Inter Press Service » Trade & Investment http://www.ipsnews.net Turning the World Downside Up Sat, 29 Aug 2015 14:42:44 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.7 OECD Urges Further Reforms for an Inclusive South Africahttp://www.ipsnews.net/2015/08/oecd-urges-further-reforms-for-an-inclusive-south-africa/?utm_source=rss&utm_medium=rss&utm_campaign=oecd-urges-further-reforms-for-an-inclusive-south-africa http://www.ipsnews.net/2015/08/oecd-urges-further-reforms-for-an-inclusive-south-africa/#comments Sat, 29 Aug 2015 14:42:44 +0000 Jaya Ramachandran http://www.ipsnews.net/?p=142187 By Jaya Ramachandran
PARIS, Aug 29 2015 (IPS)

While lauding South Africa for impressive social progress over the past two decades, a new study has asked the country to build on the successes achieved and reduce inequality further.

The latest OECD Economic Survey of South Africa by the 34-nation Organisation for Economic Cooperation and Development (OECD) says: “South Africa has made impressive social progress over the past two decades, lifting millions of people out of poverty and broadening access to essential services like water, electricity and sanitation. Now is the time to build on these successes to reduce inequality further, create badly needed jobs and ensure stronger, sustainable and more inclusive growth for all.”

The survey, released in Pretoria, the capital of South Africa, by OECD Secretary-General Angel Gurría and South African Finance Minister Nhlanhla Nene, notes that prudent macroeconomic policies have secured the confidence of financial markets.

However, economic growth has been too slow and further measures are needed to overcome infrastructure bottlenecks, strengthen the business environment, improve labour markets and ensure future spending needs can be financed.

“The National Development Plan sets the direction for reforms needed for a strong and inclusive country. Our survey provides targeted recommendations to reach these objectives,” said Gurría.

“Millions of young South Africans are eager to work, and their potential must not be wasted. Their future is precious enough to justify tough reforms and hard spending choices,” he added.

According to the survey, improving infrastructure will be essential for boosting future growth and living standards while, given the large needs, prioritisation and cost effectiveness will be crucial.

The OECD noted out that the most immediate priority is to secure additional electricity generation capacity by opening the market to independent producers. Opening electricity and transport will require strong and independent regulators to protect households and firms.

The organisation pointed out that improving the regulatory environment would promote entrepreneurship and growth opportunities for small and medium enterprises (SMEs), which offer the greatest potential for creating jobs and future growth. Reducing barriers to entry, cutting red tape and promoting competition, will be essential.

According to the survey, labour market reforms can raise employment and incomes. Establishing a public employment service as a one-stop shop for job seekers would make it easier for people to find jobs, and for employers to find the right workers.

Costly industrial actions have held back the economy without delivering major gains to workers. The OECD suggests an increased role for mediation and arbitration in order to reduce conflict and provide better outcomes for workers and employers.

The survey pleads for “a high degree of public sector efficiency, prioritisation of spending and a strong revenue base” with a view to meeting public spending needs for infrastructure and the social safety net.

It argues that the South African tax system “is well designed and well administered, but there is scope to broaden key tax bases by reducing deductions, credits and exemptions.  Such tax reform would solidify public finances and make the tax system fairer.”

Edited by Phil Harris   

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Opinion: A Farewell to Arms that Fuel Atrocities is Within Our Grasphttp://www.ipsnews.net/2015/08/opinion-a-farewell-to-arms-that-fuel-atrocities-is-within-our-grasp/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-a-farewell-to-arms-that-fuel-atrocities-is-within-our-grasp http://www.ipsnews.net/2015/08/opinion-a-farewell-to-arms-that-fuel-atrocities-is-within-our-grasp/#comments Thu, 27 Aug 2015 19:09:41 +0000 Marek Marczynski http://www.ipsnews.net/?p=142170 The recent destruction of this 2,000-year-old temple – the temple of Baal-Shamin in Palmyra, Syria – is yet another grim example of how the armed group calling itself the Islamic State (IS) uses conventional weapons to further its agenda – but what has fuelled the growing IS firepower? Photo credit: Bernard Gagnon/CC BY-SA 3.0

The recent destruction of this 2,000-year-old temple – the temple of Baal-Shamin in Palmyra, Syria – is yet another grim example of how the armed group calling itself the Islamic State (IS) uses conventional weapons to further its agenda – but what has fuelled the growing IS firepower? Photo credit: Bernard Gagnon/CC BY-SA 3.0

By Marek Marczynski
CANCUN, Mexico, Aug 27 2015 (IPS)

The recent explosions that apparently destroyed a 2,000-year-old temple in the ancient city of Palmyra in Syria were yet another grim example of how the armed group calling itself the Islamic State (IS) uses conventional weapons to further its agenda.

But what has fuelled the growing IS firepower? The answer lies in recent history – arms flows to the Middle East dating back as far as the 1970s have played a role.

Marek Marczynski

Marek Marczynski

After taking control of Mosul, Iraq’s second largest city, in June 2014, IS fighters paraded a windfall of mainly U.S.-manufactured weapons and military vehicles which had been sold or given to the Iraqi armed forces.

At the end of last year, Conflict Armament Research published an analysis of ammunition used by IS in northern Iraq and Syria. The 1,730 cartridges surveyed had been manufactured in 21 different countries, with more than 80 percent from China, the former Soviet Union, the United States, Russia and Serbia.

More recent research commissioned by Amnesty International also found that while IS has some ammunition produced as recently as 2014, a large percentage of the arms they are using are Soviet/Warsaw Pact-era small arms and light weapons, armoured vehicles and artillery dating back to the 1970s and 80s.

Scenarios like these give military strategists and foreign policy buffs sleepless nights. But for many civilians in war-ravaged Iraq and Syria, they are part of a real-life nightmare. These arms, now captured by or illicitly traded to IS and other armed groups, have facilitated summary killings, enforced disappearances, rape and torture, and other serious human rights abuses amid a conflict that has forced millions to become internally displaced or to seek refuge in neighbouring countries.“It is a damning indictment of the poorly regulated global arms trade that weapons and munitions licensed by governments for export can so easily fall into the hands of human rights abusers … But world leaders have yet to learn their lesson”

It is a damning indictment of the poorly regulated global arms trade that weapons and munitions licensed by governments for export can so easily fall into the hands of human rights abusers.

What is even worse is that this is a case of history repeating itself. But world leaders have yet to learn their lesson.

For many, the 1991 Gulf War in Iraq drove home the dangers of an international arms trade lacking in adequate checks and balances.

When the dust settled after the conflict that ensued when Iraqi President Saddam Hussein’s powerful armed forces invaded neighbouring Kuwait, it was revealed that his country was awash with arms supplied by all five Permanent Members of the U.N. Security Council.

Perversely, several of them had also armed Iran in the previous decade, fuelling an eight-year war with Iraq that resulted in hundreds of thousands of civilian deaths.

Now, the same states are once more pouring weapons into the region, often with wholly inadequate protections against diversion and illicit traffic.

This week, those states are among more than 100 countries represented in Cancún, Mexico, for the first Conference of States Parties to the Arms Trade Treaty (ATT), which entered into force last December. This Aug. 24-27 meeting is crucial because it is due to lay down firm rules and procedures for the treaty’s implementation.

The participation of civil society in this and future ATT conferences is important to prevent potentially life-threatening decisions to take place out of the public sight. Transparency of the ATT reporting process, among other measures, will need to be front and centre, as it will certainly mean the difference between having meaningful checks and balances that can end up saving lives or a weakened treaty that gathers dust as states carry on business as usual in the massive conventional arms trade.

A trade shrouded in secrecy and worth tens of billions of dollars, it claims upwards of half a million lives and countless injuries every year, while putting millions more at risk of war crimes, crimes against humanity and other serious human rights violations.

The ATT includes a number of robust rules to stop the flow of arms to countries when it is known they would be used for further atrocities. 

The treaty has swiftly won widespread support from the international community, including five of the top 10 arms exporters – France, Germany, Italy, Spain and the United Kingdom.

The United States, by far the largest arms producer and exporter, is among 58 additional countries that have signed but not yet ratified the treaty. However, other major arms producers like China, Canada and Russia have so far resisted signing or ratifying.

One of the ATT’s objectives is “to prevent and eradicate the illicit trade in conventional arms and prevent their diversion”, so governments have a responsibility to take measures to prevent situations where their arms deals lead to human rights abuses.

Having rigorous controls in place will help ensure that states can no longer simply open the floodgates of arms into a country in conflict or whose government routinely uses arms to repress peoples’ human rights.

The more states get on board the treaty, and the more robust and transparent the checks and balances are, the more it will bring about change in the murky waters of the international arms trade. It will force governments to be more discerning about who they do business with.

The international community has so far failed the people of Syria and Iraq, but the ATT provides governments with a historic opportunity to take a critical step towards protecting civilians from such horrors in the future. They should grab this opportunity with both hands.

Edited by Phil Harris   

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

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Opinion: How Will Wall Street Greet the Pope?http://www.ipsnews.net/2015/08/opinion-how-will-wall-street-greet-the-pope/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-how-will-wall-street-greet-the-pope http://www.ipsnews.net/2015/08/opinion-how-will-wall-street-greet-the-pope/#comments Thu, 27 Aug 2015 09:14:17 +0000 Hazel Henderson http://www.ipsnews.net/?p=142152

Hazel Henderson, author of 'Mapping the Global Transition to the Solar Age' and other books, is President of Ethical Markets Media (USA and Brazil), Certified B Corporation

By Hazel Henderson
ST. AUGUSTINE, Florida, Aug 27 2015 (IPS)

Millions in the New York City area are excited about Pope Francis’ visit on Sep. 25 to address the U.N. General Assembly as worldwide consensus grows on the need to shift global investments from fossil fuels to clean, efficient, renewable energy in the UN’s Sustainable Development Goals (SDGs) scheduled to replace the expiring Millennium Development Goals (MDGs). 

Private investments worldwide in the clean energy transition now total 6.22 trillion dollars while successful U.S. students’ divestment networks have forced over 30 college endowments to divest.  Over 200 institutions have divested worldwide, including the U.S. cities of Minneapolis and Seattle, Oxford in the United Kingdom and Dunedin in New Zealand.

Hazel Henderson

Hazel Henderson

The Episcopal Church and the Church of England, in a faith-based consortium, are calling on Pope Francis to urge divestment for all religious and civic groups.  Islamic Climate Change Symposium leaders cited the Quran earlier this month in calling 1.6 billion Muslims to act in phasing out fossil fuels by 2050.

Backlash from traditional Wall Streeters has joined some U.S. Catholic organisations with millions still invested in fossil energy, fracking and oil sands.  The U.S. Conference of Catholic Bishops (USCCB) has guidelines against investing in abortion, contraception, pornography, tobacco and war but is silent on energy stocks.

Reuters reports that Catholic dioceses in Boston, Baltimore, Toledo and much of Minnesota in the United States have millions of dollars in oil and gas stocks, making up between 5-10 percent of their holdings.  It has been reported that Chicago’s Archbishop Blasé Cupich, appointed by Pope Francis, will re-examine over 100 million dollars in fossil fuel investments.

Wall Street is also re-examining its positions on fossil fuels.  A survey of asset managers in Institutional Investor, July 2015, found that 77 percent expected the carbon-divestiture movement to continue and gain momentum.  Yet, Exxon Mobil CEO Rex Tillerson has claimed that the models on climate change “aren’t that good” and has no plans to invest in renewable energy.

Recently, many large companies have been calling for and budgeting for carbon pricing – favoured by most economists.  Britain’s BG Group, BP, Italy’s ENI, Shell, Norway’s Statoil and France’s Total sent an open letter to world governments and the United Nations in June asking them to accelerate carbon pricing schemes.The U.S. Conference of Catholic Bishops (USCCB) has guidelines against investing in abortion, contraception, pornography, tobacco and war but is silent on energy stocks

The ethical investing movement now accounts for one-sixth of all holdings on Wall Street and the U.N. Principles of Responsible Investing counts signatory institutions with 59 trillion dollars in assets under management.

Hybrid approaches include venture philanthropy and “impact” investing, while a recent CFA Institute survey found almost three quarters of investment professionals use environmental, social and governance information in their investment decisions.

Against this backdrop, Timothy Smith, pioneer founder of the Interfaith Council on Corporate Responsibility (ICCR) and now Senior Vice-President of Walden Asset Management, says that the “visit of the Pope in the wake of his prophetic Encyclical on climate is a clarion call – to ramp up our efforts to combat climate change with concrete actions,” adding that “it’s not the Pope’s job to present a specific game plan for Americans.  That is our job.”

Through ICCR, religious investors have worked for two decades on these issues.  Firms like Walden, Ceres and others have joined up to combat climate change, promoting efficiency and renewable resources.  All this new activity within the climate debate provides the greatest challenge yet to business-as-usual capitalism.

Many financiers in the global casino still see themselves as “masters of the universe” because they control capital flows, most investments, pension funds, influence monetary policies, capture politicians and regulators, while funding friendly academics and think tanks.

The recent jitters of stock markets have again revealed their fragility and the increasing turbulence and volatility caused by computerized algorithms accounting for over half of all activity.  High-frequency trading (HFT), “flash crashes”, are continuing with little regulation.  Foundations are crumbling from these many new challenges as small investors flee. 

Crowdfunding, peer-to-peer lending, local and cryptocurrencies, credit unions and cooperative enterprises are flowering along with hybrid start-ups in the “shareconomy” – AirBnB, Uber, Lyft, Task Rabbit and the growth of farmers markets, swap sites for tools, clothes and second-hand exchanges.

Many reformers of capitalism try to change its culture, of short term gain and speculative trading.  The U.N. Inquiry into the Design of a Sustainable Financial System will release its report to the General Assembly on Sep. 25, with global research on current practices and potential reforms.

A promising new effort to mobilise U.S. public opinion is JUSTCapital, founded by luminaries Deepak Chopra, Arianna Huffington and hedge fund philanthropist Paul Tudor Jones.  CEO Martin Whittaker says: “We are addressing some of the core questions affecting capitalism and corporations in the 21st century.  We are applying policy, research and surveys to define ‘just business behaviour’ in the eye of the public, using this definition to evaluate and rank the performance of the largest publicly traded American companies.”

While such caring financiers are quietly exploring reforms, the biggest threat is the fragility of global market structures from automation, algorithms, HFT and artificial intelligence which financiers still believe they can control.

Yet these same computers can now run markets more efficiently than humans.  Matching and trading buy and sell orders in transparent computerised black boxes makes human traders redundant, as well as reducing insider trading, speculating, front-running, naked short-selling, fixing interest rates and today’s widespread greed and corruption.

Capitalism’s greatest challenge is its reliance on rollercoaster national money systems and currencies.  Central bankers and governments’ tools fail along with economic theories as social movements are now aware of money-printing and the politics of money creation and credit-allocation, revealed in all its favouritism and inequalities.

Edited by Phil Harris   

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

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Plant in Chile Opens South America’s Doors to Geothermal Energyhttp://www.ipsnews.net/2015/08/plant-in-chile-opens-south-americas-doors-to-geothermal-energy/?utm_source=rss&utm_medium=rss&utm_campaign=plant-in-chile-opens-south-americas-doors-to-geothermal-energy http://www.ipsnews.net/2015/08/plant-in-chile-opens-south-americas-doors-to-geothermal-energy/#comments Wed, 26 Aug 2015 15:44:20 +0000 Marianela Jarroud http://www.ipsnews.net/?p=142140 The El Tatio geyser field in the northern Chilean region of Antofagasta. Geothermal energy comes from the earth’s internal heat, and the steam is delivered to a turbine, which powers a generator. Credit: Marianela Jarroud/IPS

The El Tatio geyser field in the northern Chilean region of Antofagasta. Geothermal energy comes from the earth’s internal heat, and the steam is delivered to a turbine, which powers a generator. Credit: Marianela Jarroud/IPS

By Marianela Jarroud
OLLAGÜE, Chile, Aug 26 2015 (IPS)

Chile, a land of volcanoes and geysers, has started building South America’s first geothermal plant, which would open a door to this kind of renewable energy in this country that depends largely on fossil fuels.

