Inter Press Service » Financial Crisis http://www.ipsnews.net Turning the World Downside Up Wed, 01 Oct 2014 16:36:21 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 Mass Deportations Don’t Squelch Migration Dreams of Honduranshttp://www.ipsnews.net/2014/09/mass-deportations-dont-squelch-hondurans-migration-dreams/?utm_source=rss&utm_medium=rss&utm_campaign=mass-deportations-dont-squelch-hondurans-migration-dreams http://www.ipsnews.net/2014/09/mass-deportations-dont-squelch-hondurans-migration-dreams/#comments Wed, 03 Sep 2014 08:09:47 +0000 Thelma Mejia http://www.ipsnews.net/?p=136463 Red Cross volunteers board a bus bringing back deported child and adult migrants at the Honduran border in Corinto, to check how they are and provide them with a bag of essentials. Credit: Thelma Mejía/IPS

Red Cross volunteers board a bus bringing back deported child and adult migrants at the Honduran border in Corinto, to check how they are and provide them with a bag of essentials. Credit: Thelma Mejía/IPS

By Thelma Mejía
CORINTO, Honduras , Sep 3 2014 (IPS)

The clock marks 9 AM when a bus coming from the Mexican city of Tapachula reaches Corinto, on the border between Honduras and Guatemala. It is the first bus of the day, carrying children and their families sent back from a failed attempt at making it across the border into the United States.

The bus is carrying 19 children between the ages of five and 12, six women and seven men, all of them families. The trip took 10 hours. A team of volunteers from Red Cross Honduras, supported by the International Committee of the Red Cross (ICRC), meets them and climbs aboard to provide them with bags of essentials.

It is the first stop the bus will make in Honduras, in the northwestern department or province of Cortés.

Its destination is the nearby city of San Pedro Sula, where they will be censused in a government shelter and given a bag of food and a small amount of money to help them return to their homes. The authorities don’t allow journalists to interview, photograph or film the minors.“It’s awful to see people killed or just left lying there, people from your country. Things are really ugly there, I’m relieved to be back because I’m alive, others aren’t, they were killed by the criminals and some were thrown off the train. I saw all that and it feels really bad.” -- Daniela Díaz

But this IPS reporter is allowed to get on the bus, where I see the sad, exhausted faces of the children. Their parents or other relatives look down into their laps, to hide their pain, defeat and sense of impotence.

Today, four busloads of deported immigrants – two of which carry children as well as adults – totaling 152 people come through customs at Corinto. The flow is steady, although minors only arrive, alone or accompanied, on Mondays, Wednesdays and Fridays.

“The buses bring an average of 30 to 38 people,” Yahely Milla, a volunteer with the Red Cross team, explains to IPS. She says “the mass deportation of minors started in April,” and in May and June, when the crisis of unaccompanied Central American child immigrants broke out in the United States, up to 15 buses a day were arriving.

“Children from the age of three months to 10 years, some of them alone and others accompanied by their parents, came one time; it had a big impact on us because we hadn’t seen so many deportations since we have been here at the border,” she said.

Corinto is 362 km from the capital, Tegucigalpa. It is one of the main areas along the border used by Hondurans heading north on the migration route to the United States. There are at least 80 “blind spots” used by migrants to cross the border into Guatemala before continuing on to Mexico and, if they’re lucky, to the United States.

The authorities have beefed up controls along the border, which has slightly curbed the exodus.

Institutions are practically nonexistent here and the only support for deported migrants comes from the Red Cross and the ICRC, which has been operating in this town for about two years.

The only time the government made an appearance, people here say, was in July, when the deportations spiked and Ana Hernández, the wife of president Juan Orlando Hernández, came to receive a group of children.

Over a month later, the promised camps have not yet been built, and there isn’t even a toilet at the bus stop for the deportees to use.

Between buses, Mauricio Paredes, the head of the Red Cross at the Corinto post, explained to IPS how the reception centre works. The magnitude of the humanitarian crisis has made it necessary to ration the aid.

For children there are disposable diapers, water, baby bottles and IV saline solution, while the adults are given water, toilet paper, toothpaste and toothbrushes, sanitary pads for women and razors for men. They are also allowed a three-minute call to phone their families.

At the crowded government shelter in San Pedro Sula, deported families with children receive instructions for being censused and for the return to their home villages and towns. Credit: Thelma Mejía/IPS

At the crowded government shelter in San Pedro Sula, deported families with children receive instructions for being censused and for the return to their home villages and towns. Credit: Thelma Mejía/IPS

The sun is beating down five hours later when the next bus comes, from the Mexican town of Acayuca. It brings 38 immigrants, including adolescents and adults.

One of them, 19-year-old Daniela Díaz, calls her mother to tell her that she is back from her second attempt to reach the United States. She then tells IPS about her odyssey.

“I set out on this journey nine months ago and although it’s my second try, I was still shocked by what I saw,” she says.

“This time I managed to get up on The Beast [the Mexican cargo train used by migrants, who ride on top of the wagons], but horrible things happen there. I saw women raped, I saw how the coyotes [migrant smugglers] sell people to criminal bands,” she says, speaking with long pauses.

“It’s awful to see people killed or just left lying there, people from your country. Things are really ugly there, I’m relieved to be back because I’m alive, others aren’t, they were killed by the criminals and some were thrown off the train. I saw all that and it feels really bad,” she says with a broken voice.

“What you go through is so tough that I almost have no tears left. I went out of need, because there’s no work here, my family is very poor, sometimes we eat, sometimes we don’t, we are five brothers and sisters, I’m the youngest and the most rebellious, my mom says,” adds the young woman who is from Miramesí, a poor neighbourhood in the capital.

But despite her experiences, she says she’s going to try it again. “Going to the United States is my dream, and I’ll do it even if I die in the attempt,” she says, while getting ready to hitchhike – or walk – back to the capital, because she came back without a cent.

The deportees return like Díaz – without money and with a broken dream.

Poverty and violent crime are the main factors driving Hondurans to attempt the dangerous trek to the United States, experts say. Between October 2013 and May 2014, an estimated 13,000 unaccompanied Honduran minors reached the United States.

In the first six months of this year, some 30,000 Hondurans were deported by the United States and Mexico, according to the governmental Centro de Atención al Migrante Retornado (Reception Centre for Returned Migrants).

David López, 18, comes from Copán Ruinas in the western department of Copán, one of the “hot spots” in the country, where organised crime flourishes.

That is what he was fleeing. But he came back frightened, defeated and frustrated. He was assaulted twice by criminal bands that operate along the migration route. “I left because it’s not safe to live here anymore, you see things that it’s better not to talk about. I told myself, it’s time to leave the countryside, and I came back defeated, yes alive!…but defeated,” he tells IPS with a pained voice.

His aquiline features crumple as he remembers the assaults, the abuse, the drought and the hunger he survived.

“I thought the paths life took you on were different, but this is really tough,” he says. “I’m ashamed to go home because I failed this time. But I’ll try again, when things have calmed down along the border.”

In August alone some 19,000 deportees were brought back to the country through Corinto – as many as arrived in all of 2013, Paredes said.

This Central American nation of 8.4 million, where 65 percent of households are poor, is also one of the most violent countries in the world, with a homicide rate of 79.7 per 100,000 population, according to the Honduran Observatory on Violence.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Criminalisation of Homelessness in U.S. Criticised by United Nationshttp://www.ipsnews.net/2014/09/criminalisation-of-homelessness-in-u-s-criticised-by-united-nations/?utm_source=rss&utm_medium=rss&utm_campaign=criminalisation-of-homelessness-in-u-s-criticised-by-united-nations http://www.ipsnews.net/2014/09/criminalisation-of-homelessness-in-u-s-criticised-by-united-nations/#comments Tue, 02 Sep 2014 22:41:08 +0000 Carey L. Biron http://www.ipsnews.net/?p=136460 Men line up to receive food distributed by Coalition for the Homeless volunteers at 35th St, FDR Drive, in New York City. Credit: Zafirah Mohamed Zein/IPS

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

By Carey L. Biron
WASHINGTON, Sep 2 2014 (IPS)

A United Nations panel reviewing the U.S. record on racial discrimination has expressed unusually pointed concern over a new pattern of laws it warns is criminalising homelessness.

U.S. homelessness has increased substantially in the aftermath of the financial downturn, and with a disproportionate impact on minorities. Yet in many places officials have responded by cracking down on activities such as sleeping or even eating in public, while simultaneously defunding social services.

The new rebuke comes from a panel of experts reviewing the United States’ progress in implementing its obligations under a treaty known as the International Convention on the Elimination of All Forms of Racial Discrimination, commonly referred to as CERD or the race convention.

“The Committee is concerned at the high number of homeless persons, who are disproportionately from racial and ethnic minorities,” the CERD panel stated in a formal report released on Friday, “and at the criminalization of homelessness through laws that prohibit activities such as loitering, camping, begging, and lying in public spaces.”

This was only the second time that the United States’ record on race relations and discriminatory practices, and particularly the federal government’s actions in this regard, have been formally examined against the measuring stick of international law.

The panel not only called on the U.S. government to “abolish” laws and policies that facilitate the criminalisation of homelessness, but also to create incentives that would push authorities to focus on and bolster alternative policy approaches.

The CERD findings were actually the second time this year that new U.S. laws around the criminalisation of homelessness have been criticised at the international level. Similar concerns were expressed by the Human Rights Committee, which warned the cumulative effect was “cruel, inhuman, and degrading”.

“These are human rights experts who have seen human rights abuses all over the globe, but still when they hear about these issues in the United States it boggles their mind,” Eric S. Tars, a senior attorney with the National Law Center on Poverty & Homelessness, told IPS.

The CERD panel underscored these concerns by requesting additional information from the U.S. government before the country’s next such review, in 2017. The other issues so highlighted included racial profiling and gun violence, areas that have typically received far more interest from policymakers and the media.

Questionable progress

The formal review of the United States’ progress on implementing the race convention took place over two days in mid-August, attended by some 30 U.S. officials and dozens of civil society groups. The federal government’s formal report to the committee is available here, while non-government analyses lodged with the commission covering education, housing, gun violence, health care, immigration and other issues, are available here.

Observers say the mere act of the government going before an international body to discuss these issues was important, a sense strengthened by the significant delegation and substantive response offered by the administration of Barack Obama.

“In many ways it undercuts the idea of U.S. exceptionalism – that we don’t have human rights violations here,” Ejim Dike, the executive director of the U.S. Human Rights Network, a leading organiser around the CERD review, told IPS following the CERD discussions.

“In fact we have a lot of human rights violations, and our racial past and unfortunate racial present are indications of these concerns. Sometimes the headlines are so reminiscent of what happened during the 1950s and 1960s that it begs the question of how much progress we actually have made.”

Indeed, some metrics of racial discrimination in the United States are currently worse than they were decades ago. An official summary of the review’s discussions between the U.N. experts and civil society groups noted one committee member’s shock “to realize that in spite of several decades of affirmative action in the United States to improve the mixing up of colors and races in schools … segregation was nowadays much worse than it was in the 1970s.”

Likewise, recent years have underscored the significant racial disparities that continue to characterise homelessness in the United States, a discrepancy noted by the U.N. panel. This pattern has continued and has even been strengthened in the aftermath of the 2007-2008 financial crisis.

In 2010, for instance, African-Americans were seven times more likely to need emergency housing than whites, according to statistics from the Institute for Children, Poverty and Homelessness, a research organisation. Similar discrepancies can be seen in the case of Hispanics and other minority groups.

This is important because, unlike U.S. domestic law, the race convention prohibits policies that have the effect of being discriminatory, regardless of whether or not they are meant to discriminate.

Banning sleeping, eating

As important as this continued racial pattern is how officials are responding to the new surge in homelessness. Even as the financial downturn in recent years has simultaneously squeezed state budgets and led more people to lose their jobs and homes, the official response has been to strengthen enforcement – to make homelessness more difficult.

Over the past three years, for instance, the number of U.S. cities that have banned sleeping in cars has grown by 119 percent, according to findings released in July. Bans on sleeping or camping in public have likewise risen by 60 percent during that same time.

“These numbers in general are going up and in some cases going up significantly,” the National Law Center’s Tars says. “The only cases in which those numbers are going down is where some cities have removed ordinances banning panhandling and sleeping in certain areas, and instead replaced them with bans that cover the whole city.”

Meanwhile, the financial recession has increased poverty in places where such problems hadn’t previously been visible, in suburban and rural communities. Social services were likely already weak in these areas, and the economy’s broader troubles have led authorities to slash these budgets even further.
“First the communities and governments are cutting resources for homeless shelters and related organisations and saying this isn’t the government’s responsibility. But then some are even making it difficult for charities to deal with the issue – for instance, by punishing people for eating donated food in public,” Tars says.

“In fact, there’s significant evidence that criminalisation is often more expensive and less effective than providing affordable housing.”

