Inter Press Service » Trade & Investment News and Views from the Global South Mon, 30 Nov 2015 17:32:28 +0000 en-US hourly 1 Not Yet Curtains for BRICs Tue, 24 Nov 2015 15:50:16 +0000 N Chandra Mohan

Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
NEW DELHI, Nov 24 2015 (IPS)

With Goldman Sachs folding up its haemorrhaging BRIC fund, is it curtains for the acronym that defined the investment bankers’ fancy for emerging markets? It certainly appears so after China’s stock market crash and a fast slowing economy triggered fears that the dragon will set off the next global recession.

N Chandra Mohan

N Chandra Mohan

Brazil’s economy is experiencing its deepest recession in 25 years. Russia, too, is contracting due to the crash in oil prices and sanctions. India remains a haven of stability. South Africa’s growth is sluggish with very high unemployment. Against this dismal backdrop, what are the prospects of BRICs playing a vital role in the world economy?

Fourteen years ago, BRICs was very much an idea whose time had come. Goldman Sachs projected them as the future growth engines of the world economy. This acronym soon became a self-fulfilling buzz word with a life of its own. A focus on these leading emerging economies, especially since 2006, provided handsome returns that peaked five years ago. Since 2010, however, BRIC Fund assets plunged from $842 million to $98 million in end-September 2015 according to Bloomberg. With no hope for “significant asset growth” in the near future, Goldman Sachs threw in the towel on October 23, the last trading day for this fund.

These financials clearly reflect the fast-deteriorating growth prospects of the BRIC economies. They were expected to overtake the US in size by 2015. But this isn’t likely to happen. A decelerating Chinese economy, in fact, threatens the first global recession in 50 years without help from the US, says a rival investment bank. Russia and Brazil are doing much worse as they are highly dependent on commodity exports to drive their growth. As China is the biggest importer of oil, iron ore and other raw materials, this is bad news for their commodity-driven prospects. Only India’s track record is creditable as the fastest growing economy in the world.

Such concerns can only make this grouping – which globally accounts for one-fifths of GDP, 42 per cent of population, 17.3 per cent of trade, 41 per cent of forex reserves and 45 per cent of agricultural production – less cohesive to have geo-economic significance in the world economy. Analysts consider the BRICs to represent an alliance of middle -sized economies that could lead to a serious attempt to counter-balance the US, the most powerful economy in the world. This is far from obvious except, perhaps for Russia, that has faced the full brunt of US-led sanctions due to its intervention in Ukraine. This is less true of India that is deepening its relations with the US.

But the BRICs are far from happy with the US-led global financial architecture. A striking feature of all the seven statements issued at BRIC summits from 2009 to 2015 is that this grouping aims to promote peace, security, prosperity and development in a multi-polar, equitable and democratic world order. The grouping seeks a greater voice and participation in institutions of global governance like the IMF, World Bank, WTO and UN. The Durban summit in 2013, for instance, indicated that the WTO required a new leader who demonstrated a commitment to multilateralism and that he or she should be a representative of a developing country.

The formation of a New Development Bank (NDB) is in fact a concrete expression of the desire of BRICs to set up its own alternative to the US-led World Bank and IMF. NDB President KV Kamath has indicated that the bank would blaze a different trail than the Bretton Woods twins who impose an unacceptable conditionality on their loan assistance. In sharp contrast, the NDB is expected to place a greater priority on borrowers’ interests instead of the lender’s interests; that it would better reflect the expectations and aspirations of developing countries. BRICs, however, are not keen to position the NDB as a rival to the World Bank or IMF.

At a BRICs meeting ahead of the recent G-20 summit in Turkey, India’s PM Narendra Modi stated that India will guide the NDB to finance inclusive and responsive needs of emerging economies. India will assume the chairmanship of BRICs in February 2016 and the theme of its chairmanship will be Building Responsive, Inclusive and Collective Solutions – the acronym lives on! PM Modi added for good measure that there was a time when the logic of BRICs and its lasting capacity were being questioned. But group members have provided ample proof of its relevance and value through action at a time of huge global challenges.

The good news is that the BRICs are cooperating and competing with one another for a place under the global sun. The seven summits from St Petersburg to Ufa testify to this. BRICs are the new growth drivers for low-income countries, especially in Africa, considering the growing importance of their trade and foreign direct investments in such economies. The BRICs may be passing through troubled times, but they do constitute a major consumer market. Incomes have grown as more and more people have joined the ranks of the middle class, resulting in greater demand for oil, cars and commodities in leading member countries like China and India.

But the grouping must seriously address the serious challenges of kick-starting its pace of expansion to power global growth as before. The BRICs may not be yielding returns to investment banks but they are in no immediate danger of fading into the sunset. Member countries after all take it seriously enough to set up a potential rival to the World Bank and IMF dominated by the US and Europe. Even if its creator has pulled the plug on the BRIC fund, the acronym will remain relevant in the future as well. Its resilience only exemplifies the profound truth of what the famous economist John Maynard Keynes stated long ago that the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else!


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OPINION: Keep Family Farms in Business with Youth Agripreneurs Mon, 23 Nov 2015 19:48:06 +0000 Nteranya Sanginga Nteranya Sanginga, Director General of the International Institute of Tropical Agriculture (IITA). Courtesy of IITA

Nteranya Sanginga, Director General of the International Institute of Tropical Agriculture (IITA). Courtesy of IITA

By Nteranya Sanginga
IBADAN, Nigeria, Nov 23 2015 (IPS)

Finding a way to allow youth to contribute their natural and ample energies to productive causes is increasingly the touchstone issue that will determine future prosperity.

It is a tragic irony that today’s youth, despite being the most educated generation ever, struggle to be included.

That’s true in advanced countries. But it is even more true in Africa, where almost two-thirds of the jobless are young adults, whose ranks swell by 10 to 12 million new members each year. The challenge is staggering in scale: Today there are 365 million Africans aged 15 to 35, and over the next 20 years that figure will double.

There is no magic wand. It is youth themselves who must find a solution.

Everyone else – governments, international organizations, the private sector, social groups and parents – has a huge stake in their success and so must not stand in the way. Normally one hears about the need to help cast in elaborate theories based on the need for redistribution. But the truth is, we need a step change.

That’s the spirit the International Institute of Tropical Agriculture (IITA) is adopting with our “agripreneur” coaching programmes. These aim to use self-help groups so that people can indeed help themselves. As I bluntly told a group of youth in Uganda, we will provide support in the form of technology, knowledge and advocacy, but the real activity has to be done by themselves. Another message was: “be aggressive.”

It is well known that Africa is a vast land of family farmers, many living in rural areas and regularly struggling with poverty and hunger. Figures can also be easily made to show how most family farms are exercises in subsistence, and don’t always succeed without external help.

Family farming is a way of life, to be sure. But that does not mean, when you really think about it, that it cannot be done as a business. Doing so would represent a change, but the time has come. Making agriculture a commercial trade offers a set of new tools to entice talented youth to a sector we all know they tend to run away from.

As Akinwumi Adesina, formerly Nigeria’s agriculture minister and now the president of the African Development Bank, likes to say, “Africa’s future millionaires and billionaires will make their money from agriculture.”

And it is quite likely that youth, being in a proverbial rush, will accelerate the transformations that will lead to better lives than a mad rush to cities where employment prospects aren’t keeping pace with urban population. Moreover, agriculture has been the weak link in terms of productivity growth across the continent – that means there is an enormous upside to doing it better.

Knowledge needs pollinators. While extension services are excellent and should be upgraded, young people are natural communicators when they think something is cool and useful. That’s what agriculture has to be.

IITA’s agripreneur campaign hinges on our version of a Silicon Valley hackathon. Incubators are created to allow youth to learn and exchange ideas of a practical nature – about how to keep accounts, new crops and farming techniques, the myriad possibilities of agricultural value chains that include roles for seed traders, food processors, weather forecasters, insurance salespeople, marketing specialists.

One of our agripreneur “interns” told me that what he took away was that success is not in fact all down to money. An enterprise really needs ideas, of course, and the ability to plan.

To be clear, his enthusiasm – as so many of our alumni say – was about the possibility of enterprise. Call it agribusiness. Agricultural commodity value chains provide just that, a series of transactional opportunities that work to improve efficiency for all and reward the talented. This is a major catalyst for youth. After all, it opens the door for the professionalization of agriculture.

To be sure, the agribusiness model crucially requires inclusive efforts to make sure credit is available to youth, to assure that gender equity becomes an operational assumption rather than just a goal, and a host of public goods including scientific research. Yet it begins with a changed mind set.

People must learn how to apply for a loan. Bankers always say they wish to fund on the basis of a business plan rather than collateral. It is time to put that to the test. IITA’s focus on agripreneurs is a well-placed bet on the idea that nobody learns faster than youth.


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Uruguay Puts High Priority on Renewable Energies Tue, 17 Nov 2015 00:10:46 +0000 Veronica Firme Since July 2014, Uruguay’s state power utility, UTE, has 30 100 percent electric vans. After the success of this initiative, it doubled that number in its fleet of vehicles, and incorporated two electric cars, in November 2015. Credit: Verónica Firme/IPS

Since July 2014, Uruguay’s state power utility, UTE, has 30 100 percent electric vans. After the success of this initiative, it doubled that number in its fleet of vehicles, and incorporated two electric cars, in November 2015. Credit: Verónica Firme/IPS

By Veronica Firme
MONTEVIDEO, Nov 17 2015 (IPS)

Uruguay is modifying its energy mix with the aim of achieving carbon neutrality by 2030, by means of a strategy that bolsters non-conventional clean energy sources through public-private partnerships and new investment. A majority of this South American country’s energy already comes from renewable sources.

“By the end of 2014, this country’s energy mix was made up of 55 percent renewable sources, compared to a global average of just 12 percent,” said Ramón Méndez, the president of the National Climate Change Response System, during a meeting on renewable energy.

Furthermore, 94 percent of electric power comes from renewables, he said, in a country which is only responsible for 0.06 percent of all greenhouse gas emissions, which cause global warming.

The transformation of Uruguay’s energy mix began during the first term (2005-2010) of the current president, Tabaré Vázquez, although the country was not starting from zero in terms of renewable sources, Gonzalo Abal a physicist with the Solar Energy Laboratory of the University of the Republic of Uruguay, said in an interview with IPS.

Thanks to hydropower, a significant proportion of Uruguay’s energy already came from renewables. But hydroelectricity is vulnerable to the effects of climate change.

Traditionally, the country depended on four old hydroelectric dams, three of which were built on the Negro River between the 1930s and the 1970s. The fourth is on the Uruguay River, shared with neighbouring Argentina, and was built in the 1970s.

In addition, two ancient thermal plants powered by fuel oil have served as a back-up when the hydropower supply drops or collapses due to water shortages. The last time this happened was in 2004.

This Southern Cone country of 3.3 million people has fully exploited its large hydropower sources, and began to turn towards wind power and later biomass, the two clean energies around which the greatest progress has been made, according to data provided by the experts and documents consulted by IPS.

The transformation of the energy mix required a legal framework, which included authorisation for clients connected to the low voltage grid to generate electric power from renewable sources – wind, solar, biomass or mini-dams – with a potential of no more than 150 kilowatts.

Also approved were several initiatives like the 2005-2030 Energy Policy, or the 2015-2024 National Energy Efficiency Plan, adopted on Aug. 3.

The Energy Efficiency Plan is aimed at reducing energy consumption in all industries and sectors of the economy, but especially in residential areas and transportation, which will be responsible for 75 percent of the total accumulated reduction by 2024.

In addition, the Investment Promotion Law was modified to offer tax breaks so that at least five percent of the investment in any given project goes towards renewable energy, for the goal of cleaner production.

Uruguay has 16 medium-sized and large wind farms, like this one in the northern department of Tacuarembó. The country already has 670 MW in installed wind power capacity and a similar amount under construction, which means that 30 percent of demand for electric power will be covered by wind energy by late 2016. Credit: Ana Libisch/IPS

Uruguay has 16 medium-sized and large wind farms, like this one in the northern department of Tacuarembó. The country already has 670 MW in installed wind power capacity and a similar amount under construction, which means that 30 percent of demand for electric power will be covered by wind energy by late 2016. Credit: Ana Libisch/IPS

The state power utility, UTE, is responsible for the generation, transmission, distribution and sale of electricity to the 1.2 million clients distributed throughout Uruguay’s 176,215 square kilometres of territory.

UTE has a monopoly over energy distribution but not generation, which the private sector is also involved in, which made it difficult to include power generation in the government’s energy strategy goals.

