Inter Press Service » Financial Crisis http://www.ipsnews.net Turning the World Downside Up Sat, 31 Jan 2015 14:18:44 +0000 en-US hourly 1 http://wordpress.org/?v=4.1 OPINION: Greece Gives EU the Chance to Rediscover Its Social Responsibilityhttp://www.ipsnews.net/2015/01/opinion-greece-gives-eu-the-chance-to-rediscover-its-social-responsibility/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-greece-gives-eu-the-chance-to-rediscover-its-social-responsibility http://www.ipsnews.net/2015/01/opinion-greece-gives-eu-the-chance-to-rediscover-its-social-responsibility/#comments Sat, 24 Jan 2015 14:30:34 +0000 Marianna Fotaki http://www.ipsnews.net/?p=138804 Alexis Tsipras (centre), Syriza’s charismatic 40-year-old leader, has been campaigning under the banner “Hope is on its way.” Credit: Mirko Isaia/cc by 2.0

Alexis Tsipras (centre), Syriza’s charismatic 40-year-old leader, has been campaigning under the banner “Hope is on its way.” Credit: Mirko Isaia/cc by 2.0

By Marianna Fotaki
COVENTRY, England, Jan 24 2015 (IPS)

The European Union should not be afraid of the leftist opposition party Syriza winning the Greek election, but see it as a chance to rediscover its founding principle – the social dimension that created it and without which it cannot survive.

Greece’s entire economy accounts for three per cent of the euro zone’s output but its national debt totals €360 billion or 175 per cent of the country’s GDP and poses a continuous threat to its survival.

Courtesy of Marianna Fotaki

Courtesy of Marianna Fotaki

While the crippling debt cannot realistically be paid back in full, the troika of the EU, European Central Bank, and IMF insist that the drastic cuts in public spending must continue.

But if Syriza is successful – as the polls suggest – it promises to renegotiate the terms of the bailout and ask for substantial debt forgiveness, which could change the terms of the debate about the future of the European project.

It would also mean the important, but as yet, unaddressed question of who should bear the costs and risks of the monetary union within and between the euro zone countries is likely to become the centrepiece of such negotiations.

The immense social cost of the austerity policies demanded by the troika has put in question the political and social objectives of an ‘ever closer union’ proclaimed in the EU founding documents.The old poor and the rapidly growing new poor comprise significant sections of Greek society: 20 per cent of children live in poverty, while Greece’s unemployment rate has topped 20 per cent for four consecutive years now and reached almost 27 per cent in 2013.

Formally established through the Treaty of Rome in 1957, the European Economic Community between France, Germany, Italy and the Benelux countries tied closely the economies of erstwhile foes, rendering the possibility of another disastrous war unaffordable. Yet the ultimate goal of integration was to bring about ‘the constant improvements of the living and working conditions of their peoples’.

The European project has been exceptionally successful in achieving peaceful collaboration and prosperity by progressively extending these stated benefits to an increasing number of member countries, with the EU now being the world’s largest economy.

Since the economic crisis of 2007, however, GDP per capita and gross disposable household incomes have declined across the EU and have not yet returned to their pre-crisis levels in many countries. Unemployment is at record high levels, with Greece and Spain topping the numbers of long-term unemployed youth.

There are also deep inequalities within the euro zone. Strong economies that are major exporters have benefitted from free trade and the fixed exchange rate mechanism protecting their goods from price fluctuations, but the euro has hurt the least competitive economies by depriving them of a currency flexibility that could have been used to respond to the crisis.

Without substantial transfers between weaker and stronger economies, which accounts for only 1.13 per cent of the EU’s budget at present, there is no effective mechanism for risk sharing among the member states and for addressing the consequences of the crisis in the euro zone.

But the EU was founded on the premise of solidarity and not as a free trade zone only. Economic growth was regarded as a means for achieving desirable political and social goals through the process of painstaking institution building.

With 500 million citizens and a combined GDP of €12.9 trillion in 2012 shared among its 27 members the EU is better placed than ever to live up to its founding principles. The member states that benefitted from the common currency should lead in offering meaningful support rather than decimating their weaker members in a time of crisis by forcing austerity measures upon them.

This is not denying the responsibility for reckless borrowing resting with the successive Greek governments and their supporters. However, the logic of a collective punishment of the most vulnerable groups of the population must be rejected.

The old poor and the rapidly growing new poor comprise significant sections of Greek society: 20 per cent of children live in poverty, while Greece’s unemployment rate has topped 20 per cent for four consecutive years now and reached almost 27 per cent in 2013.

With youth unemployment above 50 per cent, many well-educated people have left the country. There is no access to free health care and the weak social safety net from before the crisis has all but disappeared. The dramatic welfare retrenchment combined with unemployment has led to austerity induced suicides and people searching for food in garbage cans in cities.

A continued commitment to the policies that have produced such outcomes in the name of increasing the EU’s competitiveness challenges the terms of the European Union’s founding principles. The creditors often rationalise this using a rhetoric that assumes tax-evading unproductive Greeks brought this predicament upon themselves – they are seen as the undeserving members of the euro zone.

Such reasoning creates an unhealthy political climate that gives rise to extremist nationalist movements in the EU such as the Greek criminal Golden Dawn party, which gained almost 10 per cent of votes in the last European Parliament elections.

Explaining the euro zone debt crisis as a morality tale is both deleterious and untrue. The problematic nature of such moralistic logic must be challenged: one cannot easily justify on ethical grounds forcing the working poor to bail out a banking system from which many wealthy people benefit, or transferring the consequences of reckless lending by commercial outlets to the public.

Nor can one explain the acquiescence of creditors to the machinations of the nepotistic self-serving corrupt elites dominating the state over the last 40 years that got Greece into the euro zone on false data and continue to rule it. As I have argued, the bailout money was given to the very people who are largely responsible for the crisis, while the general population of Greece is being made to suffer.

Greece’s voters are determined to stop the ruling classes from continuing their nefarious policies that have brought the country to the brink of catastrophe, but in the coming elections their real concern will be opposing the sacrifice of the futures of an entire generation.

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

Edited by Kitty Stapp

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OPINION: Banks, Inequality and Citizenshttp://www.ipsnews.net/2015/01/opinion-banks-inequality-and-citizens/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-banks-inequality-and-citizens http://www.ipsnews.net/2015/01/opinion-banks-inequality-and-citizens/#comments Thu, 22 Jan 2015 13:27:17 +0000 Roberto Savio http://www.ipsnews.net/?p=138778

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, argues that alarming figures on what has gone wrong in global society are being met with inaction. Citing data from Oxfam’s recent report on global wealth, he says that the rich are becoming richer – and the poor poorer – in a society where finance is no longer at the service of the economy or citizens.

By Roberto Savio
ROME, Jan 22 2015 (IPS)

Every day we receive striking data on major issues which should create tumult and action, but life goes on as if those data had nothing to do with people’s lives.

A good example concerns climate change. We know well that we are running out of time. It is nothing less than our planet that is at stake … but a few large energy companies are able to get away with their practices surrounded by the deafening silence of humankind.

Roberto Savio

Roberto Savio

Another example comes from the world of finance. Since the beginning of the financial crisis in 2009, banks have paid the staggering amount of 178 billion dollars in fines – U.S. banks have paid 115 billion, while European banks 63 billion. But, as analyst Sital Patel of Market Watch writes, these fines are now seen as a cost of doing business. In fact, no banker has yet been incriminated in a personal capacity.

Now we have other astonishing data from Oxfam – if nothing is done, in two years’ time the richest one percent of the world´s population will have a greater share of its wealth than the remaining 99 percent.

The richest are becoming richer at an unprecedented rate, and the poorest poorer. In just one year, the one percent went from possessing 44 percent of the world´s wealth to 48 percent last year. In 2016, therefore, it is estimated that this one percent will possess more than all the other 99 percent combined.

The top 89 billionaires have seen their wealth increase by 600 billion dollars in the last four years – a rise of five percent and equal to the combined budgets of 11 countries of the world with a population of 2.3 billion people.

In 2010, that figure was owned by 388 billionaires, and this striking and rapid concentration of wealth has, of course, a global impact. The so-called middle class is shrinking fast and in a number of countries youth unemployment stands at 40 percent, meaning that the destiny of today’s young people is clearly much worse than that of their parents.“In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production”

It will probably take some time before those figures become part of general awareness but it is a safe bet that they will not lead to any action, as with climate change. U.S. President Barack Obama is the only leader who has announced a tax increase on the rich, although he stands little chance of succeeding with his Republican-dominated Congress.

In a world where the value of solidarity has disappeared (Europe’s debate on austerity is a good example), apathy and atomisation have become the reality. We are going back to the times of Queen Victoria, substituting a rich aristocracy with money coming from trade and finance, not production. But up to a point: 34 percent of today’s billionaires inherited all or part of their wealth, and – interestingly – “inheritance tax is the most avoidable of levies”, as James Moore noted Jan. 20 in The Independent.

The “father of modern times”, late U.S. President Ronald Reagan, saw it clearly when he said that the rich produce richness, the poor produce poverty. So let the rich pay less taxes.

Well, in a just-released report, the U.S. Institute on Taxation and Economic Policy notes that in 2015 the poorest one-fifth of Americans will pay on average 10.9 percent of their income in taxes, the middle one-fifth 9.4 percent, and the top one percent just 5.4 percent.

Now, 20 percent of the richest billionaires are linked to the financial sector and it is worth recalling that this sector has grown more than the real economy, and has regulations only at national level. At global level, finance is the only activity which has international body of some kind of governance, as do labour, trade and communications, to name just a few.

Finance is no longer at the service of the economy and citizens. It has its own life. Financial transactions are now worth 40 trillion dollars a day, compared with the world’s economic output of one trillion.

At national level, there are now attempts half-hearted attempts to regulate finance. But let us look what is happening in United States. The new bland regulation is the Dodd–Frank Wall Street Reform and Consumer Protection Act, commonly known as the Dodd-Frank, and it does not go as far as restoring the division between deposit banks, which was where citizens put their money and which could not be used for speculation, and investments banks, which speculate … and how!

This separation was abolished during the U.S. presidency of Bill Clinton, and is considered the end of banks at the service of the real economy. In any case, the lobbyists on Wall Street are intent on having the Dodd-Frank chipped away at, little by little.

There is some schizophrenia when we look at the relations between capital and politics. The U.S. Supreme Court has eliminated any limit to contributions from companies to political elections, declaring that the companies have the same rights as individuals. Of course, there are not many individuals who can shell out the same figures as a company, unless you’re one of the 89 billionaires!

Meanwhile, banks are not only responsible for the corruption of the political system, and for the illegal activities which have earned them billions of dollars, they are also responsible for funding only big investors, and leaving everybody else out from easy credit. The efforts of the Chairman of the European Central Bank,  Mario Draghi, to have banks give credit to small companies and individuals has gone largely nowhere.

But a new and imaginative initiative comes from the very stern Dutch bankers. All 90,000 bankers in the Netherlands are now required to take an oath: “I swear that I will endeavour to maintain and promote confidence in the financial sector. So help me God”.

This is not so much oriented towards the customer, and it is very self-serving; and it brings God in as the regulator of the Dutch banking system. Perhaps the Dutch bankers have been paying heed to the words of Goldman Sach’s CEO Lloyd Blankfein who said at the time of the financial crisis in 2009 that bankers were “doing God’s work”.

Well God will have to be actively involved. All the three biggest Dutch banks – Rabobank, ABN Amro and ING Groep – have been involved in scandals that have hurt consumers, or were nationalised during the financial crisis, costing taxpayers more than 140 billion dollars. In one case, Rabobank was fined one billion dollars.

New York’s Wall Street and London’s City are said to be open to the idea of introducing a similar oath.

