Inter Press ServiceTrade & Investment – Inter Press Service http://www.ipsnews.net News and Views from the Global South Tue, 27 Jun 2017 16:44:27 +0000 en-US hourly 1 https://wordpress.org/?v=4.8 East Asia’s Real Lessonshttp://www.ipsnews.net/2017/06/east-asias-real-lessons/?utm_source=rss&utm_medium=rss&utm_campaign=east-asias-real-lessons http://www.ipsnews.net/2017/06/east-asias-real-lessons/#respond Wed, 21 Jun 2017 17:20:45 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=150996 Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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International recognition of East Asia’s rapid economic growth, structural change and industrialization ("East Asian Miracle") grew from the 1980s.

To better learn from ostensible miracles, it is necessary to demystify them. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR, Jun 21 2017 (IPS)

International recognition of East Asia’s rapid economic growth, structural change and industrialization grew from the 1980s. In Western media and academia, this was seen as a regional phenomenon, associated with some commonality, real or imagined, such as a supposed ‘yen bloc’.

Others had a more mythic element, such as ‘flying geese’, or ostensible bushido and Confucian ethics. Every purported miracle claims a mythic element, invariably fit for purpose. After all, miracles are typically attributed to supernatural forces, and hence, cannot be emulated by mere mortals. Hence, to better learn from ostensible miracles, it is necessary to demystify them.

The World Bank’s 1993 East Asian Miracle (EAM) volume is the most influential document on the subject. It identified eight high-performing Asian economies: Japan, Hong Kong, three first-generation newly industrialized economies, namely South Korea, Taiwan and Singapore, and three second-generation South East Asian newly industrializing countries, viz, Malaysia, Thailand and Indonesia. Despite a title implying geo-spatial commonality, the study denied the significance of geography and culture, and specifically excluded China, the elephant in the region.

Strategic interventions?

The book identified six state interventions as important, approving of four ‘functional’ interventions, but sceptical of two ‘strategic’ interventions. Functional interventions supposedly compensated for market failures, while strategic interventions were deemed more market-distortive.

These two ‘strategic’ interventions are in the areas of finance, specifically what it calls directed (targeted) and subsidized credit, and international trade, particularly what is often referred to as ‘industrial policy’, or more rarely as ‘investment and technology policy’.

Careful consideration of the accelerated East Asian growth and transformation experiences underscore that such interventions were mainly responsible for the superior performance of the Northeast Asian HPAEs compared to their Southeast Asian counterparts.

Industrial investments

Debates over Northeast Asian industrialization continue, but the pioneering work of American political economists Chalmers Johnson and Alice Amsden was undoubtedly seminal. Both showed that Japanese, Korean and Taiwanese government measures were quite different from typical World Bank development policy advice.

Successful finance ministry and central bank efforts to keep interest rates positive, but low, were crucial for accelerating industrial investments. From the mid-1970s, more orthodox Western economists began to characterize this as constituting ‘financial repression’, for depressing interest rates, the incentive to save and funds available for investment.

Only later did other Western economists explain this Korean anomaly in terms of ‘financial restraint’ to overcome financial market failures. But few have noted that savings rates actually follow, rather than determine investment rates. Meanwhile, cultural explanations have also been invoked to explain East Asia’s high savings and investment rates.

Ownership matters
Subsidized and directed (or targeted) credit also promoted desired investments. Fiscal and other policies also encouraged reinvestment of profits, rather than maximizing ‘shareholder value’, while other incentives encouraged desired investments. Where private investments were not forthcoming, the governments themselves made needed investments despite active discouragement by international development banks.

Strict controls on capital outflows, especially when foreign exchange resources were still scarce, also served to discourage capital flight. Northeast Asian economies were also careful to distinguish between long-term foreign direct investment (FDI) and short-term portfolio investment, or ‘hot money’.

Perhaps owing to Bank preference for FDI, ostensibly to close both the ‘savings-investment’ and ‘foreign exchange’ gaps, the EAM also favoured FDI and did not consider ownership important. However, during the early decades of high growth before the 1990s, Northeast Asian governments encouraged national ownership of industrial enterprises.