As of late 2014, Uruguay had a total installed capacity of 3,719 MW, including generators connected to the national power grid as well as stand-alone power systems, according to the Ministry of Industry, Energy and Mining.

The supply consisted of 1,696 MW of thermal energy (from fossil fuels and biomass), 1,538 MW of hydropower, 481 MW of wind power and four MW of solar power, says the National Energy Balance 2014 report.

Breaking down the installed power capacity by source, 66 percent came from renewable sources (hydroelectricity, biomass, wind and solar), while the remaining 34 percent came from non-renewable sources (gasoil, fuel oil and natural gas).

In the economy, there was a structural shift in the energy consumption mix since 2008, which has remained unchanged for the past seven years. Industry is the biggest consumer (39 percent), followed by transportation (29 percent), residential (19 percent), commerce and services (eight percent), and lastly agriculture, fishing and mining (five percent).

From 2007 to 2014, industry overcame transportation, which was pushed to second place, driving up biomass consumption. Pulp mills played a decisive role in that, because thanks to biomass they became 90 percent self-sufficient in energy, as part of the transformation that began in 2005.

In this country, “the important change came in regard to wind power – that is where changes became necessary and challenges were addressed,” Gerardo Honty, an expert with the Latin American Centre for Social Ecology, told IPS.

Wind energy is in full expansion, “and we are nearing one gigawatt (1,000 MW) of installed capacity,” said Abal.

With respect to solar energy, “we have a 50-watt plant already in operation – that’s 100 hectares of solar panels – and a second 50-MW plant has begun to be built, with investment from Europe,” said the academic.

“The rest of the plants, around 15, are smaller, between one and five MW, and are distributed throughout the north of the country,” Abal added.

Connecting with the neighbours

Uruguay is diversifying its energy sources, but it can also “expand the grid in geographic terms; if you interconnect with Argentina and southern Brazil, the probability of having an atmospheric event that leaves you without wind power in the entire area of the pampas is very low,” said the physicist.

The national power grid has interconnections with Argentina (2,000 MW) and with Brazil (70 MW, currently being expanded to 500 MW). The latter has been delayed because the two countries’ power grids operate on different frequencies, and conversion capacity must be added to overcome the problem.

In Uruguay, “the problem isn’t the electric power industry but combustion engines that cannot run on the renewable sources mentioned,” said Honty.

Transportation, especially public transit, poses the big future challenges.

The Montevideo city government is studying the possibility of purchasing autonomous electric vehicles for the sake of energy efficiency and because they do not emit greenhouse gases while at the same time they reduce noise pollution, economist Gonzalo Márquez with the department of mobility said in a forum on energy.

But no timetable has been outlined yet, he told IPS, because there are difficulties to work out like the cost and maintenance of the vehicles, the driving range of the batteries, and the subsidy for public transport, “a hidden cost that society assumes.”

Uruguay projects that when the transformation of its energy industry is complete, greenhouse gas emissions will be 20 to 40 times lower than the global average, said Méndez, the top official in the government’s climate change response office.

This country also aims to be carbon neutral by 2030. That means “our target for that year is for the CO2 (carbon dioxide) that we absorb to be greater than what our entire economy emits,” he said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Africa Gears for Infrastructural Boom Fri, 13 Nov 2015 14:09:51 +0000 Jeffrey Moyo Credit: Construction Review Online

Credit: Construction Review Online

By Jeffrey Moyo
HARARE, Zimbabwe, Nov 13 2015 (IPS)

The upcoming week for the Programme for Infrastructure Development in Africa (PIDA), which runs from November 13-17 in Abidjan, the capital city of Ivory Coast, is set to throw this continent into the full gear of infrastructural boom, development experts here say.

“If PIDA and what it all entails may be strictly followed by Africa and its leaders, yes, truly the underdeveloped continent may see itself emerging from the era of infrastructural underdevelopment and help the continent attract much needed foreign investors,” Zimbabwean independent economist, Kingston Nyakurukwa, told IPS.

For African nations, from the outset PIDA was meant to promote socio-economic development and poverty reduction through improved access to integrated regional and continental infrastructure networks and services.

Owing to the infrastructure deficit facing Africa, in July 2010, African leaders launched PIDA under the leadership of the African Union, New Partnership for Africa’s Development (NEPAD) and the African Development Bank (AfDB).

At its launch, PIDA’s presidency was initially assumed by South African President Jacob Zuma, thanks to his country’s successful organization of the World Cup in 2010, which inspired the entire continent.

Then Zuma said: “Africa’s time has come and without infrastructure, our dreams will never be realized. We cannot trade on the continent because of the lack of communication. The infrastructure that we want to create will provide new opportunities for our continent.”

With the African Development Bank Group being the executing agency, PIDA was designed as successor to the NEPAD Medium to Long Term Strategic Framework (MLTSF), which was meant to develop a vision and strategic framework for the development of regional and continental infrastructure.

For many development experts here, like Henry Kakonye, Africa has however lacked development in infrastructure over the years, impacting negatively on the continent’s economic growth.

“Lack of infrastructure development in Africa over the years has gradually affected productivity and resulted in rising production and transaction costs, subsequently derailing growth through slowing competitiveness of businesses and the ability of governments to chase economic and social development policies,” Kakonye told IPS.

According to the New Partnership for Africa’s Development (NEPAD), PIDA will also help the objectives for Sustainable Energy in Africa in line with the UN’s sustainable development goal to ensure access to affordable, reliable, sustainable and modern energy for all.

But in developing Africa’s infrastructure, NEPAD has also been on record saying the private sector cannot be left out.

“With support from the private sector, PIDA is expected to play a critical role in addressing the continent’s infrastructure problems,” said Adama Deen, head of Infrastructure Programmes and Projects at the NEAPAD Agency while speaking at a recent NEPAD forum in Johannesburg, South Africa.

“Infrastructure is essential for integrating regions, realising socio-economic potential and fast-tracking development in Africa,” Deen had added.

And based on NEPAD Division at the African Development Bank, the continent would require investment of about 360 billion dollars in infrastructure in order to be well connected to the rest of the world by 2040.

To this, PIDA, a joint initiative by the African Union, NEPAD and the AfDB, aims to develop a web of 37,200 km of highways, 30,200 km of railways and 16,500 km of interconnected power lines by 2040 while at the same time it plans to add 54,150 megawatts of hydroelectric power generation capacity and an extra 1.3-billion tons capacity at Africa’s ports, according to AfDB’s Ralph Olaye.

The South African Energy Ministry has also been on record saying no infrastructure programme could be successful if it is not linked to continental development objectives.

As such, according to the SA government, PIDA remains key to the Southern African region and the entire Africa to promote socio-economic development.

Chief Executive Officer of the NEPAD Agency, Dr Ibrahim Mayaki, during this year’s commemorations of the Africa Day agreed with the SA government.

“Bridging the gap in infrastructure is thus vital for economic advancement and sustainable development. However, this can only be achieved through regional and continental cooperation and solution finding,” Mayaki said then.

“In fact, now more than ever is the time for us all to live up to the courage of our convictions for an integrated, prosperous and peaceful Africa, driven by its own citizens – as is espoused by NEPAD. Leadership is no longer a top down issue,” Mayaki had added.


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Refugee Crisis May Threaten Development Aid to World’s Poor Wed, 11 Nov 2015 21:52:23 +0000 Thalif Deen By Thalif Deen

As the spreading refugee crisis threatens to destabilize national budgets of donor nations in Western Europe, Secretary-General Ban Ki-moon Wednesday appealed to the international community not to forsake its longstanding commitment for development assistance to the world’s poorer nations.

Ban’s appeal comes two days after a UN pledging conference reported a “dramatic decline” in donor commitments: from 560 million dollars in 2014 to 77 million dollars in the most recent pledges, largely covering 2015.

Asked if the Secretary-General’s appeal was the result of the decline in commitments, UN Deputy Spokesman Farhan Haq told IPS: “It’s in response to many factors, including concerns expressed by some states about maintaining aid levels.”

The secretary-general said resources for one area should not come at the expense of another.

Redirecting critical funding away from development aid at this pivotal time could perpetuate challenges that the global community has committed to address, he warned.

“Reducing development assistance to finance the cost of refugee flows is counter-productive and will cause a vicious circle detrimental to health, education and opportunities for a better life at home for millions of vulnerable people in every corner of the world,” Ban declared.

At a summit meeting of political leaders from Europe and Africa in Malta Wednesday, the European Union (EU) was expected to announce plans to create a Special Trust Fund, initially estimated at 1.9 billion dollars, to address the financial problems arising out of the refugee crisis.

Since European countries are expected to boost this fund over the next few months, there are fears these contributions may be at the expense of development assistance.

According to figures released by the Paris-based Organisation for Economic Cooperation and Development (OECD), development aid flows were stable in 2014, after hitting an all-time high in 2013.

But aid to the poorest countries continued to fall, according to official data collected by the OECD Development Assistance Committee (DAC).

Net official development assistance (ODA) from DAC members totalled 135.2 billion dollars, with a record 135.1 billion dollars in 2013, though marking a 0.5% decline in real terms.

Net ODA as a share of gross national income was 0.29%, also on a par with 2013. ODA has increased by 66% in real terms since 2000, when the Millennium Development Goals were agreed, according to OECD.

The secretary-general said that with the world facing the largest crisis of forced displacement since the Second World War, the international community should meet this immense challenge without lessening its commitment to vitally needed official development assistance. (ODA)

He underscored the importance of fully funding both efforts to care for refugees and asylum seekers in host countries as well as longer-term development efforts.

The Secretary-General said he recognized the financial demands faced by host communities and partner governments as they seek to support the international response.

He expressed his “sincere gratitude to governments and their citizens for their generosity.”

Nick Hartmann, Director of the Partnerships Group at UN Development Programme (UNDP) told delegates Monday the important agreements that Member States had come to in 2015 called for increased policy support.

To deliver that, adequate and predictable resources were required.

He said core resources were the foundation of UNDP’s support to the poorest and most vulnerable.

UNDP, he pointed out, had responded to a range of crises over the past year and had ensured that 11.2 million people benefited from improved livelihoods. Almost a million jobs were created in 77 countries, with half of those reaching women.

“However, he said reduced contributions from many top partners and unfavourable exchange rate movements had caused a downward trend in funding.”

Hartmann said a number of partners faced overwhelming pressures, including the migrant crisis, he thanked those who had submitted pledges at Monday’s pledging conference.

The UNDP is described as the UN’s global development network covering 177 countries and territories.

The writer can be contacted at

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Opinion: Economic Slowdown Threatening Progress Wed, 11 Nov 2015 15:16:35 +0000 Jomo Kwame Sundaram

Jomo Kwame Sundaram is the Coordinator for Economic and Social Development at the Food and Agriculture Organization and received the 2007 Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

By Jomo Kwame Sundaram
ROME, Nov 11 2015 (IPS)

Slower economic growth since 2008, and especially with the commodity price collapse since the end of last year, threatens to reverse the exceptional half-decade before the financial crash when growth in the South stayed ahead of the North. From 2002, many developing countries – including some of the poorest– had been growing much faster after a quarter century of stagnation in Africa, for example.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

But this has not been their delayed reward for sticking to policies prescribed by conventional wisdom as claimed by some latter-day apologists for the structural adjustment programmes of the last two decades of the 20th century. Instead, a more favourable international environment, including higher commodity prices, low interest rates and renewed aid flows, along with accelerated growth in China and India, have been the main reasons.

Recent trends need to be seen in a longer historical context if the right lessons are to be drawn. Economic growth in the 1980s and 1990s was generally slower than in the preceding two decades. But despite the spectacular growth of several developing countries, sub-Saharan Africa lost due to stagnation for more than two decades from the late 1970s and Latin America lost at least the 1980s.

Government policies from the 1980s – ostensibly to conform to ‘market expectations’ – often cut public spending on primarily social expenditures. As national-level inequalities grew in most countries from the 1980s, inter-national inequalities among countries continued to grow. Economic welfare in developing countries has been further squeezed by demographic pressures including rapid urbanization.

Nascent industrialization in many countries was aborted by structural adjustment and economic liberalization. Premature trade liberalization has thus exacerbated de-industrialization, unemployment and fiscal deficits without generating alternative sources of economic growth. Low income countries as well failed and failing states are generally characterized by modest industrialization which, in turn, retards structural transformation and more inclusive sustainable development.