It is probably only that kind of Higher Power which could turn the tide in this world of growing inequality and lack of ethics. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris   

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

The author can be contacted at utopie@ips.org

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European Citizens Call for Increased Aid to Developing Worldhttp://www.ipsnews.net/2015/01/european-citizens-call-for-increased-aid-to-developing-world/?utm_source=rss&utm_medium=rss&utm_campaign=european-citizens-call-for-increased-aid-to-developing-world http://www.ipsnews.net/2015/01/european-citizens-call-for-increased-aid-to-developing-world/#comments Mon, 12 Jan 2015 19:12:56 +0000 Thalif Deen http://www.ipsnews.net/?p=138607 In Tapoa, Burkina Faso, a region bordering Niger, the European Commission's humanitarian aid department (ECHO) funds the NGO ACF to provide health and nutrition care as well as food assistance including cash transfers for the poorest families. Credit: © EC/ECHO/Anouk Delafortrie/cc by 2.0

In Tapoa, Burkina Faso, a region bordering Niger, the European Commission's humanitarian aid department (ECHO) funds the NGO ACF to provide health and nutrition care as well as food assistance including cash transfers for the poorest families. Credit: © EC/ECHO/Anouk Delafortrie/cc by 2.0

By Thalif Deen
UNITED NATIONS, Jan 12 2015 (IPS)

An overwhelming majority of citizens in the 28-member European Union (EU) – which has been hamstrung by a spreading economic recession, a fall in oil prices and a decline of its common currency, the Euro – has expressed strong support for development cooperation and increased aid to developing nations.

A new Eurobarometer survey to mark the beginning of the ‘European Year for Development,’released Monday, shows a significant increase in the number of people in favour of increasing international development aid."The European Year will give us the chance to build on this and inform citizens of the challenges and events that lie ahead during this key year for development." -- Commissioner Neven Mimica

The survey reveals that most Europeans continue to “feel very positively about development and cooperation”.

Additionally, the survey also indicates that 67 percent of respondents across Europe think development aid should be increased – a higher percentage than in recent years, despite the current economic situation in Europe.

And 85 percent believe it is important to help people in developing countries.

“Almost half of respondents would personally be prepared to pay more for groceries or products from those countries, and nearly two thirds say tackling poverty in developing countries should be a main priority for the EU.”

Presenting the results of the survey, EU Commissioner for International Cooperation and Development Neven Mimica said, “I feel very encouraged to see that, despite economic uncertainty across the EU, our citizens continue to show great support for a strong European role in development.

“The European Year will give us the chance to build on this and inform citizens of the challenges and events that lie ahead during this key year for development, helping us to engage in a debate with them,” he added.

Jens Martens, director of the Bonn-based Global Policy Forum-Europe, told IPS the Eurobarometer demonstrates that the overwhelming majority of EU citizens support global solidarity and strengthened international cooperation.

“This is good news. Now, EU governments must follow their citizens,” he said.

EU positions in the U.N.’s upcoming post-2015 development agenda and Financing for Development (FfD) negotiations will become the litmus test for their global solidarity, said Martens, who is also a member of the Coordinating Committee of Social Watch, a global network of several hundred non-governmental organisations (NGOs) campaigning for poverty eradication and social justice.

EU governments must translate the increased citizens support for development now into an increase of offical development assistance (ODA), but also in fair trade and investment rules and strengthened international tax cooperation under the umbrella of the United Nations, he declared.

According to the latest available statistics, only five countries – Norway (1.07 percent), Sweden (1.02), Luxembourg (1.00), Denmark (0.85), United Kingdom (0.72) and the Netherlands (0.67) – have reached the longstanding target of 0.7 of gross national income as ODA to the world’s poorer nations.

In an interview with IPS last November, Secretary-General Ban Ki-moon singled out the importance of the upcoming International Conference on FfD in Ethiopia next July.

He said the ICFD will be “one of the most important conferences in shaping the U.N.’s 17 proposed sustainable development goals (SDGs)” which will be approved at a summit meeting of world leaders next September.

Ban cautioned world leaders of the urgent need for “a robust financial mechanism” to implement the SDGs – and such a mechanism, he said, should be put in place long before the adoption of these goals.

“It is difficult to depend on public funding alone,” he told IPS, stressing the need for financing from multiple sources – including public, private, domestic and international.

Speaking of financing for development, Ban said ODA, from the rich to the poor, is “is necessary but not sufficient.”

Meanwhile, the economic recession is taking place amidst the growing millions living in hunger (over 800 million), jobless (more than 200 million), water-starved (over 750 million) and in extreme poverty (more than one billion), according to the United Nations.

In a statement released Monday, the European Commission provided some of the results of the Eurobarometer on development: At 67 percent, the share of Europeans who agree on a significant increase in development aid has increased by six percentage points since 2013, and a level this high was last seen in 2010.

One in two Europeans sees a role for individuals in tackling poverty in developing countries (50 percent).

A third of EU citizens are personally active in tackling poverty (34 percent), mainly through giving money to charitable organisations (29 percent).

Most Europeans believe that Europe itself also benefits from giving aid to others: 69 percent say that tackling poverty in developing countries also has a positive influence on EU citizens.

Around three-quarters think it is in the EU’s interest (78 percent) and contributes to a more peaceful and equitable world (74 percent).

For Europeans, volunteering is the most effective way of helping to reduce poverty in developing countries (75 percent). But a large majority also believe that official aid from governments (66 percent) and donating to organisations (63 percent) have an impact.

The European Commission says 2015 promises to be “hugely significant for development, with a vast array of stakeholders involved in crucial decision-making in development, environmental and climate policies”.

2015 is the target date for achieving the Millennium Development Goals (MDGs) and the year in which the ongoing global post-2015 debate will converge into a single framework for poverty eradication and sustainable development.

2015 is also the year that a new international climate agreement will be decided in Paris.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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Falling Oil Prices Threaten Fragile African Economieshttp://www.ipsnews.net/2014/12/falling-oil-prices-threaten-fragile-african-economies/?utm_source=rss&utm_medium=rss&utm_campaign=falling-oil-prices-threaten-fragile-african-economies http://www.ipsnews.net/2014/12/falling-oil-prices-threaten-fragile-african-economies/#comments Tue, 23 Dec 2014 22:35:42 +0000 Thalif Deen http://www.ipsnews.net/?p=138388 Soldiers patrol an oil field in Paloug, in South Sudan's Upper Nile state. Credit: Jared Ferrie/IPS

Soldiers patrol an oil field in Paloug, in South Sudan's Upper Nile state. Credit: Jared Ferrie/IPS

By Thalif Deen
UNITED NATIONS, Dec 23 2014 (IPS)

The sharp decline in world petroleum prices – hailed as a bonanza to millions of motorists in the United States – is threatening to undermine the fragile economies of several African countries dependent on oil for their sustained growth.

The most vulnerable in the world’s poorest continent include Nigeria, Angola, Equatorial Guinea, Gabon and Sudan – as well as developing nations such as Algeria, Libya and Egypt in North Africa."In the long run, governments in these oil-exporting countries should use oil revenues to support productive sectors, employment generation, and also build financial reserves when oil prices are high." -- Dr. Shenggen Fan of IFPRI

Dr. Kwame Akonor, associate professor of political science at Seton Hall University in New Jersey, who has written extensively on the politics and economics of the continent, told IPS recent trends and developments such as the outbreak of Ebola and the fall of global oil prices “shows how tepid and volatile African economies are.”

In 2012, for instance, Sierra Leone and Liberia (two of the hardest hit countries with Ebola) were cited by the World Bank as the fastest growing sub-Saharan African countries, he pointed out.

In a similar vein, countries such as Algeria, Equatorial Guinea and Gabon are considered top performing economies due to the large concentration of their oil and gas reserves.

“But the ramifications of any economic crisis will undoubtedly negatively impact the fortunes of these countries,” said Akonor, who is also director of the University’s Centre for African Studies and the African Development Institute, a New York-based think tank.

The world price for crude oil has declined from 107 dollars per barrel last June to less than 70 dollars last week.

There are multiple reasons for the decline, including an increase in oil production, specifically in the United States; a fall in the global demand for oil due to a slow down of the world economy; and a positive fallout from conservation efforts.

As the New York Times pointed out: “We simply don’t burn as much energy as we did a few years ago to achieve the same amount of mileage, heat or manufacturing production.”

There are also geopolitical reasons for the continued decline in oil prices because Saudi Arabia, one of the world’s largest producers, has refused to take any action to stop the fall.

Despite the crisis, the Saudi oil minister Ali Al-Naimi was quoted as saying, “Why should I cut production?”

This has led to the conspiracy theory it is working in collusion with the United States to undermine the oil-dependent economies of three major adversaries: Russia, Iran and Venezuela.

Besides Saudi Arabia, the fall in prices is also affecting Iraq, Kuwait, United Arab Emirates (UAE), Qatar and Oman.

But they are expected to overcome the crisis because of a collective estimated foreign exchange reserve amounting to over 1.5 trillion dollars.

The drop in oil prices, however, will have the most damaging effects on Africa which has been battling poverty, food shortages, HIV/AIDS, and more recently, the outbreak of Ebola.

The heaviest toll will be on Nigeria, the largest economy in Africa which depends on crude oil for about 80 percent of its revenues, according to the Wall Street Journal. The country’s currency, the naira, has declined about 15 percent since the beginning of the fall in oil prices.

Dr. Shenggen Fan, director general of the International Food Policy Research Institute (IFPRI), sees both a positive and negative side to the current oil crisis. He told IPS the recent decline in oil prices will help reduce food prices.

Since oil prices are highly co-related to food prices, high oil prices make agricultural production more expensive and thus cause food prices to increase, he added.

“Now that oil prices are on a downward trend, this is, by and large, good for global food security and nutrition,” he said.

Dr. Fan said poor producers and consumers in developing countries should be able to benefit from this – as long as their purchasing power increases.

However, he cautioned, oil exporting countries may lose government revenues from low oil prices.

Indeed, crude oil producing nations in Africa have felt the pinch of declining oil prices given the dependence of their economies on crude oil, he noted. In the short run, he said, poor people may suffer, if their governments reduce food subsidies.

“In the long run, governments in these oil-exporting countries should use oil revenues to support productive sectors, employment generation, and also build financial reserves when oil prices are high.”

When oil prices are low, these governments should use reserves to ensure that poor people are protected through social safety net programmes, he added.

Dr. Akonor told IPS as impressive as the current and long-term economic projections for Africa might seem, it does not change the precarious and fragile nature of the continent’s economic foundations.

“The high debt overhang and the heavy reliance on raw materials (such as oil) and minerals for exports, makes African economies susceptible to shock and systemic risks,” he noted.

Moreover, he said, the underlying human capital formation, especially amongst the burgeoning unemployed youth population, lacks the requisite skills that could lead to real sustainable growth and transformation.

“What is needed then is the effective implementation of development strategies and policies that would lead to long-term structural transformation and durable human development,” he argued.

One way to achieve this is through closer regional cooperation, given the small size of domestic markets and poor continental infrastructure. Transformative and human needs development must, amongst other things, address Africa’s poor infrastructure, said Dr. Akonor.

According to the African Development Bank, the road access rate in Africa is only 34 percent, compared with 50 percent in other developing regions. Only 30 percent of Africans have access to electricity, compared to 70-90 percent in other developing countries.

“What makes Africa’s development challenges vexing is that there has not been a shortage of autonomous development-related ideas between African leaders and interested publics,” Dr. Akonor said.

One can argue that Africa has debated and produced too many blueprints and programmes for over half a century without any tangible results or follow through, he said.

“Thus the major obstacle to durable economic performance in Africa has not been the ambitious nature of the development targets, but rather the absence of political will by African governments and the lack of consistency, coordination, and coherence at the sub regional, regional and even global levels to implement structural change,” Dr. Akonor declared.

“Transformational development will require that Africa add value to, and diversify, its export commodities. Building a solid industrial base and infrastructural capacity are also necessary prerequisites toward autonomous structural change.”

