.

The eurozone appears to be mired in economic weakness for an indefinite period. Thus, the region cannot be expected to generate expansionary impulses for the rest of the world even if it manages to restore stability in the crisis-hit periphery.

China has moved to investment-led growth as its exports slowed sharply as a result of the crisis and contraction in advanced economies, and this has added to credit and property bubbles already under way. This pattern of growth cannot be sustained indefinitely. Despite the recognition of the need to raise the share of the household income in gross domestic product (GDP) and move to a consumption-led growth, the distributional rebalancing is progressing very slowly.

Whether or not China can avoid the bursting of the bubbles and a hard landing, over the medium term it is likely to settle on a lower growth path with a gradual rebalancing of external and domestic sources of demand and domestic investment and consumption.

All these imply that there will be no more Southern tail winds. Even if the crisis in the North is fully resolved, developing countries are likely to encounter a much less favourable global economic environment in the coming years than they did before the onset of the Great Recession.

Consequently, in order to repeat the spectacular growth they had enjoyed in the run-up to the crisis and catch up with the industrial world, developing countries need to improve their own growth fundamentals, rebalance domestic and external sources of growth and reduce dependence on foreign markets and capital. This requires, inter alia, abandoning neoliberal policies in practice, not just in rhetoric, and seeking strategic rather than full integration into the global economy.

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The New York Stock Exchange, as seen from the boot of George Washington’s statue at Federal Hall. Credit: Dan Nguyen/CC-BY-2.0

The global economy is awash with successive waves of liquidity generated over the past few years by the four most advanced economies, viz., the United States, the European Union, (EU), Japan and the United Kingdom, known as the G4. This liquidity has taken the form of “quantitative easing” (QE).

When zero rates of interest have failed to stimulate their economies, these countries have resorted to large-scale asset purchases by their central banks, such as corporate bonds or mortgage backed securities, to pump more money into the banking system.

The aim is to extend credit to business and industry and encourage consumption.

In the immediate aftermath of the global financial and economic crisis in 2008, when there was a danger of financial collapse, both advanced as well as emerging economies adopted stimulus packages, to revive demand, maintain trade flows and avoid large-scale unemployment. During the crisis phase of 2008/09, QE played an important role in crisis management, helping advanced and emerging economies alike.

However, while emerging economies have weathered the crisis and seen a revival of growth, the G4 continue to experience economic stagnation, depressed markets and large-scale unemployment.

Their response has been to persist with even larger doses of QE as a means of propping up demand,encouraging banks to expand and boosting stock valuations.

Before the crisis, the U.S. held 700 to 800 billion dollars of Treasury notes. The current level is 2.054 trillion dollars. In the latest round, QE-3, the U.S. Federal Bank is committed to the purchase of 40 billion dollars of mortgage-backed securities per month as long as unemployment remains above 6.5 percent.

The European Central Bank (ECB) has pumped 489 billion euros of liquidity into the eurozone since the crisis, while in the United Kingdom QE has reached the level of 375 billion pounds.

Most recently, the Bank of Japan has decided to pump 1.4 trillion dollars in the next two years into its economy, aiming at a two-percent inflation rate by doubling the money supply.

The assets of the G4 central banks have expanded from a figure of 11-12 percent of their gross domestic product (GDP) to the current unprecedented level of 23 percent. These assets were 3.5 trillion dollars in 2007 before the crisis. They are now nine trillion dollars and rising. This is the scale of liquidity expansion we are dealing with.

Since interest rates in the G4 remain at zero and their economies remain stagnant, it is inevitable that there will be significant capital outflows to emerging and other developing economies, in quest of higher risk-adjusted returns.

According to one estimate, about 40 percent of the increase in the U.S. monetary base in the QE-1 phase leaked out in the form of increased gross capital outflows, while in the QE-2 phase, it may have been about one-third.

This massive and continuing surge of capital outflows to emerging and other developing economies is having a major impact. Corporations, which have a sound credit rating, are taking on more debt, and increasing their foreign exchange exposure, attracted by low borrowing costs.