The negative developmental implications of policies and programmes forced on developing countries, regardless of historical circumstance and economic context, are now well known. There is a world of difference between measured liberalization from a position of economic strength, as in newly industrialized East Asia from the 1980s, and their forced adoption, to meet World Trade Organization or loan obligations. Despite pious official rhetoric claiming the contrary, multilateral rules are far from supportive of sustainable development and need to be reformed accordingly.

Since the late 19th century, adverse terms of trade movements – favouring manufactures over primary commodities, temperate compared to tropical agricultural products, or manufactures from developed countries against those from developed countries – have meant that many developing countries have been producing and exporting much more, but earning relatively less from doing so.

International financial liberalization was supposed to attract private capital to fill financing gaps. But instead, it has resulted in net capital flows from the ‘capital poor’ to the ‘capital rich’, increased financial volatility and slower economic growth. Bitter experience has also shown that ‘shock therapy’ – often involving financial system ‘big bangs’ – has generally caused more harm than good.

Considering their greater vulnerability to external vicissitudes, developing countries must have greater fiscal space to ensure countercyclical capacity as well as sustained public spending for needed investments in physical and social infrastructure and human resources. Strengthening the tax base, ensuring more reliable sources of international finance and channelling aid through national budgets can be crucial.

Instead of the current fetish with eliminating fiscal deficits, a more balanced and appropriate approach to macroeconomic stabilization is needed, to minimize disruptive swings in economic activity and external balances, while fostering a virtuous cycle of greater macroeconomic stability, investment, growth and employment generation. Developing countries need to strengthen their capacities and capabilities and to ensure sufficient ‘policy space’ in order to pursue appropriate reforms favouring sustainable development.

It has often been claimed that development could only be attained through retrenchment of the state. In much of the developing world, however, this has left choice-less illiberal democracies and frustrated disenfranchised citizens. Instead, democratically accountable governments should consult widely among their citizens to promote investments for structural transformation and better employment.

The global economy now risks continuing its downward spiral into protracted stagnation. The International Monetary Fund’s improved surveillance mechanisms have not led to better international macroeconomic coordination, as touted. Instead, the path to sustainable development remains blocked by self-imposed deflationary policy constraints and a refusal to provide needed aid or to cooperate to increase taxation for all.


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UN Targets “Hidden Source” for Development Funding Thu, 05 Nov 2015 22:50:19 +0000 Thalif Deen By Thalif Deen

The United Nations has estimated a hefty funding requirement of over 3.5 trillion to 5.0 trillion dollars per year for the implementation of its ambitious post-2015 development agenda, including 17 Sustainable Development Goals (SDGs), approved by world leaders in September.

But at least one key question remains unanswered: how will the UN convince rich nations and the world’s multinational corporations to help raise the necessary trillions to reach those global goals, including the eradication of poverty and hunger by 2030?

According to the UN, there is at least one “hidden source” for development funding, primarily for the world’s most impoverished continent: capturing the illicit financial outflows from Africa, estimated at over 50 billion dollars annually.

James Zhan, Director of Investment and Enterprise at the UN Conference on Trade and Development (UNCTAD), told delegates that tackling illicit financial flows was essential for Africa to achieve the Sustainable Development Goals.

The estimated resources leaving Africa in the form of illicit financial transfers, he pointed out, was nearly 530 billion dollars between 2002 and 2012.

“That was a huge cost for the continent’s development as those resources could have been invested into Africa’s economic development and structural transformation.”

He said illicit financial flows undermined institutions, drained the state of much needed economic resources, reduced the development resource base and led to higher domestic tax burdens to fill the resource gap.

The 17 SDGs also include quality education, improved health care, gender equality, sustainable energy, protection of the environment and global partnership for sustainable development.

Bhumika Muchhala, Senior Policy Researcher, Finance and Development Programme, at the Third World Network (TWN), told IPS the three key causes of illicit financial outflows are widely held to be commercial tax evasion, criminal activity and government corruption.

She said tax evasion and avoidance, as well as transfer mispricing (trade mis-invoicing) practices of multinational corporations (particularly in the extractives sector), constitute the leading problem, along with money laundering practices and criminal activity such as trafficking in drugs and labour.

As many social movements, non-governmental organisations (NGOs), academics and policymakers point out, this does not happen by accident, she said.

Many countries and their institutions actively facilitate, and reap enormous profits from, the theft of massive amounts of money from developing countries.

“This undoes decades of economic development and sabotages the chances of future generations to grow beyond the need for economic aid,” she added.

Following an investigation last year, a High-Level Panel on Illicit Financial Flows from Africa had concluded that combating such flows was no longer a choice; it had become an imperative.

The Panel, established by the Economic Commission for Africa (ECA), called upon the African Union (AU) to engage with its partner institutions to elaborate on a global governance framework to determine the “conditions under which assets are frozen, managed and repatriated.”

Ambassador Oh Joon of South Korea, President of the Economic and Social Council (ECOSOC), told delegates at a UN panel discussion last month that Africa, like other regions, would have to mobilize resources from within the continent.

And the illicit outflows of finance represented an important loss of foreign exchange reserves, an erosion of legal tax base and bygone investment opportunities from natural resource rents, he added.

With an estimated 50 billion dollars per year in illicit financial flows, the effectiveness of domestic resource mobilization would be significantly curtailed if such illicit flows continued, he argued.

Addressing the high level segment of the General Assembly in September, the President of Senegal, Macky Sall, said illicit financial flows from Africa virtually exceeded official development assistance (ODA) to the continent (which amounts about 50 to 55 billion dollars annually).

“If 17 per cent of those assets were recovered, African countries could pay off their entire debts and finance their own development.”

UNCTAD’s Zhan said Africa was the only region where illicit financial flows reached about 5 per cent of gross domestic product (GDP).

He urged transparency and accountability through the strengthening of civil society and called for the promotion of institutional reforms and the creation of anti-corruption commissions.

He said African governments had a big responsibility to tackle the problem but so did the international community.

But African countries could not do it alone. Multinational companies and foreign direct investment (FDI) were also an important part of the solution. United Nations agencies such as UNCTAD could offer advice to African governments to design investment policies and handle tax avoidance and illicit practices by multinationals, Zhan said.

Muchhala told IPS while many organisations highlight the urgent need for reforms in information-sharing and transparency policies in the European Union and the United States, the Tax Justice Network, a key social movement comprised of various NGOs, has been stressing the need to counter tax evasion and tax avoidance.

To this extent, an advocacy campaign to establish a UN global tax body, with the universal membership of the UN, was carried out during the 2014-2015 negotiations for the third Financing for Development (FfD) conference.

The conference, held in Addis Ababa in July 2015, failed to garner consensus for a global tax body due to the resistance of developed countries.

While this is a major disappointment, she said, the push for a global tax body by both developing countries and global social movements, will persist both inside and outside the UN.

This article is part of IPS North America’s media project jointly with Global Cooperation Council and Devnet Tokyo.

The writer can be contacted at

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World Trade Organization Rules Help to Support Better Public Health Wed, 04 Nov 2015 19:38:09 +0000 Roberto Azevedo

Roberto Azevêdo is the Director General of the World Trade Organization.

By Roberto Azevêdo
GENEVA, Nov 4 2015 (IPS)

Trade and the multilateral trading system can help in creating a more favourable global environment for public health policies and the implementation of a balanced and effective intellectual property system.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

Roberto Azevêdo. Credit: World Trade Organization (WTO)

The year 2015 marks the World Trade Organization’s (WTO) 20th anniversary ­ and the 20th anniversary of the Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement.

The TRIPS Agreement introduced substantive and comprehensive disciplines on intellectual property rights into the multilateral trading system. And it impacted deeply on national intellectual property rules across the world.

It is a key tool for balancing the need of ensuring fair access to medicines, while also supporting the necessary innovation.

In these 20 years, more than 130 WTO members have notified intellectual property laws and regulations under TRIPS ­ and they have shown considerable diversity in how they have applied the broad principles of the agreement.

And, understandably, TRIPS has been an important feature of any debate about innovation and access to medicines.

This became even clearer in 2001, with the Doha Declaration on the TRIPS Agreement and Public Health.

With this declaration, WTO members reaffirmed that TRIPS can­ and should­ be part of the solution in tackling the public health challenges that confront developing countries. And they identified flexibilities in TRIPS as an important instrument in enabling access to medicines.

Moreover, members agreed to add a new flexibility to the agreement. They adopted a waiver that enabled the export of lower cost generic medicines to countries which could not produce the medicines themselves.

Led by African countries ­ and with unanimous political support ­ members subsequently decided that this issue was too important for just a waiver. They decided to provide a permanent legal instrument.

And so, in 2005, it became the first amendment agreed to the WTO’s rulebook.

Two-thirds of the membership has to confirm acceptance before the amendment comes into force. Around half of our members have already taken this step and we need 21 more acceptances to meet the threshold amount.

And it’s important to note that this amendment does not require members to take on any new obligations ­ precisely because it concerns a new flexibility, not a new obligation. It simply means that they affirm the right of all members to use this legal protection if and when they wish to.

The work of the WTO also touches on public health issues in a broader sense.

The world is more connected than ever before, and this is no different for trade in medicines and related technologies.

Worldwide imports of pharmaceutical products exceeded half a trillion dollars last year.

Trade in electro-medical apparatus ­ such as ultrasound and MRI equipment ­ exceeded 100 billion dollars.

So impediments to trade, be they uncoordinated customs processes or high trading costs, ­ can be more than just an economic burden. They can be a drag on public health, delaying access to these goods and adding to their cost. This is a very serious issue ­ and one which deserves our attention.

Implementing the WTO’s Trade Facilitation Agreement can be an important step in that direction.

In a nutshell, this agreement will help to expedite the movement of goods across borders. It aims to simplify customs procedures, increase transparency and limit fees and charges. Estimates show that full implementation of the agreement could reduce trade costs by an average of 14.5 per cent.

This can have a big impact across the board ­ including for access to medicines.

For example, the agreement contains provisions for expedited handling of perishable goods, which is vital in the cold chain management and transportation of medicine, such as vaccines.

So this agreement can bring a lot to the table.

And, of course, there are many other examples that show the impact of trade policy here.

Barriers to trade, from tariffs to standards and regulations, impact the costs and competitiveness of producers. They also affect the choices, prices and information available to consumers ­ and patients.

So an important part of our job here is to offer a place for dialogue on these subjects, and to increase transparency.

Some WTO committees, for example, deal with very sensitive standards and regulations, such as levels of toxins in food, caffeine labelling on energy drinks, or test procedures for medical devices and pharmaceuticals.

Some WTO disputes have touched upon related issues ­ for example, looking at policies to discourage tobacco consumption, or packaging information for consumers.

In addition, in many national health systems, access to medicines is supported by public funds, often through public procurement.

The WTO’s revised Agreement on Government Procurement addresses this sector, promoting transparency and good governance in public procurement activities.

Parties to this Agreement have agreed to bind their central health related agencies to these provisions, ensuring that medicines are obtained via a competitive and transparent procurement process.

So I think this illustrates how prominent health is in WTO agenda.


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Open Data – Still Closed to Latin American Communities Wed, 04 Nov 2015 00:40:37 +0000 Emilio Godoy Alicia Bárcena, executive secretary of ECLAC, and other heads of international agencies discuss the need for greater transparency on the part of governments, during the Open Government Partnership Global Summit in Mexico City. Credit: ECLAC

Alicia Bárcena, executive secretary of ECLAC, and other heads of international agencies discuss the need for greater transparency on the part of governments, during the Open Government Partnership Global Summit in Mexico City. Credit: ECLAC

By Emilio Godoy
MEXICO CITY, Nov 4 2015 (IPS)

Open data policies in Latin America have not yet enabled communities to exercise their right to access to information, consultation and participation with regard to mining or infrastructure projects that affect their surroundings and way of life.

These rights are contained in the Rio Declaration on Environment and Development adopted at the 1992 Earth Summit in Rio de Janeiro.

Principle 10 of the Rio Declaration states that “each individual shall have appropriate access to information concerning the environment that is held by public authorities, including information on hazardous materials and activities in their communities, and the opportunity to participate in decision-making processes.

“States shall facilitate and encourage public awareness and participation by making information widely available. Effective access to judicial and administrative proceedings, including redress and remedy, shall be provided.”

“In Latin America, the lack of open, timely information is a widespread problem,” said Tomás Severino, director of the Mexican NGO Cultura Ecológica.