Dr. Fan told IPS that on the broader issue of the factors that influence food prices, it is important to realise the right price of food is not easy to determine.

What is important is that the prices of food (including the natural resources that are used for food production) fully reflect their economic, social, and environmental costs and benefits in order to send the right signals to all actors along the food supply chain.

“If this causes food prices to increase, social safety nets should be provided to protect poor people in the short term and also to help them move on to more productive activities in the long term,” Dr. Fan said.

In so doing, their food security and nutrition is not compromised, he declared.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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What the U.S. Should Learn from Russia’s Collapsehttp://www.ipsnews.net/2014/12/what-the-u-s-should-learn-from-russias-collapse/?utm_source=rss&utm_medium=rss&utm_campaign=what-the-u-s-should-learn-from-russias-collapse http://www.ipsnews.net/2014/12/what-the-u-s-should-learn-from-russias-collapse/#comments Sat, 20 Dec 2014 12:35:18 +0000 Miriam Pemberton http://www.ipsnews.net/?p=138354 Oil pumps in southern Russia. Photo: Gennadiy Kolodkin/World Bank

Oil pumps in southern Russia. Photo: Gennadiy Kolodkin/World Bank

By Miriam Pemberton
WASHINGTON, Dec 20 2014 (IPS)

After months of whispered warnings, Russia’s economic troubles made global headlines when its currency collapsed halfway through December. Amid the tumbling price of oil, the ruble has fallen to record lows, bringing the country to its most serious economic crisis since the late 1990s.

Topping most lists of reasons for the collapse is Russia’s failure to diversify its economy. At least some of the flaws in its strategy of putting all those eggs in that one oil-and-gas basket are now in full view.Moscow’s failure to move beyond economic structures dominated by first military production, and now by fossil fuels, can serve as a cautionary tale and call to action.

Once upon a time, Russia did actually try some diversification — back before the oil and gas “solution” came to seem like such a good idea. It was during those tumultuous years when history was pushing the Soviet Union into its grave. Central planners began scrambling to convert portions of the vast state enterprise of military production — the enterprise that had so bankrupted the empire — to produce the consumer goods that Soviet citizens had long gone without.

One day the managers of a Soviet tank plant, for example, received a directive to convert their production lines to produce shoes. The timetable was: do it today. They didn’t succeed.

Economic development experts agree that the time to diversify is not after an economic shock, but before it. Scrambling is no way to manage a transition to new economic activity. Since the bloodless end to the Cold War was foreseen by almost nobody, significant planning for an economic transition in advance wasn’t really in the cards.

But now, in the United States at least, it is. Currently the country is in the first stage of a modest defence downsizing. We’re about a third of the way through the 10-year framework of defence cuts mandated by the Budget Control Act of 2011.

Assuming Congress doesn’t scale back this plan or even dismantle it altogether, the resulting downsizing will still be the shallowest in U.S. history. It’s a downsizing of the post-9/11 surge, during which Pentagon spending nearly doubled. So the cuts will still leave a U.S. military budget higher, adjusting for inflation, than it was during nearly every year of the Cold War — back when we had an actual adversary, the aforementioned Soviet Union, that was trying to match us dollar for military dollar.

Now, no such adversary exists. Thinking of China? Not even close: The United States spends about six times as much on its military as Beijing.

Even so, the U.S. defence industry’s modest contraction is being felt in communities across the country. By the end of the 10-year cuts, many more communities will be affected. This is the time for those communities that are dependent on Pentagon contracts to work on strategies to reduce this vulnerability. To get ahead of the curve.

There is actually Pentagon money available for this purpose. Its Office of Economic Adjustment exists to give planning grants and technical assistance to communities recognising the need to diversify.

As we in the United States struggle to understand what’s going on in Russia and how to respond to it, at least one thing is clear: Moscow’s failure to move beyond economic structures dominated by first military production, and now by fossil fuels, can serve as a cautionary tale and call to action.

Diversified economies are stronger. They take time and planning. Wait to diversify until the bottom falls out of your existing economic base, and your chances for a smooth transition decline precipitously. Turning an economy based on making tanks into one that makes shoes can’t be done in a day.

This story originally appeared on Foreign Policy in Focus.

Edited by Kitty Stapp

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Cuba’s Reforms Fail to Reduce Growing Inequalityhttp://www.ipsnews.net/2014/12/cubas-reforms-fail-to-reduce-growing-inequality/?utm_source=rss&utm_medium=rss&utm_campaign=cubas-reforms-fail-to-reduce-growing-inequality http://www.ipsnews.net/2014/12/cubas-reforms-fail-to-reduce-growing-inequality/#comments Tue, 16 Dec 2014 22:21:58 +0000 Patricia Grogg http://www.ipsnews.net/?p=138300 Mercado Amistad, one of the shops that only accept hard currency, officially called “foreign currency recovery stores”, in central Havana. Credit: Jorge Luis Baños/IPS

Mercado Amistad, one of the shops that only accept hard currency, officially called “foreign currency recovery stores”, in central Havana. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Dec 16 2014 (IPS)

One of the major challenges assumed by President Raúl Castro when he launched a series of reforms in Cuba is improving living standards in a country still suffering from a recession that began over 20 years ago and has undermined the aim of achieving economic and social equality.

Inequality has been growing since the start of the crisis triggered by the break-up of the Soviet Union and East European socialist bloc – Cuba’s main trade and aid partners – in the early 1990s. The “special period” – the euphemistic term used to refer to the lengthy recession – “has even morally affected the concept of inequality,” economist Esteban Morales told IPS.

To ease the recession in the 1990s, the government of Fidel Castro (1959-2008) opened the doors to foreign investment, fomented tourism, legalised the dollar, and created the “foreign currency recovery stores”, among other measures whose economic benefits also came accompanied by greater social inequality.: “What is annoying is that people with less education and fewer responsibilities earn more than a professional. When I started studying in the 1980s that’s not how things were. People’s salaries stretched much farther.” -- Cuban schoolteacher

However, María Caridad González appreciates the sense of equality that still exists in Cuban society, which she says has made social inclusion possible for her 10-year-old son, who knows that “to do well in life he just has to study and become a professional.”

Since the 1959 revolution, free universal healthcare coverage and education have been important tools for achieving social equality in Cuba.

González, who comes from a family of small farmers, moved to Havana in the mid-1990s. “It was hard at first. There were shortages of everything, but I stayed anyway and got married here. Now there are a lot of stores and farmers’ markets, and what is lacking is money to buy things,” said the 36-year-old, who works in the cleaning service at a company that is partly foreign owned.

Other people are worse off than González, who manages to add to her monthly income working as a domestic in the homes of families she knows, which brings her another 80 CUC – the Cuban peso convertible to dollars – or 1,920 pesos.

That is more than four times the average public sector salary of 470 pesos (19 dollars) a month. “Thanks to my income we survived the months when my husband, who is a cook in the tourism industry, was out of work,” said González.

She is in a much better position than her neighbor, a 55-year-old primary schoolteacher who earns 750 pesos a month and has no source of dollars or other foreign currency – a mainstay for many Cuban families, who receive remittances from relatives abroad or who work in tourism, where they earn tips.

The teacher, who is married and has two adult children aged 20 and 25, told IPS: “What is annoying is that people with less education and fewer responsibilities earn more than a professional. When I started studying in the 1980s that’s not how things were. People’s salaries stretched much farther.”

The inequality gap has widened as the differences in incomes have grown.

Those who only earn a public salary – the state is still by far the biggest employer, despite a reduction in the public payroll as part of the reforms – or who depend on a pension or are on social assistance find it impossible to meet their basic needs. According to statistics from the Centre for Studies of the Cuban Economy, food absorbs between 59 and 75 percent of the family budget in Cuba.

A farmers’ market on Vapor street in Old Havana. Credit: Jorge Luis Baños/IPS

A farmers’ market on Vapor street in Old Havana. Credit: Jorge Luis Baños/IPS

However, Cuba’s free universal healthcare and education, social security system, and social assistance for the poor have been preserved in spite of the country’s economic troubles, and were key to Cuba’s ranking in 44th place on the United Nations Development Programme’s (UNDP) Human Development Index (HDI) this year.

The HDI is a composite index that measures average achievement in three basic dimensions of human development: long and healthy life, knowledge and a decent standard of living.

The schoolteacher, who asked to remain anonymous, said “I understand and appreciate that, but it is no less true that the differences in income differentiate us when it comes to putting food on the table or buying clothes.”

Morales agrees with the government’s aim of “equal rights and opportunities” rather than egalitarianism. In his view, the distribution of income based on work is still unequal. “It would be ethical if people received in accordance with what they contributed, and those who needed assistance would receive it through social spending, to balance out the inequalities,” he argued.

The academic defends the idea of subsidising specific people rather than products, which is still being done through the ration card system that distributes a certain quantity of foodstuffs at prices subsidised by the state, to all citizens, regardless of their income.

The system covered the basic dietary needs of families until the 1980s. But that is no longer the case, and Cubans now have to complete their diet with products sold in the hard currency stores and the farmers’ markets, where one pound (450 grams) of pork can cost 40 pesos (1.60 dollars) – the same price fetched by a pound of onions at certain times of the year.

In its 2014-2020 pastoral plan, the Catholic Church complains that broad swathes of society are plagued by “material poverty, the result of wages that are too low to provide a family with decent living standards.”

That situation, it says, impacts semi-skilled workers as well as professionals.

After acknowledging that the expansion of opportunities for self-employment and for setting up cooperatives in non-agricultural sectors of the economy has opened up opportunities for some, the church warns that the current economic reforms “have failed to reactivate the economy in such a way that it benefits the entire population.”

Not all segments of society are in equal conditions to take advantage of the changes that have been ushered in. Researchers like Morales or Mayra Espina say women, people who are not white, and young people are at a disadvantage, whether due to a lack of formal training and education, or of assets and resources for starting up their own businesses.

According to the last official statistics on poverty published in Cuba, from 2004, 20 percent of the urban population was poor. In this Caribbean island nation, 76 percent of the population of 11.2 million lives in towns and cities. Experts worry that the proportion today is even higher, and they say decision-makers need to know the exact percentage in order to properly tailor social policies to the actual situation.

But Espina and other academics say the reforms approved in April 2011 do not put a high enough priority on social aspects, ignore the questions of poverty and inequality, and contain weak measures for guaranteeing equality.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: Europe Has Lost Its Compasshttp://www.ipsnews.net/2014/12/opinion-europe-has-lost-its-compass/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-europe-has-lost-its-compass http://www.ipsnews.net/2014/12/opinion-europe-has-lost-its-compass/#comments Sat, 13 Dec 2014 09:43:46 +0000 Roberto Savio http://www.ipsnews.net/?p=138263

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, argues that, with the fall of the Swedish government orchestrated by the far-right and centre-right opposition, a symbol of civic-mindedness and democracy in Europe has fallen, and the grip of an irrational fear of immigrants tightens as Europe’s politicians seek a scapegoat.

By Roberto Savio
ROME, Dec 13 2014 (IPS)

The Swedish Social Democrat government, which took office only two months ago, has just resigned. The far-right anti-immigrant Sweden Democrats sided with the four-party centre-right opposition alliance, and new elections will be held in March next year.

In Europe, Sweden has been the symbol of civic-mindedness and democracy – the place where those escaping dictatorship and hunger could find refuge; the country without corruption, where social justice was a national value.

Roberto Savio

Roberto Savio

However, in just a short period, the Sweden Democrat xenophobic party, which wants to close the country to foreigners and is now the third-largest party in parliament, was able to topple the government on Dec. 3.

Similar parties exist in the other Nordic countries – Finland, Norway and Denmark – where they have been similarly able to take a decisive role in national politics. The myth of northern Europe, the modern and progressive Nordic Europe, has vanished.

A few days later, in Dresden (the Florence of Germany) in Saxony, thousands of demonstrators marched to the cry ”Wir sind das Volk” [“We are the people”] – the same battle cry used in protests against the Communist regime in then East Germany 25 years ago, only this time the protest was against immigrants.