Nonetheless, the new focus on austerity budgets in other countries, particularly in the European Union, is seeing governments across the globe increasingly turn to this U.S. model of criminalisation. In June, an Australian researcher noted a new “proliferation” of enforcement-based homelessness laws and policies internationally.

Edited by Stephanie Wildes

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Will Climate Change Denialism Help the Russian Economy?http://www.ipsnews.net/2014/08/will-climate-change-denialism-help-the-russian-economy/?utm_source=rss&utm_medium=rss&utm_campaign=will-climate-change-denialism-help-the-russian-economy http://www.ipsnews.net/2014/08/will-climate-change-denialism-help-the-russian-economy/#comments Sat, 30 Aug 2014 17:00:49 +0000 Mikhail Matveev http://www.ipsnews.net/?p=136429 July 2014 floods in Russia but authorities turning blind eye to climate change. Credit: takemake.ru

July 2014 floods in Russia but authorities turning blind eye to climate change. Credit: takemake.ru

By Mikhail Matveev
MOSCOW, Aug 30 2014 (IPS)

The recent call from Russian Prime Minister Dmitry Medvedev for “tightening belts” has convinced even optimists that something is deeply wrong with the Russian economy.

No doubt the planned tax increases (introduction of a sales tax and increases in VAT and income tax) will inflict severe damage on most businesses and their employees, if last year’s example of what happened when taxes were raised for individual entrepreneurs is anything to go by – 650,000 of them were forced to close their businesses.

Nevertheless, it looks like some lucky people are not only going to escape the “belt-tightening” but are also about to receive some dream tax vacations and the lucky few are not farmers, nor are they in technological, educational, scientific or professional fields – it is the Russian and international oil giants involved in oil and gas projects in the Arctic and in Eastern Siberia that stand to gain.

“In October [2013], Vladimir Putin signed a bill under which oil extraction at sea deposits will be exempt from severance tax. Moreover, VAT will not need to be paid for the sales, transportation and utilisation of the oil extracted from the sea shelf,” noted Russian newspaper Rossiiskie Nedra.“It looks like some lucky people are not only going to escape the ‘belt-tightening’ but are also about to receive some dream tax vacations and the lucky few are not farmers, nor are they in technological, educational, scientific or professional fields – it is the Russian and international oil giants involved in oil and gas projects in the Arctic and in Eastern Siberia that stand to gain”

Some continental oil projects were alsoblessedby the “Tsar’s generosity”: “For four Russian deposits with hard-to-recover oils [shale oil, etc.] – Bazhenovskaya [in Western Siberia] and Abalakskaya in Eastern Siberia, Khadumskaya in the Caucasus, and Domanikovaya in the Ural region – severance taxes do not need to be paid. Other deposits had their severance tax rates reduced by 20-80%.”

In fact, the line of thinking adopted by Russian officials responsible for tax policy is very simple. Faced with the predicament of an economy dependent on oil and gas (half of the state budget comes from oil and gas revenue, while two-thirds of exports come from the fossil fuel industry), they decided to act as usual – by stimulating more drilling and charging the rest of the economy with the additional tax burden.

There have been many warnings from well-known economists about the “resource curse” [the paradox that countries and regions with an abundance of natural resources tend to have less economic growth and worse development outcomes than countries with fewer natural resources] – and its potential consequences for the countries affected: from having weak industries and agriculture to being prone to dictatorships and corruption.

For a long time, however, economists have been keen on separating the economic and social impacts of fossil fuel dependency from the environmental and climate-related problems. But now, these problems are closely interconnected, and Russia might be the first to feel the strength of their combination in the near future.

Medvedev may not have read much about the “resource curse” but he should at least be familiar with the official position of the UN Framework Convention on Climate Change (UNFCC), whose Executive Secretary Christiana Figueres has said that three-quarters of known fossil fuel reserves need to stay in the ground in order to avoid the worst possible climate scenario.

One should at least expect this amount of knowledge from Russia as a member of the UN Security Council and it will be interesting to note whether the Russian delegation attending the UN Climate Summit in New York on September 23 will be ready to explain why, instead of limiting fossil fuel extraction, the whole country’s economic and tax policy is now aimed at encouraging as much drilling as possible.

However, it is not just the United Nations that has been warning against the burning of fossil fuels due to the related high climate risks. In 2005, Russia’s own meteorology service Roshydromet issued its prognosis of climate change and the consequences for Russia, stating that the rate of climate change in Russia is two times faster than the world’s average.

Roshydromet predicted a rapid increase in both the frequency and strength of extreme climate events – including floods, hurricanes, droughts, and wildfires. The number of such events has almost doubled during the last 15 years, and represent not only an economic threat but also a real threat to humans’ lives and their well-being,

Consider this summary of climate disasters in Russia during an ordinary July week (not including any of the large natural disasters such as the floods in Altai, Khabarovsk, and Krymsk, or the forest fires around Moscow in 2010):

“Following the weather incidents in the Sverdlovsk and Chelyabinsk District where snow fell last weekend, a natural anomaly occurred in Novosibirsk, resulting in human casualties … Two three-year-old twin sisters died after a tree fell on them during a strong wind storm in the town of Berdsk, Novosibirsk District.”

“The flood in Yakutia lasted a week and resulted in the submersion of Ozhulun village in Churapchinsky district last Saturday. Due to the rise of the Tatta River, 57 house went under.”

“Flooding in Tuapse [on the coast of the Black Sea] occurred on July 8, 2014 … [and] has left 236 citizens homeless.”

ar swept away in July 2014 floods in Russia. Credit: takeme.ru

Cars swept away in July 2014 floods in Russia. Credit: takeme.ru

Is it not worrisome that so many climate disasters have to occur before Russian officials start to realise that climatologists are not lying? Or perhaps they are simply not inclined to take the climatologists’ warnings seriously.

Another significant problem could arise for Russia if oil consumers start taking U.N. climate warnings seriously – and there is evidence that this is happening.

The European Union (still the main consumer of Russian oil and gas) has announced an ambitious “20/20/20 programme” – increasing shares from renewables to 20 percent, improving energy efficiency by 20 percent, and decreasing carbon emissions by 20 percent. The United States has decided to decrease carbon emissions from power plants by 30 percent. These are only first steps – but even these steps can help decrease fossil fuel consumption.

Fossil fuel use has only very slowly been increasing in the United States and decreasing in Europe in the last five years. On the other hand, demand for oil has continued to rise in China and Southeast Asia, and it is perhaps this – rather than the recent “sanctions” against Russia over Ukraine – that inspired President Vladimir Putin’s recent “turn to the East”.

But there are serious doubts that Asia’s greed for oil will continue into the future. China recently admitted that it will soon be taking measures to limit carbon emissions – for the first time in its history. China has already turned to green energy andled the rest of the worldin renewable energy investment in 2013.

Will other Asian countries follow suit? Perhaps – because they certainly have a very strong incentive. According to Erin McCarthy writing in the Wall Street Journal, South and Southeast Asia’s losses due to global warming may be huge, and its GDP may be reduced by 6 percent by 2060, despite the measures taken to curb its emissions.

What does this mean for Russia?

Well, if the oil-consuming countries meet their carbon emission targets, we can expect a 10-20 percent decrease in oil demand in the next ten years, maybe more. Any decrease in demand usually induces a decrease in price – but not always proportionally. Sometimes, especially if the market is overheated, even a small decrease in demand can trigger a drastic falls in price. Economists call such a situation a “bursting bubble”.

Today, the situation in the oil (and, in general, fossil fuel) market is often called a “carbon bubble”. Because of high oil prices, investors are motivated to make investments in oil drilling in the hopes of earning a stable and long-term income.

But once the world starts taking climate issues seriously and realises that most of the oil needs to be left in the ground, oil assets will fall in value. Investors will try to withdraw their money from the fossil fuel sector, and, facing a crisis, oil companies will be forced to decrease both production and prices.

If the “carbon bubble” bursts, Russia will be left with sustainable businesses (that are being choked by the nation’s own tax politics) and with a perfect network of shelf platforms, oil rigs, and pipelines (which will be completely unprofitable and useless). Thus, by making fossil fuels the core of its economy, Russia is taking twice the number of risks.

First, it risks ruining the climate, and second, it risks ruining its own economy. It looks like Russia will lose at any rate: if the leading energy consumers are unable to decrease their oil consumption, the climate will be ruined everywhere, including Russia. If they manage to decrease their dependence on fossil fuel, the Russian economy will be ruined.

This certainly is not looking pleasant, especially if we add in the high probability of a major disaster like the Gulf of Mexico Oil spill happening in the Arctic, as well as countless minor leaks possibly occurring along the Russian pipelines.

But maybe Russia just has no other alternative to an economy dependent on fossil fuels?

In that case, perhaps it is worth mentioning a recent article by Russian financier Andrei Movchan in the Russian Forbes magazine. Movchan convincingly shows that the Achilles’ heel of the modern Russian economy is its extremely underdeveloped small and medium-sized businesses. And it looks like the current tax plans would literally exterminate them.

If Russia were able to reverse this tax policy and make small businesses play as big of a role in the economy as they do in the United States or Europe, there could be economic growth comparable to the growth expected from oil and gas – without all the frightful side effects of an economy driven by fossil fuels.

Sounds like a dream, but the first step to making it a reality can be simple: get rid of big oil lobbying in the government and try to reform the taxation system to suit the interests of Russian citizens instead of the interests of the big oil corporations.

(Edited by Phil Harris)

* Mikhail Matveev is 350.org Communications Coordinator for Eastern Europe, Caucasus, Central Asia and Russia

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Amid Crisis, Puerto Rico’s Retirees Face Uncertain Futurehttp://www.ipsnews.net/2014/08/amid-crisis-puerto-ricos-retirees-face-uncertain-future/?utm_source=rss&utm_medium=rss&utm_campaign=amid-crisis-puerto-ricos-retirees-face-uncertain-future http://www.ipsnews.net/2014/08/amid-crisis-puerto-ricos-retirees-face-uncertain-future/#comments Wed, 27 Aug 2014 11:02:49 +0000 Carmelo Ruiz-Marrero http://www.ipsnews.net/?p=136354 Puerto Rico is a commonwealth of the U.S. Its relationship with the United States has been denounced as colonial by both the independence and pro-statehood movements. Credit: Arturo de la Barrera/cc by 2.0

Puerto Rico is a commonwealth of the U.S. Its relationship with the United States has been denounced as colonial by both the independence and pro-statehood movements. Credit: Arturo de la Barrera/cc by 2.0

By Carmelo Ruiz-Marrero
SAN JUAN, Aug 27 2014 (IPS)

A feeling of insecurity has overtaken broad sectors of Puerto Rican society as the economy worsens, public sector debt spirals out of control, and the island’s creditworthiness is put in doubt.

To tackle this economic crisis, the administration of governor Alejandro Garcia-Padilla has adopted a number of measures that have been extremely unpopular with civil society and labour unions."Capital is on the offensive all over the world. But in Puerto Rico it's worse because it is a colony of the United States." -- Retired telephone company worker Guillermo De La Paz

Retirees have been particularly affected. In 2013, the government passed Law 160, which drastically changed the retirement system of public employees. It puts an end to the previous retirement system, established by Law 447 of 1951, under which every public sector worker was entitled to a full pension after 30 years of service, regardless of age.

But Law 160 changes that. The size of monthly pension payments is no longer guaranteed, and employees must work more years in order to get full benefits.

“The retirement system has been compromised,” said labour attorney Cesar Rosado-Ramos in a position paper for the Working People’s Party (PPT).

“It is unheard of, abusive and unjust that people with 30 years of service now have to keep working for four, five, 10 or even 15 additional years in order to receive a full pension. This means the working class will have to spend a lifetime working and if you survive you get a miserable retirement plan.”

The PPT was formed in 2009 by current and former members of the Movement Toward Socialism and the Socialist Front. Its first electoral participation was in the 2012 general elections but it did not get enough votes to elect any candidate.

Public school teachers were spared from Law 160. They sued and last April the PR Supreme Court ruled key parts of the law unconstitutional because they violated teachers’ contracts. Thus the teachers’ retirement was saved, but the court ruling upheld other parts of the law that reduce their Christmas bonuses, summer pay and medical benefits.

“The retirement age of public employees has been raised and their [retirement] benefits have been reduced to poverty level,” economist Martha Quiñones told IPS.

Ramón Marrero, an emergency doctor who works in the city of Cayey, was forced to continue working just when he was due for retirement. He was going to retire after 18 years of work, but with the new law he has to stay on for three more years to get a full pension.

“One has life projects for when retirement comes. When all of a sudden the date for retirement is postponed, all of these projects and plans are turned upside down,” said Marrero, who commutes to work from the nearby town of Cidra.

Quiñones, who teaches at the University of Puerto Rico, pointed out that private sector workers and pensioners are also in for a raw deal. “Many of those private pensions are tied to Puerto Rico government bonds, which have recently been downgraded by Moody’s and Standard and Poor. When the value of these bonds is affected, pensions are reduced.”