The expert explained to IPS that “information is technical and specialised. Open data gives us the possibility to generate accessible information, to break it down and to disseminate it.”“The problem is severe; it is not enough to just be transparent. There is a question of timing. When do citizens need that information? After the fact? That’s a mistake. We need to think about how to make information available before decisions are reached, as well as information about the impact of those decisions.” -- Carlos Monge

The link between open data and projects that have an influence on local communities and the environment was one of the issues at the Open Government Partnership Global Summit held Oct. 27-29 in Mexico City.

Taking part in the summit were representatives of governments and civil society and academics from the 65 countries participating in the Partnership, created in 2011 under the aegis of the United Nations. Of that total, 15 countries are from Latin America.

During the summit’s forums and workshops, the delegates of organised civil society called for a strengthening of open data policies and faster progress towards compliance with Principle 10, which cannot happen unless there is movement towards total information openness.

It is common practice in the region for communities to be uninformed about the very existence of mining, oil, energy and other kinds of projects even when carried out in their immediate vicinity, as they are neither previously consulted nor given access to information. Permits and concessions are off their radar.

Countries in the region ratified the declaration on the application of Principle 10 of the Rio Declaration, signed during the U.N. Conference on Sustainable Development (Rio+20), held in Rio de Janeiro in June 2012.

According to information shared by participants during the open government summit in Mexico, the question of the environment is limited to instructions to disseminate public consultations in the environmental impact assessment process in the Second Plan of Action on open data 2013-2015.

Currently, Mexico is collecting proposals to design a third, more ambitious, plan.

One of its key focuses is “natural resource governance”, which encompasses climate change, fossil fuels, mining, ecosystems, the right to a healthy environment, and water resources for human consumption.

Representatives of civil society in Latin America discuss the application of open data policies and Principle 10 on access to information, participation and consultation on environmental issues, during one of the panels at the Open Government Partnership Global Summit held Oct. 27-29 in Mexico City. Credit: Emilio Godoy/IPS

Representatives of civil society in Latin America discuss the application of open data policies and Principle 10 on access to information, participation and consultation on environmental issues, during one of the panels at the Open Government Partnership Global Summit held Oct. 27-29 in Mexico City. Credit: Emilio Godoy/IPS

For its part, Peru has been discussing since May a “strategy on openness and reuse of open government data” for the period 2015-2019, which would include environmental questions.

In August, Argentina presented the first part of its “second plan for open government 2015–2017”, which also fails to include major environmental considerations.

“The problem is severe; it is not enough to just be transparent,” said Carlos Monge, the representative in Peru of the U.S.-based non-governmental Natural Resource Governance Institute. “There is a question of timing. When do citizens need that information? After the fact?

“That’s a mistake. We need to think about how to make information available before decisions are reached, as well as information about the impact of those decisions,” he told IPS.

Monge complained that since 2014 countries like Bolivia, Colombia, Ecuador and Peru have reformed their legislation to lower environmental standards, with the aim of drawing investment in the mining and oil industries, due to the drop in global demand for raw materials, one of the pillars of their economies.

The “Global Atlas of Environmental Justice” lists 480 environmental conflicts in 16 Latin American and Caribbean nations, related to activities like mining, fossil fuels, waste and water management, access to land and infrastructure development.

The initiative forms part of the European project “Environmental Justice Organizations, Liabilities and Trade” and is coordinated by the University of Barcelona Institute of Science and Technology and drawn up by experts from 23 universities and environmental justice organisations from 18 countries.

The majority of the disputes, the atlas says, are concentrated in Colombia (101), Brazil (64), Ecuador (50), Peru (38), Argentina (37) and Mexico (36).

When they are in the dark about infrastructure or mining or oil industry projects in their local surroundings, communities suffer what U.S. Professor Rob Nixon calls “slow violence” from environmental problems arising from the exploitation of natural resources, which generates conflicts and further impoverishes local populations.

Alicia Bárcena, executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), complained during the summit that local communities are not previously informed about extractive industry projects and said the region is not yet ready to meet open data requirements.

“It’s important for them to have information on concessions, contracts, impacts, revenue, consultations, so they are aware beforehand of the effects,” she told IPS.

The countries of this region agreed in November 2014 on the negotiation of a treaty on Principle 10, in a process facilitated by ECLAC, which is about to open a regional natural resource governance centre.

The second round of negotiations took place Oct. 27-29 in Panama, and the third is to be held in April 2016, in Uruguay.

Severino, who is taking part in Mexico’s open data initiatives and in the Principle 10 regional negotiating process, stressed the need to modify laws to bring them into line with these schemes.

“We need participation and consultation mechanisms,” he said.

Monge cited two processes that he said should be given institutional structures. “Zoning and consultation imply the generation of a lot of information. If they want to carry out a project, the information on money, water and territory should be made transparent,” he said.

The first refers to zoning of residential, industrial or ecological areas, by the municipal authorities, and the second involves asking local populations whether or not they want a project to go ahead.

“Consultation is one of the most effective instruments. Principle 10 addresses it before a project is carried out,” Bárcena said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Nicaragua’s Interoceanic Canal, a Nightmare for Environmentalists Tue, 03 Nov 2015 01:08:16 +0000 Jose Adan Silva Hundreds of small farmers came to Managua from the Caribbean coastal region in southern Nicaragua on Oct. 27 to take part in the 55th protest against the construction of the interoceanic canal, which is set to displace thousands of rural families. Credit: Carlos Herrera/IPS

Hundreds of small farmers came to Managua from the Caribbean coastal region in southern Nicaragua on Oct. 27 to take part in the 55th protest against the construction of the interoceanic canal, which is set to displace thousands of rural families. Credit: Carlos Herrera/IPS

By José Adán Silva
MANAGUA, Nov 3 2015 (IPS)

The international scientific community’s fears about the damage that will be caused by Nicaragua’s future interoceanic canal have been reinforced by the environmental impact assessment, which warns of serious environmental threats posed by the megaproject.

The report “Canal de Nicaragua: Executive Summary of Environmental and Social Impact Assessment” was carried out by the British consulting firm Environmental Resources Management (ERM) and commissioned by the Hong Kong Nicaragua Canal Development (HKDN Group), the Chinese company that won the bid to build the canal.

The 113-page executive summary sums up the study, whose unabridged version has not been made publicly available by the government, ERM or HKND.

In the study, ERM says the megaproject could be of great benefit to the country as long as best international practices on the environmental, economic and social fronts are incorporated at the design, construction and operational stages, for which it makes a number of recommendations.

But it spells out specific risks and threats to the environment in this impoverished Central American country of 6.1 million people with a territory of 129,429 square kilometers.

The canal will go across the 8,624-sq-km Lake Cocibolca, also known as Lake Nicaragua – the second largest lake in Latin America after Venezuela’s Lake Maracaibo. The route will be nearly four times longer than its rival, the Panama Canal.

The 276-km canal will link the Atlantic and Pacific oceans; of that length, 105 km will cross Lake Cocibolca.

Salvador Montenegro, former executive director of the Aquatic Resources Research Centre of the National Autonomous University of Nicaragua (CIRA/UNAN), stressed that the executive summary suggests additional studies on Lake Cocibolca, to fully assess the risks to the environment and to recommend actions to mitigate them.

“These are the same observations that I have been making, which were never taken into account,” Montenegro told IPS. “On the contrary, they accused me of being a traitor to the government and of being in the opposition, when the only thing I was doing was trying to preserve the health of Lake Cocibolca.”

The scientific researcher was dismissed from his post in the university allegedly due to pressure from the government of left-wing President Daniel Ortega, in office since 2007, who backs the canal project driven by the government investment promotion agency, Pro-Nicaragua, headed by his son Laureano Ortega.

Now Montenegro forms part of the Grupo Cocibolca, a group made up of scientists, academics, environmentalists and activists openly opposed to the future canal.

Ometepe Island within Lake Cocibolca in western Nicaragua. Scientists, environmentalists, political opponents, academics, social organisations and people whose lives will be affected have come together against construction of the interoceanic canal and in defence of the lake. Credit: Karin Paladino/IPS

Ometepe Island within Lake Cocibolca in western Nicaragua. Scientists, environmentalists, political opponents, academics, social organisations and people whose lives will be affected have come together against construction of the interoceanic canal and in defence of the lake. Credit: Karin Paladino/IPS

Mónica López, an activist who belongs to the group, summed up for IPS the main findings in the ERM study which she believes make it clear that the project would open the doors to an unprecedented environmental catastrophe for Latin America.

She said ERM concluded that neither HKND nor the government have the experience to carry out a project of this magnitude.

The report says “the government would be wise to consider engaging with international development agencies such as the World Bank or the Inter-American Development Bank,” to avoid damage in sensitive areas like the Mesoamerican Biological Corridor, the Indio Maíz Biological Reserve, the San Juan River, Lake Cocibolca and surrounding nature reserves.

“The study says that in normal situations, these areas would generally be considered untouchable due to their social and ecological fragility,” López noted.

ERM says that if further studies are not conducted and “mitigation and offset measures” are not successfully implemented, “biodiversity impacts would be significantly worse than described.”

It recommended further studies to identify seismic risks posed by construction of the canal; gauge the impact of dredging in the lake; identify the threats from the introduction of saltwater into the lake; and assess the risk of a reduction of the outflow of water from the lake to the San Juan River.

It also concludes that without the implementation by HKND and the government of the environmental and social mitigation measures recommended in the report, not even Route 4 – the one that was selected and the only one considered viable – would have the positive net impact for the environment that could justify construction of the canal.

Based on the ERM executive summary and the considerations of local and international scientists and other experts, the Grupo Cocibolca sent a letter to the president on Oct. 26 asking for the repeal of the law that made the canal project possible.

Ortega has not responded. But HKND, through its officials outside of Nicaragua, announced further studies with a view to moving ahead on the project that will have a projected cost of 50 billion dollars – the largest megaproject that the world has seen in the last few years.

HKND’s chief project adviser, Bill Wild, told the local media that the company had made some “optimisations, with a higher cost to the project, to avoid and reduce environmental and social impacts and keep the risks to a minimum.”

According to Wild, the studies that began to be carried out in 2013 will continue until 2016 and will be complemented by additional topographic and hydrological research, to be conducted by the Australian consultancy CSA Global.

Map of southern Nicaragua with the six projected canal routes. The fourth, in green, was the one that was selected. Credit: ERM

Map of southern Nicaragua with the six projected canal routes. The fourth, in green, was the one that was selected. Credit: ERM

The executive vice president of HKND Group, Kwok Wai Pang, told the local newspaper El Nuevo Diario that now that the ERM study has been presented, “more in-depth studies will be carried out along the route.

“During the feasibility study we conducted topographical, seismic, hydrological and archaeological research and we collected a large volume of seismic information and data on water levels, salinity intrusion and other questions, to draft a conceptual design.”

Telémaco Talavera, spokesman for the president’s Great Interoceanic Canal of Nicaragua Commission, downplayed the concerns expressed by ERM and environmentalists.

Speaking with IPS and three other journalists, he expressed confidence in HKND’s capacity “to work out, with great wisdom, any inconvenience that may emerge, and which are normal in projects of such magnitude.”

Not just environmental problems

But despite the government’s and HKDN’s upbeat attitude about the project, it is overshadowed by factors other than environmental issues.

On one hand, specialised media outlets reported in September that because of China’s current financial crisis, HKND magnate Wang Jing had lost as much as 84 percent of his fortune, previously estimated at more than 10 billion dollars, which has shrunk to some 1.2 billion dollars.

On the other hand, growing resistance by peasant farmers along the projected canal route has hurt the international business climate for the company, according to López, the activist.

So far, 55 demonstrations against the project have been held in Nicaragua. The latest, held Oct. 27 in Managua by rural residents from different parts of the country along with other protesters, made the international headlines because of the violent clashes between the demonstrators and supporters of the megaproject.

In its executive summary, ERM says the social opposition affects the project’s viability.

“The land expropriation and involuntary resettlement process to date has not met international standards,” the ERM report states. “The Project risks losing its social license to operate and may jeopardize the viability of the Project by not following international standards.”

So far, the government has given HKND permission to expropriate 2,909 square kilometres of land along the projected route.

The canal law was approved in 2013. But small-scale work on the project along the Pacific Ocean did not officially get underway until December 2014.

HKDN projected that the work would take five years, and the canal would be operating in 2019. But ERM predicts that it will not meet that deadline.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: The Broken Promises of the Peruvian Development Model Fri, 30 Oct 2015 13:40:45 +0000 Alice Martin Prevel

Alice Martin Prevel is a Policy Analyst at the Oakland Institute.