A previously unknown activist, 41-year-old Lutz Bachmann, has set up the Patriotic Europeans Against the Islamisation of the West, and in seven weeks has been able to rally thousands of people. The local paper, the Sachsische Zeitung, has reported that Bachman has several criminal convictions for burglary, dealing with cocaine and driving without a licence or while drunk.“The fact that without immigrants Europe would grind to a halt and be unable to compete internationally is not matter for a campaign that appeals to politicians. On the contrary, they are flying the flag of defending Europe from a dangerous influx of immigrants”

Such details were irrelevant to the demonstrators. They “miss their country”, demand “protection of the Homeland” and applaud Bachmann’s call for a “clean and pure Germany”.

In Saxony, foreign immigrants account for only two percent of the population, and only a small fraction of those are Muslim. But the announcement that facilities would be opened for some 2,000 refugees from Syria, was the trigger in this town of 530.000 inhabitants. In the last state legislative elections, a new populist party, the Alternative for Germany, took almost 10 percent of the vote.

A similar irrational fear is gripping many European countries.

Italy, for example, now has two major parties (the Northern League and the Five Star Movement), which together account for around 35 percent of the vote, with xenophobic tones, and another major party, Forza Italia (literally Forward Italy) led by former Prime Minister Silvio Berlusconi, is flirting with an anti-European policy. The three more or less openly advocate withdrawal from the Euro.

At the same time, in 2013, only 514.308 children were born (including those of immigrants), 20.000 less than the year before. Between 2001 and 2011, according to ISTAT, the national statistical institute, the number of families formed by one person increased by 41.3 percent, while those with children fell by five percent. Of those with children, 47.5 percent had one child, 41.9 percent two and only 10.6 percent three or more.

If, as is conventionally held, the demographic replacement rate is 2.1, this means that the Italian population, like everywhere in Europe, is on a steep decline.

Of course, having child today is not an easy choice. To put it simply: in 2009, Italy had a budget of 2.5 billion euro for social interventions and, four years later, only one-third of that; in 2009, Italy’s Family Policies Fund stood at 186.5 million euro and is now less than 21 million. No wonder then that 60 percent of the population lives in fear of becoming poor.

The number of NEET (Not in Education, Employment or Training) rose from 1.8 million in 2007 to 2.5 million in 2013. And while Italy’s young people are being humiliated, its senior citizens are being mistreated – 41.3 percent of pensions are less than 1,000 euro per month.

By the way, 83,000 Italians expatriated in 2013, and the number of young people with a university degree that went to the United Kingdom, for example, was just over 3,000 – but in the same year, 44,000 foreigners also left Italy and while Italy received nearly 355,000 immigrants in 2011, two years later the number was just 280,000. And yet the campaign of xenophobia in Italy has it that there is a dramatic increase in immigrants.

This social decline is happening at different speeds and in different proportions all over Europe. In Germany, the core country, 25 percent of the population fall into the so-called “Hartz IV” category – under the Hartz Committee reform of the German labour market introduced by then Chancellor Gerhard Schroeder – and have to survive on the bare minimum of benefits.

This social decline is being accompanied by an unprecedented increase in social inequality. Two French economists, François Bourguignon and Christian Morrisson, published a study In 2002 on inequality among world citizens, starting from the 19th century, using the Gini index of inequality (where absolute equality = 0). In 1820, the index stood at 50, had risen to 60 in 1910, 64 in 1950, 66 in 1992 and 70 ten years later.

Today the ratio between a minimum wage and a top salary is very simple – the small guy must work 80 years to earn what the big guy earns in a year!

According to a number of sociologists, ‘catching up’ (or the so-called ‘demonstration effect’), is one underlying reason for corruption. It is no accident that the south of Europe has much more corruption than the north (but the Protestant Ethic must also play a role).

In just a few months, the former prime minister of Portugal, José Socrates, has been jailed, former president Nicolas Sarkozy has returned to politics in France to try to escape several accusations and Spaniards are riveted by the revelation of giant webs of corruption that the government is now trying to stymie by changing the judge in charge of the prosecution.

Meanwhile, Romans have awakened to find out that a criminal organisation has been controlling the town council and the administration, and this coming on the heels of a similar discovery in Milan, where individuals who had been already convicted of corruption got back into business and did more of the same in the public works for next year’s Expo.

It is no wonder that, as in every crisis, in a climate fear and uncertainty, there is a need for a scapegoat. The fact that without immigrants Europe would grind to a halt and be unable to compete internationally is not matter for a campaign that appeals to politicians. On the contrary, they are flying the flag of defending Europe from a dangerous influx of immigrants.

This all shows that Europe has lost its compass – and there is nothing on the horizon indicating that it can be recovered soon.

Who is going to provide an answer to Europe’s anguish when those in power escape from reality and look for scapegoats? (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

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

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OPINION: The Decline of Social Europe is Part of a World Trendhttp://www.ipsnews.net/2014/11/opinion-the-decline-of-social-europe-is-part-of-a-world-trend/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-the-decline-of-social-europe-is-part-of-a-world-trend http://www.ipsnews.net/2014/11/opinion-the-decline-of-social-europe-is-part-of-a-world-trend/#comments Wed, 26 Nov 2014 12:15:40 +0000 Roberto Savio http://www.ipsnews.net/?p=137963

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, argues that social criteria are taking a back seat to financial and economic criteria in the policies of European countries.

By Roberto Savio
ROME, Nov 26 2014 (IPS)

After the Italian sea search-and-rescue operation Mare Nostrum at a cost of nine million euros a month, through which the Italian Navy has rescued nearly 100,000 migrants – although perhaps up to 3,000 have died – from the Mediterranean since October 2013, Europe is now presenting its new face in the Mediterranean.

The European Union is launching Joint Operation Triton with a monthly budget of 2.9 million euros and funds secured until the end of the year. Its function is to enforce border controls – not to save “boat people” – and it will patrol just thirty nautical miles from the coast, which pales in comparison with Italy’s Mare Nostrum operation which saw patrols being sent close to the Libyan coast.

Roberto Savio

Roberto Savio

Even with this very limited operation, British Prime Minister David Cameron has said that the United Kingdom will not contribute because operations that save migrants make them more willing to try to cross the Mediterranean. Of course, there is a perverted logic in this: the more migrants that die, the greater will be the discouragement for others to try.

Following this logic through, the ideal situation therefore would be to reach a death rate that would stop illegal immigration once and for all!

In this context, it is worth noting that the U.K. government is considering withdrawal from the European Convention of Human Rights (something that even Russian President Vladimir Putin has never considered). The argument is that nobody can be above U.K. courts.

London is also refusing to pay its share of increased of contributions to the European Union and is considering how to put an annual cap on the number of Europeans who are entitled to work legally in the United Kingdom.“Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation”

And finally, the U.K. government received with great uproar the sentence of the European Court of Justice, which placed a European cap on banker bonuses, rejecting Britain’s claims that it was illegal. The British argument was that pay levels (also of discredited bankers) were part of social policy and thus under the authority of member states not of the European Union.

Meanwhile, the same Court has issued another sentence under which E.U. member states are not obliged to support European citizens who do not have economic activities in the E.U. countries to which they have migrated. And the German Parliament is now preparing a law to expel European immigrants who do not find a job within six months.

Of course, this will open the doors to all other countries to reduce the free movement of Europeans in Europe, a cornerstone of the original vision of a solidary Europe. Now Europeans will be obliged to take any job, and therefore the law of market will become the primary criterion for their movements in Europe.

Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation.

In fact, the point has now been reached where social criteria are the last to be used to judge whether a country is recovering or not, well after economic and financial criteria.

A devastated Greece is now again being considered in financial markets because its economic indicators are on the up. And, at the last G20 meeting in Brisbane, Spain was touted as the example that austerity policies – those indicated by German Chancellor Angela Merkel as the example for laggards like Italy and France – are the correct way out of the crisis.

At the same time, a very different source, Caritas, has reported that only 34.3 percent of Spaniards live a normal life, while 40.6 percent are stuck in precariousness, 24.2 percent are already suffering moderate exclusion and 10.9 percent are living in severe exclusion.

To understand the trend, six years ago, 50.2 percent of Spaniards had a normal life. Now, one citizen in four is suffering exclusion, and of those 11 million excluded citizens, 77.1 percent have no job, 61.7 percent no house and 46 percent no health care support.

According to UNICEF’s recent report on children under recession, 76.5 million children in the rich countries live in poverty, and in Spain, 36.3 percent of the country’s children (2.7 million) are living in a state of precariousness.

What is now new is that some major financial institutions have started to draw attention to social issues.

Janet L. Yellen, chairwoman of the U.S. Federal Reserve, has declared that she is concerned about the growing inequality of wealth and income in the United States, and that chances for people to advance economically appear to be diminishing. And Mario Draghi, governor of the European Central Bank, is now constantly mentioning the issues of “unbearable unemployment “and “growing exclusion”.

In the background there is the proven fact that countries which took emergency measures to reduce public borrowing have mostly had weaker growth, like most European countries (with the exception of Germany, helped by a boom in machinery exports to Russia and China), while those which introduced a policy of stimulus, like the United States, Japan and Britain, have done much better, also in reducing unemployment.

But Merkel continues to ignore calls from the International Monetary Fund (IMF), the World Bank and other monetary institutions – she is only interested in pleasing her constituency, which is increasingly looking to its immediate interests and losing sight of European perspectives.

In all this, the banks continue to be uninterested in any social perspective. A few days ago, European and U.S. regulators imposed new fines worth 4.5 billion dollars on a number of major banks (we are now approaching the 200 billion dollar mark since the crisis started in 2008) for illegal activities.

Jamie Dimon, the CEO of the largest of them, JP Morgan, declared in an interview with Andrew Ross Sorkin of CNBC that it is important that United States creates a “safe harbour” where JPMorgan’s illegal practice of hiring the relatives of political leaders “is not punished”.

In Dimon’s country, between 2009 and 2010, 93 percent of economic growth ended up in the pockets of one percent of the population, according to Nobel economics laureate Joseph Stiglitz, and the 16,000 families with wealth of at least 111 million dollars have seen their share of national wealth double since 2012 to 11.2 percent.

The last U.S. presidential elections cost 3.4 billion dollars, and most of that came from this small minority. Democracy, where all votes are equal, is increasingly becoming a plutocracy where money elects.

Meeting leaders of social movements on Oct. 26, Pope Francis told them: “They call me a communist [for speaking of] land, work and housing … but love for the poor is at the centre of the Gospel.” Certainly, governments are doing otherwise …

(Edited by Phil Harris)

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Child Poverty in Spain Seen Through the Eyes of Encarnihttp://www.ipsnews.net/2014/11/child-poverty-in-spain-seen-through-the-eyes-of-encarni/?utm_source=rss&utm_medium=rss&utm_campaign=child-poverty-in-spain-seen-through-the-eyes-of-encarni http://www.ipsnews.net/2014/11/child-poverty-in-spain-seen-through-the-eyes-of-encarni/#comments Sat, 01 Nov 2014 05:11:44 +0000 Ines Benitez http://www.ipsnews.net/?p=137523 Estefanía reads in the top bunk while Encarni does homework on a table in her small room. This 12-year-old girl from Málaga is one of the faces of child poverty, which according to a new UNICEF report affects 36.3 percent of children in Spain. Credit: Inés Benítez/IPS

Estefanía reads in the top bunk while Encarni does homework on a table in her small room. This 12-year-old girl from Málaga is one of the faces of child poverty, which according to a new UNICEF report affects 36.3 percent of children in Spain. Credit: Inés Benítez/IPS

By Inés Benítez
MÁLAGA, Spain, Nov 1 2014 (IPS)

“I would like to have a big house, and I wish my family didn’t have to go out and ask for food or clothes,” Encarni, who just turned 12, tells IPS in the small apartment she shares with five other family members in a poor neighbourhood in the southern Spanish city of Málaga.