The Cerro Pabellón geothermal project is “immensely important for the Chilean state, which started geothermal exploration and drilling over 40 years ago,” but no initiative had taken concrete shape until now, Marcelo Tokman, general manager of the state oil company, ENAP, told IPS.

Located in the rural municipality of Ollagüe, 1,380 km north of Santiago, in the Andes highlands in the region of Antofagasta, Cerro Pabellón “will not only be the first geothermal plant in Chile and South America, but will also be the first in the world to be built at 4,500 metres above sea level,” Tokman added.

The Italian company Enel Green Power has a 51 percent stake in the project and ENAP owns 49 percent. The plant consists of two units of 24 MW each for a total gross installed capacity of 48 MW in the first phase, but with the advantage of being able to generate electricity around-the-clock.

That makes it equivalent, in terms of annual generating capacity, to a 200-MW solar or wind power plant.

The first stage would enter into operation in the first quarter of 2017 and a year later another 24 MW would be added. But the plant could be generating around 100 MW in the medium term, on 136 hectares of land.

Tokman said that once the plant is fully operational, it will be able to produce some 340 megatwatt-hours (MWh) a year that would go into the national power grid and would meet the consumption needs of 154,000 households in this country of 17.6 million people.

He also said it would avoid over 155,000 tons of carbon dioxide emissions a year, by reducing fossil fuel consumption.

The Atacama desert, the most arid in the world, has a large part of Chile’s geothermal potential and is the location of the first South American plant to tap into this source of energy. Credit: Marianela Jarroud/IPS

The Atacama desert, the most arid in the world, has a large part of Chile’s geothermal potential and is the location of the first South American plant to tap into this source of energy. Credit: Marianela Jarroud/IPS

Sixty million dollars were invested in the exploratory phase, and an estimated 320 million dollars more will go into the plant and the construction of a 73-km power line.

Geothermal energy is obtained by tapping underground reservoirs of heat, generally near volcanoes, geysers or other hotspots on the surface of the earth. If well-managed, the geothermal reservoirs can produce clean energy indefinitely. The steam generated is delivered to a turbine, which powers a generator.

Advances in South America

Brazil has the world’s two largest freshwater reserves: the Guarani and Alter do Chão aquifers. But it does not have geothermal potential, according to a 1984 study, which is currently being revised. Geothermal energy is included in an agreement with Germany to search for alternative sources.

Six South American countries form part of the Pacific Ring of Fire, a string of volcanoes and sites of seismic activity with virgin territory for geothermal exploration: Argentina, Bolivia, Chile, Colombia, Ecuador and Peru.

In 1988, Argentina built Copahue I, an experimental geothermal plant constructed with Japanese capital, which supplied 0.67 MW but stopped operating. Currently, the country’s energy projects include the construction of the Copahue II geothermal plant in the hot springs of Copahue in the southern province of Neuquén, which would generate 100 MW.

In Peru, a preliminary study by the Japan International Cooperation Agency and the Ministry of Energy and Mines found in 2013 that the country has 3,000 MWh of geothermal potential. But so far there are no plans for geothermal plants.

In February, Bolivian President Evo Morales announced that starting in 2019 the country would begin to export electricity to neighbouring countries, from the Laguna Colorada geothermal plant. The project, financed by Japan, will consist of two stages, of 50 MW each.

The Philippines is home to three of the world’s 10 biggest geothermal plants, followed by the United States and Indonesia, with two each, and Italy, Mexico and Iceland, with one each.

Studies indicate that Chile is one of the countries with the greatest geothermal potential in Latin America.

This long, narrow country, which forms part of the Pacific Ring of Fire, stretches 4,270 km along the Andes mountains, the earth’s largest volcanic chain.

Environmentalists say geothermal energy has a relatively low impact, as long as questions of scale and location are respected.

“Geothermal is an unconventional renewable energy source to the extent that it is carried out in accordance with territorial and cultural needs. The energy source in and of itself does not guarantee social and environmental sustainability,” land surveyor Lucio Cuenca, director of the Santiago-based Latin American Observatory on Environmental Conflicts, told IPS.

Respecting these parameters, geothermal energy “is a very good alternative for this country,” he said.

In the case of the Cerro Pabellón plant, the surrounding communities form part of the Alto El Loa nature reserve, made up of the villages and communities of Caspana, Ayquina, Turi, Chiu Chiu, Cupo, Valle de Lasana, Taira and Ollagüe, which have a combined total population of just over 1,000, most of them Atacameño and Quechua indigenous people.

The Alto El Loa Indigenous Peoples Council got ENAP and ENEL to sign a series of agreements for the implementation of social development projects in the local communities in compensation for the impact of the geothermal project, and especially the power line.

For the inhabitants of Alto El Loa, scattered in remote areas in the Atacama desert, if the project is sustainable and benefits their communities, it will be a positive thing. But they say they are concerned that their way of life may not be respected.

“I would like to see more help, and if this is a good thing, then it’s welcome,” Luisa Terán, a member of the Atacameño indigenous group from the village of Caspana, told IPS. “Sometimes we feel a bit neglected and isolated.

“But it has to come with respect for our traditions, and it is our elders who are demanding that most strongly,” she added.

Others, however, reject the project as “anti-natural” and “violent” towards the local habitat.

“If you hurt the earth, she will in one way or another get back at you,” tourist guide Víctor Arque, of San Pedro de Atacama, a highlands village 290 km from Ollagüe, told IPS. “It can’t be possible to drill kilometres below ground without something happening.”

A photo taken at dawn in the middle of the steam from the El Tatio geysers in northern Chile, where this clean, unlimited source of energy will begin to be harnessed with the construction of the Cerro Pabellón geothermal plant in the rural municipality of Ollagüe. Credit: Marianela Jarroud/IPS

A photo taken at dawn in the middle of the steam from the El Tatio geysers in northern Chile, where this clean, unlimited source of energy will begin to be harnessed with the construction of the Cerro Pabellón geothermal plant in the rural municipality of Ollagüe. Credit: Marianela Jarroud/IPS

The El Tatio precedent

Chile was a pioneer in research on geothermal potential. The first exploration was carried out in 1907 in El Tatio, a geyser field located some 200 km from Cerro Pabellón and 4,300 metres above sea level. This country was the third to explore geothermal energy, after the United States and Russia.

Two wells were drilled in that area in 1931, and in the late 1960s the government carried out more systematic exploration, which was later abandoned.

In 2008, the Geotérmica del Norte company, which belonged to the Italian consortium ENEL, began exploration in Quebrada del Zoquete, a few km from El Tatio, using the equipment already installed in the geyser field.

In September 2009, a 60-metre high column of steam shot up from one of the wells where the company was extracting and reinjecting geothermal fluids. The anomaly, caused by a failed valve, lasted more than three weeks and led to the government’s cancellation of the permit for further operations.

Tokman, energy minister at the time, remembered the incident. “Fortunately all of the safeguards had been taken to demand different instruments of measurement for the project, to ensure that the reservoir was deeper and distinct from the reservoir in the El Tatio geyser field,” he said.

Cuenca said the mistake was “having restarted a geothermal programme in Chile doing everything that shouldn’t be done: that is, interfering in a place where there are indigenous communities, an area with a high tourist and economic value, simply to take advantage of the infrastructure that was already installed there.”

Experts warn that geothermal power is not a panacea for Chile’s energy deficit, because if there is one thing this country has learned, it is that a diversified energy mix is essential.

But if Chile’s potential is confirmed, Cerro Pabellón could open the door to geothermal development not only in this country but in South America.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Shifting Sands: How Rural Women in India Took Mining into their Own Handshttp://www.ipsnews.net/2015/08/shifting-sands-how-rural-women-in-india-took-mining-into-their-own-hands/?utm_source=rss&utm_medium=rss&utm_campaign=shifting-sands-how-rural-women-in-india-took-mining-into-their-own-hands http://www.ipsnews.net/2015/08/shifting-sands-how-rural-women-in-india-took-mining-into-their-own-hands/#comments Mon, 24 Aug 2015 03:16:37 +0000 Stella Paul http://www.ipsnews.net/?p=142117 At dawn women miners gather at allocated sites along riverbanks in India’s coastal Andhra Pradesh state to oversee the process of dredging, loading and shipping sand. Credit: Stella Paul/IPS

At dawn women miners gather at allocated sites along riverbanks in India’s coastal Andhra Pradesh state to oversee the process of dredging, loading and shipping sand. Credit: Stella Paul/IPS

By Stella Paul
GUNTUR, India, Aug 24 2015 (IPS)

Thirty-seven-year-old Kode Sujatha stands in front of a hut with a palm-thatched roof, surrounded by a group of men shouting angrily and jostling one another for a spot at the front of the crowd.

“When I worked in the farm, I was just another labourer. Here, I am in charge. People see my work and they also see me. It is a great feeling.” -- Yepuri Mani of the Undavalli women's mining group in Andhra Pradesh
Each of the boatmen, who carry sand mined from a nearby river to the shore every day, wants to be paid before the others.

Sujatha stares hard at them, holds up a piece of paper and says, “If you have a printed receipt of payment, come, stand in the queue. We will pay one by one. Shouting will not help you.”

This hard talk and show of nerves is a recurring part of the workday for Sujatha, a farm labourer-turned sand miner in Undavalli, a village situated on the banks of the Krishna River that flows through the coastal Guntur District of the southeastern Indian state of Andhra Pradesh.

She is one of the 18 women who run the Undavalli Mutually Aided Cooperative Society, an all-women’s collective in charge of dredging, mining, loading and selling sand.

Dealing with a few angry boatmen is not the last of her problems. Powerful ‘sand mafias’ that operate throughout the state are another force to be reckoned with, as are the lurking threats of environmental degradation and poverty in this largely rural state.

But Sujatha is determined to make this enterprise work. Overseeing the sustainable extraction and transportation of sand in this village has been her ticket to a decent wage and a degree of decision-making power over her own life.

She also knows that having women like her in charge of this operation is the best chance of avoiding the environmental catastrophes associated with unregulated sand mining, such as depletion of groundwater sources, erosion of river beds, increased flooding and a loss of biodiversity.

Rural women who have taken over sand mining operations in the southeastern Indian state of Andhra Pradesh are learning to use computers for the first time. Credit: Stella Paul/IPS

Rural women who have taken over sand mining operations in the southeastern Indian state of Andhra Pradesh are learning to use computers for the first time. Credit: Stella Paul/IPS

‘Rarer than one thinks’

Hard as it may be to fathom, sand is increasingly becoming a rare commodity as a result of the massive scale of its extraction and consumption worldwide.

In a 2014 report entitled ‘Sand: rarer than one thinks’, the United Nation’s Environment Programme (UNEP) revealed that sand and gravel (called aggregates) account for the largest share of the roughly 59 billion tonnes of material mined annually across the globe.

Combined aggregate use globally, including 29.5 billion tonnes of sand used annually in the production of cement for concrete, and the 180 million tonnes of sand guzzled by other industries every year, exceeds 40 billion tonnes per annum – twice the yearly amount of sediment carried by all the rivers of the world, according to the UNEP.

The most severe environmental consequences of the world’s insatiable appetite for sand include loss of land through river and coastal erosion resulting in the heightened risk of floods, especially around heavily mined areas; depletion of the world’s water tables; and a reduction in sediment supply.

Transporting aggregates is also a hugely carbon-heavy process, while the production of a single tonne of cement using sand and gravel releases 0.9 tonnes of carbon dioxide into the atmosphere.

Estimates from the Carbon Dioxide Information Analysis Center (CDIAC) suggest that the year 2010 saw 1.65 billion tonnes of carbon dioxide emissions from cement production – nearly five percent of total greenhouse gas emissions that year.

In India, a decades-long construction boom has driven a rapid increase in demand for sand, particularly in cement and concrete production.

The country currently boasts the third largest construction industry in the world, and huge sand mining operations, many of them unlawful or unregulated, are stripping the natural carpets of major riverbeds, deepening rivers and widening their mouths, and contaminating ground water sources.

Thus sand mining is contributing to India’s twin problems of flooding and water scarcity.

A grassroots solution to a global problem

For many years a quiet grassroots movement around the country had unwittingly been laying the foundation of what is now an entrenched network capable of fighting illicit mining: women-led self-help groups (SHGs) that have come together over a period of decades to pool their meager savings and generate interest-free micro loans to jump-start small businesses.

In Andhra Pradesh alone, an estimated 850,000 SHGs involving over 10.2 million poor, rural women have generated over 19 billion rupees (287 million dollars) in savings over the past decade.

Solomon Arokiyaraj, chief executive officer of the state-run Society for Elimination of Rural Poverty (SERP) tells IPS that SHGs’ proven track record of community finance and business management made them ideal partners in larger government schemes to both crack down on unsustainable natural resource extraction and alleviate rural poverty.

According to Arokiyaraj, women are now running 300 different mining sites (called ‘reaches’) across this state of 49 million people. A team comprising 10 or 12 people, who previously earned less than a dollar a day, runs each site on behalf of the government.

Venketeshwara Rao, a government official in Guntur District who oversees the project, tells IPS that the women of Undavalli village are licensed to operate within an eight-hectare area identified by federal environment authorities as part of de-siltation efforts around the reservoir.

At dawn every day the women gather at mining sites and at six am the mechanized dredging begins. Extracted sand is stockpiled on boats and then shifted to a fleet of waiting trucks, while excess water is pumped back into the river

“It takes three hours for the dredger to fill a boat. Each of the boats can carry 10 cubic meters of sand, enough to fill 20 large trucks,” Malleshwari Yepuri, a sand miner, tells IPS.

By Rao’s estimation, the women-led groups in the eight sand reaches in Guntur District alone have sold over a million cubic meters of sand since November 2014, amounting to some 70 million rupees (over a million dollars).

Prior to taking over management of the mines, the women had earned, on average, just under a dollar each a day as farm labourers. Now every woman miner takes home six dollars a day, and their respective cooperatives receive five rupees (0.07 dollars) for every cubic meter of sand mined under their leadership – a total of about 70,000 rupees (a thousand dollars) every year.

These illegal sand mining boats in India’s populous Andhra Pradesh state are becoming a rare sight after women’s self-groups took over mining operations last year. Credit: Stella Paul

These illegal sand mining boats in India’s populous Andhra Pradesh state are becoming a rare sight after women’s self-groups took over mining operations last year. Credit: Stella Paul

Laws and loopholes

Blessed with two major river systems, the Krishna and the Godavari, Andhra Pradesh boasts a stunning range of biodiversity, from the unique flora and fauna found on the coastal mountain range of the Eastern Ghats to the tremendously fertile plains formed in the rivers’ basins.

But its biggest asset has also been a curse, and has long attracted the gaze of major players in the sand mining industry – many of them operating outside the ambit of the law.

Considered a ‘minor’ mineral, sand falls outside of the jurisdiction of the federal government, which limits its authority to the extraction and sale of ‘major’ minerals like coal, iron and copper.

Numerous Indian laws – from a February 2012 Supreme Court order to an August 2013 ruling by the National Green Tribunal, a federal environment conservation agency – have banned river sand mining without the necessary permit.

These orders notwithstanding, media reports have consistently drawn attention to the extraction activities of organised syndicates referred to as the ‘sand mafia’, allegedly responsible for removing truckloads of sand for a nifty profit from Andhra Pradhesh and elsewhere.

Many have reportedly mined without any government permission; others have systematically exceeded the volume specified, or encroached on areas outside the scope of their permits.

In April 2015, Andhra Pradesh Finance Minister Yanamala Ramakrishnudu told the local press that illicit sand miners had robbed the state of 10 billion rupees (150 million dollars) in the past 10 years.

Even with ample evidence on the destructive environmental impacts of sand mining, including a report by the Geological Survey of India warning against damages to in-stream flora and fauna and devastation of vegetative cover, the state government has been either unable or unwilling to curb the practice.

It was not until 2014, following an outcry by the federal government’s own mining ministry about the “menace” of illegal sand extraction, that Andhra Pradhesh cancelled all licenses issued under the 2002 Water, Land and Tree Act and handed power over to the women’s self-help groups.