By Alice Martin Prevel
OAKLAND, California, Oct 30 2015 (IPS)

Lima was the host, in October 2015, of the International Monetary Fund (IMF) and the World Bank annual meetings. The two Bretton Woods institutions, criticized for their record of lowering social and environmental conditions, seek to showcase Peru as a success of their neoliberal policies and reforms to the rest of the world.

Alice Martin Prevel

Alice Martin Prevel

In the 1990s, Peru embraced the Bank’s Structural Adjustment Program, with the aim to make the country more attractive to foreign businesses through a number of deregulation and privatization reforms, such as the lifting of restrictions on foreign land ownership.

Between 1990 and 2015, the World Bank’s loans to Peru increased tremendously, channeling over $7 billion dollars to the country during the period. In 2015, it ranks 35th in the Bank’s Doing Business survey, with the second highest score in Latin America, indicating that the government has “created a regulatory environment conducive to business.”

In 2008, Peru requested help from the Bank’s International Finance Corporation (IFC) advisory services for the design of a new reform agenda that was launched in 2009. As a result, the Doing Business survey recorded 15 pro-business policy reforms ratified between 2010 and 2013, including fast-track procedures at the land registry, cuts in workers’ social benefits and tax reductions for private companies.

Following the reforms, Foreign Direct Investment (FDI) doubled from 5.5 billion dollars in 2007 to 10.2 billion dollars in 2013.

However, improving Peru’s business climate to attract foreign investment has had a severe toll on people, workers and the environment, resulting in rising social conflicts.

Simultaneously, Peru’s export-oriented economy has experienced a significant slow-down over the past three years, notably due to China’s lower demand for oil and minerals. The drop in the economy’s growth rate, from an average of 6.4 per cent in the 2000s to only 2.4 per cent in 2014, raises important questions about the high social and environmental costs associated with the country’s “development” path.

Current President Ollanta Humala follows a long tradition of neoliberal leaders implementing privatization and deregulation reforms with the objective of increasing private investment and corporate business in Peru.

In 1990, Alberto Fujimori’s government implemented a train of reforms tied to the World Bank and IMF’s Structural Adjustment Programs. The administrations that followed Fujimori’s adopted, with little variations, the same neoliberal model and further eroded workers’ rights.

Reforms have led to a win-win for corporations operating in Peru by reducing spending on both workers and taxes.

Peru has a long history of seizure, exploitation and destruction of indigenous communities’ territories that started with the Spanish colonization. Under the Fujimori government, the rights of indigenous peoples were further denied by laws that suppressed the indivisibility and inalienability of indigenous communal lands.

In 2014, there were 68 million hectares of forests in Peru encompassing some 350,000 indigenous residents. These self-sufficient communities care for and rely on these lands for food, shelter and medicine, but land grabbing and deforestation pose grave threats to their livelihoods and the regenerative health of the forests.

The average rate of deforestation between 2001 and 2012 was 123,000 hectares per year. Since 2012, the rates have doubled to 250,000 hectares per year despite Peru’s pledge to reduce deforestation to zero by 2020.

Indigenous people have been defending their territories against illegal activities, but lack a supportive legal framework to do so. While approximately 15 million hectares are officially recognized as indigenous lands in the Peruvian Amazon, indigenous communities claim they have rights over at least 20 million additional hectares, which remain unrecognized.

Since the 1990s, Peru has taken a clear shift towards large scale and export-oriented agriculture. In 2014, Peruvian exports from agriculture exceeded 5 billion dollars. The growth of the agribusiness sector, however, has not brought the expected benefits to the rural and indigenous populations. Whereas the poverty rate in the capital Lima is relatively low (14.5 per cent as of 2012), it is in stark contrast with the 53 per cent rate found in rural areas.

Unlike its neighbours, Bolivia and Ecuador, who have resisted the Bank’s push for reforms, Peru has fully embraced its neoliberal agenda. But while the World Bank tries to convince the world that Peru’s economic model has led to a miraculous growth and poverty reduction, the country faces tremendous social issues and inequality.

Small farmers, who provide 60 per cent of Peru’s basic food, have been negatively impacted by government policies that widely favour the development of a large-scale, export-oriented agriculture model, resulting in increased pressure on water sources and negatively impacting farmers’ livelihood and assets.

Many farmers have been forced to rent or sell their land, transitioning from a status of farm owner to farm worker, or migrating to urban areas. In the Andes and the Amazon, small farmers and indigenous communities are left with the toxic legacy and degradation of their lands by mining and oil companies.

Despite their region’s mineral wealth, many rural communities are victimized by extractive industries, remaining extremely poor and food insecure. Their lifestyle is highly threatened by national policies that have chosen to concentrate a tremendous amount of resources in the hands of a few private corporations.

With the dire situation only growing worse, workers, rural communities and indigenous people have expressed their anger and anxiety through protests. The World Bank’s projects and involvement with the private sector in the country have notably been associated with violent clashes with local communities. The number of social conflicts, already considerable, could rise even more with the slowdown of the Peruvian economic growth. To many, the Peruvian “miracle” promoted by the Bretton Woods institutions has a bitter taste.


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Brazil’s Megaprojects, a Short-lived Dream Thu, 29 Oct 2015 23:34:58 +0000 Mario Osava Part of the Rio de Janeiro Petrochemical Complex (COMPERJ) in October, seen from the banks of the Caceribu river, the closest to the installations that the public can get. Credit: Mario Osava/IPS

Part of the Rio de Janeiro Petrochemical Complex (COMPERJ) in October, seen from the banks of the Caceribu river, the closest to the installations that the public can get. Credit: Mario Osava/IPS

By Mario Osava
ITABORAÍ, Brazil , Oct 29 2015 (IPS)

Working as a musician in a military band is the dream of 21-year-old Jackson Coutinho, since hopes that a petrochemical complex would drive the industrialisation of this Brazilian city near Rio de Janeiro have gone up in smoke.

“I’ll try out for the navy, army and even the military police, but only to be a musician, not a police officer,” said Coutinho, who plays the double bass in bands he has set up with friends in Itaboraí.

Until last year he was working for the QGIT consortium on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ). He was a machine operator assistant on the embankment where the Natural Gas Processing Unit (UPGN), part of the complex, was built.

But he lost his job in early 2015, when lay-offs intensified as a result of the crisis faced by Petrobras, the state oil company that owns COMPERJ.

The initial projected cost of the megaproject was 6.5 billion dollars. But with cost overruns it has risen to twice that amount, even though the project was reduced drastically to a single refinery and the UPGN.

The most expensive part, the petrochemical plant, which would have fuelled industrialisation in this city 45 km from Rio de Janeiro, was cancelled because Petobras did not manage to find partners.

The plunge in oil prices and the corruption scandal shaking the company since March 2014, implicating dozens of politicians and businesspersons for billions of dollars in kickbacks, smothered the plan to build in Itaboraí the biggest petrochemical complex in Latin America.

The losses are huge. “Of 14 plants or buildings where I worked on the construction, only four or five will be used,” said Rogerio Henrique Lourenço, 26, a building technician who was employed by the COMPERJ works for five years.

Besides the white elephants - the shiny modern buildings still empty within the 45 square kilometres of the shrunken megaproject – equipment was purchased and infrastructure was built, which require costly maintenance while the future remains uncertain.

To that is added the expense of the compensation and mitigation of the social and environmental impacts, which has included sanitation, clean-up of rivers, and reforestation – obligations that have not shrunk in accordance with the downsizing of the project.

The municipalities under the influence of COMPERJ, especially Itaboraí, are losing the prospect of development promised in 2006, when then president Luiz Inácio Lula da Silva (2003-2010) announced the project.

At the time he said it would consist of two refineries and two petrochemical units, besides installations for services and training of the necessary technical personnel.

The Getulio Vargas Foundation, a leading economic think tank, predicted that the petrochemical complex would foment the emergence of a plastics industry hub. According to its projections, between 362 companies – a conservative estimate – and 724 companies – a more optimistic forecast – would set up shop in the area.

That fast-forward industrialisation was expected to generate between 117,000 and 168,000 jobs in the southeastern state of Rio de Janeiro – just over one-third of which were to be concentrated in COMPERJ’s direct area of influence.

Itaboraí, as the city where COMPERJ is located, was to reap the greatest benefits, leaving behind its status as one of the poorest municipalities in the state – a commuter town whose residents work in neighbouring cities.

Jackson Coutinho, 21, managed to buy a car after working 18 months in a construction company helping to build the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil. Now unemployed, the dream of this worker from the city of Itaboraí is to join a military band as a musician, and study accounting. Credit: Mario Osava/IPS

Jackson Coutinho, 21, managed to buy a car after working 18 months in a construction company helping to build the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil. Now unemployed, the dream of this worker from the city of Itaboraí is to join a military band as a musician, and study accounting. Credit: Mario Osava/IPS

“The castle came crumbling down,” said Lourenço, who was laid off in March 2014, when construction of the petrochemical complex began to run out of steam.

The father of three young children now gets by with casual work, mainly on small-scale construction sites. When he talked to IPS he was handing out pamphlets on the main street of Itaboraí.

His dream is to pass a civil service exam and become a public employee, with job stability.
“In COMPERJ I had well-paid jobs, but they were temporary,” he said. His five years there were divided between short-term contracts in a number of different companies.

Francisco Assunção, 22, had a similar experience. He worked for nearly two years in three of the dozens of companies participating in the construction of COMPERJ.

Now he is trying to make a living with his motorcycle taxi, “but people prefer to walk, because they don’t have money,” he said. So he also finds casual or part-time work in the construction industry and restaurants.

“I earned more in the COMPERJ jobs,” he said. Although he was paid just 300 dollars a month, he got an additional 40 percent for food and medical assistance, he explained.

Coutinho stands out because he spent 18 months in the same job, which made it possible for him to be promoted and to earn enough to buy a car. “It was a dream, but it’s over,” he said.

Although he is focused on his musical career, he has a “Plan B”: to study accounting, although he doesn’t like math. “I have friends who are accountants,” he said.

But he is confident that “COMPERJ will resume its original plan (to build a petrochemical complex), because too much money was invested there, and they went beyond the point of no return.” An estimated 80 percent of the construction is complete.

Rogerio Henrique Lourenço, 26, worked for five years on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil, for several different companies. Now he supports his three young children and their mother in the city of Itaborai, where the shrunken and stalled megaproject is located, with casual work. Credit: Mario Osava/IPS

Rogerio Henrique Lourenço, 26, worked for five years on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil, for several different companies. Now he supports his three young children and their mother in the city of Itaborai, where the shrunken and stalled megaproject is located, with casual work. Credit: Mario Osava/IPS

For these young men, the well-paying, steady work they enjoyed for several years merely drove home the lack of opportunities in Itaboraí, a 343-year-old city of 230,000 people that has remained faithful to its origins as a town that emerged alongside a highway, which is now its long central avenue.

The scant local productive activity, virtually limited to ceramics and orange groves, offers neither jobs nor intellectual stimulus for young people.

“This is a city that does not cultivate a cultural identity,” Franciellen Fonseca, who is studying to become a social worker and is taking part in the Incid research project, told IPS. “There are no recreational opportunities, plazas or places where locals can gather.”

The study by the Brazilian Institute of Social and Economic Analyses (IBASE) monitors compliance with citizen rights in the 14 municipalities in COMPERJ’s area of influence, based on a system of indicators that the non-governmental organisation developed.

Its most recent study, on “the invisible citizenship rights of COMPERJ workers”, stressed the difficulty of obtaining information about the situation faced by labourers working on the project.

Refusing to provide information on the workers’ conditions is “a serious rights violation, because it makes it impossible to closely monitor the effects and impacts of these megaprojects on people’s lives,” says an Incid research project report.

The number of workers on the COMPERJ construction sites has never been revealed. There was talk of 30,000 at the height of construction, in 2012-2013, and figures have varied widely since then.

The young men who were laid off and talked to IPS say local workers were a minority on the construction sites – running counter to the promise to put a priority on hiring local labour. One of the numerous strikes that brought work temporarily to a halt demanded precisely that more local workers be hired, Coutinho pointed out.

The companies argued that there was not enough skilled local labour. But when people with the necessary training appeared, the companies set impossibly high standards for prior work experience, or simply did not hire them, said Lourenço.

The “invisibility” surrounding workers at COMPERJ was broken by the frequent strikes and rioting, which the old union was unable to handle.