This girl with shoulder-length straight brown hair, brown eyes and broad forehead is one of the faces of child poverty in Spain, which has grown 28.5 percent since 2008, according to a report released Tuesday Oct. 28 by the United Nations children’s fund, UNICEF.

The report, “Children of the Recession”, which studied 41 industrialised nations, says child poverty in Spain climbed from 28.2 percent in 2008 to 36.3 percent in 2013. It includes Spain on the list of countries hardest hit by the economic crisis, along with Croatia, Cyprus, Greece, Ireland, Italy and Portugal.

Almost every day in the middle of the afternoon Encarni goes with her mother and her aunt to get food at the Er Banco Güeno, a soup kitchen run by the community in the Palma-Palmilla neighbourhood.

The soup kitchen has been operating for the last two years in what used to be a bank, which the local residents occupied for this purpose. They serve three meals a day to the needy.

“I worked in construction until the start of the 2008 crisis, when I was laid off,” Encarní’s stepfather, Antonio Delgado, tells IPS. Since then he has not found work, and has done a little of everything, ”from picking up junk to selling things in street markets.”

Antonio, with a lean face and teeth that have seen better days, brings in a few euros a day fixing things using a soldering machine and a tire pump, which he keeps in a corridor off the street, where several bird cages hang at the entrance.

Encarni explains that her mother, Inmaculada Rodríguez, found work for a couple of months taking care of an elderly person, but was fired.

The unemployment rate in this country of 47 million people currently stands at 23.6 percent. But in the autonomous community or region of Andalusia, where Málaga is found, it is 35.2 percent, according to the national statistics institute, INE.

“I really like to go to school. I especially love gymnastics,” Encarni says, with her sweet voice, although she adds that she gets sad when she feels they leave her out sometimes, “because they saw me go into the soup kitchen for food. But I just ignore them,” she adds, with a wan smile.

One of the apartment blocks in Palma-Palmilla, the poor neighbourhood in the southern Spanish city of Málaga where Encarni and her family live. Credit: Inés Benítez/IPS

One of the apartment blocks in Palma-Palmilla, the poor neighbourhood in the southern Spanish city of Málaga where Encarni and her family live. Credit: Inés Benítez/IPS

A few days ago her aunt and three cousins moved to another house nearby. But until then there were 11 people living in Encarni´s house, the family said when they described their day-to-day life to IPS.

She slept in the top bunk with her cousin Estefanía, who is a year older than her. In the bottom bunk slept her aunt Ana María and her nine-year-old cousin Juan José. Encarni’s two-and-a-half-year-old cousin Ismael slept next to them in a crib.

Encarni’s mother, her stepfather, and four other members of her family slept in the rest of the rooms of the house, which only has one small bathroom which you reach by ducking under a clothesline, where the recently washed clothes are being dried by a fan, near the kitchen.

Estefanía and Ismael suffer from epilepsy, says their mother Ana María, who is unemployed and shows IPS the box where she keeps the medications that they have to take every day.

“Is your house big?” Encarni asks IPS while petting her dog, a friendly black pup named Gordo.

She goes on to ask: “Where do rich people get their money?”

According to the report “Even it Up: Time to End Extreme Inequality” by the international relief and development organisation Oxfam, the richest one percent of Spaniards have as much wealth as 70 percent of the entire population.

The report also says the number of billionaires around the world doubled to 1,645 as of March 2014, from 793 in March 2009, demonstrating that the rich actually benefited from the economic crisis.

Spain, in particular, is one of the 34 countries of the Organisation for Economic Cooperation and Development (OECD) where inequality between rich and poor grew the most during the crisis, according to its Society at a Glance 2014 report.

Between 2007 and 2010, the income of the poorest 10 percent of the population of Spain fell 14 percent, while of the other OECD countries it only dropped more than five percent in Mexico, Greece, Ireland, Estonia and Italy, and did not drop more than 10 percent in any other country.

Encarni wants to be a judge when she grows up. But she says that for now she would be happy just to be able to “dress well” and be able to buy more things in the supermarket.

“Everything we have was given to us because my parents don’t have enough money,” she explains, pointing to the clothes folded on the shelves, the packages of rice and lentils on a high shelf, and even the backpack that a neighbour gave her for school, where she eats lunch every day free of charge because she comes from a low-income family.

Encarni has fun skipping rope, playing Chinese jump rope and goofing off on the swings near her house. She also likes it when her stepfather gives her a ride on his bike.

She likes candy too, and enhoys singing and dancing with her cousin Estefanía, who swam in the sea this summer for the first time in her life, even though she lives only a few kilometres from the beach. “The water tasted salty,” Estefanía tells IPS.

Of every 100 children at risk of poverty in Spain, 25 are in the region of Andalusía, 15 are in Cataluña in the northeast, 10 are in Valencia in the east and 10 are in Madrid and the rest of the autonomous communities, according to INE figures cited by the report “Boys and girls, the most vulnerable in all of the autonomous communities”, by the organisation Educo.

The new UNICEF study warns that 2.6 million children have fallen into poverty as a result of the economic crisis in the most affluent countries, bringing the total number of poor children in the industrialised North to 76.5 million.

With her hair loose and recently combed, sitting on a bed near a window while the TV spits out news on the latest corruption scandals in the country, Encarni hugs her little cousin Ismael, who clasps a piece of bread in his hand while they wait for night to fall.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Crisis Fuelled Resurgence of Horse-Drawn Carriages in Cubahttp://www.ipsnews.net/2014/10/crisis-fuelled-resurgence-of-horse-drawn-carriages-in-cuba/?utm_source=rss&utm_medium=rss&utm_campaign=crisis-fuelled-resurgence-of-horse-drawn-carriages-in-cuba http://www.ipsnews.net/2014/10/crisis-fuelled-resurgence-of-horse-drawn-carriages-in-cuba/#comments Thu, 30 Oct 2014 13:52:40 +0000 Ivet Gonzalez http://www.ipsnews.net/?p=137478 People in the city of Bayamo in the eastern Cuban province of Granma use horse-drawn carts as public transportation. Credit: Jorge Luis Baños/IPS

People in the city of Bayamo in the eastern Cuban province of Granma use horse-drawn carts as public transportation. Credit: Jorge Luis Baños/IPS

By Ivet González
HAVANA, Oct 30 2014 (IPS)

Up and down the streets of towns and cities in Cuba go horse-drawn carriages with black leather tops and large back wheels, alongside more simple carts, operating as public transportation.

This ancient means of transportation can be seen throughout this country, in urban, suburban and rural areas, where motor vehicles are expensive and there are not enough cars and buses. And in the most remote parts of the country carts are virtually the only way to get around.

As he has done every morning for the past 11 years, Bienvenido García waits for customers at the ‘piquera’ or stop in the resort town of Varadero, 121 km east of Havana, to take them in his carriage along a fixed route down the main street of this tourist town.“What are needed first of all are solutions that would strengthen and reorient the public transportation system, improve the road infrastructure and reduce vehicle emissions, which would mean upgrading the vehicle fleet.” -- Lizet Rodríguez

Depending on where, what kind of cart, and the distance to be travelled, the cost ranges from two to 10 pesos per passenger (10 to 50 cents of a dollar). But a jaunt in one of the comfortable fancy traditional carriages is much more costly, because they cater exclusively to foreign tourists.

“I used to work in the ‘guaguas’ (public buses). But with the crisis, there weren’t any spare parts or fuel. So I started driving a carriage,” García, a ‘cuentapropista’ or self-employed worker, told IPS.

Like most sectors of the economy, transportation collapsed in 1991 when the East European socialist bloc, Cuba’s main trade and aid partner, fell apart. Observers say measures aimed at recuperating transport have been slow and inefficient.

Cubans were forced to find ways of getting around that did not depend on fossil fuels – such as horses, carts, bicycles and three-wheeled pedal-powered “bicitaxis”.

In response, as part of the socialist government’s opening up to small private businesses and cuentapropistas, new trades were added by the authorities: ‘cochero’ or carriage driver, and ‘bicitaxista’ and ‘mototaxista’, who drive bicitaxis and motorcycle taxis.

In 2010, the government declared that private enterprise was key to easing the chronic public transportation shortage. Most of the country’s 473,000 cuentapropistas work in the areas of food and restaurants, housing rental or transportation.

There are no specific statistics on the number of cocheros, who are mainly men. But they abound in cities like Bayamo, called “the city of the carriages”, and Guantánamo, in the east; Cárdenas and Varadero in the west; and Santa Clara, Ciego de Ávila and Santi Spíritus in central Cuba.

 

Bienvenido García has been driving a carriage for 11 years in the resort town of Varadero, in western Cuba. Credit: Jorge Luis Baños/IPS

Bienvenido García has been driving a carriage for 11 years in the resort town of Varadero, in western Cuba. Credit: Jorge Luis Baños/IPS

Nor are there clear figures on how many motor vehicles are circulating today in this Caribbean island nation of 11.2 million people. But in July 2013 the local media reported that there were only 7,840 public transport buses – just half of the 15,800 buses serving the population in the 1980s.

And due to the lack of new vehicles, classic U.S. 1950s cars or Soviet-made Ladas are still plying the streets of Cuba’s cities.

“You can just get by on this job as a cochero because the taxes are high,” said García, whose cart carries up to eight people, “the weight that the horse can pull without it being abusive.”

“I keep the ‘culero’ (manure bag) in good shape, to avoid getting the streets dirty, and I taught my horse to make the stops, so we don’t distort traffic on the road,” he said.

But not all of the streets in towns with horse-drawn carts and carriages are as clean as Varadero’s.

“To get something done, people had to complain to the authorities about horses on the streets. There was manure everywhere,” Aliuska Labrada, a young woman who lives in the town of Cayo Ramona, 200 km southeast of Havana, told IPS.

The resurgence of this old means of transportation brought with it problems related to hygiene, the public image of rural and urban areas, traffic safety, and the welfare of draft animals.

Rules established by local authorities included carriage stands that must be kept clean by the drivers, the following of traditional ways of handling carts, and urban areas off-limits to horse-drawn vehicles. And for the drivers to obtain a license, their horses must undergo veterinary exams.

“It’s a more natural means of transportation…but at what price?” wrote a cybernaut who identified herself as Marina in an online IPS forum.

“The horses damage the paved streets and can cause accidents because the drivers don’t have total control over their animals,” she said. “There’s also the question of mistreatment of the animals. Some people exploit them to exhaustion, just to make money from them.”

That is a sensitive issue that animal rights organisations have been complaining about for years. Since 1988, the Scientific Veterinary Council and the Cuban Association for the Protection of Animals and Plants have been presenting a proposed draft law on animal protection to the Agriculture Ministry, without success.

The local scientific community is pressing for the development of green-friendly, sustainable transportation in Cuba.

In an email response to IPS, the engineer Lizet Rodríguez identified several short- and long-term alternatives, although she said the shift to a cleaner transportation system would require an in-depth feasibility study.

“What are needed first of all are solutions that would strengthen and reorient the public transportation system, improve road infrastructure and reduce vehicle emissions, which would mean upgrading the vehicle fleet,” she said.

Rodríguez, a researcher at the Marta Abreu Central University in the city of Villa Clara, 268 km east of Havana, recommended “improving communications over the Internet, to make it possible to carry out a large number of operations online that today require that people physically go somewhere.”

Few people in Cuba have online connection in their homes, most of them dial-up and some wireless. In 2013, there were 2,923,000 users, including both Internet and intranet accounts, which offer access to a limited number of local and international websites.

The engineer said “the use of the bicycle (as long as there are bike paths) would be feasible above all in small and medium-sized towns, and the use of cleaner fuels like natural gas or so-called biofuels – methanol and ethanol, obtained from biomass residue – could be encouraged.”