SHGs, meanwhile, are under strict orders to ensure that mining happens only in those areas where massive silt-deposits are causing environmental stress, including over-sedimentation resulting in a reduction of the river’s holding capacity.

There are about 40 reservoirs in the state, some over a century old, which hold massive build-ups of sand. Undavalli village falls within one of these reservoirs – the Prakasam barrage, built in 1855, over the Krishna River – where sedimentation has been increasing at the rate of 0.5 percent to 0.9 percent every year, according to officials from the state’s irrigation department.

Still, licenses are not granted indefinitely – their duration fluctuates between two and 12 months, depending on the extent of sedimentation and the specific ecology of the area.

The work is not without its challenges. Women are learning how to digitize their operations (with some using computers for the first time), keep their proceeds safe and vigilantly monitor environmental degradation, all under the threat of reprisals from the sand mafia.

Add to this a full working day in 40-degrees-Celsius heat with little shade and no security and you have a task that not many would voluntarily sign up for; yet, few are complaining.

“When I worked in the farm, I was just another labourer,” Yepuri Mani of the Undavalli mining group tells IPS. “I was almost invisible. Here, I am showing others what to do. I am in charge. People see my work and they also see me. It is a great feeling.”

Putting women in charge is not a magic bullet for the ills of sand mining: the move does not tackle the looming issue of unsustainable global demand for sand that is driving major environmental destruction in India, and elsewhere in the world.

But having rural women at the helm of a hitherto male-dominated industry is certainly a major first step towards a more sustainable, grassroots-based economic model of carefully managing a limited and vital natural resource.

Edited by Kanya D’Almeida

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Opinion: Brazil Poised on Verge of Unstable Equilibriumhttp://www.ipsnews.net/2015/08/opinion-brazil-poised-on-verge-of-unstable-equilibrium/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-brazil-poised-on-verge-of-unstable-equilibrium http://www.ipsnews.net/2015/08/opinion-brazil-poised-on-verge-of-unstable-equilibrium/#comments Sat, 22 Aug 2015 11:29:33 +0000 Fernando Cardim de Carvalho http://www.ipsnews.net/?p=142103

In this column, Fernando Cardim de Carvalho, economist and professor at the Federal University of Río de Janeiro, looks at the current political situation in Brazil and argues that the country finds itself in an impasse, with no political force apparently strong enough, or even interested in finding a better and more promising alternative policy strategy.

By Fernando Cardim de Carvalho
RIO DE JANEIRO, Aug 22 2015 (IPS)

As the political situation in Brazil appears to be reaching a state of unstable equilibrium, or more bluntly, as it is transformed from instability to impasse, the economy continues to deteriorate.

The sharpening of political conflicts that could lead to an outright collapse of the economy seems to have been attenuated by the shift on Apr. 7 of effective political power from President Dilma Rousseff to Vice-President Michel Temer.

Fernando Cardim de Carvalho

Fernando Cardim de Carvalho

Temer was successful in bringing Renan Calheiros, the chairman of the Federal Senate, back to the government camp, in a power-sharing agreement meant to isolate the chairman of the House, Eduardo Cunha, who has assumed a much more radical stance. The arrangement has worked so far.

The pressure on the President to resign or on the appropriate bodies to give cause to initiate impeachment processes seems to have reached its limit. Popular opposition to the federal administration, which has its stronghold in Sao Paulo – as shown in mass demonstrations in March and April and most recently on Aug. 16 – has not seen the snowball growth its leaders expected.

In sum, positions seem to have been hardened as a measure of political accommodation has been reached, with the Brazilian Democratic Movement Party (PMDB) taking the lead on the side of government, and the formal opposition to government, including the nominally leading opposition party, the Brazilian Social Democracy Party (PSDB), rallying to the side of Eduardo Cunha, still their best hope on the way to an impeachment procedure.

Street demonstrations at this point seem to be unable to change this picture. Still, it should be noted that only the opposition has been able to organise large demonstrations. Attempts by pro-government groups to do the same in favour of the government have been few and largely unsuccessful.

In this context, as expected, the Brazilian economy continues to deteriorate. The contractionary impact of fiscal retrenchment has been greater than anticipated because not many people can foresee what will come next. In fact, no one can, even if announced measures will in fact be implemented while current difficulties, including fiscal difficulties, grow further.

The federal government was not able to pass the contractionary measures it argued to be essential, thus creating a ‘Catch 22’ situation in which one expects the success of the government to be very bad for the country but its failure to be even worse. Many economists are predicting a fall in 2015 GDP close to two percent, postponing chances of recovery until at least 2017.

“[Brazil] finds itself at an impasse. No political force seems to be strong enough, or even interested in finding a better and more promising alternative policy strategy”
If this contraction actually happens, it will be one the most serious recessions in recent history, much worse than what happened in 2008 and 2009.

The reasons for this are complex and the government is partly correct to point to the worsening of the external scenario. China can no longer carry Brazil forward. The recovery of the U.S. economy is weak and volatile. Europe is unable to overcome its own fossilised views on the virtues of austerity, causing the whole area to limp around.

Of course, this excuse only goes so far. Many analysts had called the attention of government authorities to the fact that growth during President Lula da Silva’s two terms in office (2003-2011) would vanish in the event that China lost its breath, as has actually happened.

The country lost the opportunity to make the investments, particularly in infrastructure, which could have increased its productive capacity. Efficient industrial policies should have been consistently implemented to that end, public investment should have been expanded, and consistent exchange rate policies should have been sought to change the picture of overvaluation that has been killing local manufacturing, on and off, since the Real Plan was implemented in 1994.

Practically nothing of this was effectively done. Investment plans were announced that had no consequence, local manufacturers became importers on an increasing scale, and roads, ports and energy production fell behind needs, while the government presented policies to increase household indebtedness to expand consumption as a successful combination of economic and social policies.

In the last two years of Rousseff’s first term (2011-2014), these policies were not even successful in increasing growth rates and GDP stalled as the government appealed more and more to tricks, particularly accounting tricks, and the distribution of favours to politically-connected sectors to try to revive the economy.

To a large extent, the turn to austerity was motivated by the failure to revive the economy, which doubled the bet on mistaken policies. Austerity measures in a shrinking economy can only accelerate the fall. But the dissolution of the political power of the president tripled the bet.

No one can believe that the president has the power to effectively pursue an alternative policy path. In fact, if the alternative to austerity is going back to what she did in her first term, the president will not find any supporters, except, perhaps, in her fast-shrinking number of hard-core believers.

So the country finds itself at an impasse. No political force seems to be strong enough, or even interested in finding a better and more promising alternative policy strategy. The more radical opponents – the Workers’ Party (PT) and the PSDB – got lost in a ‘blame game’, trying to pin down which of two presidents, Fernando Henrique Cardoso or Lula, had been worse.

None of them seems to have anything to offer. PMDB does not deal in wholesale strategies, it is more interested in retailing. Given the steep loss of trust in the PT or its leaders, including Lula, the party seems to be excluded from any power arrangement to be designed in the near future (its perspectives for the long-term future are at a minimum very uncertain).

The situation of the PSDB is not much better, because all it has in its favour is the receding memory of the Cardoso period, in which much the same problems were as serious as they are now and the party was as incompetent in pointing to solutions as the PT is now.

In this situation, the PMDB stepped in. It reached some measure of political stability but it has no vision of where to take the economy. Given its structure as a federation of state leaderships, the PMDB deals better with favours than with strategies.

As happened under President José Sarney in the late 1980s, this may be enough – in the best of circumstances – to put the brakes on economic deterioration but not to guide its revival.

The country will survive, of course, as it has done in the past.  The problem is that Brazil has experience of unfortunately all too frequent low-quality political leadership, so even the optimistic analysts can only see hardship ahead. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

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China’s Economy Has Sounded the Alert; Will Latin America Listen?http://www.ipsnews.net/2015/08/chinas-economy-has-sounded-the-alert-will-latin-america-listen/?utm_source=rss&utm_medium=rss&utm_campaign=chinas-economy-has-sounded-the-alert-will-latin-america-listen http://www.ipsnews.net/2015/08/chinas-economy-has-sounded-the-alert-will-latin-america-listen/#comments Fri, 21 Aug 2015 23:00:08 +0000 Diego Arguedas Ortiz http://www.ipsnews.net/?p=142093 Costa Rica’s National Stadium, donated by China as a gift for the reestablishment of bilateral ties in 2007, and built in 2009-2010 by a Chinese company with Chinese labour. Credit: Diego Arguedas Ortiz/IPS

Costa Rica’s National Stadium, donated by China as a gift for the reestablishment of bilateral ties in 2007, and built in 2009-2010 by a Chinese company with Chinese labour. Credit: Diego Arguedas Ortiz/IPS

By Diego Arguedas Ortiz
SAN JOSE, Aug 21 2015 (IPS)

For years, Latin America has exported its raw materials to China’s voracious factories, fuelling economic growth. But now that the Asian giant is putting a priority on domestic consumption over industrial production, how will this region react?

China’s dizzying growth gave a boost to the economies of Latin America, and in exchange, this region received manufactured products, credits, and heavy investment in infrastructure.

Given the slowdown in China’s growth, the countries of Latin America have two options: move toward a more value-added economy or lose relevance with an obsolete economic model inherited from the 20th century, said several experts consulted by IPS.

“Over the last five years, the relationship between Latin America and China has been dominated by Latin America sending China a few raw materials and China sending Latin America manufactured goods,” U.S. academic Rebecca Ray told IPS.“In simple terms, China’s rebalancing is aimed at reducing the relative importance of investment and exports in its economic growth, relying on household consumption playing a larger role.” -- Keiji Inoue and Sebastián Herreros

“But this may be about to change,” added the research fellow at the Boston University Global Economic Governance Initiative, where she coordinates the Working Group on Development and the Environment in the Americas’ China in Latin America project and coauthors the China-Latin America Economic Bulletin.

According to Ray, China’s leaders are shifting toward a development strategy with an emphasis on slower but steady growth, which prioritises internal consumption over factory production, thus opening up opportunities for importing manufactured goods from other countries.

The path toward that future was one of the central focuses of the Forum for East Asia-Latin America Cooperation (FEALAC) meeting in the Costa Rican capital from Tuesday, Aug. 18 to Friday, Aug. 21, which brought together foreign ministers and other senior officials from 36 countries under the theme “Two Regions, One Vision”.

The experts who spoke to IPS all agreed that given China’s slowdown, decision-makers in Latin America must take the initiative and propose economic alternatives based on more value added.

But the region has been slow to make the leap. Just five commodities – soy, iron, oil and unrefined and refined copper – account for 75 percent of exports to China, only a tiny share of which are manufactured goods.

But the other major economic flow between China and Latin America, investment in infrastructure, could paradoxically benefit from the slowdown and the shift in direction of the Chinese economy, the experts said.

The deceleration in the engine of the global economy since 2014, when China’s growth stood at 7.4 percent, the lowest level in 24 years, “May hurt Latin American economies that have become dependent on exporting those few commodities. In contrast, China’s infrastructure investments can help all industries do well,” Ray said.

Ponta da Madeira, a port in northeast Brazil where ships carrying iron ore set out, mainly for China. Credit: Mario Osava/IPS

Ponta da Madeira, a port in northeast Brazil where ships carrying iron ore set out, mainly for China. Credit: Mario Osava/IPS

Well-administered, she said, Chinese-financed projects could close the region’s historic gap in infrastructure and serve as a platform for the development of other industries that would benefit from investment in transport and energy, two main areas of interest for China.

“Hopefully, policy makers will make use of this opportunity to spur development in non-traditional industries,” Ray said.

Keiji Inoue and Sebastián Herreros, with the Economic Commission for Latin America and the Caribbean’s (ECLAC) International Trade and Integration Division, concurred.

“To the extent that these projects are aligned with the priorities of countries in the region, a greater Chinese presence could help gradually close Latin America’s infrastructure gap, thus strengthening regional integration and improving the region’s international competitiveness,” they stated in a joint analysis for IPS.

One of the aims of China’s investments in infrastructure in Latin America, they noted, is for that country’s to invest people’s savings.

But the direction taken by the growing links between Latin America and China do not leave much room for optimism.

Up to now, the region’s exports to China “Support fewer jobs, generate more net greenhouse gas emissions, and use more water than other LAC (Latin American and Caribbean) exports,” according to a study by GEGI.

China, meanwhile, has been promoting and financing controversial megaprojects in the region, like the “great inter-oceanic canal” in Nicaragua, to be built by the Chinese consortium Hong Kong Nicaragua Canal Development (HKDN-Group) at an estimated cost of 50 billion dollars, and the projected 5,000-km Transcontinental Railway, which would connect Brazil and Peru.

Chinese investment has also fuelled trade ties based on raw materials. According to ECLAC, between 2010 and 2013 nearly 90 percent of China’s investment in the region went into the extractive industry, mainly mining and fossil fuels.

Executives of the Chinese consortium HKDN-Group behind a big sign on Dec. 22, 2014 in the town of Brito Rivas on the Pacific ocean coast, at the ceremony for the formal start of construction of the Great Canal of Nicaragua, which will cut across the country. Credit: Mario Moncada/IPS

Executives of the Chinese consortium HKDN-Group behind a big banner on Dec. 22, 2014 in the town of Brito Rivas on the Pacific ocean coast, at the ceremony for the formal start of construction of the Great Canal of Nicaragua, which will cut across the country. Credit: Mario Moncada/IPS

“From that perspective, China’s high level of demand for raw materials at a global level has effectively consolidated and reinforced the specialisation of these processes, also known as ‘re-primarisation’ of the economy,” Enrique Dussel, director of the Centre for China-Mexico Studies of the National Autonomous University of Mexico, told IPS.

But Dussel said emphatically that the countries of Latin America will have to respond, given the signals. “It is Latin America and the Caribbean that have the responsibility – and need – to make a decision, not China,” he stated.

This refocusing of the economies of the region on the production of primary commodities for export happened when Latin America was seduced by last decade’s high commodities prices and prioritised exports of raw materials over exports of greater added value.

Raw materials represent more than 60 percent of the region’s exports – the highest proportion seen since the early 1990s, according to ECLAC studies – up from 44 percent at the start of the century.

Manufactured goods like machinery and electronic devices, meanwhile, make up 64 percent of China’s exports to this region, and are less sensitive to price swings.

Between 2000 and 2014, imports from China rose from two to 14 percent of the regional total.

Dussel said China’s growth highlighted the serious problems faced by the region’s exports. In his view, the problems do not necessarily lie in the predominance of raw materials, but in the fact that these industries have “very little value added and technology.”

ECLAC’s Inoue and Herreros say the shift in focus of China’s development presents an opportunity.

They said that “in simple terms, China’s rebalancing is aimed at reducing the relative importance of investment and exports in its economic growth, relying on household consumption playing a larger role.”

“To the extent that this process has an effect, it should favour the diversification of Latin America’s exports to China,” they said.

They expect sectors like agribusiness and processed food to become more important in the region, although they warn that it could take years for the effects to be felt, and say that in order for that to happen, decision-makers would have to take ambitious steps toward consolidating the region as a trade bloc.

“We must also make more decisive progress towards a truly integrated regional market,” Inoue and Herreros wrote. “That would make Latin America more attractive and increase its bargaining power vis-à-vis China, the rest of Asia and other big global economic actors.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: Misinformation Hides Real Dimension of Greek “Bailout”http://www.ipsnews.net/2015/08/opinion-misinformation-hides-real-dimension-of-greek-bailout/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-misinformation-hides-real-dimension-of-greek-bailout http://www.ipsnews.net/2015/08/opinion-misinformation-hides-real-dimension-of-greek-bailout/#comments Thu, 20 Aug 2015 11:14:47 +0000 Roberto Savio http://www.ipsnews.net/?p=142057

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, writes that the purpose of Greece’s third bailout is clear – all but seven percent of the 86 billion euros will go to pay debt with the other European governments, recapitalize Greek banks, pay interest on Greece’s debt and pay the debt of the state with Greek enterprises, while the country’s citizens will see none of it.

By Roberto Savio
SAN SALVADOR, Aug 20 2015 (IPS)

The long saga on Greece is apparently over – European institutions have given Athens a third bailout of 86 billion euros which, combined with the previous two, makes a grand total of 240 billion euros.