Its successor, the Itaboraí union of assembly and maintenance workers, emerged in June 2014 to confront a different reality: the growing wave of lay-offs.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Southeast Asia: How to Make Good Business Out of Doing Good Thu, 29 Oct 2015 18:19:37 +0000 Diana G Mendoza A better quality of life should be the business sector’s concern, too.  Credit:  S Li.

A better quality of life should be the business sector’s concern, too. Credit: S Li.

By Diana G Mendoza
KUALA LUMPUR, Oct 29 2015 (IPS)

When his father drove back to pay the 47 Malaysian cents they owed to the food stall they had just left, then nine-year-old Anis Yusal Yusoff, today president and chief executive officer of the Malaysian Institute of Integrity, learned the meaning of standing firm by one’s values.

“To me, that was having integrity, having values,” Yusoff recalled while speaking at the ASEAN Responsible Business Forum held here this week in the Malaysian capital. “We had to drive back so we can pay the stall owner what we owed him, even if it was only 47 sen (less than one US dollar) he said.

It may sound cliché, he continued, but integrity should be taught early in life so that it is carried to adulthood, and especially when a person joins the corporate world.

He asked parents and schools to teach children to be “God-fearing and law-abiding,” so that they have firm ethical foundations in life. A walk in a public park, for instance, can teach a child not to throw trash or vandalise flowers because the park belongs to everyone and should be cared for by all who use it.

Simple things like these may be far removed from what business people usually discuss in boardrooms or pay attention to in the world of negotiations, dividends and profit margins. But Yusoff said that business integrity is seen in how people work, in corporations and organisations big and small.

Doing good and practising integrity when doing business resonated through the three-day forum, which was organised by the Singapore-based ASEAN CSR Network. The conference aims to have the public sector, private sector and civil society advance responsible business practices and partnerships as deeper economic integration takes root in the 10-member Association of Southeast Asian Nations (ASEAN) with the launch of the ASEAN Economic Community in December 2015.

Attended by some 250 participants from governments, civil society groups, trade unions, academe and business, the forum discussed issues that businesses in the region have identified as important to their brand of “corporate social responsibility”: responsible business practice in agriculture, respect for human rights, assurance of a decent workplace and a path toward a corruption-free ASEAN business community.

“Businesses are widely recognised as the engine for economic growth and poverty eradication,” said Yanti Triwadiantini, chair of the ASEAN CSR Network. “The forum can provide answers by helping transform companies from merely profit-driven entities into agents of change for responsible and sustainable development.”

As agents of change that have a stake in the betterment of the societies they do business in, businesses take an active role in ensuring equitable, inclusive and sustainable development, speakers at the forum explained.

A business can be good if it has good people running it, stressed Lim Wee Chai, founder and chairman of Top Glove Corp, which produces rubber gloves. “We create awareness in the workforce on how to be good in the conduct of business – from picking up rubbish daily to wearing an anti-corruption badge,” he said.

“We encourage our people to do good. We educate them,” he told the forum. But in the wider world of ASEAN and its partner governments and organisations – as ASEAN companies get more opportunities to go across national borders – “being good alone is not good enough; make sure your neighbouring countries are also doing good,” he pointed out.

Yanti stressed that the need for the private sector to be involved in defining responsible business practices and adhering to these values, against the backdrop of the momentum of economic integration at the launch of the ASEAN Community this year.

The ASEAN Community will officially be launched by ASEAN leaders at their 27th Summit in November in this city. It marks the progression of the Southeast Asia’s main regional grouping into a community of more than 600 million people in economic, socio-cultural and political terms. If it were one single economy, ASEAN would be the seventh largest economy in the world with a combined GDP or 2.4 trillion dollars in 2013. “2015 is a milestone year for ASEAN,” said Yanti.

At the same time, Yanti asked participants to be mindful of the need to narrow the development gap among the richer and poorer ASEAN countries, and the gap within these countries, by ensuring protection for the most vulnerable groups such as children, women and migrant workers.

“Many of the problems we face today are also caused by irresponsible companies who take advantage of the prevailing conditions to earn maximum profits at the expense of people and the environment,” she said. “The current haze (is) as prime example of such a phenomenon,” she added, referring to how the drive for profits has pushed plantation owners and companies with concessions in Indonesia to use burning practices that annually pollute the air across several countries in Southeast Asia and cause regional tensions. This year’s haze episode has been the worst since 1997.

Corruption, the concern of many ASEAN citizens and a touchy topic among governments, also drew lively discussion.

“More often, corruption occurs when the government transacts business with the private sector,” said Francesco Checchi, regional anti-corruption adviser of the Southeast Asia and the Pacific office of the UN Office of Drugs and Crime. International mechanisms such as the UN Convention against Corruption (UNCAC) could be a guide to not just eliminate but to prevent corruption in business, he added.

The forum’s guest of honor, Sen. Paul Low Seng Kuan, minister for governance and integrity of the prime minister’s department of Malaysia, pointed that there are “businesses that partner with corrupt political institutions.”

“Corruption has eroded the integrity of almost all institutions,” explained Jose Cortez, executive director of Integrity Initiative Inc in the Philippines. In his country, he said, a trust-building movement has been mounted where institutions are trying to win the public’s confidence by signing “integrity initiative pledges” that commit to transparency and honesty in doing business.

“If transparency is prevalent in a company’s culture, then it is easier to detect corrupt practices,” he said.

From a larger perspective, the quest for “human dignity” is still any businessperson’s aspiration, added Thomas Thomas, chief executive officer of the ASEAN CSR Network. “I’ve heard the quest to doing good many times in this forum, and the difficulty of being good, but it is attainable,” he pointed out.

This feature is part of the ‘Reporting ASEAN: 2015 and Beyond’ series of IPS Asia-Pacific and Probe Media Foundation Inc.

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Cuba’s Extra-Heavy Crude Awaits Technology and Investment Tue, 27 Oct 2015 14:33:48 +0000 Ivet Gonzalez 0 Itaborai, a City of White Elephants and Empty Offices Fri, 23 Oct 2015 16:05:21 +0000 Mario Osava All of the offices, shops and locales in the modern two-building Enterprise complex are empty. It is one of the many white elephants left in the city of Itaboraí, in southeast Brazil, by the state-run Petrobras’ aborted petrochemical and oil industry megaproject. Credit: Mario Osava/IPS

All of the offices, shops and locales in the modern two-building Enterprise complex are empty. It is one of the many white elephants left in the city of Itaboraí, in southeast Brazil, by the state-run Petrobras’ aborted petrochemical and oil industry megaproject. Credit: Mario Osava/IPS

By Mario Osava
ITABORAÍ, Brazil , Oct 23 2015 (IPS)

Itaboraí still recalls its origins as a sprawling city that sprang up along a highway, not far from Rio de Janeiro. But a few years ago big modern buildings began to sprout all over this city in southeast Brazil, whose offices and shops are almost all empty today.

The number of white elephants, or costly, useless constructions, in this city of 230,000 people was the result of “two huge shocks” caused by the Rio de Janeiro Petrochemical Complex (COMPERJ), Luiz Fernando Guimarães, the municipal secretary of economic development, told IPS.

“The first impact came from the 2006 announcement by then President Luiz Inácio Lula da Silva (2003-2010) of the project, which was to consist of two refineries and two petrochemical plants that would generate 221,000 jobs, according to the Getulio Vargas Foundation,” he said.

The estímate by the prestigious Rio de Janeiro-based think tank was larger than the entire population of the city, which stood at 218,000 in 2010, according to that year’s census.

The complex, belonging to Brazil’s state-run oil company Petrobras, was to cost around 6.5 billion dollars according to initial projections. But it ballooned to twice that, and will now only entail a single refinery with a capacity to process 165,000 barrels a day of oil. Construction of the petrochemical plants and the second refinery was cancelled.

The original announcement and the start of construction in 2008 “turned Itaboraí into an El Dorado, attracting people from across Brazil, as well as many foreigners. Rents skyrocketed, the prices of food and services soared, and the value of land for building housing more than doubled,” Guimarães said.

The employment of some 30,000 workers and the prospect of a surge in industrialisation around the petrochemical complex drew abundant investment, because of the expectation that the city, “one of the poorest in the country, would soon to enjoy great prosperity,” the municipal secretary of finance, Rodney Mendonça, told IPS.

The real estate boom in this city 45 km from Rio de Janeiro led to the construction of modern buildings, including two big hotels – instead of the four that were originally planned.

In just a few years, there were 4,000 new shops and office buildings, said Guimarães, whose office was renamed the Secretariat of Economic Development and Integration. The former oil industry executive is now in charge of relations between the city government and COMPERJ.

The second shock was the decision to reduce the project to a single refinery, which was only announced in 2014. “But the change happened in 2010, and the public was not informed,” the official said. “I knew because several subsidiaries of Petrobras and Braskem (Latin America’s biggest petrochemical company) pulled out of the consortium.”

Bazarzão, which sells building materials and hardware in the city of Itaboraí, in southeast Brazil, saw its sales rise twofold when construction on the Rio de Janeiro Petrochemical Complex (COMPERJ) began. But they later plummeted when Petrobras cancelled the petrochemical side of the project. Credit: Mario Osava/IPS

Bazarzão, which sells building materials and hardware in the city of Itaboraí, in southeast Brazil, saw its sales rise twofold when construction on the Rio de Janeiro Petrochemical Complex (COMPERJ) began. But they later plummeted when Petrobras cancelled the petrochemical side of the project. Credit: Mario Osava/IPS

“Imagine, a local university was getting ready to launch a new degree programme in petrochemical technology, with a view to the jobs that would be offered by COMPERJ. When I told him what was happening, the director just about killed me,” Guimarães said.

Not ony were the petrochemical plants and second refinery cancelled, but “construction of the first refinery stalled, and according to Petrobras, financing is being sought to finish it,” he said – even though it is 87 percent complete.

On the 45 sq km acquired for the construction of COMPERJ, Petrobras is forging ahead with the construction of the Natural Gas Processing Unit, which is now employing around 3,000 workers. “But after it is built, only 80 employees will be left to operate it,” said Guimarães.

The city has felt the blow. The shiny new commercial and office buildings are empty, and walking down the streets you see “to rent” or “to lease” signs everywhere, while most shops and other businesses are closed.

“The land of oranges turned into the land of white elephants,” joked Bruno Soares, the manager of a building materials, hardware and appliances store, Bazarzão, on 22 of May avenue, the main street in Itaboraí.

His store did not register as a COMPERJ supplier. Nevertheless, it has suffered the effects. “Our sales have fallen 50 percent since late 2014,” he estimated, although he admitted that they actually returned to the levels prior to the boom that was cut short.

“Business went up and down in five years, too quickly. Other stores closed and neighbouring towns were also hurt,” he said.

“Itaboraí would be a powerhouse in Latin America if the petrochemical complex was doing well, but it all came crumbling down because of the corruption,” Soares maintained.

The entrance to the nearly empty Hellix luxury office building. The local Secretariat of Economic Development in Itaboraí, in southeast Brazil, moved into several of the offices because of the low rent, driven down by the lack of demand after Petrobras drastically cut back its oil and petrochemical industry megaproject nearby. Credit: Mario Osava/IPS

The entrance to the nearly empty Hellix luxury office building. The local Secretariat of Economic Development in Itaboraí, in southeast Brazil, moved into several of the offices because of the low rent, driven down by the lack of demand after Petrobras drastically cut back its oil and petrochemical industry megaproject nearby. Credit: Mario Osava/IPS

That is a common conclusion reached by the public – and not only in Itaboraí – in response to the daily reports on the kickback scandal involving Petrobas projects, including COMPERJ, in which dozens of politicians and construction companies have been implicated.

Valcir José Vieira, the owner of a parking lot in downtown Itaboraí, concurs with Soares. “Between 2006 and 2014 my parking lot was always full – 200 cars a day came in. Today, I receive 100 at the most,” he told IPS.

The decline in the number of cars began in November 2014, and forced him to reduce his fees from five to two reais (1.30 dollars to 52 cents) an hour.

For the city government the disaster is twofold. Tax revenue plunged, while expenditure, which was driven up by the frustrated megaproject and the illusion of progress, continued to increase.

The tax on services, the municipal government’s main source of income, brought in around 64 million dollars a year during the COMPERJ construction boom – an amount that will fall 40 percent this year, according to forecasts by the local Secretariat of Finance.

Revenue from other taxes is also falling, due to the insolvency faced by companies in crisis.

Meanwhile, public spending has not dropped. The influx of workers and their families drawn by the prospect of jobs and prosperity drove up demand for healthcare, schools and other public services.