Last year, renewable energy sources made up 22.4 percent of the country’s primary energy production, according to the latest report by the national statistic institute, ONEI.

Up to now, renewable energy sources have only been used in a handful of industries, mainly for generating electricity, pumping and heating water, and cooking food.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: Rousseff Re-elected President – What Lies Ahead for Brazil?http://www.ipsnews.net/2014/10/opinion-rousseff-re-elected-president-what-lies-ahead-for-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-rousseff-re-elected-president-what-lies-ahead-for-brazil http://www.ipsnews.net/2014/10/opinion-rousseff-re-elected-president-what-lies-ahead-for-brazil/#comments Thu, 30 Oct 2014 13:31:06 +0000 Fernando Cardim de Carvalho http://www.ipsnews.net/?p=137473

In this column, Fernando Cardim de Carvalho, economist and professor at the Federal University of Río de Janeiro, looks at the challenges facing re-elected Brazilian president Dilma Rousseff and argues that in the economic sphere she must find a way out of the trap that Brazil has faced since control of inflation was achieved twenty years ago.

By Fernando Cardim de Carvalho
RIO DE JANEIRO, Oct 30 2014 (IPS)

The tight race between incumbent President Dilma Rousseff of Brazil’s Workers’ Party and her opponent, Aecio Neves from the centre-right Brazilian Social Democracy Party (PSDB) party, ended on Sunday, Oct. 26 with the re-election of Rousseff.

As happens in cases of re-election, the new government is, for all purposes, inaugurated immediately, because there is no need to wait until the legal date of January 1 to begin forming the new government and making necessary decisions.

Fernando Cardim de Carvalho

Fernando Cardim de Carvalho

Neither is there a honeymoon in a re-election: voters expect work to begin and some results to show right away.

There is no doubt that Rousseff faces a difficult period ahead. The economy has ground to a halt during 2014 and the perspectives for 2015 are not much better. During practically the whole of the first semester, inflation remained near or above the ceiling of 6.5 percent that was set by the government itself, and the perspectives for next year are not good either.

Balance of payments positions are not comfortable, marked by very high deficits in current transactions and dependence on capital inflows. Social inclusion programmes that were very successful in the recent past may be near exhaustion and will need an upgrade.

Finally, a huge deal was made during the electoral campaign of corruption cases in the administration and in state enterprises, notably Petrobrás, the Brazilian oil company, raising issues that will have to be dealt with by the incoming administration.“There is no doubt that Rousseff faces a difficult period ahead. The economy has ground to a halt during 2014 and the perspectives for 2015 are not much better”

This does not address, of course, another set of difficulties related to the formation of governments in the Brazilian political system, requiring coalitions to be formed with political parties that look like being for rent rather than available for political debates around principles or programmes.

Let us be clear: the situation is uncomfortable on many fronts but is far from catastrophic, no matter how dramatic opposition speeches have tried to suggest.

Things are far better than in Western Europe, for example, where a second recession is very likely to happen in the near future in economies already devastated by the irrational adherence to austerity policies imposed by some governments led by Germany. But the problems the new government will have to face cannot be underestimated either.

Focusing only on the economic challenges, Rousseff’s first task is to try to escape the curse the Brazilian economy has been facing since it achieved control of inflation twenty years ago.

The Real Plan, named after the new currency that was introduced in 1994, was based on the access to cheap imports obtained by liberalising foreign trade and an overvalued currency. To maintain overvaluation it was necessary to attract foreign capital inflows, which required high interest rates (higher than that paid in other countries). High interest rates were also necessary to control domestic demand so that no significant pressure would be applied on domestic prices.

However, exchange rate overvaluation and high interest rates reduced the competitiveness of local producers, particularly in the manufacturing sector, which are very sensitive to exchange rate behaviour.

As a result, the Brazilian economy has lived on a see-saw in these twenty years, alternating periods where devalued exchange rates have allowed some industrial expansion at the cost of accelerating inflation with periods of controlled inflation at the cost of industrial stagnation.

Fernando H. Cardoso was imprisoned by this dilemma, as was Lula da Silva. So was Rousseff in her first term, when she, to her credit, realised that the country had to escape the trap but was unsuccessful in finding the way to do so.

With the international economy in a weak condition, and which is forecast to last, Rousseff has to find a way to promote growth without fuelling higher inflation and increasing external vulnerability, that is, without raising the volume of imports when exports are stagnating.

Bringing the inflation rate down is also needed. Societies tend to have long memories (see how the Germans still react to the hyperinflation they experienced a century ago). A large number of Brazilians still remember how unbearable life was when inflation was in the two-digit figures a month.

We are not anywhere close to repeating that experience, but it has made Brazilians alert and sensitive to any signs that government may be lax in fighting inflation. Besides, 6.5 percent a year for more than three years in a row does add to significant loss of purchasing power for fixed incomes and for those wages and salaries that are not compensated by more generous increases.

Even the greatest triumph of the Workers’ Party administration – social programmes – may be near exhaustion.

The Food and Agriculture Organization of the United Nations (FAO) has announced that hunger is no longer an issue for Brazil. Of course, this is great news but it also means that social policies will now have to be designed with higher aims, to improve the quality of life for the populations that were upgraded by past programmes.

Jobs, education and health are much more difficult to address than extreme poverty, the reduction of which could be dealt with cash transfers. Even if no other important problem was on the agenda, this is a tall order for any political leader, but it is even more so for a re-elected president.

Brazilian citizens are impatient to see how Rousseff will meet the challenge. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

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

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The Invisible Reality of Spain’s Homelesshttp://www.ipsnews.net/2014/10/the-invisible-reality-of-spains-homeless/?utm_source=rss&utm_medium=rss&utm_campaign=the-invisible-reality-of-spains-homeless http://www.ipsnews.net/2014/10/the-invisible-reality-of-spains-homeless/#comments Tue, 28 Oct 2014 17:33:47 +0000 Ines Benitez http://www.ipsnews.net/?p=137423 Socially marginalised people waiting for lunch at a stand run by the Ángeles Malagueños de la Noche association, whose volunteers serve three meals a day in the centre of Málaga, Spain. Cedit: Inés Benítez/IPS

Socially marginalised people waiting for lunch at a stand run by the Ángeles Malagueños de la Noche association, whose volunteers serve three meals a day in the centre of Málaga, Spain. Cedit: Inés Benítez/IPS

By Inés Benítez
MÁLAGA, Spain , Oct 28 2014 (IPS)

“It’s easy to end up on the street. It’s not because you led a bad life; you lose your job and you can’t afford to pay rent,” says David Cerezo while he waits for lunch to be served by a humanitarian organisation in this city in southern Spain.

Cerezo, 39, lives in a filthy wreck of a house in downtown Málaga with two other people. He used to work as a baker and confectioner but his drug abuse ruined his life, and separated him from his wife and his 36 and 39-year-old brothers.

Now he is determined to undergo rehabilitation, he tells IPS in front of the lunch counter of the Ángeles Malagueños de la Noche (Málaga Angels of the Night) association.

“Most of those who ask for food here have ended up on the street because of drugs or alcohol, but there are also parents coming for food for their kids, and very young people,” he says, pointing towards the dozens of people lined up under the midday sun for a plate of rice, which is steaming in a huge pot.

Spain’s long, severe recession and high unemployment rate, which currently stands at 24.4 percent according to the national statistics institute, INE, have impoverished the population while government budgets for social services for the poor have been cut. “On the street I feel vulnerable, so inferior. You lose your dignity and it’s hard to get it back. I want out of this.” -- Miguel Arregui

According to statistics from earlier this year, between 20.4 and 27.3 percent of the population of 47.2 million – depending on whether the measurement uses Spanish or European Union parameters – lives below the poverty line.

Nor does having a job guarantee a life free of poverty. The crisis drove up the proportion of working poor from 10.8 percent of the population in 2007 to 12.3 percent in 2010, according to the Dossier de Pobreza EAPN España 2014, a report on poverty in Spain by the European Anti Poverty Network.

Even worse is the fact that 27 percent of the country’s children – more than 2.3 million girls and boys – live in or on the verge of poverty, according to the United Nations children’s fund, UNICEF.

A study published Sept. 19 by the Association of Directors and Managers of Social Services reported that public spending on the neediest this year was 18.98 billion dollars – 2.78 billion less than in 2012.

“You find yourself in the street because you don’t have anyone to turn to,” said Miguel Arregui, 40. “And once you’re there it’s really hard to take flight again.”

The tall, black-haired Arregui, who is separated and has an 11-year-old son, told IPS that he spent 15 “endless” days sleeping rough, and that two bags holding his clothes and cell phone were stolen. For the past few weeks, he has been living in a shelter, where he is overcoming his addiction to drugs.

Cerrezo and Arregui are two of the thousands of homeless people in Spain – who total 23,000 according to the last INE census, from 2012, although the social organisations that help them put the number at 40,000.

But the 2014 study on exclusion and social development in Spain by the Foessa Foundation reports that there are five million people in this country affected by “severe exclusion” – 82.6 percent more than in 2007, the year before the lingering economic crisis broke out.

The report states that although homeless people are part of the landscape, most people have no idea what their lives are like. They sleep rough or in shelters, after ending up on the street as a result of numerous social, structural and personal factors.

In Málaga dozens of poor families, many of whom were evicted for failing to pay the rent or mortgage, are living together in squats known as “corralas”, in empty buildings owned by banks or construction companies that went bankrupt.

In the first half of 2014 there were 37,241 evictions in Spain, according to judicial sector statistics.

Since 2007 there have been 569,144 foreclosures, the Platform for Mortgage Victims (PAH) reports. At the same time, there are 3.5 million empty dwellings – 14 percent of the total, according to the INE.

A number of people wake up on the stone benches near the stand where breakfast is served at 9:00 AM. “The day I went to the shelter, they told me it was full and they gave me a blanket,” says José, 47, who spent 15 years in prison and admits that he has to steal to pay for a night in a pension.

“The system could use a turn of the screw, to provide permanent and unconditional housing, in first place,” the director of the RAIS Foundation, José Manuel Caballol, told IPS.

His organisation is promoting the Housing First model in Spain. This approach focuses on moving homeless people immediately from the streets or shelters into their own apartments, based on the concept that their first and primary need is stable housing.

The approach targets people who have spent at least three years living on the streets, or those suffering from mental illness, drug use, alcoholism or disabilities.

Caballol said people with severe problems have a hard time gaining access to homeless shelters, supportive housing or pensions, and that even if they do they fail to move forward with their rehabilitation or end up being expelled from the system once again.

“The results are spectacular,” he said. “The people are so happy, they take care of their house and of themselves because they don’t want to lose what they have.”

The activist is convinced that this approach, which emerged in the United States in the 1990s, “offers a definitive solution to the problem of homelessness and spells out significant savings in costs for the state, in hospital care for example.”

Since July, a total of 28 homeless people have been living in eight housing units in Málaga, 10 in Barcelona and 10 in Madrid, some given to RAIS and others rented by the NGO by means of agreements with city governments and foundations, and with economic support from the government.

“Changes are seen very quickly in the people involved,” said Caballol, who stressed the role played by social workers, psychologists and experts in social integration, who listen, support and assist the beneficiaries, depending on what they themselves decide, rather than the other way around.

“On the street I feel vulnerable, so inferior. You lose your dignity and it’s hard to get it back. I want out of this,” says Miguel Arregui just before going into a shelter in downtown Málaga for the night.

Another local NGO, Ayuda en Acción (Help in Action), warns that one out of every five people are at risk of social exclusion in Spain.

Cerezo says the social network for the homeless falls short of meeting the current needs, and calls for other models like “casas de acogida” – halfway homes or residential-based homes for the most vulnerable, “with orientation by professionals.”