Roberto Savio

Roberto Savio

There is no doubt that the large majority of European citizens are convinced that this is a great example of solidarity, and that if Greece is not now able to walk on its own feet, the responsibility will lie solely with Greek citizens and their government.

But this is only due to the fact that the media system has, by and large, ceased to provide alternative views … and some people even ignore that the bailout is a loan, and therefore increases the country’s debt.

In fact, the productive economy of Greece saw very little of that money because the bailouts were merely financial operations and Greek citizens, not only did not see anything, they have even had to pay a brutal price.

The truth behind the operation has been aptly described by Mujtaba Rahman, the respected chief Eurozone analyst for the London-based Eurasia Group, who said: “The bailout is not really about a growth plan for Greece, but a plan to make sure the European Central Bank (ECB) and the International Monetary Fund (IMF) get paid, and the euro area does not break up.”

And the purpose of this third bailout is clear. Of the famous 86 billion, 36 billion will go to pay the debt with the other European governments (and first of all Germany). Another 25 billion will go to recapitalize the Greek banks, because much capital left the country, heading for safer European banks. Another 18 billion will go to pay interest on the debt which Greece has been piling up. And, finally, seven billion will go to pay the debt of the state with Greek enterprises.“How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?”

So, seven will go to the real economy and nothing to the citizens, who will have now to go through several new drastic measures of austerity, which will further depress their standards of living and their ability to spend.

Financially, the bailouts have been a success. All the losses and bad exposure of European institutions have been passed on to Greece. Before the first bailout, French banks were exposed with bad bonds for 63 billion euros, now only for 1.6 billion with no losses. German banks have gone from 45 to five billion.

What is intriguing is that a number of studies show that until the very last moment, when it was widely known that Greece was in deep crisis, European banks and investors continued to buy Greek bonds.

Were they certain that Greece would pay? No, but they were confident that the Greek government would be rescued, and that they would therefore recover their investments, which is exactly what happened.

The financial system has now a life of its own and has nothing to do with real economy, which it dwarfs by being 40 times larger (if we judge by the volumes of daily financial transactions against the production of goods and services). Capital is untouchable and circulates freely in Europe, unlike its citizens. And now there is a great wave of legislation to introduce lower taxation for the richest one percent!

During the negotiations, one frequent accusation levelled against the Greeks was that they were unable to have their rich ship-owners pay their share of taxes. Of course, ship-owners place their money where it cannot be reached.

But is this not hypocritical when we know that there are at least two trillion euros stashed in fiscal paradises, and that, just to give one example, nobody has got Ryanair to really pay taxes? Not to mention the fact that when he was prime minister of Luxembourg, European Commission President Jean-Claude Juncker granted secret tax rebates to over a hundred international companies?

Now Agence France Press has circulated a new astonishing study from the German Leibnitz Institute of Economic Research, which says that Germany has profited from the Greek crisis to the tune of 100 billion euros, saving money through lower interest payments on funds the government borrowed amid investor “flights to safety” and “these savings exceed the cost of the crisis – even if Greece were to default on its entire debt.”

Meanwhile, a large number of studies point out how, by having a positive balance of trade with its European partners, Germany is in fact sucking capital from Europe.

Interpreting the third bailout and its conditions of austerity as a mere economic operation would be to commit a great error.

No economist can believe that Greece will be able to pay back and not only because it has always had a fragile economy, with little industry and with tourism as its main source of income (aggravated by decades of mismanagement and the corruption of its traditional parties, the very parties that European leaders would like to see come back).

Greece is already in recession and now the doubling of VAT is going to compress consumption further, also because there will now be further reductions in pensions and public salaries (which have been already cut by 20 percent).  It is widely believed that the Greek debt will now reach 200 percent of its GDP, up from 170 percent prior to the bailout.

How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?

Well, it is no coincidence that the IMF, which is the Rotary Club of conservative economists, has refused to join this bailout. The IMF has said it will not put in any money unless European creditors (which is a diplomatic way of saying Germany) accept a restructuring of the Greek debt.

It is clear that the bailout has not been a technical but a political operation. Many European leaders, starting with Juncker himself, intervened in last month’s internal Greek referendum, asking Greeks to vote against Prime Minister Alexis Tsipras. They indicated clearly and openly, in a campaign that the Wall Street Journal repeated in the United States, that the revolt against austerity and the neoliberal economy should be stopped dead in its tracks to avoid political contagion.

For her part, German Chancellor Angela Merkel has declared on German television that she has come to the conclusion that °Tsipras has changed°. This has an air of dejà vu … was it not then British Prime Margaret Thatcher who, intent on destroying the trade unions, launched her famous TINA slogan – There Is No Alternative?

And is there no alternative to this kind of Europe? (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

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Time to Work Out a Plan C for Greecehttp://www.ipsnews.net/2015/08/time-to-work-out-a-plan-c-for-greece/?utm_source=rss&utm_medium=rss&utm_campaign=time-to-work-out-a-plan-c-for-greece http://www.ipsnews.net/2015/08/time-to-work-out-a-plan-c-for-greece/#comments Tue, 18 Aug 2015 16:14:04 +0000 Pavlos Georgiadis http://www.ipsnews.net/?p=142029 Original illustration courtesy of Stéphane Roux

Original illustration courtesy of Stéphane Roux

By Pavlos Georgiadis
ATHENS, Aug 18 2015 (IPS)

Just over a month ago, Greek citizens were asked to go to the polls for a referendum that posed the country with an unprecedented existential dilemma and challenged the EU with the possibility of its collapse.

The question that shook the world was a choice between a Plan A – more of the same, evidently failed austerity policies that made the country lose 25 percent of its GDP in five years – and a Plan B – a poorly designed Grexit, with unpredictable consequences that could mean the country’s sudden death.Instead of viewing Greece as a scapegoat, Europe should take this unique opportunity to capitalise on the solutions created by the civil society in the country.

It is an indisputable fact that Greece requires major reforms and Greeks know this better than anyone else. These are related, among others, to major existing legislative gaps, the country’s geography which generates huge transaction costs, a cultural gap between cities and rural areas, and the decision making processes in the country.

Such reforms are of systemic nature, something that no politician in Greece seems able to grasp or advocate. The old guard that still rules the country’s affairs, despite being fully aware of its own failure, is still opting for quick and flaky solutions that hardly address the causes of this crisis.

The same goes for Europe’s leaders, who seem to be more cloistered than ever, limited to their national egos and political clientele. They seem to lack the capacity, both morally and intellectually, but above all the vision to steward Europe’s human face, while addressing this crisis.

A project of “unity in diversity” is threatened by its outdated, largely opaque decision making structures that govern its economics. This explains why European leaders, in the past years, instead of solutions have been offering no more than a narrative based on the worst possible stereotypes.

A top-down approach that plundered Greece into depression and made Greeks, especially the youth, feel like little hamsters in some sort of sick socio-economic experiment.

The Birth of a New Solidarity Economy

Some impressive civil society projects are already being implemented at the local grassroots level, piloting a parallel solidarity and needs-based economy and participa-tory governance.

Every day, a community kitchen called “The Οther Ηuman” is supplying free meals to hundreds of Greeks in need, and lately to immigrants from Syria and Afghanistan, camping in the parks of Athens.

The Metropolitan Community Clinic at Helliniko near the old Athens airport, a 1.2 hectare plot of prime land on the beachfront of Athens, set to be privatised in a scan-dalous low price, is delivering free medicine, health check ups and preventive treat-ments to citizens with no insurance.

Both initiatives have no legal structure nor bank accounts, basing their operations in a currency that survives the capital controls: solidarity and humanity. Speaking of new ways of transaction, a bartering system is making a comeback in response to the closed banks, especially in rural areas.

Open access technologies are driving this transition, as they always do with initiatives promoting public dialogue, knowledge exchange, political participation and account-ability between citizens and politicians.

Politeia 2.0, a grassroots initiative for citizens’ engagement which is pioneering methods for participatory design of a new constitution and Vouliwatch, an independ-ent parliament watchdog, are just two of them.

With such prototypes launched, tested and operating at different levels, the challenge now is to scale and communicate them in every neighbourhood, village and city of the country.

This crisis never had its crisis manager, exposing the EU’s deficiencies and the distance that splits the politicians’ realities with those of citizens. This is not only evident in the way political leaders handle the Greek case, but other challenges too, such as the TTIP, climate change and immigration.

A new political arena is thus emerging within the EU, that has nothing to do with traditional ideological divides of the left or the right. This new political arena struggles to balance top-down versus bottom-up approaches to our ways of making decisions and planning the future.

Based on this recognition, it is clear that besides a “Plan A” (a politically humiliating and financially unsustainable agreement) and a “Plan B” (the risk of a Grexit), Greece is in dire need of working out a “Plan C”.

A roadmap for advancing towards a real transition back to the Commons, based on civil engagement for participatory mapping and collective management of the assets that influence what is currently under attack: the everyday lives of the people.

Greece needs to put in an unprecedented effort in order to overcome an unprecedented challenge, engaging the best actors in key social fields such as health, food, education and social welfare, just to name a few. At this point, this is absolutely necessary in order to maintain social cohesion and explore systemic solutions during the difficult times to come.

The starting point should probably be in the fields, which a recent study by Endeavor Greece identified as the only dynamic sectors that survive the crisis: agriculture, product manufacturing and Information and Communications Technology (ICT).

The food sector, especially, can pave the way since it is already an integral part of the country’s cultural fabric. With around 13 percent of the Greek workforce engaged in agriculture (the EU average is just over 5 percent), a carefully structured plan for a transition towards agroecology can become an extremely powerful vector of change and a drive for Greece’s new economy.

Community gardens like Per.Ka., located inside an abandoned army camp in Thessaloniki, and peer to peer networks like Peliti -Europe’s largest seed-swap community- are already carving out new food system paradigms.

This new process can only be led by the youth of Greece. Highly skilled, socially networked and internationally educated, many of them are looking back to the land to seek ways out of unemployment.

All these years, these young Greeks have been deprived access to bank loans, while others were transferring 250 billion euros outside the country. Should they be connected with food business incubators, seed funding opportunities and open source technologies, they could catalyse this transition towards a quality, climate-friendly agrifood system which connects the land with health, education, tourism, energy, transport and other services.

Of course, this would require the types of reforms against existing institutional barriers and an outdated legal framework in Greece. Unfortunately, in the last five years, such reforms have never been put on the table by successive Greek governments nor their creditors.

Agrifood is only one example of the few sectors that can generate considerable social, economic and environmental benefits which are necessary towards a more resilient future for the country.

Moreover, it is possibly one of the very few ways to create jobs for the youth, who are challenged by a staggering 52.4 percent unemployment rate, the highest in the EU. Citizens are in need of new options and new development indicators need to be considered in rebuilding the country’s economy.

This change needs to start at the local level, leveraging the potential of the aforementioned initiatives and many more that are acting at the grassroots.

The conditions are ripe, as the 2014 municipal elections brought staff with fresh ideas into office in Greek local authorities. The cities of Athens and Thessaloniki, home to half of the country’s population, received the Mayors Challenge and 100 Resilient Cities awards respectively.

Each one offers one million euros to their budgets for delegating, implementing and scaling strategies for civic participation and urban regeneration. It remains to be seen whether the tools and opportunities offered by those grants and networks will be used efficiently, and not from obsolete mismanagement attitudes and the nepotism of the past.

The challenge is also huge for the citizens of the rest of Europe, who are largely misinformed by reporters of mainstream media, landing in Athens with a mandate from their editors to mainly report on horror stories and misery icons.

This is the time to change this agenda of shame, and instead of viewing Greece as a scapegoat, Europe should take this unique opportunity to capitalise on the solutions created by the civil society in the country.

Again, the youth can play a major role in strengthening the vision of a unified Europe, despite the power games that unfold at the political level. After all, we are the first true European generation.

Evidently, Greece was turned into an experiment in suffocating austerity. But what if Greece became the testing ground for visualising, prototyping and scaling a new economic paradigm that is socially inclusive, climate friendly and economically viable?

I am not sure whether the “Plan C” is the right name for this process. It is quite likely that populist politicians in Greece and Europe might abuse the term, like they did with so many others.

But the essence remains: this is a plan of solidarity, collaboration and resilience. And it is time that this dialogue opened all over Europe, if it wants to remain a Union, and maintain its leading role in the world.

Follow Pavlos Georgiadis on  Twitter: @geopavlos

Edited by Kitty Stapp

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Presalt Oil Drives Technological Development in Brazilhttp://www.ipsnews.net/2015/08/presalt-oil-drives-technological-development-in-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=presalt-oil-drives-technological-development-in-brazil http://www.ipsnews.net/2015/08/presalt-oil-drives-technological-development-in-brazil/#comments Tue, 18 Aug 2015 15:40:34 +0000 Mario Osava http://www.ipsnews.net/?p=142026 The third floor of the central building of Petrobras’s R&D centre, CENPES, built in 2010 on University City Island. On the right, a scale model of an oil rig. Credit: Mario Osava/IPS

The third floor of the central building of Petrobras’s R&D centre, CENPES, built in 2010 on University City Island. On the right, a scale model of an oil rig. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Aug 18 2015 (IPS)

The extraction of deepwater oil, the most abundant kind in Brazil, is costly but foments technological and industrial development, requiring increasingly complex production equipment and techniques.

One challenge is the water extracted with the oil, the proportion of which grows with the age of the well, reducing productivity by using up an increasing proportion of the transport and processing capacity of the productive installations.

“Since two years ago we’ve had a separator of oil and water that operates at a depth of 2,000 metres,” said Oscar Chamberlain, head of supplies and biofuels in the Research and Development Centre (CENPES) of Petrobras, Brazil’s state oil company. “That water, in time, can represent 80 percent of the volume extracted, which is why it has to be separated deep down in order to not overtax the rig.”

Rio de Janeiro has become a centre of know-how and innovation in offshore oil, thanks to CENPES, which has 227 laboratories and a technological park where 52 institutions and companies have set up shop so far, including 12 multinational corporations.“There are no longer any technological barriers to the production of oil in the presalt layer; all of the challenges identified – involving the distance, depth and complexity posed by the layer of salt - have been overcome.” -- Luiz Felipe Rego

University City Island, widely known as Fundão Island, is the epicentre of that transformation. It is the campus of the Federal University of Rio de Janeiro (UFRJ), near the international airport of this city that is more famous for its beaches and carnival.

This development has been driven by Petrobras’s 2006 discovery of oil deposits in what is known as the presalt area, under a two-kilometre-thick salt layer more than 5,000 metres below the surface in the Atlantic ocean.

The new reserves brought Brazil new oil wealth as well as new challenges.

The presalt reserves are at least 250 km from the coast of southeast Brazil, which poses logistical difficulties.

“There are no longer any technological barriers to the production of oil in the presalt layer; all of the challenges identified – involving the distance, depth and complexity posed by the layer of salt – have been overcome,” Luiz Felipe Rego, Petrobras general manager of well engineering, told IPS.

As a result, just eight years after they were discovered, the presalt reserves account for 23 percent of Petrobras production in Brazil, which in October climbed to 2.58 million barrels a day of oil-equivalent, including natural gas.

But the constant battle to reduce costs has fuelled the effort to do as much as possible deep below the surface, with underwater systems that require electrification, robots and remote maintenance services in a corrosive, high-pressure atmosphere with wildly varying temperatures, said Chamberlain, a Nicaraguan who has been with Petrobras for 30 years.

Corrosion is a threat at every stage of the process, all the way up to the refinery where the petroleum can damage the equipment if the excess salt is not previously removed.

CENPES was founded in 1963 when Petrobras, a state company created to explore for oil and reduce the imports that Brazil depended on, was 10 years old. Its 1,930 researchers, 36 percent of whom hold masters’ or doctoral degrees, are now carrying out 862 R&D projects.

“Thanks to their work, Petrobras is the Brazilian company that has applied for the most patents in Brazil and abroad,” the executive manager of CENPES, André Cordeiro, told IPS. “In 2013 alone 56 new applications were made.”

Petrobras’s investment in R&D, administered by CENPES, has increased nearly eight-fold so far this century. The annual average, which stood at 160 million dollars from 2001 to 2003, climbed to 1.2 billion dollars in the last three years.