Many public sector retirees are politically active, not only defending their benefits and pension plans from the ever present threat of privatisation, but also protesting the government’s neoliberal austerity policies, which affect all of society.

“The local ruling class seeks to reverse the gains and livelihoods of workers to what they used to be in a bygone era,” said labour activist Jose Rivera-Rivera, president of the retirees chapter of the UTIER labour union.

“In order for the neoliberal system to establish its superiority it must erase the last two centuries of labor struggle and solidarity. It’s the new stage of capitalism, they want us to start from zero.”

“Capital is on the offensive all over the world. But in Puerto Rico it’s worse because it is a colony of the United States,” retired telephone company worker Guillermo De La Paz told IPS. “Here the exploiters can experiment in ways they cannot do in a sovereign country.”

Puerto Rico is a commonwealth of the U.S. Its relationship with the United States has been denounced as colonial by both the independence and pro-statehood movements.

The Puerto Rico Telephone Company was public until it was privatised by then governor Pedro Rosselló in 1998. Privatisation opponents paralysed the island in a two-day general strike in July of that year, but to no avail.

“For the rich there is no crisis,” said De La Paz. “I mean, we’ve got [billionaire] Henry Paulson urging rich people to come here to avoid taxes.”

Rivera-Rivera believes that in order to get Puerto Rico out of its economic crisis and protect retirement benefits, the government could start by taxing the rich.

“Our government is supposedly in crisis because it cannot pay its debt, but the previous administration [Governor Luis Fortuño, 2009-2012] practically eliminated the fiscal responsibility of major corporations and rich people in its 2009 tax reform. It wasn’t justified, they were already enjoying major tax breaks.”

Edited by Kitty Stapp

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Cry for Argentina: Fiscal Mismanagement, Odious Debt or Pillage?http://www.ipsnews.net/2014/08/cry-for-argentina-fiscal-mismanagement-odious-debt-or-pillage/?utm_source=rss&utm_medium=rss&utm_campaign=cry-for-argentina-fiscal-mismanagement-odious-debt-or-pillage http://www.ipsnews.net/2014/08/cry-for-argentina-fiscal-mismanagement-odious-debt-or-pillage/#comments Thu, 14 Aug 2014 20:01:34 +0000 Ellen Brown http://www.ipsnews.net/?p=136137 By Ellen Brown
SONOMA, California, Aug 14 2014 (IPS)

Argentina has now taken the U.S. to The Hague for blocking the country’s 2005 settlement with the bulk of its creditors. The issue underscores the need for an international mechanism for nations to go bankrupt.

Better yet would be a sustainable global monetary scheme that avoids the need for sovereign bankruptcy.Better than redesigning the sovereign bankruptcy mechanism might be to redesign the global monetary scheme in a way that avoids the continual need for a bankruptcy mechanism.

Argentina was the richest country in Latin America before decades of neoliberal and IMF-imposed economic policies drowned it in debt. A severe crisis in 2001 plunged it into the largest sovereign debt default in history.

In 2005, it renegotiated its debt with most of its creditors at a 70 percent “haircut.” But the opportunist “vulture funds,” which had bought Argentine debt at distressed prices, held out for 100 cents on the dollar.

Paul Singer’s Elliott Management has spent over a decade aggressively trying to force Argentina to pay down nearly 1.3 billion dollars in sovereign debt. Elliott would get about 300 million dollars for bonds that Argentina claims it picked up for 48 million. Where most creditors have accepted payment at a 70 percent loss, Elliott Management would thus get a 600 percent return.

In June 2014, the U.S. Supreme Court declined to hear an appeal of a New York court’s order blocking payment to the other creditors until the vulture funds had been paid. That action propelled Argentina into default for the second time in this century – and the eighth time since 1827.

On Aug. 7, Argentina asked the International Court of Justice in the Hague to take action against the United States over the dispute.

Who is at fault? The global financial press blames Argentina’s own fiscal mismanagement, but Argentina maintains that it is willing and able to pay its other creditors. The fault lies rather with the vulture funds and the U.S. court system, which insist on an extortionate payout even if it means jeopardising the international resolution mechanism for insolvent countries.

If creditors know that a few holdout vultures can trigger a default, they are unlikely to settle with other insolvent nations in the future.

Blame has also been laid at the feet of the IMF and the international banking system for failing to come up with a fair resolution mechanism for countries that go bankrupt. And at a more fundamental level, blame lies with a global debt-based monetary scheme that forces bankruptcy on some nations as a mathematical necessity. As in a game of musical chairs, some players must default.

Most money today comes into circulation in the form of bank credit or debt. Debt at interest always grows faster than the money supply, since more is always owed back than was created in the original loan. There is never enough money to go around without adding to the debt burden.

As economist Michael Hudson points out, the debt overhang grows exponentially until it becomes impossible to repay. The country is then forced to default.

Fiscal mismanagement or odious debt?

Besides impossibility of performance, there is another defense Argentina could raise in international court – that of “odious debt.” Also known as illegitimate debt, this legal theory holds that national debt incurred by a regime for purposes that do not serve the best interests of the nation should not be enforceable.

The defence has been used successfully by a number of countries, including Ecuador in December 2008, when President Rafael Correa declared that its debt had been contracted by corrupt and despotic prior regimes. The odious-debt defence allowed Ecuador to reduce the sum owed by 70 percent.

In a compelling article in Global Research in November 2006, Adrian Salbuchi made a similar case for Argentina. He traced the country’s problems back to 1976, when its foreign debt was just under six billion dollars and represented only a small portion of the country’s GDP. In that year:

An illegal and de facto military-civilian regime ousted the constitutionally elected government of president María Isabel Martínez de Perón [and] named as economy minister, José Martinez de Hoz, who had close ties with, and the respect of, powerful international private banking interests.

With the Junta’s full backing, he systematically implemented a series of highly destructive, speculative, illegitimate – even illegal – economic and financial policies and legislation, which increased Public Debt almost eightfold to 46 billion dollars in a few short years.

This intimately tied-in to the interests of major international banking and oil circles which, at that time, needed to urgently re-cycle huge volumes of “Petrodollars” generated by the 1973 and 1979 Oil Crises.

Those capital in-flows were not invested in industrial production or infrastructure, but rather were used to fuel speculation in local financial markets by local and international banks and traders who were able to take advantage of very high local interest rates in Argentine Pesos tied to stable and unrealistic medium-term U.S. dollar exchange rates.

Salbuchi detailed Argentina’s fall from there into what became a 200 billion dollars debt trap. Large tranches of this debt, he maintained, were “odious debt” and should not have to be paid:

“Making the Argentine State – i.e., the people of Argentina – weather the full brunt of this storm is tantamount to financial genocide and terrorism. . . . The people of Argentina are presently undergoing severe hardship with over 50% of the population submerged in poverty . . . . Basic universal law gives the Argentine people the right to legitimately defend their interests against the various multinational and supranational players which, abusing the huge power that they wield, directly and/or indirectly imposed complex actions and strategies leading to the Public Debt problem.”

Of President Nestor Kirchner’s surprise 2006 payment of the full 10 billion dollars owed to the IMF, Salbuchi wrote cynically:

“This key institution was instrumental in promoting and auditing the macroeconomic policies of the Argentine Government for decades. . . . Many analysts consider that . . . the IMF was to Argentina what Arthur Andersen was to Enron, the difference being that Andersen was dissolved and closed down, whilst the IMF continues preaching its misconceived doctrines and exerts leverage. . . . [T]he IMF’s primary purpose is to exert political pressure on indebted governments, acting as a veritable coercing agency on behalf of major international banks.”

Sovereign bankruptcy and the “Global Economic Reset”

Needless to say, the IMF was not closed down. Rather, it has gone on to become the international regulator of sovereign debt, which has reached crisis levels globally. Total debt, public and private, has grown by over 40 percent since 2007, to 100 trillion dollars. The U.S. national debt alone has grown from 10 trillion dollars in 2008 to over 17.6 trillion today.

At the World Economic Forum in Davos in January 2014, IMF Managing Director Christine Lagarde spoke of the need for a global economic “reset.”

National debts have to be “reset” or “readjusted” periodically so that creditors can keep collecting on their exponentially growing interest claims, in a global financial scheme based on credit created privately by banks and lent at interest. More interest-bearing debt must continually be incurred, until debt overwhelms the system and it again needs to be reset to keep the usury game going.

Sovereign debt (or national) in particular needs periodic “resets,” because unlike for individuals and corporations, there is no legal mechanism for countries to go bankrupt. Individuals and corporations have assets that can be liquidated by a bankruptcy court and distributed equitably to creditors.

But countries cannot be liquidated and sold off – except by IMF-style “structural readjustment,” which can force the sale of national assets at fire sale prices.

A Sovereign Debt Restructuring Mechanism ( SDRM) was proposed by the IMF in the early 2000s, but it was quickly killed by Wall Street and the U.S. Treasury. The IMF is working on a new version of the SDRM, but critics say it could be more destabilising than the earlier version.

Meanwhile, the IMF has backed collective action clauses (CACs) designed to allow a country to negotiate with most of its creditors in a way that generally brings all of them into the net. But CACs can be challenged, and that is what happened in the case of the latest Argentine bankruptcy. According to Harvard Professor Jeffrey Frankel:

“[T]he U.S. court rulings’ indulgence of a parochial instinct to enforce written contracts will undermine the possibility of negotiated restructuring in future debt crises.”

We are back, he says, to square one.

Better than redesigning the sovereign bankruptcy mechanism might be to redesign the global monetary scheme in a way that avoids the continual need for a bankruptcy mechanism. A government does not need to borrow its money supply from private banks that create it as credit on their books.

A sovereign government can issue its own currency, debt-free. But that interesting topic must wait for a follow-up article. Stay tuned.

Ellen Brown can be found on her Web of Debt Blog.

Edited by: Kitty Stapp

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Going Back to the Farm in Cubahttp://www.ipsnews.net/2014/08/going-back-to-the-farm-in-cuba/?utm_source=rss&utm_medium=rss&utm_campaign=going-back-to-the-farm-in-cuba http://www.ipsnews.net/2014/08/going-back-to-the-farm-in-cuba/#comments Thu, 07 Aug 2014 18:17:12 +0000 Ivet Gonzalez http://www.ipsnews.net/?p=135990 Hortensia Martínez, who along with her husband Guillermo García decided to dedicate herself to farming on the La China farm on the outskirts of Havana, after a long career as a mechanical engineer. Credit: Jorge Luis Baños/IPS

Hortensia Martínez, who along with her husband Guillermo García decided to dedicate herself to farming on the La China farm on the outskirts of Havana, after a long career as a mechanical engineer. Credit: Jorge Luis Baños/IPS

By Ivet González
HAVANA, Aug 7 2014 (IPS)

Scattered houses amidst small fields of vegetables and other crops line the road to the La China farm on the outskirts of the Cuban capital. This is where Hortensia Martínez works – a mechanical engineer who has been called crazy by many for deciding to become a small farmer.

“Our story isn’t common,” Martínez, 48, told Tierramérica at the entrance to the six-hectare farm that was granted “in usufruct” to her husband Guillermo García in May 2009 in Punta Brava, in the municipality of La Lisa, a semi-urban suburb west of Havana.

Since Cuba adopted economic reforms in 2008, land has begun to be granted to people “in usufruct”, to stimulate agriculture.

From one edge of La China, scrubland can be seen stretching all the way to the horizon. In 2013, according to official figures, 1,046,100 of the 6,342,400 arable hectares in this Caribbean island nation were idle.

A scarcity of people not only interested in farming but who also have the skills and resources to produce more food is one of the hurdles to making headway towards the goal set as part of the broader economic reforms that put a priority on the agricultural sector in a country in dire need of boosting production and reducing food prices.

Among the factors standing in the way of improvements in agriculture are realities that are rarely talked about, such as the rural exodus decades ago, which left the Cuban countryside much emptier.

Of the country’s 11.2 million inhabitants, just 2.5 million now live in rural areas, according to 2013 data from the National Office of Statistics and Information (ONEI).

Although half of the rural population is female, women do not generally work the land themselves directly, due to a culture of sexism and machismo. To begin to change that, the authorities have stepped up strategies aimed at drawing more women into the rural workforce, although it is widely recognized that progress in that direction has been slow.

In April there were a total of 65,993 women in the country’s farming cooperatives – not a major increase from 64,063 in February 2011.“My experience, from driving around the countryside for many years, has shown me that there is little social activity, and that life is full of limitations and unmet needs. With what they earn, farmers cannot cover their basic needs.” -- Agroecologist Fernando Funes-Monzote

The Cuban population is irreversibly ageing, and is doing so fast. It is estimated that by 2025, people over 60 will make up 30 percent of the population.

“The farm was a way to return to our roots,” said Martínez who, like his wife, comes from a farming family in Granma, 730 km east of Havana.