The number of people assisted in Spain by the Catholic charity Caritas rose 30 percent from 2012 to 2013, according to a report it released Sept. 29.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Zimbabwe’s Rich Fuel Inequality Through Illicit Financial Flowshttp://www.ipsnews.net/2014/10/zimbabwes-rich-fuel-inequality-through-illicit-financial-flows/?utm_source=rss&utm_medium=rss&utm_campaign=zimbabwes-rich-fuel-inequality-through-illicit-financial-flows http://www.ipsnews.net/2014/10/zimbabwes-rich-fuel-inequality-through-illicit-financial-flows/#comments Mon, 27 Oct 2014 12:29:24 +0000 Tonderayi Mukeredzi http://www.ipsnews.net/?p=137393 A woman poses at the front of a shack settlement in Epworth, outside Zimbabwe’s capital, Harare. Sixteen percent of the country’s 12.5 million people are deemed extremely poor. Credit: Ephraim Nsingo/IPS

A woman poses at the front of a shack settlement in Epworth, outside Zimbabwe’s capital, Harare. Sixteen percent of the country’s 12.5 million people are deemed extremely poor. Credit: Ephraim Nsingo/IPS

By Tonderayi Mukeredzi
HARARE, Oct 27 2014 (IPS)

Zimbabwe has lost 12 billion dollars in illicit financial flows over the last three decades and experts say this illegal practice is perpetuating social inequalities and poverty in this southern African nation.

A September report by the Zimbabwe Vulnerability Assessment Committee (ZIMVAC) estimates that 63 percent of Zimbabweans are poor, with 16 percent of the country’s 12.5 million people deemed extremely poor.

While the number of extremely poor households in the country has reduced from 42.3 percent in 2001, Sydney Mhishi, a principal director in the Ministry of Labour and Social Welfare, told IPS that there is an overwhelming demand for cash transfers because of rising poverty and inequalities, mostly in rural areas.

  • Inequalities are more widespread in rural areas — occurring in 76 percent of rural households compared to 38 percent of households in the urban areas.
  • A majority of Zimbabwe’s people, some 7.7 million, live in rural areas.
  • Nearly 200,000 to 250,000 households in Zimbabwe are classified as ultra poor.

In 2013, about 55,000 households received up to 25 dollars in cash handouts every month from the government under the Harmonised Social Cash Transfer Programme.

The government is supporting 20 percent of vulnerable and labour constrained households through the programme.

“The demand for the cash transfers is more in depth in urban areas. In urban areas we have also started a mix of cash [transfers] as well as electronic transfers in poor suburbs like Epworth,” Mhishi said.

A study conducted by the Institute of Development of Studies in 2013 and released last month, shows that poverty was increasingly taking on an urban face with levels higher than expected. Zimbabwe’s economy is in a fragile state subjugated by a liquidity crunch, funding constraints, and corruption, which has made the government struggle to raise revenue.

And even though Zimbabwe has vast natural resources, the blessings of its natural wealth has not benefitted its people.

The nation has of some of the largest diamond and platinum reserves in Africa and the world, and has over 40 exploitable minerals. All of this could potentially transform the lives of Zimbabwe’s citizens.

But the valuation of the country’s mineral deposits, experts say, remains unknown because of the shadowy arrangements under which most Zimbabwean mines are being exploited.

The Zimbabwe Environmental Law Association (ZELA) points to a dearth of transparency and accountability in the management of the Marange diamond mines.

Minister of Finance Patrick Chinamasa said in December 2013, during his presentation of the 2014 national budget, that the government did not receive any diamond dividends in that year.

According to ZELA, of the seven companies operating in the Marange diamond fields, only one has shown some modicum of transparency and accountability by publicly disclosing its diamond revenue.

Janet Zhou, a programmes director with the Zimbabwe Coalition on Debt and Development, told IPS that her organisation has been campaigning for a tax justice system, which exhorts big companies in the extractive sector to pay their dues to the government to enhance revenue collection.

“Illicit financial inflows cause inequalities because the government loses revenue that should in turn be redistributed to the poor through the trickle-down effect. The rich should pay taxes and subsidise the underprivileged so that they get access to social services,” Zhou said.

Zimbabwe has been affected by illicit financial flows, as money is illegally transferred or utilised elsewhere usually through criminal activities, corruption, tax evasion, bribes and cross-border smuggling.

Research conducted in August by the African Forum and Network on Debt and Development (Afrodad) and the Zimbabwe Economic Policy Analysis and Research Unit approximates that between 2009 and 2013, cash-strapped Zimbabwe lost 2,85 billion dollars through illicit financial flows in mining, fisheries, forestry and illegal safari activities.

The illicit financial flows occurred mostly through under-invoicing by multinational companies and weak legal and institutional frameworks. Afrodad policy advisor Momodou Touray says illicit financial flows deprive governments of revenue that should be ploughed into public sector investment and poverty-reduction programmes.

Zhou added that when the government failed to tap revenue from the rich, usually ordinary people become soft targets. Tafadzwa Chikumbu, an economic governance policy officer with Afrodad, agreed.

“Illicit financial flows perpetuate inequality because they are fuelled by rich multinational corporations and rich individuals who have the capacity to do tax planning resulting in transfer mis-pricing and trade mis-invoicing.

“So if the government fails to harness resources from them, it transfers the burden to weaker economic agents, who are the ordinary citizens,” he told IPS.

Chikumbu said this was demonstrated in the country’s August mid-term fiscal statement, which introduced a raft of tax measures targeted at raising revenue principally from ordinary tax payers.

Edited by: Nalisha Adams

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Put People Not ‘Empire of Capital’ at Heart of Developmenthttp://www.ipsnews.net/2014/10/put-people-not-empire-of-capital-at-heart-of-development/?utm_source=rss&utm_medium=rss&utm_campaign=put-people-not-empire-of-capital-at-heart-of-development http://www.ipsnews.net/2014/10/put-people-not-empire-of-capital-at-heart-of-development/#comments Mon, 27 Oct 2014 08:23:11 +0000 Ravi Kanth Devarakonda http://www.ipsnews.net/?p=137387 By Ravi Kanth Devarakonda
GENEVA, Oct 27 2014 (IPS)

President Rafael Correa Delgado of Ecuador does not mince words when it comes to development. ”Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour,” he told a crowded auditorium at the 15th Raul Prebitsch Lecture.

The Raul Prebitsch Lectures, which are named after the first Secretary-General of the U.N. Conference on Trade and Development (UNCTAD) when it was set up in 1964, allow prominent personalities to speak to a wide audience on burning trade and development topics.

This year, President Correa took the floor on Oct. 24 with a lecture on ‘Ecuador: Development as a Political Process’, which covered efforts by his country to build a model of equitable and sustainable development, “Neoliberal policies based on so-called competitiveness, efficiency and the labour flexibility framework have helped the empire of capital to prosper at the cost of human labour” – President Rafael Correa Delgado of Ecuador

Development, he told his audience, “is a political process and not a technical equation that can be solved with capital” and he offered a developmental paradigm that seeks to build on “people-oriented” socio-economic and cultural policies to improve the welfare of millions of poor people instead of catering to the “elites of the empire of capital”.

Proposing a “new regional financial architecture”, he said that “the time has come to pool our resources for establishing a bank and a reserve fund for South American countries to pursue people-oriented developmental policies in our region” and reverse the “elite-based”, “capital-dominated”, “neoliberal” economic order that has wrought havoc over the past three decades.

“We need to reverse the dollarisation of our economies and stop the transfer of our wealth to finance Treasury bills in the United States,” Correa said. “South American economies have transferred over 800 billion dollars to the United States for sustaining U.S. Treasury bills and this is unacceptable.”

According to Correa, people-centric policies in the fields of education, health and employment in Ecuador have improved the country’s Human Development Index (HDI) since 2007. The HDI is published annually by the U.N. Development Programme (UNDP) is a composite statistic of life expectancy, education and income indices used to rank countries into tiers of human development.

Ecuador’s HDI value for 2012 is 0.724 – in the high human development tier – positioning the country at 89 out of 187 countries and territories, according to UNDP’s Human Development Report (HDR) for 2013.

Explaining his country’s achievement, Correa said that public investments involving the creation of roads, bridges, power grids, telecommunications, water works, educational institutions, hospitals and judiciary have all helped the private sector to reap benefits from overall development.

“At a time when Hooverian depression policies based on austerity measures are continuing to impoverish people while the banks which created the world’s worst economic crisis in 2008 are reaping benefits because of the rule of capital,  Ecuador has successfully overcome many hurdles because of its people-oriented policies,”  he said.

Correa argued that by investing public funds in education, which is the “cornerstone of democracy”, particularly in higher education or the “Socrates of education”, including special education projects for indigenous and Afro-Ecuadorian people, it has been shown that society can put an end to capital-dominated policies.

“We need to change international power relations to overcome neocolonial dependency,” Correa told the diplomats present at the lecture.  “Globalisation is the quest for global consumers and it does not serve global citizens.”

The Ecuadorian president argued that developing countries have secured a raw deal from the current international trading system which has helped the industrialised nations to pursue imbalanced policies while selectively maintaining barriers.

He urged developing countries to implement autonomous industrialisation strategies, just as the United States had done over two centuries ago.

Developing countries, he said, must pursue ”protectionist policies as the United States had implemented under the leadership of Alexander Hamilton [U.S Secretary of the Treasury under first president George Washington] when it closed its economy to imports from the United Kingdom.”

Citing the research findings of Cambridge-based economist Ha-Joon Chang in his book ‘Bad Samaritans:  The Myth of Free Trade and the Secret History of Capitalism’, Correa said that protectionist policies are essential for the development of developing countries.

He stressed that developing countries, which are at a comparable of stage of economic development as the United States was in Hamilton’s time, must devise policies that would push their economies into the global economic order.

The strategy of “import-substitution-industrialisation [ISI]” and nascent industry development is needed for developing countries, he said. “However, the developing countries must ensure proper implementation of ISI strategies because governments had committed mistakes in the past while implementing these policies.”

“Free trade and unfettered trade,” continued Correa, is a “fallacy” based on the Washington Consensus and neoliberal economic policies. In fact, while the United States and other countries preach free trade, they have continued to impose barriers on exports from developing countries.

Turning to the global intellectual property rights regime, which he said is not helpful for the development of all countries, Correa said that these rights must serve the greater public good, suggesting that the current rules do not allow equitable development in the sharing of genetic resources, for example.

In this context, he said that governments must not allow faceless international arbitrators to issue rulings that would severely undermine their “sovereignty” in disputes launched by transnational corporations.

President Correa also called for the free movement of labour on a par with capital. “While capital can move without any controls and cause huge volatility and damage to the international economy, movement of labour is criminalised. This is unacceptable and it is absurd that the movement of labour is met with punitive measures while governments have to welcome capital without any barriers.”

He was also severe in his criticism of the financialisation of the global economy which cannot be subjected to the Tobin tax. “Nobel Laureate James Tobin had proposed a tax on financial transactions in 1981 to curb the volatile movement of currencies but it was never implemented because of the power of the financial industry,” he argued.

Concluding with a hint that his government’s social and economic policies are paving the way for the creation of a healthy society, Correa quipped: “The Pope is an Argentinian, God may be a Brazilian, but ‘Paradise’ is in Ecuador.”

(Edited by Phil Harris)

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Central Asia Hurting as Russia’s Ruble Sinkshttp://www.ipsnews.net/2014/10/central-asia-hurting-as-russias-ruble-sinks/?utm_source=rss&utm_medium=rss&utm_campaign=central-asia-hurting-as-russias-ruble-sinks http://www.ipsnews.net/2014/10/central-asia-hurting-as-russias-ruble-sinks/#comments Thu, 23 Oct 2014 16:35:04 +0000 David Trilling and Timur Toktonaliev http://www.ipsnews.net/?p=137344 By David Trilling and Timur Toktonaliev
BISHKEK, Oct 23 2014 (EurasiaNet)

Pensioner Jyparkul Karaseyitova says she cannot afford meat anymore. At her local bazaar in Kyrgyzstan’s capital, Bishkek, the price for beef has jumped nine percent in the last six weeks. And she is not alone feeling the pain of rising inflation.