A circular laboratory and office building in CENPES, built in 1973 on University City Island in Rio de Janeiro. The Maré and Floresta de Tijuca favelas or shantytowns can be seen in the background. CENPES is the R&D arm of Brazil’s state oil company Petrobras, whose symbol is BR. Credit: Mario Osava/IPS

A circular laboratory and office building in CENPES, built in 1973 on University City Island in Rio de Janeiro. The Maré and Floresta de Tijuca favelas or shantytowns can be seen in the background. CENPES is the R&D arm of Brazil’s state oil company Petrobras, whose symbol is BR. Credit: Mario Osava/IPS

“We currently work with 122 Brazilian universities and research institutes, organised in 49 thematic networks – a model that has fomented partnerships between Petrobras and academia in strategic questions in the area of oil and gas,” Cordeiro said.

The closest partnership began 46 years ago with the UFRJ’s Alberto Luiz Coimbra Institute for Graduate Studies and Research in Engineering (COPPE), which is also a technology business incubator.

For example, Ambidados, which emerged there in 2006, provides oil companies with environmental assessments and data. And with just 11 staff members in its office in the UFRJ’s Technological Park, it created its own buoys and devices to monitor wind, tides, ocean currents and rainfall, which affect operations out at sea.

“We also study the ocean bottom relief, the water temperature at different depths, the salinity, and the amount of algae,” oceanographer Leonardo Kuniyoshi told IPS.

There are another 31 small and medium-sized companies in the Technological Park, along with seven laboratories, and R&D centres of global leaders in oil industry services and equipment, such as Schlumberger, FMC Technologies and Halliburton, which recently acquired Baker Hughes, another oilfield services provider with offices on Fundão Island.

The U.S.-based GE opened its new Global Research Centre in the park on Aug. 13, joining other multinationals outside the oil industry, such as France’s L’Oreal cosmetics company and Brazilian beer maker Ambev.

“This coexistence among different industries is fascinating,” said the director of the Technological Park, Mauricio Guedes. “The coming together of knowledge from different areas constitutes the wealth of the Technological Park, which will generate innovations.”

That also requires “bringing companies and the university together in the same place, to generate knowledge that gives rise to products and services, because without business, technology and know-how are lost,” he said.

The park was designed to hold 200 companies in its 350,000-square-metre area at the southeastern tip of the island, which belongs to the UFRJ. The area was flood-prone and had to be filled in before the Technological Park opened in 2003. One hundred thousand truckloads of soil and rubble, dumped over the space of four years, raised the ground level two metres, Guedes said.

After the discovery of the presalt reserves, which meant Brazil could become one of the world’s leading oil producers and exporters, the park began to attract major international firms like the British multinational oil and gas company BG Group or Germany’s Siemens.

The list includes information technology companies that are not limited to oil industry services, such as EMC2, which opened “its first research centre outside of the United States” in the UFRJ park, according to Karin Breitman, the company’s local chief scientist.

The future of the Technological Park and oil industry research is ensured in Brazil. Contracts to exploit the country’s oilfields require that the companies must invest one percent of their revenue in R&D.

That adds up to some 12 billion dollars over the next 10 years. “The combination of technological challenges and resources to tackle them promises success,” said Guedes.

Besides boosting the oil industry’s productivity, the R&D contributes to the development of other sectors, with oceanographic and environmental knowledge and multiple-use technologies.

One example is the hyperbaric chamber, a steel vessel in which atmospheric pressure can be raised or lowered by air compressors, which is being used to generate electric power from waves, in a plant developed by Coppe. New materials, new inputs and energy solutions will emerge from the bottom of the sea, said Guedes.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: Kerry Going Back Homehttp://www.ipsnews.net/2015/08/opinion-kerry-going-back-home/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-kerry-going-back-home http://www.ipsnews.net/2015/08/opinion-kerry-going-back-home/#comments Thu, 13 Aug 2015 11:54:13 +0000 Joaquin Roy http://www.ipsnews.net/?p=141969

In this column, Joaquín Roy, Jean Monnet Professor of European Integration and Director of the European Union Centre at the University of Miami, writes that when he visits Havana on Friday Aug. 14 within the framework of the resumption of US-Cuba relations, Secretary of State John Kerry will feel at home because, despite more than half a century of troubled relations, Cuba is the Latin American country which is most naturally "American-Yankee".

By Joaquín Roy
BARCELONA, Aug 13 2015 (IPS)

Recovering from a broken femur following a bicycle accident suffered in Switzerland, U.S. Secretary of State John Kerry – former senator and former presidential candidate – is anxious to accelerate his convalescence and will visit Cuba on Friday Aug. 14, where he will hoist the Stars and Stripes flag over the emblematic U.S. embassy building in Havana.

Joaquín Roy

Joaquín Roy

But Kerry will not going to a strange place: in reality, he will be going back home. As he catches a glimpse of the Capitol building in the Cuban capital, he will certainly think that it looks familiar – no wonder, it is a copy of the one on Capitol Hill back in Washington.

More than Mexico (from which the United States snatched half of its territory) and Puerto Rico (the peak of the 1898 Spanish-American War, together with the Philippines), Cuba is the land in Latin America which is the most naturally “American-Yankee”. Nothing is more palpable confirmation of this than to see the appalling ease with which anyone who has recently arrived in Cuba from Miami adapts to the local environment.

At this point, one must ask why it has taken so long to “normalise” what should have been a close relationship between the empire and a modest island about 160 kilometres from Key West.

“More was lost in Cuba” has been the cry of several generations of Spaniards as they considered a family or business misfortune. What did the United States lose in Cuba through having maintained that lengthy embargo in place, whose goal has been recognised as a failure?

More than substantial property, most of which actually belonged to Spaniards or their immediate descendants, Washington lost the arrogance of its hegemonic superiority after World War II.

The conversion of Cuba into a Marxist-Leninist state, allied with the Soviet Union – the arch-enemy of the United States – and the total destruction of the capitalist system, plus the exile of a stratum of a remarkable society, was a painful slap on the face of such magnitude that no U.S. president was willing to forgive and go down in history for being the first who had bowed before Castro.“The United States is what Latin America wanted to be and could not be. Hence, Castro insisted on converting the country [Cuba] into an enemy, a task in which he was helped by the unfortunate policies of Washington”

This explains the inertia of maintaining the embargo, an error that bit by bit has been weakened in the economic field. But any explanation must also take into account the primary role played by Fidel Castro, lord and master of the situation.

His leadership will be remembered in history, although probably without absolving him (as he promised when he was condemned in 1956 after his first failed rebellion). He has had no match since Simon Bolívar.  His success is credited to his extreme understanding of the meaning of the United States in the historical evolution of Latin America and its innate identity. Unlike the erroneous vision of other leaders, Castro understood that United States was an intrinsic part of the Latin American personality, and Cuba in particular.

The United States is what Latin America wanted to be and could not be. Hence, Castro insisted on converting the country into an enemy, a task in which he was helped by the unfortunate policies of Washington. Nevertheless, he retained the notion that in reality Cubans do not hate the United States, but only despise the temporary occupants of the White House and the detested U.S. security institutions.

Castro knew perfectly well that while Cuba was by defect becoming a nation after gaining independence mortgaged by the Platt Amendment (another of Washington’s errors), it was also becoming inexorably “Americanised”.

The new empire reinforced this error through its support for or tolerance of dictators and corrupt Cuban rulers of the 1930s and 1940s, details that Castro exploited in a ruthless Machiavellian fashion to attempt to demonstrate the alien nature of the United States.

That is why, faced with maintenance of the embargo, Castro responded with actions that provoked the negative reaction of Washington.

When there were phases of relative calm (as happened under the Jimmy Carter and Bill Clinton administrations) Castro sent troops to Africa, or shut down planes of Brothers to the Rescue (a Miami-based activist organization formed by Cuban exiles), generating adoption of the Helms-Burton Act which codified the embargo. He also got the European Union to adopt a Common Position, a sort of weak “embargo” to “keep up with the Joneses”.

Why does this scaffolding now appear to be coming down – because the justifications of the past do not have the arguments that are necessary for pragmatism today. The United States needs a secure and steady environment it its backyard. Barack Obama has more important issues to deal with in the rest of the world. Cuba has become a nuisance.

The other reason is because Raúl Castro is not like his brother and is clutching at the straw of the United States “returning home”.

But the change will not be easy. The political conditions of normalisation inserted in the Helms-Burton Act are formidable (disappearance of the Castro brothers or many high officials named by them, establishment of political parties, freedom of expression, elimination of Radio/TV Martí, etc.).

Erosion by slow progress (as in the economic field) will not be sufficient. It will be necessary for Congress to repeal the legislation en bloc. This time Raul is not going to commit a fatal error. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

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Opinion: Crisis, Emergency Measures and Failure of the ISDS System: The Case of Argentinahttp://www.ipsnews.net/2015/08/opinion-crisis-emergency-measures-and-failure-of-the-isds-system-the-case-of-argentina/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-crisis-emergency-measures-and-failure-of-the-isds-system-the-case-of-argentina http://www.ipsnews.net/2015/08/opinion-crisis-emergency-measures-and-failure-of-the-isds-system-the-case-of-argentina/#comments Wed, 12 Aug 2015 05:40:36 +0000 Federico Lavopa http://www.ipsnews.net/?p=141942

In this column, Federico Lavopa, Professor, University of San Andrés and University of Buenos Aires, argues that the way in which the investor-state dispute settlement (ISDS) system was used to handle a spate of claims from foreign investors against Argentina following its economic and financial crisis of 2001/2002 has shown up flaws in the system and the need for its reform.

By Federico Lavopa
BUENOS AIRES, Aug 12 2015 (IPS)

The investor-state dispute settlement (ISDS) system has come under increasing criticism in recent years.

Inconsistent decisions, poorly reasoned awards, lack of transparency, parallel proceedings, serious doubts about arbitrator’s impartiality and the sheer size of the compensations sought by investors and awarded by arbitration tribunals are just some examples of the flaws that have been pointed out by detractors of the system.

Federico Lavopa

Federico Lavopa

The dozens of cases that were initiated against Argentina as a result of the outburst of one of its worst economic and financial crises in late 2001 became an often-quoted sad illustration of many of these shortcomings of the ISDS system.

Apart from the tragic consequences entailed by the economic and political crisis which was faced by Argentina, in particular in 2001/2002, which included a fall in gross domestic product (GDP) per capita of 50 percent, an unemployment rate of over 20 percent, a poverty rate of 50 percent, strikes, demonstrations, violent clashes with the police, dozens of civil casualties and a succession of five presidents in 10 days, Argentina received a flood of claims from foreign investors that were filed under different ISDS mechanisms and, in particular, before the International Centre for Settlement of Investment Disputes (ICSID).

Indeed, in the period 2003-2007, claims against Argentina represented one-quarter of all the cases initiated within the framework of the ICSID Convention. These claims before international arbitral tribunals challenged the changes to the economic rules that Argentina had implemented to contain the effects of perhaps the worst economic cycle of its history.

After 1991, Argentina had embarked on an economic deregulation and liberalisation programme. Among others, this programme included the convertibility of the Argentine peso and the creation of a currency board to maintain parity between the peso and the U.S. dollar by limiting the local money supply to the amount of Argentina’s foreign exchange reserves. “If all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars”

This economic and pro-market programme was accompanied by a strong emphasis on the attraction of foreign investment which, among other aspects, resulted in the conclusion of 58 bilateral investment treaties (BITs) – 55 of which came into effect.

It also included a mass privatisation process of public companies which, at that time, represented an important part of the domestic economy.

This market-oriented model reached its limits in the late 1990s, and in May 2003 a new president took office, whose government reformed the regulatory framework for the economy – particularly that for the public services privatised over the 1990s – and introduced a package of emergency laws which implied a considerable change in the conditions under which foreign investors and, in particular, public services providers had to run their business in Argentina.

As a consequence, many of them decided to resort to the investor-state dispute settlement mechanisms embodied in the dozens of bilateral investment treaties that Argentina had signed in the 1990s. In total, in the period 2001-2012, exactly 50 cases were filed against Argentina.

A striking characteristic of the Argentinian experience is the amount of requests for compensations made by the companies that sued Argentina. According to estimates made when the peak of cases following the crisis was reached, if all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars.

This sum would have been practically impossible to pay, even if Argentina had not been undergoing a period of acute economic crisis, because it represented approximately 13 percent of Argentina’s GDP for 2013.

Although Argentina’s response to this flood of cases was varied and it is still early to offer definite figures, it is already possible to conclude that, in general, arbitration tribunals were prone to render awards in favour of investors.

Almost 45 percent of the cases have received a condemnatory award, although most of these cases could still be reversed by annulment proceedings, whereas only 15 percent of the arbitration proceedings ended up with a final decision completely in favour of Argentina. The remaining 30 percent are mostly cases which resulted in an agreement between the parties or which were altogether suspended.

All in all, of the 80 billion dollars of the possible amount of compensations calculated when the peak of cases against Argentina was reached following the crisis, Argentina has so far received final rulings involving the payment of 900 million dollars.

The first salient conclusion is that the ISDS system has a very low capacity to adapt to totally exceptional circumstances for which it does not seem to have been designed. Despite the efforts of Argentinian attorneys to show that the measures implemented in the post-crisis period were adopted in an emergency context, being so exceptional as to justify any breach of the substantial clauses of the BITs, few tribunals were prepared to sustain this defence.

This notwithstanding, and with most of these cases having already been dealt with, the upcoming scenario for Argentina seems much less drastic than that forecast when the peak of cases was reached.

While they represent a heavy burden for a developing country like Argentina, so far the compensations actually paid amount to a small portion of the sum initially estimated.

The Argentinian case also represents a worrisome example of the failure of the ISDS system to ensure coherence and soundness in its decisions.

Although the dozens of cases submitted against Argentina addressed exactly the same package of measures (the post-crisis emergency laws) and  had to assess very similar arguments of the different claimants and a practically identical series of defences put forward by the Argentinian government, the conclusions at which they arrived have shown striking differences.

Additionally, some of the decisions have been subject to strong criticism and/or declared null and void by annulment committees.

Finally, the experience of Argentina shows the difficulties that arbitration tribunals might encounter when trying to scrutinise the economic policy choices made by governments. On top of the sensitiveness of examining sovereign decisions of States, arbitrators might find themselves in the awkward situation of deciding on highly technical matters which they are clearly ill-equipped to assess.

The case of Argentina thus represents a sad example of the urgent need to reconsider and reform the ISDS system. Yet, the lessons to be drawn from this experience do not seem to lead to clear conclusions about which direction to take.

On the one hand, the system has proved to be extremely inflexible, which prevented it from addressing the exceptional peculiarities of the Argentinian case. On the other hand, however, the wide margin of discretion available for the arbitral tribunals resulted in the adoption of inherently poor decisions, and with high levels of incoherence among them. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

*  This column is based on a paper with the same title published as South Centre Investment Policy Brief No 2, July 2015, available here.

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Money, Knowledge and Controversy in Brazil’s Development Bankhttp://www.ipsnews.net/2015/08/money-knowledge-and-controversy-in-brazils-development-bank/?utm_source=rss&utm_medium=rss&utm_campaign=money-knowledge-and-controversy-in-brazils-development-bank http://www.ipsnews.net/2015/08/money-knowledge-and-controversy-in-brazils-development-bank/#comments Sat, 08 Aug 2015 07:51:46 +0000 Mario Osava http://www.ipsnews.net/?p=141920 The BNDES building, left, is across the street from the headquarters of the state oil company Petrobras, overlooking the Avenida República do Chile in Rio de Janeiro. Credit: Mario Osava/IPS

The BNDES building, left, is across the street from the headquarters of the state oil company Petrobras, overlooking the Avenida República do Chile in Rio de Janeiro. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Aug 8 2015 (IPS)

Brazil’s rush to build hydroelectric dams, refineries, railways, ports and other megaprojects since the last decade, not only at home but in other countries as well, has been fueled by the sheer volume of financing from its development bank.

The state development bank, BNDES, lent 187.8 billion reals (62.5 billion dollars) last year – more than one-third of which went towards infrastructure. For years the credits granted have broadly surpassed those of the World Bank, in terms of the annual totals.