For decades, farmers proudly hung on their walls the university degrees earned by their children, who gained broad access to tuition-free education after the 1959 revolution.

But the newly educated generations migrated to the cities to work in their new professions.

And in the 1980s the idea was that it was cheaper to import food than to develop the agricultural sector, thanks to the subsidised trade with the now defunct Soviet Union. The collapse of the socialist bloc in 1989 tipped the Cuban economy over the edge, into a crisis that has dragged on to this day.

One of the results of the crisis was that professionals began to earn less than those who produced goods with their work.

“We joined the agricultural workforce to support our family,” Martínez said, explaining that both his and his wife’s nephews and nieces work on the farm with them.

“Now we eat healthier food and we are earning more money,” he said. The family raises rabbits, lambs, pigs and 18 species of birds. They also grow fruit and vegetables.

In La China, there is a large shed for rabbits, several corrals, and even a ‘ranchón’, the name given in Cuba to a traditional open-side palm-thatched wooden structure that serves as a social space, decorated with hanging flower pots.

But “we still don’t have a house here yet. I wish they would approve that,” lamented Martínez, who every day makes the five-km trek back and forth to the farm, where she leaves a guard on duty at night.

Decree-law 259, passed in 2008, stipulated that people could apply for idle land to farm in usufruct for an extendable period of 10 years. But it was not until 2012 that decree-law 300 was approved, allowing people to also build homes on the land.

“The red tape surrounding that is really bad,” Martínez complained.

Bureaucracy is a chronic problem in Cuba’s agricultural sector, which is tightly controlled by the state, even the portion that is in private hands.

During a Jul. 5 parliamentary session it was reported that the Agriculture Ministry staff and its provincial and municipal delegations were being cut 41 percent, as part of economic adjustments and an attempt to reduce bureaucracy.

Of the land farmed in Cuba today, 26.6 percent is in private hands, 21.7 percent has been granted in usufruct, and the rest is state-owned or belongs to cooperatives.

“It’s really hard to return to the countryside if you don’t have the know-how, skills and economic resources,” said 44-year-old Mireya Ramírez (no relation), who left her job in computers to take charge of the family farm when her father-in-law injured his hand.

Until five years ago, she told Tierramérica, she knew nothing about farming, even though she lived ever since she got married on the Los Solos farm in Campo Florida, another area on the outskirts of Havana.

“If the land is far away, you need transportation to get there,” she said. “Producing at some scale requires a significant investment of capital. For me it was hard to juggle the capital to diversify production, even though I received a farm that was already up and running.”

But “I finally have a level of liquidity that I never had before,” she said with a smile on her face.

The authorities also opened up lines of microcredit for farmers, and stores selling some farming tools and seeds, while increasing the prices paid by the government for agricultural products (farmers must sell a majority of their production to the state). In addition, tourist establishments are now allowed to directly purchase from farmers.

But farmers and experts told Tierramérica that the measures have fallen short.

“Policies must be broader and more generous, ranging from more credit for buying seeds and baby animals to facilities to rent or buy vehicles and buy houses, sheds, corrals and access roads to fields,” journalist Roberto Molina said in an interactive online conversation organised by Tierramérica in Cuba.

The faces of Cuba’s farmers vary depending on how far from the cities they are and the level of economic development of each province.

On the outskirts of the capital and in the western provinces like Mayabeque, Artemisa and Matanzas, there are prosperous farming families with cars and comfortable homes.

But in the mountains and other remote parts of the country many people live in bohíos – dirt-floored wooden shacks typical of poorer parts of the Cuban countryside – with pit latrines and no electricity or running water.

“My experience, from driving around the countryside for many years, has shown me that there is little social activity, and that life is full of limitations and unmet needs. With what they earn, farmers cannot cover their basic needs,” agroecologist Fernando Funes-Monzote told Tierrámerica.

The 43-year-old professional has also started running a farm with his family: the Finca Marta in Artemisa, the province adjacent to Havana.
This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Child Malnutrition Doesn’t Take Vacation in Spainhttp://www.ipsnews.net/2014/08/child-malnutrition-doesnt-take-vacation-in-spain/?utm_source=rss&utm_medium=rss&utm_campaign=child-malnutrition-doesnt-take-vacation-in-spain http://www.ipsnews.net/2014/08/child-malnutrition-doesnt-take-vacation-in-spain/#comments Wed, 06 Aug 2014 19:45:12 +0000 Ines Benitez http://www.ipsnews.net/?p=135969 Children in the cafeteria of the Manuel Altolaguirre public school in the poor neighbourhood of La Palma-Palmilla, in the southern city of Málaga, Spain, which provides meals to the poorest students in the summertime. Credit: Inés Benítez/IPS

Children in the cafeteria of the Manuel Altolaguirre public school in the poor neighbourhood of La Palma-Palmilla, in the southern city of Málaga, Spain, which provides meals to the poorest students in the summertime. Credit: Inés Benítez/IPS

By Inés Benítez
MALAGA, Spain, Aug 6 2014 (IPS)

It’s two in the afternoon, and María stirs tomato sauce into a huge pot of pasta. School is out for the summer in Spain, but the lunchroom in this public school in the southern city of Málaga is still open, serving meals to more than 100 children from poor families.

“My son has had to take my grandson to summer school because he doesn’t have enough money to feed him.” -- Mercedes Arroyo
“The kitchen is always operating, winter and summer,” Miguel Ángel Muñoz, the prinicipal of the Manuel Altolaguirre school, told IPS. “There are families in situations of extreme need. For many children, the only hot meals they eat are what they are served at school.”

The school is in La Palma-Palmilla, one of the poorest neighbourhoods in this city in the southern autonomous community or region of Andalusia.

A number of reports have described the dire economic situation faced by many families with children in Spain, and the resultant problems of poor quality diets and child malnutrition.

There are 2.3 million children in Spain – 27.5 percent of the total – living under the poverty line, according to a study by UNICEF, the United Nations children’s fund.

The report, “La Infancia en España 2014” (Childhood in Spain 2014), released Jun. 24, found that the number of households with children where no adult is working increased 290 percent since 2007, the year before the global financial crisis broke out. Between 2007 and 2013 the total climbed from 325,000 to 943,000 families.

The unemployment rate in this country of 46.7 million people stands at 25.9 percent, according to the National Statistics Institute. Then there is the “working poor” who earn wages too low to cover mortgage payments or rent, utility bills and food.

“My mother sells lottery tickets and my father is at home,” Rafa told IPS just after eating pasta, salad and watermelon for lunch in the Manuel Altolaguirre school lunchroom. The eight-year-old has siblings aged four, 10 and 12.

Sitting next to him, 11-year-old Yeray said he and his brother Antonio have lunch at the school every day while his father works “carrying luggage in the airport.”

“The food is good,” said Yeray, who wants to “fix cars or be a policeman” when he grows up.

Daniel Fernández, with the local non-governmental organisation Animación Malacitana, who has been responsible for summertime activities in the school for 13 years, told IPS that “there are entire strata of society in emergency situations” and in need of help in Spain.

Since 2013 the government of Andalusia, the most populous autonomous community in Spain, has extended through the summer vacation period the aid it provides during the school year, and subsidises summer school in institutions like Manuel Altolaguirre in cities throughout the region.

In summer school, the poorest children are served breakfast, lunch and an afternoon snack at no cost, while they participate in recreational and educational activities run by social organisations.

“My son has had to take my grandson to summer school because he doesn’t have enough money to feed him,” Mercedes Arroyo, who has three children – aged 18, 24 and 28 – and three grandchildren – two seven-year-olds and a 10-year-old – told IPS.

“And many of us are in that situation,” said her husband, Enrique Sánchez, outside the “25 Mujeres” “economato social” – government shops that sell basic foodstuffs and cleaning and hygiene products at cost to poor families – in La Palma-Palmilla.

It is now common to see grandparents supporting their children and grandchildren – and even great-grandchildren – on their small pensions. Rosario Ruíz, 67, draws a disability pension of 365 euros (500 dollars) and lives with her 26-year-old unemployed granddaughter who is a single mother of two children, aged two and five.

“Are you going to write about how I need help? Are you going to tell?” Ruíz asked IPS after shopping in the ‘economato’.

The families of some 200,000 children in Spain can’t afford a meal based on beef, chicken or fish every two days, the NGO Educo reported on its website.

Poor nutrition in childhood can have irreversible effects on children’s health, abilities and development, experts say.

“Parents need school lunchrooms to be open in the summertime too,” said Muñoz, who stressed the vulnerability of the children who attend schools in La Palma-Palmilla.

The children mainly come from gypsy (Roma) or other immigrant families, most of them from Romania. They are served breakfast and lunch, and are given an afternoon snack in a bag to take home, year-round as part of an anti-poverty plan run by the socialist government of Andalusia, one of the regions with the highest unemployment rates in Spain.

Different NGOs in Málaga also organise summer activities for poor children. For example, Málaga Acoge runs ¡Queremos montar un circo! (We Want to Mount a Circus!) for 120 immigrant children, financed through microdonations, while Prodiversa ran a summer camp in July for 23 children between the ages of six and 11, subsidised by the Obra Social la Caixa Proinfancia and offering meals, tutoring and counseling.

Spain is the European Union country with the second highest level of child poverty, following Romania, according to a report by Caritas Europa on the social impact of the austerity policies applied in the countries hit hardest by the economic crisis, released Mar. 27.

Caritas, a Catholic social assistance organisation, put the proportion of children under 18 in Spain living on the edge of social exclusion at 29.9 percent.

And the report Child Poverty and Social Exclusion in Europe published by Save the Children in June put the proportion at 33.8 percent.

“It’s a chronicle of impoverishment foretold,” economist Juan Torres López told IPS. He said the “policies involving steep cutbacks have dismantled the social services and basic collective assets,” turning Spain into “the country with the worst inequalities in Europe.”

According to the economist, the government of right-wing Prime Minister Mariano Rajoy has adopted “inadequate, unfair and ineffective” measures to combat the economic crisis, instead of opting for “alternatives that could bring good results such as tax reforms aimed at greater equality and financing that is not set up to benefit the banks.”

The budget earmarked for children in Spain fell 14.6 percent from 2010 to 2013, UNICEF reported.

Cuts in public spending began during the administration of socialist Prime Minister José Luis Rodríguez Zapatero (2004-2011). But the biggest cutbacks in social expenditure in democracy in Spain have been applied since Rajoy took office.

Teachers and members of social organisations told IPS that some students ask to fill their plates three times in the school lunchrooms. Many don’t even have hot water at home to take showers in the winter, because they live in broken homes or come from extremely poor families.

“Good thing the summer comes. Then I don’t mind taking a shower with cold water,” a boy whose family could not afford a water heater or gas cylinder every month told Fernández.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Cuba’s Balsero Crisis Still an Open Wound, 20 Years Onhttp://www.ipsnews.net/2014/08/cubas-balsero-crisis-still-an-open-wound-20-years-on/?utm_source=rss&utm_medium=rss&utm_campaign=cubas-balsero-crisis-still-an-open-wound-20-years-on http://www.ipsnews.net/2014/08/cubas-balsero-crisis-still-an-open-wound-20-years-on/#comments Wed, 06 Aug 2014 13:09:02 +0000 Ivet Gonzalez http://www.ipsnews.net/?p=135960 Cubans anxious to leave the island used a sometimes bizarre range of materials to build makeshift rafts in their attempt to reach the United States, during the August 1994 balsero crisis. Credit: Creative commons

Cubans anxious to leave the island used a sometimes bizarre range of materials to build makeshift rafts in their attempt to reach the United States, during the August 1994 balsero crisis. Credit: Creative commons

By Ivet González
HAVANA, Aug 6 2014 (IPS)

Tears, silence and evasive responses are the reactions from Cubans when they are asked about the “balseros” or rafters crisis; two decades after an exodus without parallel in Latin America, it remains a taboo subject in this Caribbean island nation.

Balseros was the term coined at the time to refer to those who set out for the United States from Cuba in improvised ‘balsas’ or rafts – a dangerous route that began to be used in 1961 and saw a flood of rafters in August 1994.

And Cubans are still making the hazardous journey by sea, even though local immigration laws were reformed in 2013.

“The balseros aren’t talked about here in the press [a state monopoly],” 66-year-old Frank López, who witnessed the last big exodus, told IPS. “People who know something found out from the antenna,” he added, referring to clandestine access to foreign TV stations.

According to the U.S. Coast Guard, the flow of people leaving Cuba by sea is now stable. Although the two countries are only 90 miles (145 kilometres) apart, many Cubans are now using more complex routes through places like Mexico, the Cayman Islands or Puerto Rico.

Around 1,271 balseros were intercepted at sea in the period October 2012 to September 2013, compared to 1,275 who were seized and sent back to Cuba from October 2011 to September 2012, in compliance with the bilateral agreements signed by the U.S. and Cuba.