“The number of people who visited the emergency room of the Municipal Hospital climbed from 500 a day, to 2,000 since 2013,” said Mendonça, the finance secretary. The city government dedicates 30 percent of its budget to healthcare – double what is required by law, he pointed out.

And the administration that left office in 2012 hired 2,000 new public employees through competitive examinations, based on the increased demands and projected new revenue flow. And although the tax revenue dropped, the new civil servants can’t be laid off, because they enjoy guaranteed job stability in Brazil. So that increase in expenditure remains in place.

The two municipal secretaries complained that there was no compensation from COMPERJ for the impacts in the municipality, nor investment to mitígate the damaging effects of the shrinking megaproject.

In the face of these challenges, the city government is seeking alternatives to fuel development. Guimarães is convinced that logistics will be the main future activity in Itaboraí.

The city is located at the intersection of several highways, outside of the congested Rio de Janeiro metropolitan region, and in the centre of an area of oil industry activity – unrelated to COMPERJ – ports, shipyards and various industries, he pointed out.

At the same time, the municipalities affected by the downsizing of the COMPERJ project mobilised to pressure Petrobras to at least resume construction of the first refinery.

Itaboraí is also focusing on boosting small businesses. Guimarães’ Secretariat of Economic Development created a centre for entrepreneurs, aimed at expediting the creation of microenterprises and formalising the ones currrently operating in the informal sector of the economy.

Small firms that refurbish or expand housing, and beauty salons are the most frequent businesses opening at this time. “They rival the evangelical churches,” the head of the centre, Wilson Pereira, told IPS.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: TPP is Bad for One’s Health Thu, 22 Oct 2015 20:14:05 +0000 N Chandra Mohan

Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
Oct 22 2015 (IPS)

Reflecting President Barack Obama’s pivot to Asia, the US, Japan and 10 other Pacific Rim nations have inked a Trans-Pacific Partnership (TPP) agreement. This is the largest mega free trade agreement (FTA) in two decades and represents 40 per cent of the global economy.

N Chandra Mohan

N Chandra Mohan

This pact puts tremendous pressure on the European Union to conclude its Transatlantic Trade and Investment Partnership with the US. China, too, will seek to hasten the Regional Comprehensive Economic Partnership. With the Wold Trade Organization (WTO) unable to conclude the Doha Round, India’s policy makers feel that it is in the country’s interest to be part of at least one of these mega FTAs that reflect the new global architecture for trade.

What are India’s gains if it joins the TPP? According to economic theory, the trade creation after joining this grouping will benefit India as its exports go up manifold. Cheaper imports, in turn, lower inflation. There will also be much greater Indian participation in US and Japanese supply chains in the Indo-Pacific region. Larger export markets would bring economies of scale to textile and other manufacturing firms. But there will be an adverse impact on the demand for its products if it does not join. Vietnam thus will gain at India’s expense in garment exports as it enjoys duty free access to the US while India faces duties of 14-30 per cent.

But TPP is less about trade and more to do with stricter intellectual property rights (IPRs), labour, environment standards and investor-state dispute settlement. Its IPR regime is Big Pharma-driven with provisions that adversely affect the availability of affordable medicines in the developing world. In fact, it would be disastrous for public health in India. The proviso to grant patents to “new uses of a known product” is fraught with grave implications as it may lead to ever-greening of patents. Similarly, the special treatment extended to pharmaceutical patents, placing them in a preferred category compared to other technologies, by patent term adjustment for regulatory delays, also will lead to a longer term for patents, argued TC James, consultant with the think-tank RIS at a recent panel discussion on TPP.

This trade pact thus will bring in new handicaps for India’s pharmaceutical industry, which are mostly generics, from getting marketing approvals. A case in point is the data exclusivity provisions for test data of biologics – which are grown from live cells – for five to eight years. These constitute a major barrier for the entry of cheaper generic versions, or biosimilars, in which India has a proven world-class capability. US law protects data collected during the development of biologics for 12 years. Pressure from Australia and others ensured that this was brought down to five years but this could go up to eight years.

In the fine-print of Article QQ.E.20, Big Pharma ensured that market exclusivity for biologics is provided either through at least eight years of data protection, or at least five years of data protection with other measures to “deliver a comparable outcome in the market,” As the latter option is problematical, market exclusivity will inevitably extend further by another three years. This means a longer period when monopoly pricing can be exercised by Big Pharma that will raise the price of drugs and take them out of reach for many people in India and even in the 12-menber grouping, for that matter.

India will thus seriously compromise its public health objectives if it chooses to join TPP. It has a well-established legal framework for IPRs and its courts have been active in enforcing this regime, exemplified by the denial of a patent for an anti-cancer drug to a foreign drug major in 2013 as it did not meet the criteria of inventiveness in India’s Patent Act. Such judicial activism has also been manifested in the award of a compulsory licence for the local manufacture of an anti-cancer drug due to the unaffordable prices charged by the global pharma giant that held the patent.

Not surprisingly, Big Pharma has for long been up in arms against India’s IPRs and has sought to pressurize the country to dilute some of the rigours of its legislation for drug patents. The United States Trade Representative has listed India under the Priority Watch list for the enforcement of its patent legislation, especially for drugs even though it is Agreement on Trade Related Aspects of Intellectual Property Right-compliant. What better opportunity to make amends under the guise of joining TPP. Compulsory licensing thus is a no-no. So is Section 3(d) of India’s Patent Act, which raises the bar for what is inventive to be granted a patent. These flexibilities provided by WTO’s TRIPS agreement are bound to clash with TPP that has low inventiveness thresholds to be granted patent protection.

India must not buckle under such pressures to weaken its IPR legislation. According to its national policy on IPRs, the right to health is an integral part of the right to life enshrined in the Constitution of India. India is committed to providing its citizens access to affordable medicines, quality healthcare and innovative products and services. The Patents Act as amended in 2005 protects innovation in pharmaceuticals and provides for measures to safeguard public health. India should continue to use the flexibilities available under TRIPS agreement and not compromise on the patent linkage and patent term extensions sought by TPP.

Nonetheless, India shouldn’t desist from efforts to engage with Big Pharma if it entails win-win outcomes that ensure affordable drugs to its people. The US drug major Gilead Sciences Inc introduced tiered pricing, whereby it charges lower prices in India compared to prices in the US. Gilead and nine Indian companies entered into a partnership based on effective IPR protection and licensing to produce an affordable version of a drug for Hepatitis C. India thus has access to patented products at affordable prices while ensuring a decent return for the innovating company. Can’t other US drug majors be persuaded to follow Gilead’s example? India does not need to join the 12-member grouping for such outcomes that further its public health objectives.


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OPINION: Time to Reform the Global Casino Tue, 20 Oct 2015 10:12:18 +0000 Hazel Henderson

Hazel Henderson, president of Ethical Market Media (U.S. and Brazil) is a futurist, science policy advisor and author of Mapping he Global Transition to the Solar Age and other books.

By Hazel Henderson
ST. AUGUSTINE, Florida, Oct 20 2015 (IPS)

The year 2015 highlights the global shift from traditional money-based, gross domestic product (GDP)-measured economic growth to the new models of sustainable, inclusive human development embodied in the United Nations Sustainable Development Goals (SDGs) ratified by its 193 member nations.

Hazel Henderson Credit:

Hazel Henderson

This historic shift still involves ideological and political struggles between incumbent industries of the earlier Industrial Revolution and the disruptive forces and technologies of our succeeding Information Age. The battles continue between the fossilized economic and financial sectors and those rising in the knowledge-richer technologies and cleaner, greener companies based on efficiency, renewable energy and “shareconomies.”

This multi-generational shift also involves deeper processes of changing world views, social organisations and evolving cultures in our global human family of some 7.5 billion people.

These historic changes in 2015, now visible in the SDG 17’s intertwined goals, go far beyond the earlier Millennium Development Goals (MDGs). They embrace the major problems and opportunities for continuing the successful evolution of human societies on planet Earth. The SDGs close the obsolete textbooks on money-based, GDP-measured economic growth. Today, the social and environmental costs of this earlier GDP model are evident to all in pollution, ecological and social disruption, widespread effects of climate change, global warming and rising sea levels – all measured daily by 120 Earth-observing satellites.

All this physical evidence of humans stressing ecological limits and planetary boundaries also led to the focus on finance as driver of these failed models of GDP-growth and short-term profits. The “free market” models of Britain’s prime minister Margaret Thatcher and US president Ronald Reagan in the 1980s drove “financialisation” and globalization which privatized and deregulated economic activities – divorcing them from their social context and consequences.

Finance became a global casino, the servant of fossilized industrialization and its overemphasis on investing in coal, oil and gas. This is highlighted in the research of the British NGO Carbon Tracker: trillions of “assets” in fossil fuel companies balance sheets became potential liabilities because they could not be burned without further damage to the climate. Client Earth, a public interest law firm, announced it is monitoring 250 corporations and their directors for possible legal action pursuant to the Companies Act of 2006.

Many science policy analysts, including this writer, and millions of citizens have been pointing out the failures of economics and its GDP-growth fetish which still drives financial markets. Yet, it took decades before today’s physical evidence, growing crises and millions of ethical investors produced the global transitions now recognized in the UN’s SDGs. This fossilized global finance is addressed in the two-year, ground-breaking United Nations Environment Programme (UNEP) Inquiry: Design of a Sustainable Financial System, whose report The Financial System We Need was released October 8, 2015.

This two-year Inquiry was steered by a global advisory board of central bankers, stock exchange and pension fund executives, regulators led by UNEP administrator Achim Steiner, and was co-directed by Nick Robins and Simon Zadek. It explores how to reshape and align crisis-prone global financial markets with the new SDGs – beyond short term speculative high speed trading toward serving needs of the real world economies. The UN Inquiry report contains many innovative studies including Greening China’s Financial System; Exploring Financial Policy and Regulatory Barriers to Private Climate Finance in South-East Asia; Scaling Green Bond Markets for Sustainable Development; Financial Reform, Institutional Investors and Sustainable Development; Fiduciary Duty in the 21st Century; Values BasedBanking; Insurance 2030 – Harnessing Insurance for Sustainable Development; and reports on these issues from India, Brazil, Indonesia, Bangladesh, Africa and Colombia.

Many innovative critiques are also referenced, including Ethical Markets’ Reforming Electronic Markets and Trading; Britain’s New Economics Foundation’s Financial System Impact of Disruptive Innovation, on the electronic shareconomy, crowdfunding, peer-to-peer lending – all bypassing conventional finance. Canada contributed research from CIGI (Center for International Governance Innovation) on environmental risk disclosure, its new FALSTAFF model and Central Banks Can and Should Do Their Part in Funding Sustainability, which boldly calls for central banks to use their quantitative easing (i.e., money printing) to buy new green bonds to grow the next economy for real people rather than bailing out past mistakes of big banks.

The Inquiry’s 4th progress report: The Coming Financial Climate reviewed all the findings on how governments, regulators, standard-setters and market actors are starting to incorporate sustainability factors into the rules that govern the financial system. Although there is much still to be done to de-risk and transform conventional finance, this Inquiry has broken down major barriers and brought together many of the progressive forces taming speculative markets and reforming practices that led to the 2008 crises and resulting human misery. The battle lines are drawn. Ending tax breaks and subsidies to fossil fuels and nuclear power will accelerate the new cost advantages of the more efficient renewable sectors worldwide.


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Trans-Pacific partnership raise the barriers for the access to affordable medicines Thu, 15 Oct 2015 14:09:32 +0000 carlos-m-correa ]]>

Carlos Correa, is the special adviser on trade and intellectual property issues of the South Centre.

By Carlos M. Correa
GENEVA, Oct 15 2015 (IPS)

The pharmaceutical industry from the US and Europe scored a major victory with the adoption, in 1994, of a binding agreement on intellectual property (Agreement on Trade Related Aspects of Intellectual Property Rights – TRIPS) in the context of the nascent World Trade Organization (WTO).

While some transitional periods were allowed, the TRIPS Agreement did not leave any space for a special and differential treatment based on the countries’ levels of development. In particular, it imposed on all World Trade Organisation members (WTO) the obligation to grant patents in all fields of technology.

The lack of patent protection promotes price competition in the pharmaceutical market and, in some cases, clears the way for the development of generic pharmaceutical industries. The most noticeable case is that of India, which developed a strong pharmaceutical industry and is known today as “the pharmacy of the developing world.”

The Trans-Pacific Partnership (TPP) is an ambitious trade agreement between the U.S. with 11 other countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).