Intelligence is needed to guide the direction of different sectors of the economy, nearly always obscured by the impressive sums, and it comes from the accumulated knowledge and know-how of the bank’s 2,881 employees, 85 percent of whom hold university degrees, and 11.4 percent of whom have graduate degrees.

“Since it was founded in 1952, the BNDES has been of strategic importance to Brazil,” economist Fernando Cardim de Carvalho, a retired Federal University of Rio de Janeiro professor, told IPS. “That hasn’t changed, in essence, and to some extent the bank is more important now than in the past.

“It survived many passing political fads, from (former president Juscelino) Kubitschek’s (1956-1961) developmentalism, to the authoritarian planning of (former president General Ernesto) Geisel (1974-1979) and the neoliberalism of (former president) Fernando Henrique Cardoso (1995-2002), who unsuccessfully tried to change its culture,” he said.

“With the gradual dismantling of the state apparatus for planning and intervention since the end of the (1964-1985) military regime, the BNDES became the last of the Mohicans, the only institution left capable of formulating economic policies in the country, although in relatively restricted fields,” Cardim de Carvalho said.

The Planning Ministry “was reduced to exercising oversight and control over the implementation of budgets, and in the process of erosion that demolished Brazil’s public sector, only two organs survived in the economic arena: the BNDES and the Central Bank,” said Cardim.

But the bank, although “essential” for financing infrastructure works, is no longer able to cover investment needs in Brazil, which require additional financing mechanisms, he added.

Its operations depend on the government, “which formulates more general strategies,” he said. That led to “a big mistake, which is not the responsibility of the bank but of the governments that decided to use it as an instrument of anti-cyclical policy,” the economist lamented.

His criticism focuses on the acceleration of projects financed by national treasury funds transferred to the bank, to sustain economic growth after the global economic crisis that broke out in 2008. “The bank exists to promote long-term objectives, that transform the productive system, and imposing on it other functions and financial dependency on the national coffers is a mistake,” he argued.

For his part, Mauricio Dias David, who worked in the BNDES until 2009, blamed loans granted to “many incoherent projects and white elephants,” like football stadiums built or remodeled for the 2014 World Cup, on “financing facilities” left without control because they were considered anti-cyclical.

In the past, when it was small, the bank was “creative and had a critical capacity that was lost with its growth and growing bureaucracy,” according to Dias David, who is now a professor of economy at the Rio de Janeiro State University. “But without that critical eye, badly-designed projects are approved, whose costs and even insolvencies will blow up in our faces in the future,” he told IPS.

A poor neighbourhood in the city of Altamira in the northern state of Pará on the banks of the Xingú River, which will be flooded when the Belo Monte hydroelectric dam’s reservoir is filled. The Amazon jungle city will suffer the biggest impact from the megaproject financed by the BNDES. Credit: Mario Osava/IPS

A poor neighbourhood in the city of Altamira in the northern state of Pará on the banks of the Xingú River, which will be flooded when the Belo Monte hydroelectric dam’s reservoir is filled. The Amazon jungle city will suffer the biggest impact from the megaproject financed by the BNDES. Credit: Mario Osava/IPS

The development bank’s financing grew six-fold during the governments of the left-wing Workers Party (PT), first under former president Luiz Inácio Lula da Silva (2003-2011) and later under his successor President Dilma Rousseff.

In addition, the number of employees nearly doubled this century, and 35.8 percent are women. They are selected by means of public contests and they enjoy job stability.

The bank’s potential attracts graduates from the best universities, because it offers “the best job in a federal institution in Rio de Janeiro,” said BNDES presidential adviser Marcelo Miterhof.

The economist, who has worked for the BNDES for 13 years, said the employees gain know-how in the bank, in the analysis of projects and in communication with companies and people from different specialised areas.

“Our technicians don’t know more about specific areas, like energy or logistics, than specialised bodies or companies,” Miterhof told IPS. “But they gain a big picture, they systematise sectors, and they have the opportunity to learn about a lot of areas.”

There are also internal mechanisms, like seminars, discussion groups, or the “knowledge café” where experts from within or outside the bank speak on different issues, such as wind energy. The exchange of public employees with other government agencies also helps make the learning process continuous.

The bank’s employees and its “thinkers” are distributed in 20 areas, such as infrastructure, industry, foreign trade, and the environment, and the strategic planning and economic research departments.

The BNDES also publishes a quarterly magazine with articles from authors from within and outside the bank.

Miterhof clarifies that as a bank, the BNDES does not promote development on its own, but depends on the initiative and demands of its clients.

But sometimes it launches its own proposals, such as a programme to modernise the tax administration, which supports city governments in improving financial administration and citizen services.

Environment

The environmental dimension has gradually been incorporated into the bank’s activities. The BNDES started to work in cooperation with the environmental authorities in the 1970s. Later, a section was created “to support the assessment of internal bank projects and policies,” which was turned into a department in the 1990s and into an “area” in 2009.

Environmental issues thus have representatives in the committees that select loan requests and approve resolutions and guidelines, who join the representatives of other areas that dictate the way the bank is governed, the head of the Environment Department, José Guilherme Cardoso, told IPS.

After the 1992 United Nations Conference on Environment and Development, or Earth Summit, held in Rio de Janeiro, the bank stepped up its environmental actions. The BNDES manages, for example, the Amazon Fund, which finances projects in the rainforest and comes up with its own initiatives as well.

One example is the BNDES Ecological Restoration Programme, which channels funds into the recovery of vegetation in ecosystems such as the Mata Atlántica (Atlantic Forest along the east coast), the pampas in the south, and the central Cerrado savannah.

The environmental question has been extended to different departments and activities, like the Sustainability Committee and the Planning Area’s Socioenvironmental Management, thus cutting across all decision-making levels, from the selection of projects to be financed to the approval of resolutions on general guidelines.

The complexity of the inter-connnected issues has increasingly been recognised in the territorial development that the BNDES is trying to foment in the area of impact of the Belo Monte hydropower plant on the Xingú River in the Amazon jungle, involving the local population and governments.

It is an approach that seeks to overcome the serious conflicts generated by such a major infrastructure project as an 11,330-MW hydropower dam, one of the world’s biggest, in a poor region.

“The mobilisation of a well-organised civil society that participates intensely in the plenary meetings on the local development plan is impressive,” said Ana Maria Glória, of the BNDES planning area, which has taken part in the process with visits to the region.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: The Road to Paris and the Path to Renewable Energyhttp://www.ipsnews.net/2015/08/opinion-the-road-to-paris-and-the-path-to-renewable-energy/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-the-road-to-paris-and-the-path-to-renewable-energy http://www.ipsnews.net/2015/08/opinion-the-road-to-paris-and-the-path-to-renewable-energy/#comments Fri, 07 Aug 2015 20:33:25 +0000 Jed Alegado http://www.ipsnews.net/?p=141917

Jed Alegado (@jedalegado) is a climate campaigner based in the Philippines. He holds a master's degree in Public Management from the Ateneo School of Government and is also one of the climate trackers for Adopt a Negotiator's #Call4Climate campaign.

By Jed Alegado
MANILA, Aug 7 2015 (IPS)

Renewable energy is now being seen by many people around the world as a cost-effective development solution both for developed and developing nations. Countries have slowly been realising that the use of coal and the huge amount of carbon emissions it generates harms the environment and impacts our daily activities.

Jed Alegado

Jed Alegado

In fact, according to Christine Lins, Executive Secretary of the Renewable Energy Network for the 21st Century, “last year, for the first time in 40 years, economic and emissions growth have decoupled”.

“If you look back 10 years ago, renewable energies were providing 3 per cent of global energy, and now they provide something close to 22 per cent, so that has really sky-rocketed,” noted Lins.

This is being led most obviously by countries like Uruguay, which aims to generate 90 percent of its electricity from renewable sources by 2015, and Costa Rica, which maintained 100 percent renewable energy generation for the first 100 days of this year.

These countries are not alone and are fast becoming the norm rather than the ‘alternative’. Even small developing countries such as Burundi, Jordan and Kenya are leading the world in investments in renewable energies as a percentage of GDP.Recently, the Philippine government gave the go-ahead for the construction of 21 coal-powered projects despite President Aquino’s promise in 2011 to “nearly triple the country’s renewables-based capacity."

Philippines’ dependence on coal

In 2008, the Philippines has enacted the Renewable Energy Act of 2008 aiming to “increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of renewable energy system…and reduce the country’s dependence on fossil fuels.”

However, after seven years of its implementation, the Philippines hasn’t yet fully maximised the use of renewable energy, according to Advocates of Science and Technology for the People (AGHAM), an NGO based in the Philippines promoting the use of local science and technology practices.

Recently, the Philippine government gave the go-ahead for the construction of 21 coal-powered projects despite President Aquino’s promise in 2011 during the launch of the Philippine government’s National Renewable Energy Plan to “nearly triple the country’s renewables-based capacity from around 5,400 MW in 2010 to 15,300 MW in 2030.”

In the next five years, the new coal plants that are expected to be constructed are the following: Aboitiz company Therma South Inc.’s 300-megawatt(MW) plant in Davao City (2016); the 400-MW expansion of Team Energy’s Pagbilao coal-fired power plant in Quezon (2017); the 600-MW Redondo Peninsula Energy, Inc. plant in Subic, Zambales (2018); San Miguel Corp. Global’s 300-MW plant in Davao (2017) and a 600-MW plant in Bataan (2016).

While the government has provided incentives to companies to make use of renewable energy, the private sector is not keen on doing so because of the profit generated by coal. Furthermore, they are also looking at the short-term gain of using it – the relatively cheaper price of harnessing the so-called “dirty energy.”

The path to low-carbon development

A report titled “Powering up against Poverty: Why Renewable Energy is the Future” released last week by the international development organisation Oxfam argues that renewable energy is in fact a more affordable energy source than coal for poor people in developing countries.

The report argues that as a result of the changing energy landscape around the world, the decreasing price of renewable energies, and the often remote location of the majority of people who don’t have access to electricity, renewable energy may actually offer a more reliable and effective energy source.

Furthermore, the report stated that, “Four out of five people without electricity live in rural areas that are often not connected to a centralized energy grid, so local, renewable energy solutions offer a much more affordable, practical and healthy solution than coal.”

“But as well as failing to improve energy access for the world’s poorest people, burning coal contributes to hundreds of thousands of premature deaths each year due to air pollution and is the single biggest contributor to climate change.”

This supports statements made this year by the World Bank, IMF and former U.N. chief Kofi Annan, who have all argued that renewable energy and not fossil fuels are key to improving energy access and reducing inequality, especially in developing countries.

The road to Paris and beyond

If the Philippines wants to show to the world that our country is the rallying point against climate change especially in the global climate talks, our government needs to walk the talk on renewable energy. Indeed, climate adaptation practices are not enough. We need to show other countries and lead the way towards climate change mitigation by leading the path to sustainable development and use of renewable energy.

Similarly, countries under United Nations Framework Convention on Climate Change (UNFCCC)’s Conference of the Parties must agree on a fair and legally binding agreement in Paris on December. We cannot afford another failed climate negotiations like the one in Copenhagen in 2009 to happen again.

Edited by Kitty Stapp

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U.N. Post-2015 Development Agenda Adopted Amidst Closed-Door Dealshttp://www.ipsnews.net/2015/08/u-n-post-2015-development-agenda-adopted-amidst-closed-door-deals/?utm_source=rss&utm_medium=rss&utm_campaign=u-n-post-2015-development-agenda-adopted-amidst-closed-door-deals http://www.ipsnews.net/2015/08/u-n-post-2015-development-agenda-adopted-amidst-closed-door-deals/#comments Fri, 07 Aug 2015 12:41:13 +0000 Bhumika Muchhala http://www.ipsnews.net/?p=141904 Bhumika Muchhala of Third World Network. Credit: UN Photo/Paulo Filgueiras

Bhumika Muchhala of Third World Network. Credit: UN Photo/Paulo Filgueiras

By Bhumika Muchhala
UNITED NATIONS, Aug 7 2015 (IPS)

At about a quarter to seven on the evening of Sunday, Aug. 2, the member states of the United Nations adopted the post-2015 development agenda outcome document, titled “Transforming Our World: The 2030 Agenda.”

As governments endorsed the 29-page product resulting from almost two years of transparent and relatively democratic negotiations, the final 48 hours had witnessed a very different story, that of a sharp turn towards closed-door consultations and last-minute bargaining chips.What transpired requires a moment to reflect on the reality of vested interests and deeply unequal power between negotiating governments.

The 2030 Agenda is arguably the most ambitious and expansive development agenda that has ever been set in motion. It will be in effect for 15 years (2015-2030) and is to be implemented on all levels ranging from the global and multilateral level (such as the World Bank), regional (such as regional commissions and funds) and national (both government level and development agencies).

The main meat of the 2030 agenda is the Sustainable Development Goals (SDGs), comprised of 17 goals and 169 targets covering economic, social and environmental issues ranging from inequality, poverty, climate change, infrastructure, energy, industrialisation, consumption and production, health, education, ecosystem, biodiversity and oceans.

These SDGs will be the first global development paradigm to be marked by universality, meaning that all countries are to take action toward sustainable development, including the rich and powerful. This distinguishes the SDGs from the Millennium Development Goals (MDGs) of 2000-2015, which was based on an explicitly donor-recipient model of aid from the rich countries to the poor.

For all 193 governments of the U.N. to come to an agreement on this agenda was a breathtaking feat of conflict and compromise. However, over the first weekend of August, the otherwise open and recorded negotiations went into radio-silence in the back-rooms as the United States reportedly issued an ultimatum without which they refused to adopt the document.

The U.S. wanted to replace the word “ensure” with the word “promote” in two goals that talked about ensuring that the profits and patents reaped from the world’s natural biodiversity are shared fairly with the countries and communities from which they are extracted. The legal agreement on biodiversity clearly states the word “ensure.” By injecting the much weaker word “promote,” the U.S. tried to dilute hard-won legal language to something that is nebulous at best and unenforceable at worst.

This amendment essentially lets rich and powerful countries, whose corporations and research institutions extract the vast majority of biodiversity resources of the world, off the hook from their legal commitments to equitably share benefits and rewards that come from these resources. Developing countries were infuriated because most of this extraction happens in their countries, specifically, from the seeds, plants, forests and land on which most indigenous peoples across the world live in.

The negotiating group of 134 developing countries had repeatedly stated that the global goals were not to be re-opened for negotiation at the last minute, that they were sacrosanct. The fact that this firm position was flagrantly violated as a last-minute take-it-or-leave-it deal filled the air of the U.N. conference room with a palpable distrust and tension. People rushed in and out of conference rooms, furiously whispering in each other’s ears while working day and night to reach a consensus, no matter what.

Similarly, the progressive language on debt was also undermined, reportedly by the European Union this time. Up until the morning of Sunday, Aug. 1, the document said: “We recognize the need to assist developing countries … through debt financing, debt relief, debt restructuring and sound debt management, as appropriate.” This language recognised the sound development economics arguments called for by numerous economists and developing countries, on the urgent need to address external debt if any development goals are to be achieved.

By late afternoon, this was inserted: “Maintaining sustainable debt levels is the responsibility of the borrowing countries…”  Plucked out of the outcome document of the Financing for Development conference in Addis Ababa last month, this sentence harmfully faults borrowing countries for their debt burdens without due attention on the complex role of lenders and creditors, a point that has been repeatedly emphasised in the Greek case.

It’s a stark regression from the notion of co-responsibility between lenders and borrowers in previous U.N. documents from Monterrey in 2002 and Doha in 2008.

The fear of such retrogression in language from the Addis Ababa document drove developing countries to keep insisting until the last hour that it not be annexed to the 2030 Agenda as developed countries called for. In the end, the Addis Ababa text was not annexed. But the compromise was this sort of selective importation of language. Other attempts were also proposed by developed countries in the final hours but were steadfastly fought back, such as removing reference to “policy space,” arguably the most vital demand of developing countries.