Their vulnerability to future interest rate changes in the developed world and exchange rate volatility will increase. Such inflows put upward pressure on exchange rates, stimulate credit expansion, and cause inflationary pressures, which pose a major challenge to policy-makers in the developing world.

Most of the capital inflows are in the nature of portfolio investments, which are prone to sudden and volatile movement and puts emerging economies at greater risk. The volatility one has witnessed in the Indian stock market is a case in point. In general, we may conclude that the overall impact of these capital flows is expansionary and distortionary.

There has been considerable criticism of the G4’s unconventional monetary policies from the emerging economies, including the BRICS (Brazil, Russia, India, China and South Africa).

The magnitude of QE has had unintended consequences beyond the borders of the G4, especially because their currencies are not only fully convertible but, together, constitute the pillars of the global financial system.

The U.S. dollar is the world’s leading reserve currency, and the euro, the British pound and the Japanese yen together constitute the basket of currencies the International Monetary Fund (IMF) uses to value its Special Drawing Rights. Thus, the nature of the G4 currencies and their significant role in the global financial market ensures that QE undertaken by them has a global impact on economies across our globalised and interconnected world.

It is necessary, therefore, for the G4 to act with great responsibility and to work together with the emerging economies, to minimise the adverse effects of their QE policies. It would be particularly important to forge a consensus on how to handle the potential financial turmoil and disruption that may afflict developing economies once the QE is sought to be retired and interest rates once again become positive in the G4. The sudden and large-scale reversal of capital flows is a likely scenario that would need to be anticipated and managed.

The Asian financial crisis of 1997/98 was, in part, triggered by an earlier version of QE pursued by Japan in the aftermath of the bursting of its property and asset bubble in the early 1990s. Then, too, the large inflow of low-cost yen loans led to the asset price bubbles, inflationary pressures and currency instability in the Asian economies. They paid a heavy price in the bargain.

A larger, more pervasive crisis may await the emerging and developing economies unless there is a much more coordinated and careful handling of the risks that are already building up. The G20 should have this issue at the top of its agenda.

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A cornerstone of Africa’s planned Free Trade Area will be improved production capacity. Credit: Kristin Palitza/IPS

The old theories governing the way that countries produce and trade are being replaced. The pattern of trade is being transformed by increasingly sophisticated technology and innovations in transportation; and the topography of actors is shifting to reflect new poles of growth.

This is no longer the clearly delineated North-South order of the 20th century. A large number of developing countries have now emerged. And Africa, both as a continent and as the sum of individual sovereign states, is poised to lead the new patterns of growth for the foreseeable future.

Six of the world’s ten fastest-growing economies over the past decade were in sub-Saharan Africa. Five years into the global financial crisis, Africa as a region has shown great resilience, with an average growth rate of over five percent over the last decade. This is in contrast with the advanced economies, most of which are yet to fully recover from the economic downturn.

The World Trade Organisation (WTO) recently published the trade figures for 2012 and the outlook for 2013. World trade grew by just two percent in 2012. And this slow growth should continue into 2013 where we are projecting trade growth of only 3.3 percent, which is below the previous 20-year average of around five percent.

With structural flaws in some economies due to remain for the foreseeable future, I expect the global economy will move at three speeds: flat growth in the euro zone; a slightly better outlook in the United States and Japan; and faster growth in most developing countries, especially in Africa. Prospects for economic growth are thus greater in developing and low-income countries.

Pascal Lamy, director-general of the World Trade Organisation (WTO). Credit: Courtesy WTO

Several factors have contributed to Africa’s rebound in growth. These include higher investment and savings; stronger export growth, particularly resulting from the higher commodity prices; an improved legal, regulatory environment; and overall macroeconomic stability.

Consumer demand by its growing middle class is also an engine for growth. According to a recent World Bank report, consumer spending accounted for more than 60 percent of sub-Saharan Africa’s recent economic growth, which is forecast to accelerate to more than five percent over the next three years, outpacing the global average.