The Cuban Adjustment Act, which has been in effect in the United States since 1966 and grants Cuban immigrants U.S. residency one year and a day after reaching the country, regardless of whether their entry was legal or undocumented, is a touchy question in the bilateral conflict.

Havana says the law foments illegal emigration from the island while Washington argues that it responds to the discontent in Cuba over the policies of the socialist government in power since 1959.

But that situation had little to do with the turbulent summer of 1994, when more than 36,000 Cubans took to the sea in fishing boats or on flimsy homemade rafts constructed with wood and inner tubes and propelled by motors or simply rowed.

The number of Cubans trying to cross the Florida Straits had begun to rise in early 1994, and tension grew between the two governments, which do not have formal diplomatic ties and have been distanced over the U.S. embargo against Cuba in place since 1962.

In July and early August, groups of Cubans hijacked at least four government-owned boats, in both successful and failed attempts to reach the United States.

This formed the backdrop to serious disturbances in Havana on Aug. 5, known as the “Maleconazo” – the first in Cuba in three decades.

Then-President Fidel Castro (1959-2008) told the U.S. administration of Bill Clinton (1993-2001) that if it did not take measures to discourage the wave of hijackings and departures by sea, the Cuban government would stop preventing them.

Castro argued that the exodus was fuelled by the fact that balseros were welcomed and assisted, while the U.S. government failed to live up to the commitment, agreed by the two governments in 1984, to provide visas to 20,000 Cubans a year.

Only 11,122 people received U.S. visas between 1987 and 1994, instead of a possible total of 160,000.

The balsero crisis is seen as starting on Aug. 12, when Castro ordered the Coast Guard in Cuba to stop patrolling and preventing departures by sea, after another incident with a boat. The controls were reinstated on Sept. 13, after talks were launched by the two governments.

Many Cubans who lived through that period say they were marked forever.

“Crowds would gather on the coast to see off those who were leaving,” López said. “I went to the pier at Cojímar [a Havana suburb] to see it for myself, instead of listening to other people’s versions.”

Among the many things that made an impression on him were signs reading “rafts for sale”, hanging on houses, the steady stream of vehicles arriving, carrying homemade rafts, and the groups of people getting ready to make the 90-mile journey.

In a conversation with IPS in Miami, Florida, Clara Domínguez said she has never regretted having set out on Aug. 21, 1994 with her husband and son from the Havana shore, even though she knew that all the balseros who were intercepted would be held in the U.S. navy base in Guantánamo, in eastern Cuba.

Clara Domínguez, a ‘balsera’ who left Cuba on Aug. 21, 1994 along with her husband and son, in her yard on the Miami, Florida street where she lives now. Credit: Ivet González/IPS

Clara Domínguez, a ‘balsera’ who left Cuba on Aug. 21, 1994 along with her husband and son, in her yard on the Miami, Florida street where she lives now. Credit: Ivet González/IPS

In that base and in similar installations in Panama and the Krome Refugee Camp in Florida, the Clinton administration held thousands of Cuban migrants to decide what to do with them. They were kept there in a kind of limbo that lasted two years.

Cuba agreed to allow them to come back if they wanted to, in the first bilateral agreement reached, on Sept. 9, which some rafters took advantage of. But most of them staked their bets on the uncertain outcome of the talks between the two governments, which finally came in May 1995, when Washington gradually began to issue visas on humanitarian grounds.

The crisis formally ended in January 1996, when the last refugee left Guantánamo.

Unable to hold back her tears, Domínguez said the date was “a disgraceful anniversary”. “We had to leave Cuba because of the lack of freedom and opportunities,” the 68-year-old woman said.

After the Soviet Union, Cuba’s main aid and trade partner, collapsed in 1991, this country fell into an economic depression from which it has not yet emerged.

For Domínguez, the most positive aspect of the agreements reached in 1994 and 1995 was that the United States began to issue a minimum of 20,000 visas a year to prioritise safe, legal, and orderly immigration.

The most tragic face of the exodus, from not only Cuba but from the Dominican Republic and Haiti as well, is the number of people who die and go missing every year in the turbulent shark-infested waters of the Florida Straits, where networks of drug and people traffickers operate as well.

Nancy Reyes, 74, has had no news of her only son since 1992. “I only heard he was leaving the country. I live with that uncertainty,” Reyes, who lives in the city of Matanzas, 87 km east of Havana, told IPS.

The fight against illegal emigration and people smuggling has been a fixture on the agenda of the talks which have been going on since then, with ups and downs, between Havana and Washington.

“It would be very unlikely for a similar crisis to break out again,” researcher Antonio Aja told IPS.

There are two key factors influencing departures by sea: the internal situation in Cuba and U.S. compliance with the immigration accords, according to studies cited by Aja.

In 2013 Cuba’s immigration laws were reformed, making it easier to leave and come back to Cuba. Meanwhile, the U.S. Interests Section in Havana began to issue five-year multiple-entry visas to Cubans who are approved for non-immigrant travel to the United States.

A year earlier, according to official figures, 46,662 people emigrated from this country of 11.2 million. But these days most of them leave by plane.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Did Argentina Default or Not? It’s More Than Semanticshttp://www.ipsnews.net/2014/08/did-argentina-default-or-not-its-more-than-semantics/?utm_source=rss&utm_medium=rss&utm_campaign=did-argentina-default-or-not-its-more-than-semantics http://www.ipsnews.net/2014/08/did-argentina-default-or-not-its-more-than-semantics/#comments Mon, 04 Aug 2014 20:48:05 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=135929 Argentine President Cristina Fernández addressing supporters in a courtyard in the government palace on Jul. 31, after giving a speech to the nation to explain the country’s debt payment situation. Credit: Casa Rosada

Argentine President Cristina Fernández addressing supporters in a courtyard in the government palace on Jul. 31, after giving a speech to the nation to explain the country’s debt payment situation. Credit: Casa Rosada

By Fabiana Frayssinet
BUENOS AIRES, Aug 4 2014 (IPS)

Argentina’s supposed “default”, an unprecedented case in the history of world capitalism, sets a legal, political and financial precedent that indicates the need for concrete measures regarding the fine line between legal, ethical business activities and criminal usury.

In the debate, the orthodox financial sectors say Argentina’s failure to comply with U.S. Judge Thomas Griesa’s ruling means it has once again defaulted, while others argue that it has actually honoured its commitments and made its payments, and the fact that the funds have not reached the creditors is not the government’s fault.

“Preventing someone from paying is not default,” said President Cristina Fernández in a Jul. 31 nationally televised address, after a meeting with the so-called vulture funds – opportunistic investors who purchase the debt of heavily indebted countries at pennies to the dollar and then vigorously pursue full repayment in court – which failed to come up with a solution to the conflict.

“Now they invented a new term: ‘selective default’. It doesn’t exist. Preventing someone from taking our payments is not default. I told them they would have to invent a new word,” she said with irony.

At a Jul. 30 meeting in New York with Argentine officials, the mediator named by the U.S. court, Daniel Pollack, rejected Argentina’s offer to restructure the debt in the hands of “holdout” creditors – those who did not agree to the 2005 or 2010 debt swaps.

Since Argentina defaulted on nearly 100 billion dollars in debt in late 2001, during the worst economic crisis in the country’s history, 92.4 percent of the bonds have been restructured at a deep discount, with lower interest rates and at longer terms.

But a group of hedge funds that refused to participate in the two debt restructurings sued for full payment of 1.3 billion dollars in Argentine bonds in federal court in New York.

The offer made by Argentina in the Jul. 30 negotiations was for the holdouts to restructure their debt in conditions similar to those accepted earlier by the vast majority of creditors – under late president Néstor Kirchner (2003-2007) in 2005, and under his successor and widow Fernández in 2010.

Jul. 30 was the deadline to pay 539 million dollars in interest due on the discount bonds.

The Fernández administration had deposited the funds with the bond trustee, the Bank of New York Mellon (BoNY Mellon). But Judge Griesa blocked the payments to the bondholders because the Argentine government ignored his order to also pay the hedge funds.

”Unfortunately, no agreement was reached and the Republic of Argentina will imminently be in default,” Pollack said after the meeting in New York. “Default is not a mere ‘technical’ condition, but rather a real and painful event that will hurt real people.”

In an Aug. 1 court hearing, Argentina’s representatives unsuccessfully demanded that Pollack be removed as mediator, because of his remarks.

Some credit rating agencies lowered the rating on Argentina’s foreign currency bonds to “selective default”, while the judge avoided using that term in the Aug. 1 hearing but said it was clear that there had been no payments.

Argentine Economy Minister Axel Kicillof said “Argentina is not in default, because it has already paid. The bondholders did not pick up their payments because of a ban put in place by Judge Griesa.

“They talk about technical default, selective default — some have called it Griesa default, Griefault. No one knows what to call it because it is new, because it doesn’t exist, because no one would have thought that a judge could come along, and say – after the payment – ‘I’m going to order the banks to not meet their contracts.’ ”

Alejandro Drucaroff, a lawyer who specialises in banks and finance, pointed out to IPS that the debt swaps accepted by the vast majority of creditors “involved major discounts of capital and interest and very long terms for repayment.” But he also stressed that Argentina has punctually met all of its payments.

Some of the holdouts – the 7.6 percent of the creditors, who refused to accept the swaps that offered about 35 cents on the dollar – sold their bonds to hedge funds, two of which later sued in federal court in New York for full payment of 1.3 billion dollars in bonds, roughly one percent of the total debt.

The vulture funds acquired the bonds in 2008 at 20 to 30 percent of their nominal value.

In 2012 Judge Griesa ordered Argentina to pay the bonds at full-face value, plus interest and fees – some 1.5 billion dollars.

On Jun. 16, the U.S. Supreme Court rejected an appeal by the Argentine government, thus upholding the earlier ruling, which banned Argentina from making payments on the restructured debt unless it also paid the holdouts.

“That ban, which has no legal basis and goes beyond the judge’s legal authority, has no practical effect because Argentina met its payments anyway,” Drucaroff said.

But after BoNY Mellon was “warned” by Griesa that transferring the money to bondholders would violate his ruling, the bank held on to the funds.

“Griesa does not have the authority to keep Argentina from paying its debts to third parties not involved in the trial. Nor does he have authority over funds that aren’t from the U.S. – he can’t embargo them,” Drucaroff argued.

“There is no default; what this is, is an absolutely unprecedented legal situation,” the lawyer added.

“BoNY should be held accountable by the 92.4 percent of creditors and by Argentina for failing to comply with its function,” he said. “It could argue that it acted the way it did because it could be found guilty of contempt of court as a result of Griesa’s ruling – and in my opinion, in that case Griesa would also be responsible for preventing the money from reaching the creditors.”

According to University of Buenos Aires economist Fernanda Vallejos, the wording in the contracts makes it clear that a default would only occur “if Argentina didn’t pay.”

“However, the country not only has the will and the capacity to pay, but it has already paid and will continue to do so,” she added.

That, in her view, is independent of the credit rating agencies, “which in their eagerness to pave the way for the vulture funds to do business, because of the payment of default insurance, invent terms like ‘selective default’, which have nothing to do with reality or with Argentina’s financial solvency.”

The problem, the Argentine government says, are not the 1.5 billion dollars that the judge and the plaintiff are demanding payment of, but the fact that the debt would skyrocket if the bondholders that accepted a discount sued for repayment at full value as well.

The government said the debt could climb as high as 500 billion dollars in that case, which would throw the country back into a crisis similar to the one that triggered the 2001 default in the first place.

Political analyst Alejandro Horowicz said: “A plunge in our foreign reserves of that magnitude would not only affect international trade but would make the fixed exchange rate impossible to control and hence the rest of the reserves would face the same fate and would end up fleeing in a vain attempt to curb the stampede in the price of the dollar.”

Vallejo warned that the U.S. court ruling discouraged any process of debt restructuring by favouring “a small minority who represent the most savage face of international financial capital.”

“Who would accept a restructuring like Argentina’s if by bringing legal action in the courts of any country you can get that level of returns and repayment at full face value?” she asked.

The economist said an international regulatory framework is needed “that would preserve debt restructuring processes and put limits on the complete deregulation of the financial markets which trod roughshod over states and subjugate people.”

Vulture funds are already under scrutiny from governments and international bodies, among which there is a growing consensus that they should be reined in.

Nearly all of them “were involved in the latest international financial crisis [which broke out in 2008] by means of a range of speculative maneuvers that in many cases were actually illegal,” Drucaroff said.

“In theory a large part of the ‘formal’ financial system rejects them and sees them as running counter to business ‘ethics’. But no concrete step has been taken to curtail their activities which, to a large extent, are carried out through tax havens,” he said.