Notably, there are major differences in the level of development of these countries (for example, Vietnam’s gross domestic product per capita (GDP) is approximately 43 times less than the US GDP per capita). Despite this, Washington seeks the application of the same standards of protection to all parties in the partnership.

In fact, tariffs are already low among the TPP negotiating countries. There are very little gains to be obtained from the TPP in this regard.

What these agreements tend to be really about are issues such as intellectual property rights. And the most important strategic reason of this initiative for the US is likely to be to counter China’s growing influence in the Asia-Pacific region, and to make the region less hospitable for the Chinese “state capitalism.”

The enhanced protection of pharmaceutical products was a key concern for the US in trade negotiations that led to the adoption of the TRIPS agreement. Despite the significant enhancement of the international standards of intellectual property protection that that agreement entailed, the pharmaceutical industry from the US and the European Union remained unsatisfied. They aimed at even higher standards of protection.

However, it soon became evident that it would not be possible to obtain such higher standards within the relevant multilateral organizations, WTO and World Intellectual Property Organisation (WIPO), where developing countries resisted further increases in intellectual property protections.

In this scenario, developed countries opted to seek the enhanced protection demanded by the pharmaceutical industry and other constituencies through bilateral or plurilateral trade agreements, where the bargaining position of individual countries is weaker and the promises of market access, or other real or expected trade advantages, make agreements of intellectual property more viable.

Thus, while under the TRIPS Agreement patents must last for 20 years from the date of application, the free trade agreements (FTAs) promoted by the US oblige the partner signatory countries to extend the patent term to compensate for “unreasonable” delays beyond a certain period in the procedures for the marketing approval of a medicine as well as in the examination and grant of patent applications.

FTAs also oblige, among other things, to grant patents based on “utility” rather than industrial applicability and, importantly, to secure market exclusivity on the basis of the protection of test data required for the marketing approval of pharmaceuticals, generally for five years from the date of such approval in the country where protection is sought. FTAs also require partners to establish a “linkage” between the marketing approval of medicines and patents, thereby granting pharmaceutical companies with rights that, under some FTAs, are also stronger than those available under the US law.

For instance, a study found that the patent term extension would generate in Colombia an increase in pharmaceutical expenditures of US$ 329 million and a reduction in pharmaceutical consumption of 7 per cent by 2025.

With respect to the potential impact of the TPP, in particular, a study by Australian and US researchers estimated that, in Vietnam, the government would only be able to provide anti-retroviral therapy to 30 per cent of people in living with HIV (down from its current rate of 68 per cent) since the cost per person per year of treatment would increase to US$ 501 under the US proposal from its current level of $127.22.

The negative impact of TRIPS-plus standards on access to medicines has been found even in developed countries that are not net exporters of intellectual property rights, such as in Canada and Australia.

The costs incurred by the smaller partners in FTAs are disproportionately high in relation to the benefits that accrue to pharmaceutical companies.


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If the World Trade Organisation did not Exist, it Would Have to be Invented Wed, 14 Oct 2015 16:50:45 +0000 Roberto Azevedo

Roberto Azevêdo is the director general of World Trade Organisation (WTO)

By Roberto Azevêdo
GENEVA, Oct 14 2015 (IPS)

The World Trade Organisation (WTO) is a relative newcomer on the international stage. This year we are marking our 20th anniversary.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

Roberto Azevêdo. Credit: World Trade Organization (WTO)

One hundred twenty-eight governments came together to create this organisation to govern world trade in 1995. In their Ministerial declaration they predicted that it would usher in “a new era of global economic cooperation”.

So has that prediction or that ambition­ proved accurate?

Over these two decades, the organisation has certainly faced major challenges.

Our negotiating arm, especially the Doha Development Round, has made slow progress. A growing number of trade conflicts is putting real pressure on our dispute settlement system.

With the expansion of regional trade agreements, some of them among major trading blocs­, many have questioned whether they could actually replace the WTO. And, of course, the WTO has been the focus of some discontent ­ particularly in the form of anti-globalisation protests which came to a head at our Seattle ministerial meeting in 1999.

These challenges should not be underestimated. But actually, in some cases, rather than being a consequence of the WTO’s shortcomings, I think they are ­ for the most part ­ a result of its achievements.

And despite these challenges, I would argue that the open, transparent and rules-based trading system, as embodied in the WTO, has become an essential and unassailable pillar of global governance.

To appreciate this, I think it is important to look at the origins of the system.

In 1947, a group of 23 nations signed the General Agreement on Tariffs and Trade (GATT).

The GATT was not a fully-fledged organisation; its membership was limited and so was the scope of its mandate. And so the WTO was created in 1995.

And, as I see it, by founding the WTO and agreeing on the legal texts, our members provided the equivalent of a “constitution” for global trade.

That “constitution” enshrines the basic, perennial principles of trade. Non-discrimination, for example, is embodied in an important premise: most-favoured nation treatment, which prohibits a member from discriminating between trade partners by offering more favourable treatment to one member over another.

It is no coincidence that as the rule of law in trade has spread, average tariffs have fallen dramatically. In fact, they have been cut in half. Average applied tariffs were 15 percent in 1995. Today they stand at less than 8 percent. And trade volumes have more than doubled.

Many argue that the difficulties in advancing the Doha Round of world trade negotiations,­ the latest in a long line of trade “rounds,” ­ show that the organisation has lost its ability to negotiate.

And while these difficulties are very real, the reality is that members are negotiating all the time ­ and, actually, they have delivered a great deal.

The clearest proof that the multilateral system can deliver new negotiated outcomes is the Bali Package.

Negotiated in 2013, the Bali Package contains a set of decisions that include steps on agriculture, measures for least developed countries (LDCs), and the first multilateral agreement since the WTO was created:­ the Trade Facilitation Agreement.

The Trade Facilitation Agreement will simplify, standardise and speed up global customs procedures, which can lead to an average cut in trade costs by around 14 percent an impact potentially greater than the elimination of all remaining global tariffs.

And while the economic gains of Bali are indeed significant, it has had a broader systemic impact.

Right now, we are working hard to deliver meaningful outcomes in our next Ministerial Conference in Nairobi this December.

These conferences, which happen at least every two years, are the highest decision-making body of the WTO.

However, gaps in some key negotiating areas are still very big. The big issues of the Doha Round, such as agricultural subsidies and market access, have proved to be extremely contentious. The situation may change, but there are few signs of this at present.

But, despite differences on major issues, I think there is potential for a meaningful agreement in Nairobi.

And crucially, there is a broad understanding that those deliverables must include significant steps on development and LDC issues.

So, where does the WTO stand after 20 years?

The WTO was seen as a key pillar of a new kind of global economic order ­ open, inclusive, cooperative ­ that was taking shape at the end of the Cold War.

And through much hard work, I think this vision has been made into reality:
Global trade barriers are historically low, and international trade has grown significantly. Trade is underpinned by solid rules, and most importantly ­ rules which are respected. Participation in the trading system has become nearly universal, and support is provided for those members most in need. More members are making use of the dispute settlement system and ­ with each new case ­ a more relevant body of trade law develops. And more members are using WTO councils, committees and working groups to coordinate policies, head-off disputes, using the “soft power” of the system to complement the “hard power” provided by the dispute settlement mechanism.

If the WTO did not exist, it would have to be invented.

In the end, the WTO represents the willingness of its members to cooperate. It represents the recognition that their national interests are increasingly intertwined with their collective interests.


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Opinion: India’s Compact with Africa Tue, 13 Oct 2015 12:53:22 +0000 N Chandra Mohan

Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
NEW DELHI, Oct 13 2015 (IPS)

The third India-Africa Forum Summit to be held in New Delhi later this month – in which 54 African countries will participaate – is expected to result in a deeper engagement between India and Africa. This summit takes place at a time when both need each other more than ever before. Both remain bright spots in a bleak and blighted growth landscape. Out of 189 countries, only 63 are expected to grow by 4 per cent and more this year, 36 of which are in Africa. But many countries there are adversely impacted by China’s diminishing appetite for commodities and shrinking trade. India is currently one of the fastest growing economies in the world.

N Chandra Mohan

N Chandra Mohan

India wants to create a new architecture for its closer ties with Africa. What could be its important elements? There is no doubt that economic relations in terms of bilateral trade and investment are expected to improve manifold. Foreign Office mandarins bristle at the suggestion that this summit represents an effort at catching up with the much bigger Africa summits that China organized since 2006. They probably also demur at the suggestion that India has, in a “too little, too late” fashion, discovered Africa and is making amends through the promise of capacity-building, more aid and duty free access to its market.

Energy security is an important area that has seen Beijing and New Delhi scramble for sources of oil supply in Africa to fuel their rapidly growing economies. But this is an area where India has lost out heavily to Chinese oil giants.Given this track record, there is a warrant for going beyond a “China catch-up” The perception that India’s interests in Africa are identical — notably, to only secure acccess to its vast raw materials and resources — needs to be dispelleed. India has one major advantage over China in this region, notably, the dynamism of its fast-globalising private sector, represented by the likes of Tata Motors, Godrej and Bharti Group.

This is the trump card that India must play to forge a new partnership with the continent. Its investments must propel African trade into cutting-edge global networks that alter the international division of labour, as argued by Harry Broadman in his book Africa’s Silk Road: China and India’s New Economic Frontier. Indo-African trade has grown exponentially to US$93 billion in 2013. India has signed bilateral trade agreements with more than 20 African countries. India’s private investments in the continent have also surged over a period of time in diverse sectors like telecommunications, information technology, energy and automobiles.

Another major advantage is the Indian Diaspora, especially in south and east Africa. For instance, India’s linkages with South Africa go back in time – the 1.15 million strong people of India origin arrived between 1860 and 1911 as indentured labour to work as field hands and mill hands in sugar and other plantations and stayed on. In east Africa, the Diaspora’s contribution has been significant in India’s trade as they own distribution channels, manufacturing facilities and even mines. Unfortunately, this potential has not been adequately tapped. India’s growing partnership with Africa must harness the strengths of the Diaspora.

India Inc has committed US$10 billion to infrastructure and other projects since 2008. For instance, the Bharti Group has undertaken 11 green-field investments projects in Nigeria and Uganda in 2014, adding to its existing investments in 13 other African countries like Burkina Faso, Chad, Democratic Republic of Congo, Ghana, Kenya, Madagascar, Malawi, The Republic of Congo, Seychelles, Sierra Leone, Tanzania, Zambia and Uganda. The Tatas have invested in Algeria. India’s green-field investments in Africa amounted to US$1.1 billion as against US$6 billion of China in 2014, according to UNCTAD’s World Investment Report for 2015.

The other important element is building on the longstanding history of friendship and cooperation in development. Indo-African relations quintessentially define the modern concept of development compact that is based on shared responsibility and helping one another meet their developmental goals. This compact is more South-South than North-South as it entails mutual gain, non-interference, collective growth opportunities and indeed an absence of loan conditionalities. All of this strengthens the partnership in capacity-building, education, agriculture, food security, climate change, energy security and so on in a concerted manner.

Since the second summit in 2011, India has given 25,000 scholarships to African countries. A number of capacity-building institutions are in various stages of implementation. Three vocational centres have been set up in Ethiopia, Burundi and Rwanda. “India never says that we are setting up this institute, in this African country; here is the money, here is the institute, run it. This is what distinguishes us from the others,” stated the Secretary (West) in the Ministry of External Affairs at a consultation organized by the think-tank RIS ahead of the summit, adding that African countries felt “a vested interest” in such institutions and a sense of ownership.

India offered US$7.4 billion in the form of lines of credit (LoC) or soft loans since the summits began in 2008 of which $7 billion has been approved. There are 140 projects currently happening over 41 countries with such concessional aid. Even earlier, India provided a major LoC for Ethiopia in 2006 which in a way changed the dynamics of cooperation. The (US$640 million LoC for the development of its sugar industry across the value chain was a landmark development. In the case of Mozambique, financing a solar panel production unit represented a departure from the way India previously supported projects in the realm of advanced technologies.

The architecture of India’s engagement thus reflects its desire to provide comprehensive support for Africa’s development. India Inc is the spearhead for closer ties in trade and investment with the fast-growing economies of the continent. It is also a source for reliable and quality medicines and vaccines at affordable rates for large parts of Africa, especially in the battle against AIDS. The cooperation in the field of healthcare has contributed significantly towards Africa’s efforts to achieve MDGs. Post-2015, this partnership will also extend to achieving SDGs.


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