Butcher Aigul Shalpykova says her sales have fallen 40 percent in the last month. “If I usually sell 400 kilos of meat every month, in September I sold only 250 kilos,” she complained.On Oct. 20 a “large player” also sold about 600 million dollars, which kept the tenge stable at about 181/dollar. Observers believe the “large player” is a state-run company with ample reserves, but are mystified that the Central Bank refuses to comment and concerned that the interventions appear to be growing.

A sharp decline in the value of Russia’s ruble since early September is rippling across Central Asia, where economies are dependent on transfers from workers in Russia, and on imports too. As local currencies follow the ruble downward, the costs of imported essentials rise, reminding Central Asians just how dependent they are on their former colonial master.

The ruble is down 20 percent against the dollar since the start of the year, in part due to Western sanctions on Moscow for its role in the Ukraine crisis. The fall accelerated in September as the price of oil – Russia’s main export – dropped to four-year lows. The feeble ruble has helped push down currencies around the region, sometimes by double-digit figures.

In Bishkek, food prices have increased by 20 to 25 percent over the past 12 months, says Zaynidin Jumaliev, the chief for Kyrgyzstan’s northern regions at the Economics Ministry, who partially blames the rising cost of Russian-sourced fuel.

In Kyrgyzstan, Tajikistan and Uzbekistan, remittances from the millions of workers in Russia have started to fall. In recent years, these cash transfers have contributed the equivalent of about 30 percent to Kyrgyzstan’s economy and about 50 percent to Tajikistan’s. As the ruble depreciates, however, it purchases fewer dollars to send home.

Transfers contracted in value during the first quarter of 2014 for the first time since 2009, the European Bank for Reconstruction and Development said last month, “primarily due” to the downturn in Russia. The EBRD added that any further drop “may significantly dampen consumer demand.”

“A weaker ruble weighs on [foreign] workers’ salaries […] which brings some pain to these countries,” said Oleg Kouzmin, Russia and CIS economist at Renaissance Capital in Moscow.

This month the International Monetary Fund said it expects consumer prices in Kyrgyzstan to grow eight percent in 2014 and 8.9 percent in 2015, compared with 6.6 percent last year. Kazakhstan and Tajikistan should see similar increases. A Dushanbe resident says he went on vacation for three weeks in July and when he returned food prices were approximately 10 percent higher. In Uzbekistan, the IMF said it expects inflation “will likely remain in the double digits.”

The one country unlikely to feel the pressure is Turkmenistan, which is sheltered from the market’s moods because it sells its chief export – natural gas – to China at a fixed price.

One factor that could sharply and suddenly affect the rest of the region is a policy shift at Russia’s Central Bank, which has already spent over 50 billion dollars this year defending the ruble. Some, like former Finance Minister Alexei Kudrin, have condemned efforts to prop up the currency, arguing that a weaker ruble is good for exports.

The tumbling ruble and the drop in the price of oil have helped steer Kazakhstan’s economy into a cul-de-sac, slowing growth projections, forcing officials to recalculate the budget, and suggesting the tenge is overvalued. The National Bank already devalued the currency by 19 percent in February.

On Oct. 21, National Bank Chairman Kairat Kelimbetov urged Kazakhs not to worry about another devaluation, but investors grumble that he said the same thing less than a month before February’s devaluation.

Another devaluation would send a distress signal to investors, says one Almaty banker. Astana “lost a fair bit of credibility last time,” the banker said on condition of anonymity, fearing new legislation designed to combat panic selling.

“They need to be much more careful about how they handle expectations going forward. And that is affecting how things are happening this time. People seem to be a lot more dollarised compared to a year ago and more hesitant to hold large tenge balances.”

“My personal position?” the banker added. “I’m not holding tenge.”

Meanwhile, a mystery investor has been propping up the tenge by selling hundreds of millions of dollars a day, according to Halyk Finance in Almaty. On Oct. 21 “a larger player, again offsetting the intraday trend, sold about 650 million dollars,” Halyk said in a note to investors.

On Oct. 20 a “large player” also sold about 600 million dollars, which kept the tenge stable at about 181/dollar. Observers believe the “large player” is a state-run company with ample reserves, but are mystified that the Central Bank refuses to comment and concerned that the interventions appear to be growing.

In Kyrgyzstan and Tajikistan, central banks have dipped into limited reserves to ease their currencies’ slides. Nevertheless, the Kyrgyz som has fallen by 12 percent against the dollar this year, the Tajik somoni by about 5 percent. The World Bank said this month it expects the somoni to sink further.

Renaissance Capital’s Kouzmin cautions against the bank interventions in Central Asia, which use up reserves and widen trade deficits. “It makes sense for the national banks of these countries to let currencies depreciate to some extent to keep national competitiveness,” he told EurasiaNet.org.

Overall, the slowdown in Russia has long-term effects on Central Asia. “Portfolio investors look at the region as a whole. If you’re a CIS fund, the news on Russia has been bad and has caused the withdrawal of funds” from the region, said Dominic Lewenz of Visor Capital, an investment bank in Almaty. “So the trouble in Russia has hit things here.”

GDP growth projections have fallen markedly across the region, but nowhere near the levels seen during the 2008-2009 financial crisis. Everything, it seems, depends on Ukraine. Any worsening scenario there would have “far-reaching implications” for the region, possibly on food security, according to the EBRD.

Back at the bazaar in Bishkek, Orunbay Jolchuev was forced this month to increase by 15 percent what he charges for flour. But at least sales have not been affected. “We all need flour, we all need to eat bread, macaroni, dough,” Jolchuev said. “It’s not something people can cut back even if it becomes too expensive.”

Editor’s note:  David Trilling is EurasiaNet’s Central Asia editor. Timur Toktonaliev is a Bishkek-based reporter. This story originally appeared on EurasiaNet.org.

Edited by Kitty Stapp

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OPINION: Europe is Positioning Itself Outside the International Racehttp://www.ipsnews.net/2014/10/opinion-europe-is-positioning-itself-outside-the-international-race/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-europe-is-positioning-itself-outside-the-international-race http://www.ipsnews.net/2014/10/opinion-europe-is-positioning-itself-outside-the-international-race/#comments Wed, 22 Oct 2014 08:23:35 +0000 Roberto Savio http://www.ipsnews.net/?p=137313

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, argues that the crisis of internal governance, fomented by a latter-day Protestant ethic of fiscal sacrifice, is pushing Europe to the side lines of world affairs.

By Roberto Savio
ROME, Oct 22 2014 (IPS)

The new European Commission looks more like an experiment in balancing opposite forces than an institution that is run by some kind of governance. It will probably end up being paralysed by internal conflicts, which is the last thing it needs.

During the Commission presided over by José Manuel Barroso (2004-2014), Europe has become more and more marginal in the international arena, bogged down by the internal division between the North and the South of Europe.

Roberto Savio

Roberto Savio

We are going back to a new Thirty Years’ War – which took place nearly five centuries ago – between Catholics and Protestants. Catholics are considered profligate spenders, and there is a moral approach to economics from the Protestant side.

The Germans, for example, have transformed debt into a financial “sin”.  The large majority of Germans support the stern position of their government that fiscal sacrifice is the only way to salvation, and the looming economic slowdown will only strengthen that feeling. As a result, the handling of Europe’s internal governance crisis has largely pushed Europe to the side lines of the world.

It is a mystery why it is in the interests of Europe to push Russia into a structural alliance with China and, in such a fragile moment, inflict on itself losses of trade and investment with Russia which could reach 40 billion euro next year.“We are going back to a new Thirty Years’ War – which took place nearly five centuries ago – between Catholics and Protestants. Catholics are considered profligate spenders, and there is a moral approach to economics from the Protestant side.”

The latest issue of the prestigious Foreign Affairs magazine – the bible of the U.S. elite – carries a long and detailed article on “Why the Ukraine Crisis is the West’s Fault” by Chicago academic John J. Mearsheimer, who documents how the offer to Ukraine to join the North Atlantic Treaty Organisation (NATO) was the last of a number of hostile steps that pushed Russian President Vladimir Putin to stop a clear process of encroachment.

Mearsheimer wonders how all this was in the long term interests of the United States, beyond some small circles, and why Europe followed. But politics now has only a short-term horizon, and priorities are becoming conditioned by that approach.

A good example is how European states (with the exception of the Nordic states), have been slashing their international cooperation budgets. Not only have Spain, Italy and Portugal – and of course Greece – practically eliminated their official development assistance (ODA) budgets, but France, Belgium and Austria have also been following suit. Meanwhile China has been investing heavily in Africa, Latin America and, of course, Asia where the term ‘cooperation’ would not be the most appropriate.

But the best example of Europe’s inability to be in sync with reality is the last cut in the Erasmus programme, which sends tens of thousands of students every year to another European country. Has it been overlooked that one million babies have been born to couples who met during their Erasmus scholarships, and that this programme is being cut at a moment when anti-Europe parties are sprouting everywhere?

In fact, education – and especially culture (and medical assistance) – are under a continuous reduction in spending. As Giulio Tremonti, Finance Minister under Italian Prime Minister Silvio Berlusconi, famously said, “you don’t eat with culture”.

The per capita budget for culture in southern Europe is now one-seventh that of northern Europe. Italy, which according to UNESCO holds 50 percent of Europe’s cultural heritage, has just decided in its latest budget to open up 100 jobs in the archaeological field with a gross monthly salary of 430 euro. In today’s market, this is half what a maid receives for 20 hours of work a week.

Italian politicians do not say so explicitly, but they believe that there is already such rich heritage that there is no need for further investment and, anyhow, the tourists continue to arrive. The budget for all Italian museums is close to the budget of the New York Metropolitan Museum … in the real world, this is like somebody who wants to live by showing the mummified body of his great grandmother for the price of a ticket!

It can be said that, in a moment of crisis, the budget for culture can be frozen because there are more urgent needs. But no need is more urgent than to keep Europe running in the international competition in order to ensure a future for its citizens. And yet, the budget for research and development, which is essential for staying in the race, is also being cut year by year.

Let us look at the situation since 2009. Spain has reduced investment in R&D by 40 percent, which has led to a 40 percent cut in financing for projects and a 30 percent cut in human resources. Italian universities have witnessed a total cut of 20 percent in spending which has meant a reduction of 80 percent in hiring and 100% in projects, while 40 percent of PhD courses have disappeared.

France has cut hiring in centres of research by 25 percent and in universities by 20 percent. Less than 10 percent of demand for projects receives financing because funds are no longer available.

Greece has cut budget for centres of research and universities by 50 percent since 2011, and has frozen the hiring of any new researchers.

In the same period in Portugal, universities and research centres have suffered a cut of 50 percent, the number of scholarships for PhDs has been cut by 40 percent and post-doctoral courses by 65 percent.

It is important to recall that the Lisbon Strategy, the action programme for jobs and growth adopted in 2000,  aimed to  make the European Union “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion” by 2010. Not only were most of its objectives not achieved in 2010, but Europe continues to slide backwards. The Lisbon Strategy had set 3 percent of GNP for R&D, but southern Europe is now below 1.5 percent.

A notable exception is the United Kingdom. The current government, which works in strong synchronicity with the City and its industrial constituency, has funded a 6 billion euro “Innovation and Research Strategy for Growth” plan to the applause of the private sector.

China is steadily increasing steadily its R&D budget, which is now 3 percent (what the Lisbon Strategy had set for Europe), but it aims to reach 6 percent of GNP by 2020 and, in just seven years, China has become the largest producer of solar energy, bankrupting several U.S. and European companies.

Is cutting Europe’s future in international competition really in the interests of Germany? Or it is that politics are losing the view of the forest while they discuss how many trees to cut, to reach a compromise between the Catholics and the Protestants?

We are now making of economics a moral science, which makes of Europe an unusual world. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

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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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