An area in which the question of whether Argentina defaulted or not is just one tip of the iceberg.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Food – Thou Shall Not Wastehttp://www.ipsnews.net/2014/07/food-thou-shall-not-waste-2/?utm_source=rss&utm_medium=rss&utm_campaign=food-thou-shall-not-waste-2 http://www.ipsnews.net/2014/07/food-thou-shall-not-waste-2/#comments Tue, 29 Jul 2014 07:34:49 +0000 Silvia Giannelli http://www.ipsnews.net/?p=135788 Still edible food thrown away together with plastic bottles and empty crates at local food market in Lucca, Italy. Credit: Silvia Giannelli/IPS

Still edible food thrown away together with plastic bottles and empty crates at local food market in Lucca, Italy. Credit: Silvia Giannelli/IPS

By Silvia Giannelli
LUCCA, Italy, Jul 29 2014 (IPS)

“Only two years ago, the soup kitchen was serving 50 meals a day. Today the number has almost doubled and, what is even more worrying, we have started receiving families with children,” says Donatella Turri, director of the Caritas Diocese of Lucca.

The paradox is that the lengthening queues at the Lucca soup kitchen come against a backdrop of increasing food loss and waste.

Turri has no doubts concerning the impact of the current economic crisis on Italian families in terms of food security – “we call it ‘poverty of the third week’.”If our goal is to feed the planet, we cannot simply increase production and keep losing and wasting one-third of it. Our first commandment needs to be 'thou shall not waste' – Andrea Segré, President of Last Minute Market

“It means that the poor are no longer the homeless, the mentally ill and the drug addicts. More and more often we get requests for primary goods from families that simply cannot reach the end of the month with their salaries,” she told IPS.

Turri’s claims are confirmed at the national level by the yearly Italian National Institute of Statistics (ISTAT) report on poverty. According to the survey, absolute poverty [the threshold below which a family cannot afford the goods and services that are essential to guarantee a barely acceptable standard of living] has maintained its steady increase in recent years, rising from 4.6 percent in 2010 to 7.9 percent in 2013.

“The traditional distinction between the quantitative aspect of food security being typical of developing countries, and the qualitative one being a concern of the industrialised world, is fading away,” Andrea Segré, Dean of the Faculty of Agriculture at Bologna University and President of Last Minute Market, a company that recovers unsold or non-marketable goods in favour of charity organisations, told IPS.

However, while access to food is also becoming increasingly difficult for the low-income class of developed countries, the Food and Agriculture Organization (FAO) reports that Europe, North America and Oceania are top of the world’s food wasting classification, with a per capita food loss of almost 300 kg per year in North America.

“Food loss and waste are dependent on specific conditions and local circumstances,” Eliana Haberkon from FAO’s Office for Communications, Partnerships and Advocacy, explained to IPS.

“In low-income countries, food loss is mainly connected to managerial and technical limitations in harvesting techniques, storage, transportation, processing, cooling facilities, infrastructure, packaging, etc. … and food waste is expected to constitute a growing problem due to undergoing food system changes and due to factors such as expansion of supermarket chains and changes in diets and lifestyle.”

Currently, the biggest gap between rich and poor nations remains the quantity of food wasted at the consumer level. According to FAO figures, Europeans and North-Americans waste between 95 to 115 kg of food per capita every year, while in sub-Saharan Africa and South/Southeast Asia the number drops down to only 6 to 11 kg a year.

At the beginning of July, Last Minute Market, in cooperation with the SWG survey company, published a report called ‘Waste Watcher’. Using a complex questionnaire survey among Italian consumers, the outcomes paint a comprehensive picture of the social dynamics and behaviour of families that lead to food waste.

“The overall waste of food in Italy is worth 8.1 billion euro every year, and most of it comes from our houses. The rest of the losses, in agriculture, industries, distribution and service, can be recovered, but it is much less significant than what we throw in our bins,” said Segrè, commenting on the survey results.

Last Minute Market is now working to prepare the ground for a discussion on food waste during EXPO 2015, which will take place in under the heading ‘Feeding the planet, energy for life’.

“In order to be credible, EXPO needs to take into account the issue of food waste,” said Segré. “If our goal is to feed the planet, we cannot simply increase production and keep losing and wasting one-third of it. Our first commandment needs to be thou shall not waste.”

Indeed, as Haberon explained, the consequences of food loss and waste stretch far beyond their monetary value, “affecting current use and future availability and causing unnecessary pressure on natural resources.”

Studies by FAO estimated a yearly global quantitative food loss and waste of 30 percent of cereals, 40-50 percent of food crops (fruits and vegetables), 25 percent of oil seeds, meat and dairy products and 30 percent of fish.

Both Last Minute Market and Caritas agree on the paramount role of education in tackling food waste. In cooperation with more than ten local primary schools, the Caritas Diocese of Lucca has managed to recover excess food intact from school canteens for a value of 40,000 euro, taking it to the soup kitchens it manages.

This initiative has allowed it to develop a parallel food education project with the children of the schools involved.

“We obviously need normative support to help us reduce food waste, but first of all we must re-introduce food education, starting from primary schools,” said Segrè. “The current generation has completely lost the value of food and we must get it back.”

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Human Development Report Finds South Asia’s Poor on a Knife’s Edgehttp://www.ipsnews.net/2014/07/human-development-report-finds-south-asias-poor-on-a-knifes-edge/?utm_source=rss&utm_medium=rss&utm_campaign=human-development-report-finds-south-asias-poor-on-a-knifes-edge http://www.ipsnews.net/2014/07/human-development-report-finds-south-asias-poor-on-a-knifes-edge/#comments Thu, 24 Jul 2014 14:58:30 +0000 Amantha Perera http://www.ipsnews.net/?p=135728 Women sleep on a crowded train in Myanmar. Globally, some 1.2 billion people live on less than 1.25 dollars a day. Credit: Amantha Perera/IPS

Women sleep on a crowded train in Myanmar. Globally, some 1.2 billion people live on less than 1.25 dollars a day. Credit: Amantha Perera/IPS

By Amantha Perera
COLOMBO, Jul 24 2014 (IPS)

Millions still live in poverty and even those who have gained the security of the middle-income bracket could relapse into poverty due to sudden changes to their economic fortunes in South Asia, the latest annual Human Development Report by the United Nations Development Programme (UNDP) revealed.

“In South Asia 44.4 percent of the population, around 730 million people, live on 1.25−2.50 dollars a day,” said the report, released in Tokyo Thursday.

It went on to warn that despite the region’s gains, the threat of more of its citizens being pushed back into poverty was very real and that there were large disparities in income and living standards within nations.

“Many who recently joined the middle class could easily fall back into poverty with a sudden change in circumstances,” the report’s authors stressed.

“The most successful anti-poverty and human development initiatives to date have taken a multidimensional approach, combining income support and job creation with expanded healthcare and education opportunities." -- UNDP Human Development Report 2014
Here in Sri Lanka, categorised as a lower middle-income country by the World Bank in 2011, overall poverty levels have come down in the last half-decade.

The Department of Statistics said that poverty levels had dropped from 8.9 percent in 2009 to 6.7 percent by this April. In some of the richest districts, the fall was sharper. The capital Colombo saw levels drop from 3.6 percent to 1.4 percent. Similar drops were recorded in the adjoining two districts of Gampaha and Kalutara.

However the poorest seemed to getting poorer. Poverty headcount in the poorest area of the nation, the southeastern district of Moneralaga, increased from 14.5 percent to 20.8 percent in the same time period.

The disparity could be larger if stricter measurements aren’t used, argued economist Muttukrishna Sarvananthan.

“There is a very low threshold for the status of employment,” he told IPS, referring to the ‘10 years and above’ age threshold used by the government to assess employment rates.

“Such a low threshold gives an artificially higher employment rate, which is deceptive,” he stressed.

The UNDP report said that in the absence of robust safeguards, millions ran the risk of being dragged back into poverty. “With limited social protection, financial crises can quickly lead to profound social crises,” the report forecast.

In Indonesia, for instance, the Asian Financial Crisis of the late 1990s saw poverty levels balloon from 11 percent to 37 percent. Even years later, the world’s poor are finding it hard to climb up the earnings ladder.

“The International Labour Organisation estimates that there were 50 million more working poor in 2011. Only 24 million of them climbed above the 1.25-dollars-a-day income poverty line over 2007–2011, compared with 134 million between 2000 and 2007.”

Globally some 1.2 billion people live on less than 1.25 dollars a day, and 2.7 billion live on even less, the report noted, adding that while those numbers have been declining, many people only increased their income to a point barely above the poverty line so that “idiosyncratic or generalised shocks could easily push them back into poverty.”

This has huge implications, since roughly 12 percent of the world population lives in chronic hunger, while 1.2 billion of the world’s workers are still employed in the informal sector.

Sri Lanka, reflecting global trends, is also home to large numbers of poor people despite the island showing impressive growth rates.

Punchi Banda Jayasundera, the secretary to the treasury and the point man for the national economy, predicts a growth rate of 7.8 percent for this year.

“This year should not be an uncomfortable one for us,” he told IPS, but while this is true for the well off, it could not be further away from reality for hundreds of thousands who cannot make ends meet or afford a square meal every day.

While the report identified the poor as being most vulnerable in the face of sudden upheavals, other groups – like women, indigenous communities, minorities, the old, the displaced and the disabled – are also considered “high risk”, and often face overlapping issues of marginalisation and poverty.

The report also identified climate change as a major contributor to inequality and instability, warning that extreme heat and extreme precipitation events would likely increase in frequency.

By the end of this century, heavy rainfall and rising sea levels are likely to pose risks to some of the low-lying areas in South Asia, and also wreak havoc on its fast-expanding urban centres.

“Smallholder farmers in South Asia are particularly vulnerable – India alone has 93 million small farmers. These groups already face water scarcity. Some studies predict crop yields up to 30 percent lower over the next decades, even as population pressures continue to rise,” the report continued, urging policy-makers to seriously consider adaptation measures.

Sri Lanka is already talking about a 15-percent loss in its vital paddy harvest, while simultaneously experiencing galloping price hikes in vegetables due to lack of rainfall and extreme heat.

It has already had to invest over 400 million dollars to safeguard its economic and administrative nerve centre, Colombo, from flash floods.

“We are getting running lessons on how to adapt to fluctuating weather, and we better take note,” J D M K Chandarasiri, additional director at the Hector Kobbekaduwa Agrarian Research Institute in Colombo, told IPS.

Smart investments in childhood education and youth employment could act as a bulwark against shocks, the report suggested, since these long-term measures are crucial in interrupting the cycle of poverty.

The report also urged policy makers to look at development and economic growth through a holistic prism rather than continuing with piecemeal interventions, noting that many developed countries invested in education, health and public services before reaching a high income status.

“The most successful anti-poverty and human development initiatives to date have taken a multidimensional approach, combining income support and job creation with expanded health care and education opportunities and other interventions for community development,” the reported noted.

(END)

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BRICS – The End of Western Dominance of the Global Financial and Economic Orderhttp://www.ipsnews.net/2014/07/brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order/?utm_source=rss&utm_medium=rss&utm_campaign=brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order http://www.ipsnews.net/2014/07/brics-the-end-of-western-dominance-of-the-global-financial-and-economic-order/#comments Wed, 23 Jul 2014 07:17:42 +0000 Shyam Saran http://www.ipsnews.net/?p=135688

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

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

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

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

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

Shyam Saran

Shyam Saran

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Yilmaz Akyuz
GENEVA, Jul 16 2014 (IPS)

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

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

Yilmaz Akyuz

Yilmaz Akyuz

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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Europe and the United States, Allies in Crisishttp://www.ipsnews.net/2014/07/europe-and-the-united-states-allies-in-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=europe-and-the-united-states-allies-in-crisis http://www.ipsnews.net/2014/07/europe-and-the-united-states-allies-in-crisis/#comments Mon, 14 Jul 2014 06:25:23 +0000 Joaquin Roy http://www.ipsnews.net/?p=135530

In this column, Professor Joaquín Roy, Professor of European Integration and Director of the European Union Centre at the University of Miami, argues that although the United States and Europe are in crisis, they are still a magnet for the rest of the world, as shown by the ceaseless waves of migrants they attract.

By Joaquín Roy
BARCELONA, Jul 14 2014 (IPS)

A few decades ago, even before the end of the Cold War and before and after Ronald Reagan’s election to the White House, analyses regularly referred to U.S. decadence. At other times, it was Europe’s turn for pessimistic descriptions, especially when it could not overcome its ambivalence over deepening integration, and above all because of the failure of its constitutional project. 

The West was in crisis. And now the pair are apparently going through a similar phase, with each one trying to outdo the other in inferiority.

The United States seems to be in the doldrums because of the apparently erratic foreign policy of President Barack Obama, who does not seem to be profiting from surmounting the legacy of George W. Bush’s actions in the Middle East.

Joaquín Roy

Joaquín Roy

Obama’s agenda based on “leading from behind” is creating serious problems that would damage his re-election chances if he were eligible (which he is not).