Although policy space is mentioned twice in the 2030 agenda and once in the SDGs, it is qualified with language from the Addis Ababa text in one of these three mentions. This language is: “…while remaining consistent with relevant international rules and commitments.” This negates the very point of policy space, which is to address the very “international rules and commitments” that constrain the ability of a state to formulate and carry out development-oriented policies and pathways.

On the other side of the North-South firewall, African and Arab countries called for the removal of a critical paragraph recognising human rights as a principal aim of sustainable development and a commitment to non-discrimination for all. While the paragraph was saved from this late Friday night intervention, the essential term “discrimination” was scrapped and the word “fulfill” was demoted to “promote.”

Issues such as ethnicity, migration status, culture, economic situation or age as a protected status were also scrapped although “race, colour, sex, language, religion, political opinion, national or social origin, property, birth, disability or other status” remain.

African and Arab diplomats argued against the recognition of LGBT rights and objected to the inclusion of “all social and economic groups,” while many Latin American countries, the European Union and the U.S. firmly opposed the offense against human and civil rights.

It is now more than two decades since the U.N. reaffirmed the interdependence of human rights and development at the Vienna World Conference on Human Rights and more than 20 years since the U.N. first recognised sexual orientation and gender identity as prohibited grounds of discrimination.

The 11th hour turn from openness to opacity reflects a crisis of multilateralism in the world’s primary locus of multilateralism, the U.N. After all, the U.N. is supposed to be the most democratic and universal institution that exists to date, one in which every nation has a vote, unlike the rich country-dominated IMF or World Bank.

The private bilateral consultations over the weekend of Aug. 1-2 were, according to many independent observers, a manufactured crisis that opened the door to text that endangers global development and law.

The problem is that backroom dealings and pressure campaigns have ominous implications for the legitimacy and fairness of international negotiations, not to mention the political will of governments to take the sustainable development goals seriously.

The new global development agenda has powerful potential to make an ambitious and universal dent of urgently needed progress in our economies, societies and environments.  At the same time, process is also important. What transpired this first weekend of August requires a moment to reflect on the reality of vested interests and deeply unequal power between negotiating governments.

(Note: As of Aug. 6, 3:00 p.m., the final outcome document of the post-2015 development agenda has not yet been officially published by the U.N. Secretariat. The last draft available is the Aug.1  draft without the changes noted above.  There is some speculation and concern as to why there is a delay of four days, which is only compounding the lack of transparency in the final hours of negotiation.)

Edited by Kitty Stapp

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Trans Fat Substitute May Lead to More Deforestationhttp://www.ipsnews.net/2015/08/trans-fat-substitute-may-lead-to-more-deforestation/?utm_source=rss&utm_medium=rss&utm_campaign=trans-fat-substitute-may-lead-to-more-deforestation http://www.ipsnews.net/2015/08/trans-fat-substitute-may-lead-to-more-deforestation/#comments Thu, 06 Aug 2015 17:57:36 +0000 Zhai Yun Tan http://www.ipsnews.net/?p=141886 An oil palm seedling in a burned peat forest. Credit: Courtesy of Wetland International

An oil palm seedling in a burned peat forest. Credit: Courtesy of Wetland International

By Zhai Yun Tan
WASHINGTON, Aug 6 2015 (IPS)

Following growing concerns in the United States about the risks of trans fat since 1999, demand for palm oil, a cheap substitute for trans fat, more than doubled over the last decade and is expected to increase, eliciting concerns about deforestation in several Southeast Asian countries that provide 85 percent of the world’s palm oil.

Trans fat is a partially hydrogenated oil added to many frozen and baked goods that improves shelf life and adds flavour. The United States’ Food and Drug Administration (FDA) proposed banning trans fat after studies showed it may cause cardiovascular diseases. FDA banned the use of trans fat last month.

The ban, along with the burgeoning demand by China and India, are among the reasons many experts say motivate the rise in demand for palm oil. According to the United Nations Food and Agriculture Organization, global demand for palm oil is likely to grow by 60 percent in 2050 from 1999. Palm oil imports in the United States increased by more than 80 percent since 1999, according to the United States Department of Agriculture (USDA).

“Palm oil has a lot of same properties that hydrogenated oil has, that’s one of the reasons why it’s a common replacement,” Lael Goodman, a tropical forest analyst at the Union of Concerned Scientists told IPS in an interview. “As companies are looking around on what to use instead of these partially hydrogenated oils, palm oil is the cheapest vegetable oil in the market now.”

Palm oil plantations, according to the United Nations Environment Programme and Greenpeace International, is the leading cause of deforestation in Indonesia and Malaysia. Although United States imports most of its palm oil from Malaysia, Malaysia’s production growth is slowed by limited land and labor, according to USDA. Indonesia has emerged as the largest exporter since 2011.

Source: World Resources Institute

Source: World Resources Institute

The concerns come at a time when Indonesia is expecting to double its palm oil production by 2020 in response to the rise in demand, although it is already suffering from one of the world’s highest deforestation rates.

Joko Widodo, president of Indonesia, strengthened the country’s moratorium against deforestation earlier this year. However, the moratorium, which was introduced in 2011, has failed to control the expansion of oil palm plantations in primary forest and peat lands, according to USDA.

A study by researchers from University of Maryland and World Resources Institute (WRI), a Washington, D.C. based think tank, revealed that Indonesia lost over 6 million hectares of primary forest from 2000 to 2012, an area half the size of England.

“We don’t have the data for 2014 or 2015 yet and there was a decrease in 2013, but the end result is still that the deforestation rate is at one of the highest rate it’s been in the country’s history,” James Anderson, communications manager for WRI’s Forests Program, told IPS.

The country is also notorious for causing haze pollution in Southeast Asia for forest burning activities that are often linked to land clearing for palm oil plantations.

“Up to 20 percent of land that are on fire have been traced back to palm oil,” Goodman said. “When peat soils are cleared– these are very carbon-rich soils– they can burn for months or even years. It puts a lot of particulate matter into the air that spreads across Asia and it is a huge health issue every year.”

The fires usually peak around September every year. In 2013, Malaysia and Singapore were badly hit by the haze pollution. The Singapore Meteorological Service expects haze pollution from Indonesia to be as bad this year with the incoming El Nino season.

Goodman said companies, under pressure from the public, have begun to focus on deforestation-free palm oil.

“There is a very great corporate attention to where palm oil comes from,” she said. “A lot of those pledges started in 2015, some of them don’t start until 2020. We are really just starting to see what’s going to make a difference hopefully in the next few years.”

The Roundtable on Sustainable Palm Oil (RSPO) was established in 2004 as a certification body for the production of sustainable palm oil. The nonprofit’s website said that it has over 2,000 members, representing 40 percent of the palm oil industry, and it certifies 20 percent of the world’s palm oil production.

Several companies, such as Dunkin’ Brands, Krispy Kreme, McDonald’s have made commitments to purchase deforestation-free palm oil in recent years.

Global Forest Watch (GFW), an initiative convened by WRI, tracks forest fires and forest clearings in Indonesia. The service offers real time maps of deforestation and hotspots for users. According to WRI, companies using the system include Unilever and members of the RSPO.

“A lot of companies lack the tools to actually implement the commitments simply because it is very difficult to trace their supply chains to know if the palm oil is coming from a place that is actually deforested,” Sarah Lake, corporate engagement research analyst for GFW told IPS.

The GFW service, she said, was offered free-of-charge to companies to receive alerts and monitor their land for deforestation or fires.

“Our approach isn’t necessarily to reduce the use of palm oil,” Lake said. “It can be perfectly sustainable. It’s just a matter of making sure you’re sourcing palm oil that isn’t linked to environmentally problematic behaviour.”

Edited by Kanya D’Almeida

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Opinion: No Aid, No Tax, No Developmenthttp://www.ipsnews.net/2015/08/opinion-no-aid-no-tax-no-development/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-no-aid-no-tax-no-development http://www.ipsnews.net/2015/08/opinion-no-aid-no-tax-no-development/#comments Wed, 05 Aug 2015 22:49:56 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=141881 Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Aug 5 2015 (IPS)

The Addis Ababa Action Agenda is widely seen as a major disappointment for developing countries as well as others hoping for adequate means of implementation to realise national development ambitions and the Sustainable Development Goals (SDGs).

It has become clear that the South, including the least developed countries, should not expect any serious progress to the almost half century old commitment to transfer 0.7 percent of developed countries’ economic output to developing countries. But to add insult to injury, developing countries cannot expect to participate meaningfully in inter-governmental discussions to enhance overall as well as national tax capacities.In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined as tariffs and export duties, which accounted for the largest share of tax revenue, declined with trade liberalisation.

While OECD countries agree that taxation is the only viable strategy for developing countries to exit foreign aid dependency in the long run, they have refused to accede to the latter’s desire for a full-fledged inter-governmental body for international tax cooperation under United Nations auspices.

The ability to pursue development policies depends crucially on available fiscal space, which relies mostly on domestic revenues, especially taxes. However, tax revenues in most low- and lower middle-income developing countries are low.

The average tax-GDP ratios in low-income and lower-middle income countries are around 15 and 19 per cent respectively, compared to over 30 percent in high income countries.

Low- and lower-middle-income countries should take steps to increase their revenues; but the main approach in recent decades has been to increase tax rates only if unavoidable. It was presumed that lower rates would ensure better compliance with tax laws, and thus raise revenue.

The prevailing tax wisdom also favoured broadening the tax base, even when taxation capacities are modest. Thus, indirect taxation has tended to increase while direct taxation of corporations and individuals has tended to decline. The latter was supposed to be good for investment and growth although the empirical support for this presumption is dubious.

In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined as tariffs and export duties, which accounted for the largest share of tax revenue, declined with trade liberalization. Unfortunately, other taxes have not grown to compensate for the lower trade taxes.

There is an urgent need to reverse this trend, with greater commitment to revenue generation in order to improve social protection, create employment and otherwise contribute to sustained economic recovery.

With their different economic circumstances, it does not make sense for developing countries to simply try to emulate developed economies in trying to generate revenue. Even among developing countries, no one size fits all.

And certainly not for all time, as tax systems must evolve with changing economic circumstances. A key question is: which taxes are most likely to meet the requirements of implementability, buoyancy and stability?

Domestic Taxes: Direct or Indirect?

The revenue to GDP ratio can rise in the following ways: the domestic tax base is widened; tax avoidance and evasion are reduced; and new sources of international taxation are found.

There is no reason to be overly pessimistic about direct taxation as tax reform has significantly improved the contribution of direct taxes to overall revenue in many countries. It is certainly possible to enhance tax revenues by increasing the share of direct taxation of the wealthy through more progressive income taxes in developing countries.

However, there should also be a greater effort to ensure better compliance with, and higher collection of existing taxes.

Limiting the discretionary authority of tax officials could also help improve compliance and reduce evasion. Computerisation of tax administration can help limit corruption, as it makes it harder to tamper with records. But government computerisation alone cannot ensure effective introduction of the much-touted value-added tax (VAT), an indirect tax largely responsible for facilitating the shift from direct to indirect taxation.

Improved tax administration can increase the share of personal income taxes in total tax revenue. Expansion of the scope for tax deduction at source has been very effective in taxing those otherwise hard to reach.

Every individual who is a house owner, vehicle owner, club member, credit card holder, passport, driving licence or identity card holder and telephone subscriber can be required to file a tax return.

Excise taxes are another important source of revenue in developing countries as they have a buoyant base and can be administered at low cost. They are typically levied on products such as alcohol, tobacco, petroleum, vehicles and spare parts.

From a revenue perspective, they are convenient, involving few producers, large sales volumes, relatively inelastic demand and easy observability.

Excises may be levied on quantities leaving the factory or arriving at ports, thus simplifying measurement and collection, ensuring coverage, limiting evasion and improving monitoring. Excise taxes currently amount to less than 2 per cent of GDP in low-income countries, compared to about 3 per cent in high-income countries.

Globalisation and Tax Evasion

Revenue losses due to globalisation need to be addressed. There are three main reasons for revenue losses: first, capital movements increase opportunities for tax evasion because of the limited capacity that any tax authority has to check the overseas incomes of its residents; evasion is easier as some governments and financial institutions systematically conceal relevant information.

Where dividends, interest, royalties, and management fees are not taxed in the country in which they are paid, they more easily escape notice in the countries where the beneficiaries live. There have been large non-resident aliens’ bank deposits in some countries like the U.S. that imposes no taxes on interest from such deposits.

Second, avoidance (not evasion) may increase, given international differences in tax rules and rates, because of the choice of tax regime that international-tax-treatment of enterprise income commonly offers. This is more likely for taxation of profits from corporations’ international operations.

Transfer pricing for goods, services and resources – moving among branches or subsidiaries of a company – provides opportunities for shifting income to minimise tax liability.

Third, international competition for inward foreign direct investment has lead governments to reduce tax rates and increase concessions to foreign investors. The tax rates that governments can impose are thus constrained by international competition.

Hence, they are reluctant to raise rates or to tax dividend and interest income for fear of capital flight although it is well known that direct tax concessions have little effect in diverting international investment, let alone in attracting such flows. Hence, such tax concessions constitute an unnecessary loss of revenue.

Not surprisingly, income tax rates, both on corporations and on individuals, have fallen sharply since the 1980s. Beggar-thy-neighbour policies have led to losses of revenue for many developing countries in a larger race-to-the-bottom also involving labour and environmental standards and conditions, which also undermines the possibility of balanced, inclusive and sustainable development.

Finance ministries and tax authorities in developing countries need to cooperate among themselves and with their counterparts in the OECD economies to learn from one another and to close existing loopholes in their mutual interest. With the huge and growing size of public debts as well as the real and imagined fiscal constraints to sustained global economic recovery, such cooperation is more urgent than ever.

Edited by Kitty Stapp

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U.N. Taps Private Sector to Fund Development, Advocate Social Causeshttp://www.ipsnews.net/2015/08/u-n-taps-private-sector-to-fund-development-advocate-social-causes/?utm_source=rss&utm_medium=rss&utm_campaign=u-n-taps-private-sector-to-fund-development-advocate-social-causes http://www.ipsnews.net/2015/08/u-n-taps-private-sector-to-fund-development-advocate-social-causes/#comments Wed, 05 Aug 2015 18:56:58 +0000 Thalif Deen http://www.ipsnews.net/?p=141877 Secretary-General Ban Ki-moon addresses the International Business Forum of the UN’s Third International Conference on Financing for Development, hosted by the Ffd Business Sector Steering Committee. Credit: UN Photo/Eskinder Debebe

Secretary-General Ban Ki-moon addresses the International Business Forum of the UN’s Third International Conference on Financing for Development, hosted by the Ffd Business Sector Steering Committee. Credit: UN Photo/Eskinder Debebe

By Thalif Deen
UNITED NATIONS, Aug 5 2015 (IPS)

When the United Nations seeks outside financial assistance either for development needs or to advocate social causes, it invariably turns to the private sector these days.

Perhaps the most demanding is Secretary-General Ban Ki-moon’s appeal to private investors to help the United Nations reach its 100-billion-dollar target per year to battle the devastating consequences of climate change.“We believe that youth can make a difference, especially in the achievement of the post 2015 agenda: but giving voice to them is not enough. It is important to give new generations the tools to make a change.” -- Mariarosa Cutillo of Benetton

But critics have urged the United Nations to double-check the credentials of some of these companies — on issues such as human rights, fair wages, child labour and environmental record — before deciding to collaborate.

Still, on a more modest scale, the U.N. Development Programme (UNDP) received over 135 million dollars in funds from the business sector between 2009 and 2013 for some of its projects relating to water, energy, healthcare, agriculture and finance and information technology.

A South African company called Mediclave has provided sterilising machines that decontaminate used medical equipment and waste, such as syringes, personal protective suits and gloves, used in treating communicable diseases.

In Liberia, a Japanese company, Panasonic, has distributed its first batch of 240 solar lanterns to health workers in Monrovia, allowing them to work at night.

The UNDP also has a partnership with Svani Group Limited, a Ghanaian vehicle dealership, which has provided over eight armoured vehicles deployed to the UN Mission on Ebola Emergency Response (UNMEER) in Guinea, Liberia, Sierra Leone and Ghana.