Africa has also made remarkable progress in the areas of political stability and governance, which are fundamental to growth.

But if I had to name one single factor, I would say it is “confidence”. Africans today are more confident and hopeful about the future than ever before. This is also the great transformation that I have seen in the attitude of African negotiators in the WTO: confidence that trade, if coupled with domestic policies and Aid for Trade, can be an engine for growth.

The real challenge for Africa lies in sustaining the growth process, enabling it to reach its full potential and ensuring the growth is inclusive.  Widespread and sustained poverty reduction, which is, in effect, the ultimate aim of growth and development, is only possible if the domestic policies are in place to ensure that the deliverables from this success story translate into real impact on the ground.

Trade is one of the strategies that can be exploited to solidify and enhance the growth prospects. The recent African Union decision on boosting intra-African trade and moving forward on the Continental Free Trade Area are testaments to the political attention being given to trade as a real engine of growth in the continent.

Africa has a number of regional trade agreements, all of which aim to expand trade among its members. These regional agreements can be complementary to multilateral trade opening, provided they are crafted in a coherent manner.

I must specifically highlight the East African Community (EAC) for its progressive regional integration efforts. The creation of a customs union and a common market, and the ongoing discussions on a possible monetary union, are smart and economically robust decisions.

I also believe that the formation of a tripartite among the EAC, the Common Market for Eastern and Southern Africa (COMESA) and South Africa Development Community (SADC), should help address the complexity of the tariff regimes imposed by the different regional trade agreements and facilitate freer and less costly trade amongst members.

But the fact remains that inter and intra trade in Africa is still constrained by non-tariff barriers and poor connectivity. Cumbersome border procedures increase trade costs and the likelihood of inaccurate documentation and raise the chances of malpractices such as corruption.

According to a recent study by the Organisation for Economic Co-operation and Development (OECD), reducing global trade costs by one percent would increase worldwide income by more than 40 billion dollars, most of which would accrue to developing countries. Furthermore, trimming border procedures could lead to more than a five-percent increase in gross domestic product (GDP) in many African countries.

African countries, in particular, stand to benefit substantially from the ongoing negotiations at the WTO for a multilateral Trade Facilitation Agreement which, with its focus on reducing the thickness of borders and removing customs-related red tape, will ease access to markets and boost trade flows including agricultural commodity trade and time-sensitive products such as horticultural and other highly perishable goods.

It is in the interest of all WTO members to deliver a Trade Facilitation Agreement at the WTO Ministerial Conference in December. It will not only be an injection of confidence into the multilateral trading system ­ and to the notion of multilateralism ­ but it would lead to concrete economic deliverables on the ground.

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SNAP benefits are already set to decrease in November 2013, when increased benefits that were included in the American Recovery and Reinvestment Act of 2009, or federal stimulus package, expire.

A selection of foods available on a food stamp budget. Credit: Miss Karen/cc by 2.0

Benefits – which currently represent a “bare bones diet” prepared by the federal government – will already decrease between eight and 25 dollars per month, depending on household size. The average benefit is already as low as one dollar and 46 cents per person per meal.

But that is not enough for the current Congress, which is seeking to squeeze even more money out of the emergency food programme.

Groups like the Progressive Democrats of America have been circulating an online petition to oppose the cuts.

“There is a push to end entitlements, and if you‘ve got a push to end entitlements, no matter what formula they use, people will be hurting,” Dr. Joyce Dorsey, first vice chair for the National Community Action Partnership, told IPS.

“Food is a major issue for people who really just can’t afford groceries. What we realise is the average low-income person is on minimum wage or a fixed income. Most poor people do work. They may not work full-time jobs,” Dorsey said.

“There are no other income sources to turn to – the jobs are still hard to find, or jobs are not paying wages that allow a person to live at the standard level in their region, then naturally they’re going to need their assistance.”