Hillary Clinton may inherit this liability if she finally decides to run for the presidency. What is certain is that indecision in Syria, the disaster of Iraq’s disintegration and the still unsolved challenge of Russia in Ukraine, create a picture of the United States in international decline.“Both partners [Europe and the United States] are still the natural allies that could lead the world out of the crisis. And the future of both is welded to their role as immigration destinations” – Joaquín Roy

The European Union, for its part, does not offer a more hopeful scenario, and only if it is able to strengthen its institutions following the European Parliament elections in May will it be able to overcome the generalised forecast of a problematic future.

Gripped by the rise of populism and neo-nationalism and with its economy weighed down by inequality and lack of sustained growth, the European Union is a long way from offering alternative leadership and hope for the rest of the planet, and appropriately partnering the United States to beat the global crisis.

Yet curiously, this odd couple, which can be subsumed in what is generously called the West, can pride itself on an immense capital that is a basis not only for survival, but of sustained leadership for the rest of the world.

In both cases, a systematic humanitarian tragedy reveals their mutual strength and guarantees their future survival. Dramatic, repeated migration processes produce huge human capital flows to both Europe and the United States compared with other regions.

On the one hand, thousands of Latin American teenagers are invading the United States in search of a much better future than they are leaving behind in Central America, racked by crime, poverty and inequality.

On the other hand, the shores of Italy are being bombarded by desperate migrants cast up by traffickers, resulting in shipwrecks and deaths by suffocation. Elsewhere, attempts to take the Spanish border by storm in the enclaves in Morocco have ceased to call attention as newsworthy.

What do these apparently dissimilar scenarios reveal?

Quite simply, that the strength of these partners in crisis is based on their relatively powerful magnetism for migrants.

For all the present difficulties suffered by many European countries, the prospect of life in Europe is comparatively far better than in Africa or Asia, and even Latin America, in spite of the fact that many immigrants are returning to their countries of origin.

The future and the present of the United States – as it always was in the past – remains linked to the immigration pool. Hence, U.S. sectors that oppose migration reform are not only destined to fail, they are also currently rendering poor service to their country.

Both regions, now engaged in exploring a Transatlantic Trade and Investment Partnership (TTIP) agreement, are destined to surpass other world regions in terms of standard of living and future expectations.

Both partners are still the natural allies that could lead the world out of the crisis. And the future of both is welded to their role as immigration destinations.

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Greek Privatisation of Key Sectors Meets Strong Oppositionhttp://www.ipsnews.net/2014/07/greek-privatisation-of-key-sectors-meets-strong-opposition/?utm_source=rss&utm_medium=rss&utm_campaign=greek-privatisation-of-key-sectors-meets-strong-opposition http://www.ipsnews.net/2014/07/greek-privatisation-of-key-sectors-meets-strong-opposition/#comments Wed, 09 Jul 2014 06:29:13 +0000 Apostolis Fotiadis http://www.ipsnews.net/?p=135431 PPC power station in Ptolemaida. northern Greece. Credit: Nikos Pilos

PPC power station in Ptolemaida. northern Greece. Credit: Nikos Pilos

By Apostolis Fotiadis
ATHENS, Jul 9 2014 (IPS)

Plans by the Greek government to sell companies that handle the key resources of energy and water face serious obstacles and its policy to offer investors exceptional privileges in an effort to boost interest in privatisation is coming under strong pressure.

Privatisation is one of the ‘prerequisites’ of the Troika – the tripartite committee led by the European Commission with the European Central Bank and the International Monetary Fund – in exchange for additional bailout money that Greece is seeking to continue to avoid insolvency.

The Greek government recently announced plans to sell a 30 percent share of its Public Power Corporation (PPC), and create a new ‘Small PPC’, which will be sold to private investors.

The new company will take with it some key production sites, lignite mines, and hydroelectric and natural gas units. In addition, about two million customers will be transferred from the original company and will be obliged to receive services from the new company for six months.Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country.

The lucrative terms and assets accompanying the new company, described in the legislation that creates it, are already attracting many local investors as well as major foreign energy companies like Germany’s RWE as well as the French EDL and the Italian ENEL.

The plan has caused strong reactions in north-western Greek cities where communities depend heavily on employment created by PPC mines and electricity production plants. PPC unions decided to take strike action to protest the privatisation plans, but these were declared illegal. The Greek opposition has called for a referendum on the issue but it appears unable to gather the 120 signatures of members of parliament necessary for it to go through parliament.

Kriton Arsenis, an independent Member of the European Parliament, has asked the European Commission whether obliging customers to receive services from the company constitutes an illegal state subsidy. In response, European Commissioner for Energy Gunther Oettinger said that the Commission “does not have adequate information to deliberate on whether this constitutes illegal state subsidy”.

At the end of March, Arsenis submitted a similar question concerning the Hellenic Republic Asset Development Fund (HRADF), which has been set up to manage Greek privatisations, and met with a similarly evasive answer.

The HRADF has announced the sale of 100 percent of Hellinikon SA – which administers 6,200 acres of land occupied by the former Athens Airport of Hellinikon – to Lamda Development.

Arsenis pointed that Article 42 of Law 3943/2011 establishing Hellinikon SA states that the company “shall be exempt from any tax, duty or fee, including income tax, in respect of any form of income derived from its business, of transfer tax for any reason, and capital accumulation tax” and again asked the Commission whether this unjustifiable tax exemption constituted state subsidy.

European Commissioner for Competition Joaquin Almunia replied that “Greece has not notified the Commission about the alleged tax exemption measure”, thus the Commission does not have sufficient information to assess whether it constitutes state aid and will ask Greece to provide clarifications on the issue.

Tax exemption seem to be a vehicle the Greek government favours using in its effort to attract investors to the country. Last week, Greek Energy Minister Ioannis Maniatis said that oil and gas explorers would pay 25 percent tax, down from the current 40 percent, to attract them to help exploit Greece’s untapped offshore hydrocarbon resources. “We have done this in order to incentivise our investors to invest in the future of Greece” he told a conference in London.

Plans to privatise water utilities stalled last month after the Supreme Court considered privatisation of the Athens Water Supply and Sewerage Company (EYDAP) unconstitutional. Following this decision, the transfer of a 34.03 percent share of the company’s stock holding to HRADF has been cancelled and the privatisation authority has publicly admitted that it is reconsidering the tender despite still holding 27.3 percent of the company.

This has effectively cast doubts on the privatisation process for EYATH, the water and sewage company of Thessaloniki, Greece’s second largest city. HRADF President Konstantinos Maniatopoulos was quoted saying in Greek media that “it will be difficult to continue the process for EYATH without taking into account the decision for EYDAP.”

The Suez/Ellaktor and Merokot/G. Apostolopoulos/Miya/Terna Energy consortia had been in the process of submitting binding offers by June 30. It appears now that HRADF will return about 50 percent of the 74 percent of its share in EYATH back to the state.

Two weeks ago, the Greek National Commission for Human Rights produced a focus report about the protection of access to water. Kwstis Papaioanou, President of the Commission told IPS: “International experience has proven that privatisation curtails the access of people to safe water. It is very encouraging though that the water has united citizens against its privatisation.”

Privatisation of water has indeed provoked strong public reactions. In an informal referendum in Thessaloniki in which over 200,000 people took part, 98 percent voted against privatisation.

“The court’s deliberation against privatisation of water companies is very clear but I would not be surprised if the government finds a way to circumvent it. There are plenty of other examples in which they have not implemented court decisions,” Arsenis, told IPS.

“Those interested in Greek public assets do not think like real investors. They take an interest only in privileged deals when profits are guaranteed and when most of investment risk is undertaken by the state in advance so that they have secured income that will cover their expenses in two or three years’ time.”

A first privatisation target of 50 billion euros in revenue by 2020 has been cut by more than half, with the country’s lenders now forecasting 22.3 billion. So far, only 3 billion has been collected.  The 2014 and 2015 targets for revenue from privatisations were set at 1.5 billion euros and 2.24 billion euros respectively but these are now very unlikely to be achieved.

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Shoemaking Saves Zimbabwe’s Jobless Youthhttp://www.ipsnews.net/2014/07/shoemaking-saves-zimbabwes-jobless-youth/?utm_source=rss&utm_medium=rss&utm_campaign=shoemaking-saves-zimbabwes-jobless-youth http://www.ipsnews.net/2014/07/shoemaking-saves-zimbabwes-jobless-youth/#comments Thu, 03 Jul 2014 12:00:55 +0000 Jeffrey Moyo http://www.ipsnews.net/?p=135356 Makers of handmade shoes sit on the pavement in Harare, Zimbabwe’s capital. There are almost 200,000 youth involved in unlicensed, backyard handmade shoe businesses across the country. Credit: Jeffrey Moyo/IPS

Makers of handmade shoes sit on the pavement in Harare, Zimbabwe’s capital. There are almost 200,000 youth involved in unlicensed, backyard handmade shoe businesses across the country. Credit: Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Jul 3 2014 (IPS)

For many young Zimbabweans like 19-year-old Shelton Mbariro, running an unlicensed, backyard handmade shoe business has become a way to escape unemployment in this southern African nation.

“We craft the shoes using raw hides that we get from abattoirs and cattle farms in and outside Harare, making strong and long-lasting shoes,” Mbariro tells IPS.

According to statistics from the Harare United Cobblers Association, an organisation of young shoemakers, Mbariro is one of 196,423 young people aged between 19 and 24 who have set up shop on street corners across towns and cities in Zimbabwe, offering a range of handmade shoes.

There are no clear figures about the total number of youth in the informal sector. However, in 2012 the Zimbabwe National Statistics Agency said 3.7 million of the country’s 13.7 million Zimbabweans worked in the informal sector.

Handmade shoes for either men or women can cost anything from 25 to 40 dollars, with sandals costing about 10 dollars. According to shoemakers interviewed in Harare, these prices fluctuate, often falling during the day. However, the prices are linked to demand and increase during peak hours and at month end.

Despite the increased availability of cheap, Chinese-made shoes, these handmade shoes are popular because of their long lifespan, attractive designs and negotiable prices. They could also be popular because soon after Zimbabwe’s July 2013 elections, the country’s sole shoe manufacturing company, Bata, scaled down operations citing the country’s poor economic performance.

But Mbariro and even 21-year-old Shadrack Bvumb, another shoemaker from Harare, attract large numbers of customers.

“When business is good, mostly during month end, I pocket at least 100 dollars from my daily sales,” Mbariro says.

Making shoes by hand has become the way of life for youth here in a country where the economy continues to shrink amid perpetual closures of industries.

  • The National Social Security Authority’s Harare Regional Employer Closures and Registrations Report for July 2011 to July 2013 shows 711 companies shut down in Harare during that period, leaving 8,336 people jobless.
  • In 2013, over 2,300 workers lost their jobs after 165 companies embarked on staff rationalisation programmes, according to statistics from the country’s Ministry of Public Service Labour and Social Welfare.

“This is the way we now survive as you see us here selling these handmade shoes. We make them on our own and come here to sell them because it’s a waste of time to keep searching for unavailable jobs,” Bvumbi, who comes from Mabvuku, a high-density suburb in the Zimbabwean capital, tells IPS.

But local authorities say they hardly benefit from these young people, whom they accuse of evading tax and flouting council bylaws.

“As council, we get nothing from these shoemakers because they operate at undesignated points often evading council cops,” Harare City Council spokesperson Lesley Gwindi tells IPS.

Most street venders here have, at some time or another, engaged in running battles with council cops for selling their handmade shoes without licences.

It costs about 20 dollars to apply for a vendor’s licence in the city. If approved, the licence costs 120 dollars and is valid for a year.

But the young entrepreneurs say they cannot pay local authorities and get nothing in return.

“We make money on the streets where there are no designated points for us to do business. Council authorities here have no facilities for us,” Mbariro says.

Edmund Chiutsi, who heads the Harare United Cobblers Association, tells IPS: “There are no proper points for us in towns here to sell the shoes we make; there are no shelters and what should we pay councils for?” Instead, the association lobbies local and government authorities to recognise informal shoemakers’ strides in stimulating the economy and to allow them to safely operate in cities and towns.

Economists say young people are finding a way to survive the current economic crisis.

“Increasing retrenchments in workplaces and the increase of jobless young people fuels the rise of local innovators as people strive to fight against the tide of economic challenges here,” economist Daniel Mbewe tells IPS.

“Unemployed youth have shifted focus to the informal sector, often learning completely new skills in order to survive under harsh economic conditions,” adds Mbewe.

In 2011, the Ministry of Youth, Indigenisation and Economic Empowerment created the 11-million-dollar Youth Fund to assist young people start self-help projects.

But only two percent of young footwear makers benefitted from this, according to the Harare United Cobblers Association. And those who benefitted allegedly had links to ruling party politicians.

“We rather prefer to fight on our own and keep going,” Bvumbi says.