And more recently, the U.N. Academic Impact (UNAI), created under the aegis of the Department of Public Information (DPI) has collaborated with United Colours of Benetton’s “UnHate Foundation” for a Diversity Contest to “showcase the engagement of young people around the world, and the innovation, energy and commitment they bring to personally-crafted solutions that address some of the world’s most pressing issues”, including racial intolerance and xenophobia.

The contest drew more than 100 entries from 31 countries worldwide with innovative ideas and solutions for tackling a wide range of issues, primarily intolerance, racism and extremism.

A panel of judges picked 10 winners who received 20,000 Euros each donated by United Colors of Benetton, a global fashion brand based in Italy.

Benetton has also teamed with U.N. Women in its intense campaign to eliminate gender violence worldwide.

Nanette Braun Chief, Communications and Advocacy at U.N. Women, told IPS Benetton’s UnHate Foundation has been supporting U.N. Women in its advocacy on ending violence against women for the past two years through advertising and social media campaigns.

“We hope to expand the partnership and collaboration in the future,” she added.

Asked about Benetton’s role in advocating U.N. causes, Mariarosa Cutillo, Corporate Social Responsibility Manager at Benetton Group in Milan, told IPS the main reason is “because, first of all, this is an integral part of the DNA of our company, which has always been in the frontline – often in provocative and very progressive ways – on social issues, including the fight against any form of intolerance and discrimination.”

She pointed out this approach has been consolidated through social projects and communication campaigns, and has been translated also through the establishment of the UnHate Foundation.

Since 2011, the Foundation representing one of the arms of the company has developed social programmes to fight against hate in all its forms, while supporting youth leadership.

“We believe that youth can make a difference, especially in the achievement of the post 2015 agenda: but giving voice to them is not enough. It is important to give new generations the tools to make a change.”

With the UnHate news initiative, in partnership with UNAI/DPI, “we activated youth and gave them a possibility to concretely develop projects on human rights and development.”

Cutillo also cited “another outstanding example of successful support and activation of youth promoted by UnHate Foundation, which is the ‘Unemployee of the Year’ initiative through which the Foundation financed 100 projects and start-ups submitted and implemented by youth coming from all over the world in 2012.”

Unemployee of the Year celebrated young people’s ingenuity, creativity, and their ability to create new smart ways of addressing the problem of unemployment.

In general, she said, “putting people at the centre of our activities is one of the key points of Benetton Group sustainability strategy, of which UnHate Foundation is one of the assets.”

She described it as an example of private/public partnership that can work in an innovative way, by activating new generations and giving them the means to become leaders of change.

Asked if Benetton is planning to get involved in any other U.N. sponsored events in the future,

Cutillo told IPS: “We are presently exploring further joint possible collaboration programmes for the future with UNAI/DPI.”

She also said Benetton has a record of 20 years of cooperation, in different ways, with the United Nations.

More than ever before, “Benetton finds the United Nations as a most crucial partner within the stakeholders’ engagement of our present sustainability strategy.”

She said she sees partnerships with U.N. agencies as “a mutual growth process in our respective roles, where we can bring an active contribution to the achievement of the U.N.’s Sustainable Development Goals (SDGS) by putting in place partnerships that can bring an innovative approach and a real, concrete impact.”

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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Suez Canal Reopens to Fanfare but Not Shared by Allhttp://www.ipsnews.net/2015/08/suez-canal-reopens-to-fanfare-but-not-shared-by-all/?utm_source=rss&utm_medium=rss&utm_campaign=suez-canal-reopens-to-fanfare-but-not-shared-by-all http://www.ipsnews.net/2015/08/suez-canal-reopens-to-fanfare-but-not-shared-by-all/#comments Mon, 03 Aug 2015 23:46:44 +0000 a Global Information Network correspondent http://www.ipsnews.net/?p=141859 Southern exit of the Suez Canal, Port Suez. Credit: WPCOM/Heb

Southern exit of the Suez Canal, Port Suez. Credit: WPCOM/Heb

By a Global Information Network correspondent
CAIRO, Aug 3 2015 (IPS)

Ships at sea around the world will blast their horns on Aug 6 to mark the re-opening of the world-famous centenarian waterway in Egypt, local officials there say.

“Food will arrive faster. Medicine will arrive faster. Petroleum products will arrive faster,” proclaimed Suez Canal Authority head Admiral Mohab Mohamed Hussein Mameesh.

“Egypt is serving the whole the world by speeding up this naval passage.”

The “new canal” – constructed parallel to the existing one – will allow ships to pass by each other, like a two-lane highway, as opposed to a single lane. Upon completion, more ships will fit inside the canal at the same time, reducing the wait time for some ships from 22 hours to 11 hours.

“Ships manufactured today are enormous,” said Mameesh. “Our current capacity is just eight ships per day. If there are nine ships, one has to wait outside the canal.” With the expansion, the Canal Authority expects to capture over 13 billion dollars a year in toll fees by 2023, or more than 5 billion dollars over what the canal now earns.

But critics of the refurbished canal see it as an attempt by Egyptian President Abdel Fattah Al Sisi to shore up support for his government amid continuing economic problems in Egypt.

“[There are] questions about the merits of the overall project. The country is still in a very difficult situation, with population growth high, economic growth low, and where inflation remains high, in addition to a more politicized population,” said Angus Blair, chief executive of Signet, a Cairo-based regional forecasting consultancy firm.

Others have suggested Suez Canal may not need an upgrade.

“I don’t understand the logic of this Suez Canal expansion,” said Robin Mills, head of consulting at Manaar Energy in Dubai. “On the oil side, the canal’s importance is likely to wane as European Union oil imports from the Middle East fall. As for liquefied natural gas, the existing canal can already take the largest LNG carrier.

Even if successful, it may not be enough to improve the lives of average Egyptians, who are suffering rising poverty and prices, as the economy tries to recover from the financial and political turmoil between 2011 and 2013, said Naval History Professor Andrew Lambert, of King’s College in London.

“It’s a high-risk strategy,” Lambert said. “Egypt is a large, complex country with a very big population. It is highly unlikely it is going to be able to live off the kinds of incomes it will get, even from two canals.”

For the surrounding area, development of an industrial hub along a 160 km corridor of barren desert beside the waterway been awarded to the Bahrain-registered consultancy Dar Al-Handasah, which called the canal “one of the greatest feats of modern engineering and one of the world most vital channels for global trade.”

The consultants are partners with the Egyptian Army through the Armed Forces Engineering Authority, according to the Reuters news agency citing army and government sources.

A World Bank country director confirmed that the Bank is participating in the project in an advisory capacity saying it would “change the economic landscape of Egypt and create sustainable job opportunities for brilliant and energetic Egyptian youth.”

The original 101 mile-long canal, which connects Europe and Asia, took ten years to build in the 1860s at great human and financial cost.

Edited by Kitty Stapp

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Belo Monte Dam Marks a Before and After for Energy Projects in Brazilhttp://www.ipsnews.net/2015/07/belo-monte-dam-marks-a-before-and-after-for-energy-projects-in-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=belo-monte-dam-marks-a-before-and-after-for-energy-projects-in-brazil http://www.ipsnews.net/2015/07/belo-monte-dam-marks-a-before-and-after-for-energy-projects-in-brazil/#comments Fri, 31 Jul 2015 20:20:19 +0000 Mario Osava http://www.ipsnews.net/?p=141821 A street in the Jatobá neighbourhood, the first of the five settlements built by the company Norte Energía to resettle families displaced from the city of Altamira by the Belo Monte hydroelectric dam in the northern state of Pará in Brazil’s Amazon rainforest. Credit: Mario Osava/IPS

A street in the Jatobá neighbourhood, the first of the five settlements built by the company Norte Energía to resettle families displaced from the city of Altamira by the Belo Monte hydroelectric dam in the northern state of Pará in Brazil’s Amazon rainforest. Credit: Mario Osava/IPS

By Mario Osava
ALTAMIRA, Brazil, Jul 31 2015 (IPS)

Paulo de Oliveira drives a taxi in the northern Brazilian city of Altamira, but only when he is out of work in what he considers his true profession: operator of heavy vehicles like trucks, mixers or tractor loaders.

For the past few months he has been driving a friend’s taxi at night, while waiting for a job on the construction site of the Belo Monte dam – a giant hydroelectric plant on the Xingú river in the Amazon rainforest which has given rise to sharply divided opinions in Brazil.

Oliveira, whose small stature contrasts with the enormous vehicles he drives, has lived in many different parts of the Amazon jungle. “I started in the Air Force, a civilian among military personnel, building airports, barracks and roads in Itaituba, Jacareacanga, Oriximiná, Humaitá and other municipalities,” he told IPS.

His sister’s death in a traffic accident brought him back to Altamira, where he became a garimpeiro or informal miner. “I was buried once in a tunnel 10 metres below ground,” he said.

He survived this and other risks and earned a lot of money mining gold and ferrying miners – who paid him a fortune – in a taxi back and forth from the city to the illegal mine. “But I spent it all on women,” he confessed.

He then moved to Manaus, the Amazon region’s capital of two million people, to work on the construction of the monumental bridge over the Negro river. After that he headed to Porto Velho, near the border with Bolivia. But he had a feeling that something would go wrong at the Jirau hydropower construction site and quit after a few months.

Just a few days later, in March 2011, the workers rioted, setting fire to 60 buses and almost all of the lodgings for 16,000 employees, and bringing to a halt construction on the Jirau dam and another nearby large hydropower plant, Santo Antônio, both of which are on the Madeira river.

After bouncing between jobs on different construction sites, at the age of 50 Oliveira found himself back in Altamira, a city of 140,000 people located 55 km from Belo Monte, where he already worked in 2013 and is trying to get a job again. But things are difficult, because the amount of work there is in decline, as construction of the cement structures is winding up.

And it is possible that workers like him, specialised in heavy construction, no longer have a future in building large hydroelectric dams. The controversy triggered by Belo Monte will make it hard for the country to carry out similar projects after this.

A bridge being built in a neighbourhood of the northern Amazon city of Altamira, because a small local river floods during rainy season. Works like these form part of the basic environmental plan designed to mitigate and compensate the impacts of the giant Belo Monte hydroelectric dam, 55 km away. Credit: Mario Osava/IPS

A bridge being built in a neighbourhood of the northern Amazon city of Altamira, because a small local river floods during rainy season. Works like these form part of the basic environmental plan designed to mitigate and compensate the impacts of the giant Belo Monte hydroelectric dam, 55 km away. Credit: Mario Osava/IPS

The final assessment of the Belo Monte experience will determine the fate of the government’s plans to harness the energy of the Amazon rivers, the only ones that still have a strong enough flow to offer large-scale hydropower potential, which has been exhausted on rivers elsewhere in Brazil.

A study by the non-governmental Socioenvironmental Institute states that if the government’s construction plans for the 2005-2030 period are implemented, the hydropower dams in the Amazon will account for 67.5 percent of the new power generation in this country of 203 million people.

The next project of this magnitude, the São Luiz dam on the Tapajós river to the west of the Xingú river, is facing an apparently insurmountable obstacle: it would flood indigenous territory, which is protected by the constitution.

Belo Monte, whose original plan was modified to avoid flooding indigenous land, has drawn fierce criticism for affecting the way of life of native and riverbank communities. The public prosecutor’s office accuses the company that is building the dam, Norte Energía, of ethnocide and of failing to live up to requirements regarding indigenous communities, who in protest occupied and damaged some of the dam’s installations on several occasions.

São Luiz, designed to generate 8,040 MW, and other hydropower dams planned on the Tapajós river, are facing potentially more effective resistance, led by a large indigenous community that lives in the river basin – the Munduruku, who number around 12,000.

Just over 6,000 indigenous people belonging to nine different ethnic groups live in the Belo Monte area of influence, with nearly half of them living in towns and cities, Francisco Brasil de Moraes, in charge of the middle stretch of the Xingú river in Brazil’s national indigenous affairs agency, FUNAI, told IPS.

Francisco Assis Cardoso (dark tank top, centre), in his new supermarket. The young entrepreneur opened the grocery store and a pharmacy in Jatobá, the new neighbourhood in the city of Altamira where his entire family was relocated due to the construction of the Belo Monte dam in the Brazilian Amazon. Credit: Mario Osava/IPS

Francisco Assis Cardoso (dark tank top, centre), in his new supermarket. The young entrepreneur opened the grocery store and a pharmacy in Jatobá, the new neighbourhood in the city of Altamira where his entire family was relocated due to the construction of the Belo Monte dam in the Brazilian Amazon. Credit: Mario Osava/IPS

Another battle, for local development, has had less international repercussions than the indigenous question. But it could also be decisive when it comes to overcoming resistance to future hydroelectric dams in the Amazon.

Norte Energía, a consortium of 10 public and private companies and investment funds, has channeled some 1.1 billion dollars into activities aimed at mitigating and compensating for social and environmental impacts in 11 municipalities surrounding the megaproject.

This sum, unprecedented in a project of this kind, is equivalent to 12 percent of the total investment.

The company resettled 4,100 families displaced from their homes by the construction project and reservoir, and indemnified thousands more. It rebuilt part of Altamira and the town of Vitoria de Xingú, including basic sanitation works, and built or remodeled six hospitals, 30 health centres and 270 classrooms.

Nevertheless, complaints have rained down from all sides.

Norte Energía installed modern water and sewage treatment plants, and sewers and water networks in Altamira. But there was a 10-month delay before an agreement was signed in June to connect the water and sewer networks to the housing units, which the local government will administer and the company will finance.

And it will take even longer for the city council to create a municipal sanitation company and for the service to begin to operate.

“My family was promised three houses, because we have two married sons,” said José de Ribamar do Nascimento, 62, resettled in the neighbourhood of Jatobá, on the north side of Altamira, the first one built for families relocated from areas to be flooded by the reservoir. “But then they took away our right to two of them, maybe because I was unable to protest, since I’m ill.”

A water treatment station built in Altamira by Norte Energía, the consortium building the Belo Monte dam in the Brazilian Amazon. It is not yet operating, because the sewage network installed in the city is not connected to the buildings. Urban sanitation is one part of the development works which the company was required to provide. Credit: Mario Osava/IPS

A water treatment station built in Altamira by Norte Energía, the consortium building the Belo Monte dam in the Brazilian Amazon. It is not yet operating, because the sewage network installed in the city is not connected to the buildings. Urban sanitation is one part of the development works which the company was required to provide. Credit: Mario Osava/IPS

Each 63-square-metre housing unit has three bedrooms, a living room, a kitchen and a bathroom, and is built on 300 square metres of land in a neat new housing development with paved streets.

Nascimento, who has prostate cancer, has a hard time walking and survives on a small pension. But he is confident that the future will be more promising for the local population, thanks to the jobs generated by the hydropower plant.

“We live much better here,” said his wife, 61-year-old Anerita Trindade. “Our old house would get cut off by the water when it rained; we had to wade through the water, on little walkways made of rotten boards. Sometimes there’s no water or transportation to get downtown, but now we’re on dry land.”

The move especially benefited Francisco Assis Cardoso, who at the age of 32 has become the leading shopkeeper in Jatobá. His family of four siblings was assigned five houses in a row. That enabled him to build a supermarket and a pharmacy together with his mother. “I worked in a pharmacy, it’s what I know how to do,” he said.

But Norte Energía has been criticised for delays in providing the promised schools, buses and health posts in the five new neighbourhoods, and for what many say was an unfair distribution of new housing.

A Plan for Sustainable Regional Development of the Xingú aims to go beyond compensation for relocation and other impacts of the dams. Together, society and governments choose projects that are financed with contributions from Norte Energía.

The Territorial Development Agenda was drafted on the basis of studies and consultations with a team hired by the government’s National Bank for Economic and Social Development, which financed 80 percent of the construction of the Belo Monte dam.

A third challenge for Belo Monte is to effectively combat criticism from voices within the power industry itself, who are opposed to run-of-the-river hydroelectric plants, where water flows in and out quickly, the reservoirs are small, and during the dry season the power generation is low.

Belo Monte will generate on average only 40 percent of its 11,233 MW of installed capacity. To avoid flooding indigenous lands, it reduced the size of the reservoir to 478 square kilometres – 39 percent of what was envisaged in the original plan drawn up in the 1980s.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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