Today, a record 47.5 million U.S. citizens receive emergency food assistance through the SNAP programme, according to the most recent data from the Department of Agriculture, making up more than 15 percent of all U.S. residents.

The debate is centring around the Agriculture, Reform, Food and Jobs Act of 2013 – commonly known as the Farm Bill – which Congress typically reenacts every five years to set national policies for agriculture, nutrition, conservation, and forestry.

On May 15, the Republican-led House Agriculture Committee voted to approve nearly 21 billion dollars in cuts to SNAP. The cuts would represent a loss of benefits to nearly two million people, including children, by changing the eligibility requirements.

These are people who are currently eligible to receive food stamps because they have disposable incomes below the poverty line, even if they have assets or gross incomes that push them above the SNAP eligibility threshold.

Currently, federal law allows these people to be deemed eligible for SNAP if they are deemed eligible for another state-run programme under the Temporary Aid for Needy Families block grant.

According to the Center on Budget and Policy Priorities (CBPP), many low-income U.S. households that own a modest car would be impacted. It may also include working families with high childcare costs, or seniors with high medical bills.

The House bill also would eliminate SNAP incentive payments to states that have improved payment accuracy and service delivery; would cut nutrition education funding; and would curtail an option that allows states to approve families for SNAP benefits if they already qualify for low income heating assistance – something the Senate version of the Farm Bill also does.

On May 14, the Democratic-led Senate Agriculture Committee voted during a hearing to approve 4.1 billion dollars in cuts to SNAP.

“It stops overpayments to a small number of individuals in the programme… A small number can claim a heating bill they don’t have, on food assistance, to get additional benefits above and beyond,” Cullin Schwarz, a spokesman for the Senator Debbie Stabenow, a Democrat from Michigan who chairs the Committee, told IPS.

Schwarz claims states are using administrative tactics – qualifying people for separate energy assistance payments of under 10 dollars per year – purportedly for the sole purpose of increasing their food stamp eligibility.

“Fifteen states are providing a very small amount of home heating assistance, as little as one dollar or 10 cents per year. There are some folks who don’t have a heating bill, it’s included in their rent. That [dollar] doesn’t really help someone pay heating – what it does, they can claim both rent and a heating bill they don’t have on their application,” he said.

If enacted, the Congressional Budget Office estimates that 500,000 people will receive on average 90 dollars less under the Senate bill.

But Stabenow’s office insists this is not a cut to the benefit structure. “They’re going to get exactly what they’re supposed to get on the programme based on their real expenses,” Schwarz said.

When asked what would likely come out of House and Senate negotiations, Schwarz said, “If Republicans can up with additional ways to reduce spending that does not reduce standard benefits or harm truly needy families… we’re open to discussing those.”

Senator Kirsten Gillibrand, a Democrat from New York, offered an amendment to strike the SNAP cuts from the Farm Bill, and to offset the costs by limiting crop insurance reimbursements to providers.

Congress is encouraging farmers to purchase crop insurance, and Congress is subsidising the crop insurance companies, as it is also ending a longstanding policy of direct payments to farmers. This switch saves 16.5 billion dollars from the federal budget.

Gillibrand contends the reimbursements, however, are corporate welfare, in some cases for overseas companies.

“Families who are living in poverty, our children, our veterans, our seniors, some of our active duty personnel are going to suffer if we cut food stamps. I believe we should not be balancing the debt or the deficit on the backs of these hardworking Americans who are just hungry,” Gillibrand said during the hearing.

“And I think it is a moral statement, and obviously I will fight against any cuts to the food stamp programme and I want people to think about what they’re actually doing when they offer, the nature of these amendments,” Gillibrand said.

Gillibrand brought the amendment to the Senate floor debate on the Farm Bill.

The amendment failed in a vote of 26 to 70, with more than half of the Democratic caucus joining nearly all Republicans in voting no.

However, an amendment by Senator David Vitter, a Republican from Louisiana, to end SNAP eligibility for convicted violent rapists, pedophiles, and murderers, passed by unanimous consent.