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Argentina Once More on the Map, Invited by BRICShttp://www.ipsnews.net/2014/06/argentina-once-more-on-the-map-invited-by-brics/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-once-more-on-the-map-invited-by-brics http://www.ipsnews.net/2014/06/argentina-once-more-on-the-map-invited-by-brics/#comments Wed, 18 Jun 2014 18:55:43 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=135068 “Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

“Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

By Fabiana Frayssinet
BUENOS AIRES, Jun 18 2014 (IPS)

As Argentina starts to mend fences with the international financial markets, the emerging powers that make up the BRICS bloc invited it to their next summit. This could be a step towards this country’s reinsertion in the global map, after its ostracism from the credit markets since the late 2001 debt default.

For now, there is no letter “A” in the BRICS acronym, which stands for Brazil, Russia, India, China and South Africa. But in Buenos Aires speculation is rife about whether it should be called BRICSA, ABRICS or BRICAS, if Argentina is admitted.

The invitation for President Cristina Fernández to participate in the group’s sixth summit, scheduled for Jul. 15 in the northeast Brazilian city of Fortaleza, is seen as another sign that Latin America’s third-largest economy may be incorporated, after India, Brazil and South Africa indicated their interest.

“This is very significant for Argentina,” Fernanda Vallejos, an economist at the University of Buenos Aires (UBA), told IPS.

“It not only points to the recognition by the rest of the members of Argentina’s importance and potential, but also opens a door for our country to gain greater political and economic clout on the international stage.”

Vallejos stressed the key role played by BRICS over the last decade in the growth of the global economy at a time of financial crisis in the industrialised North.

The term BRICS was coined for the world’s major emerging markets in 2001 by economist Jim O’Neill of investment bank Goldman Sachs. Together, these countries represent around one-quarter of global GDP, 43 percent of the planet’s population, and 20 percent of global investment.

In addition, as Argentina’s foreign ministry stressed, the five countries account for 45 percent of the world’s labour force, hold over three trillion dollars in combined foreign reserves, and produce two billion tonnes a year of agricultural products.

Vallejos said that in a world where blocs are playing a bigger and bigger role, BRICS has a growing voice in international forums, where the members are “demanding participation in accordance with the weight of their economies.”

“The proposal set forth by India – with which bilateral trade expanded 30 percent in 2013 – and backed by Brazil and South Africa also puts paid to the opposition’s tired complaint about our country supposedly being isolated from the world,” said Vallejos, who is also a researcher at the Energy, Technology and Infrastructure Observatory for Development (OETEC).

The formal invitation to Fernández was issued by Russia, which also thus confirmed its support.

“I think this shows that Argentina is fully inserted in international relations, not ‘isolated from the world’,” Nicolás Tereschuk, a political scientist at UBA, told IPS. “It simply doesn’t toe the line with the policies of the central countries at just any cost or in any circumstances, as it used to do at other times in its history.”

Argentina’s invitation from BRICS came almost simultaneously with the May 28 announcement of an agreement reached by the Fernández administration and the Paris Club, which this country owed 9.7 billion dollars since the default 13 years ago.

Some political sectors here see the public debt contracted by the 1976-1983 military dictatorship as illegitimate. But the centre-left Fernández administration hopes the agreement with the Paris Club will facilitate the renewed flow of international credit and investment.

Economist Diego Coatz said the agreement and other measures adopted by the government such as “improving” its economic data, whose reliability was questioned by the International Monetary Fund (IMF), point to a “shift” by the authorities aimed at “reintegration in the world in financial terms…and at positioning the country better on the international front.”

Coatz, with the research centre of the Argentine Industrial Union – the country’s leading industrial employer federation – said that if Argentina is admitted to the BRICS bloc, “it will once more be seen as an emerging developing country with great potential.”

In addition, incorporation in the bloc would open a new window for external financing, when Argentina is in need of foreign exchange and investment, he said.

At the Fortaleza summit a formal decision could be reached on creating a regional development bank as an alternative to international financial institutions like the IMF, World Bank or Interamerican Development Bank.

The new bank would have a 50 billion dollar fund for financing infrastructure in the bloc’s member countries. It would also establish a joint foreign exchange reserves pool of 100 billion dollars, “which would serve as insurance against the volatility of the markets,” Vallejos said.

“Argentina could access financing at very beneficial rates compared to the heavy interest rates of other international institutions” in order to finance infrastructure for development, she underscored.

“The strengthening of international trade by the possible admission to BRICS means important possibilities for Argentina to make significant progress towards a more developed industrial sector, with insertion in global production chains, the development of strategic sectors and the industrialisation of the countryside,” Vallejos said.

The interest would appear to be mutual.

“The invitation came after the turmoil in emerging markets early this year, after which the ‘establishment’ international financial press talked about a ‘decline’ of BRICS,” Tereschuk said.

In addition, “growth in China is slowing down, India is at a decisive moment, with the dilemma of faster growth or stagnation, and the Brazilian economy is not really flourishing at this time,” the economist said.

So for them and the rest of the members of the bloc, “joining together with a periphery country that makes up the G20 [Group of 20] would seem to be a decision of interest to the BRICS countries,” he said.

The G20 block of leading industrialised and emerging economies “is in somewhat of a crisis itself, because of the crisis that the central countries are still immersed in.”

For that reason, according to Tereschuk, Argentina would be useful to the BRICS so that the voice of their two South American leaders, Argentina and Brazil, “would be heard in unison in the greatest number of places possible.”

The political scientist said Brazil and Argentina have led a “shift to the left with growth, reduction of poverty and inequality in a framework of democracy and greater political, civilian and social rights for their citizens.

“The other members of BRICS cannot offer all of these characteristics combined,” he said.

Vallejos, for her part, stressed Argentina’s role as a supplier of raw materials. “We are an agricultural powerhouse,” she pointed out.

In addition, “Argentina has the world’s second-largest reserves of lithium, one of the biggest reserves of gold – nearly 10,000 tonnes – 500 million tonnes of copper, and 300,000 tonnes of silver, while we are becoming the third-largest global exporter of potassium,” she said.
“We are sitting on the world’s third- largest platform of unconventional fossil fuels. And to that you have to add our technological development, and the development of nuclear energy for peaceful purposes,” she added.
So would it be “BRICAS”, “ABRICS” or “BRICSA”? At any rate, what is at stake is a bit more than deciding on a new acronym.

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Argentina Seeks to Ward Off “Paradoxical” Defaulthttp://www.ipsnews.net/2014/06/argentina-seeks-ward-paradoxical-default/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-seeks-ward-paradoxical-default http://www.ipsnews.net/2014/06/argentina-seeks-ward-paradoxical-default/#comments Tue, 17 Jun 2014 23:06:26 +0000 Diana Cariboni http://www.ipsnews.net/?p=135049 Screenshot of Argentine President Cristina Fernández during her Monday Jun. 16 televised address to the nation. Credit: TV Pública

Screenshot of Argentine President Cristina Fernández during her Monday Jun. 16 televised address to the nation. Credit: TV Pública

By Diana Cariboni
MONTEVIDEO, Jun 17 2014 (IPS)

Argentina finds itself in a strange position since the U.S. Supreme Court rejected its appeal Monday to take a case in which a small group of creditors is suing this country for full repayment: it is on the brink of default even though it is one of the countries in the world that has done the most to dig itself out of debt.

The Supreme Court decision in the case Republic of Argentina v. NML Capital leaves in place a 2012 ruling handed down by the second district court of New York, ordering Buenos Aires to pay bondholders, immediately and in full, some 1.5 billion dollars – an amount that includes interest and penalties.

But it also sets a precedent with respect to all of the unpaid debt in the hands of other speculative bondholders, totalling around 16 billion dollars.

This amount, however, “is equivalent to just three percent of Argentina’s GDP,” economist Ramiro Castiñeira, with the Econométrica consultancy, told IPS.

“It doesn’t make sense for Argentina to default over that amount, when it is one of the countries that has advanced the most in reducing its debt in the past few years,” Castiñeira argued.

Brazil, for example, owes interest payments this year equivalent to five percent of GDP, on top of principal payments amounting to more than 12 percent of GDP, he said.

The problem is that Argentina does not have 16 billion dollars in cash – the equivalent of half of its foreign reserves, which were hit hard by a series of restrictive monetary policies that fuelled capital flight.

Argentine President Cristina Fernández complained about the Supreme Court ruling Monday night, calling it “extortion” while stressing that her country would continue to make repayments to lenders who had agreed on renegotiated settlements.

After Argentina defaulted on its foreign debt in late 2001 during the worst economic crisis in the country’s history, the government made enormous efforts to work its way out of debt, which had reached 160 percent of GDP.

It repaid the World Bank and International Monetary Fund (IMF) in full and restructured the debt held by 92.4 percent of bondholders, at a deep discount, in 2005 and 2010.

The debt shrank to manageable volumes. In late May, Argentina reached an agreement with the Paris Club of creditor nations for repaying overdue debts. And earlier this year, the government agreed on a package to compensate Spanish oil company Repsol for the 2012 nationalisation of its subsidiary YPF.

But the situation produced by the Supreme Court ruling could jeopadise everything achieved so far.

The sentence prohibits banks in New York from making interest and principal payments to creditors that accepted the restructuring unless the New York-based hedge fund NML Capital is paid.

On Jun. 30, Buenos Aires is to pay 532 million dollars for bonds issued under foreign legislation.

To avoid the embargo, payment jurisdicion could be modified by means of a voluntary swap. “The idea might seem tempting, but it is impracticable and would also mean falling into technical default” by changing the parameters set when bonds are issued, Argentine economist Leonardo Stanley, associated with the Centro de Estudios de Estado y Sociedad (CEDES) think tank , told IPS.

Although Fernández’s statement was ambiguous, Stanley’s interpretation is that the president expressed a willingness to pay. That means “negotiations will have to start with the holdouts [creditors who refused the restructuring], which could take place within the context of what the judge handling the case [in New York] is asking for,” he said.

Stanley said: “From here on out the decision is political. Just as it reached agreements recently with Repsol and the Paris Club, the government should sit down and negotiate with Paul Singer,” whose hedge fund, Elliott Management, is the parent company of NML Capital.

The economic impact is inevitable, he added, “although the current government would not necessarily have to deal with it,” as Fernández’s term ends in December 2015. For that reason, “any proposal would have to be made in the legislative sphere,” which would help boost “transparency and credibility,” he said.

In her address to the nation Monday, Fernández said “this case has repercussions for the entire global financial system. [The ruling] validates a business model on a global scale which, if it continues to be reinforced, will produce unimaginable tragedies.”

Eric LeCompte, executive director of the religious anti-poverty organisation Jubilee USA Network, said in a statement that “For heavily indebted countries supporting poor people, this is a devastating blow. These hedge funds are [now] equipped with an instrument that forces struggling economies into submission.”

“Argentina may not have used the best options or strategies,” said Stanley. But the stance taken by the U.S. Supreme Court shows that “despite the institutional crisis, the lobbying power of the financial sector is intact,” he added.

And if countries begin to doubt the benefits of issuing a bond under New York jurisdiction, the ruling “could also hurt that sector, and the United States…which has gone from being the world’s creditor to one of its biggest debtors,” he argued.

Peter Hakim, president emeritus of the Washington-based Inter-American Dialogue think tank, said “Both the U.S. Treasury and the IMF were also concerned about the broader effect of what would be considered an Argentine default, and also worried about the impact on other debt negotiations.

“Remember the U.S. Treasury [along with the IMF], although it did not join the lawsuit, basically supported Argentina’s contention that it should be able to pay the holdouts the same amount as it was paying creditors who had accepted Argentina’s debt restructuring.
“ U.S. relations with Argentina… have improved in recent months as Argentina has pursued a more orthodox and moderate set of economic policies (including efforts to reform its notoriously manipulated economic statistics, repay its Paris Club obligations, settle the claims of Repsol, etc).”

But the immediate future of those ties depends on how Buenos Aires reacts in this case, for which a solution could be possible if the Argentine goverment demonstrates greater flexibility, Hakim said.

“The Fernández government will have to resist the temptation to turn the decision into a domestic political issue,“ he said.

But that seems difficult to do. For decades the management of the country’s debt has been a central factor in economic and political crises. In her speech Monday, Fernández summed up the history of this issue.

The portion of bonds that Singer and his allies are pressing Argentina to pay is illustrative on its own. In 2008, NML Capital purchased the bonds at a nominal price of 370 million dollars. But at the time they were only worth 48 million dollars.

Thirty percent had been issued during the administration of Carlos Menem (1989-1999), when the peso was pegged to the dollar.

The rest were issued during the “megaswap” – a financial operation cooked up in 2001 to give Argentina breathing space by stretching out the government’s principal and interest payments, which backfired and increased the public debt by tens of billions of dollars.

Former president Fernando de la Rúa (1999-2001) and his economy minister Domingo Cavallo were prosecuted for the megaswap and an international arrest warrant was issued for David Mulford, at the time chairman international of the Credit Suisse First Boston bank and former U.S. Treasury official.

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