This policy served to promote vertically and horizontally integrated industrial conglomerates in the case of Korean chaebol and Japanese keiretsu. (Zaibatsu were suppressed after the Second World War as they were held responsible for the pre-war Japanese military industrial complex.) Instead of FDI, South Korea encouraged licensing and, if necessary, joint-ventures to promote technology transfer.

Singapore and Malaysia in Southeast Asia have especially sought to attract FDI, initially for political reasons. Singapore desired strong Western support after establishing a new state in 1965. Since then, FDI has been attracted as part of a pro-active technology policy complemented by government policies, including investments. Attracting FDI to accelerate technology development is quite different from capital account liberalization enabling short-term financial inflows.

Trade policies
The Japanese, Korean and Taiwanese governments pursued import substituting industrialization policies from the 1950s, but later encouraged export orientation as well. Infant industries were provided with effective protection conditional on export promotion, effectively requiring firms to quickly become internationally competitive.

By protecting firms temporarily, depending on the product to be promoted, and by requiring certain output shares be exported within pre-specified periods, discipline was imposed on firms in return for the support provided. Such policies forced firms to achieve greater economies of scale and accelerate learning to reduce production costs quickly.

Requiring exports has also meant producers have had to achieve international consumer quality standards quickly, which accelerated progress in product and process technology. This ‘carrot and stick’ approach induced many firms to rapidly become internationally competitive.

Thus, the very industrial, trade and financial policies rejected by the Bank were in fact necessary for East Asia’s achievements. Some policies were inappropriately and prematurely undermined or terminated, e.g., with Japan’s financial ‘big bang’, with disastrous consequences.

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IFAD’s President Houngbo Calls for Investment in Climate-Smart Agriculture for Poverty-Free Futurehttp://www.ipsnews.net/2017/06/ifads-president-houngbo-calls-investment-climate-smart-agriculture-poverty-free-future/?utm_source=rss&utm_medium=rss&utm_campaign=ifads-president-houngbo-calls-investment-climate-smart-agriculture-poverty-free-future http://www.ipsnews.net/2017/06/ifads-president-houngbo-calls-investment-climate-smart-agriculture-poverty-free-future/#respond Fri, 16 Jun 2017 11:26:19 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=150919 Implementing climate-smart agriculture is critical to reduce hunger and poverty, according to International Fund for Agricultural Development’s (IFAD) new president Gilbert Houngbo. Approximately 20 million are at the brink of starvation. Over 65 million have been forcibly displaced by conflict. One in five people in developing regions live on less than 1.25 dollars per day, […]

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Implementing climate-smart agriculture is critical to reduce hunger and poverty, according to IFAD's new president Gilbert Houngbo

IFAD President Gilbert Houngbo's first official visit to Uganda where he met with small holder farmers in financial saving groups. Credit: IFAD

By Tharanga Yakupitiyage
UNITED NATIONS, Jun 16 2017 (IPS)

Implementing climate-smart agriculture is critical to reduce hunger and poverty, according to International Fund for Agricultural Development’s (IFAD) new president Gilbert Houngbo.

Approximately 20 million are at the brink of starvation.

Over 65 million have been forcibly displaced by conflict.

One in five people in developing regions live on less than 1.25 dollars per day, and many risk slipping back into poverty.

A former Prime Minister of Togo, Houngbo entered IFAD’s presidency at a time of extreme suffering around the world. Though the global picture seems bleak, Houngbo remains optimistic and highlights the importance of long-term investments and development in agriculture in rural areas.

Though often neglected, rural areas are home to 80 percent of the world. Such areas are also responsible for most countries’ agriculture, and small farms in particular account for up to 80 percent of food production in sub-Saharan Africa and parts of Asia.

Agriculture is therefore often the main route out of poverty and food insecurity for rural people, and focus on it will allow for progress in the internationally agreed 2030 Agenda for Sustainable Development.

However, climate change is among the challenges that stand in the way.

As World Day to Combat Desertification and Drought approaches, IPS spoke to Houngbo briefly about the ambitious goals and increasingly complex challenges to make hunger and poverty things of the past.

Q: How realistic is it to eradicate hunger and poverty by 2030? Is this feasible? If not, why? What are or what could be some of the obstacles in trying to achieve those goals?

A: I’m maybe the wrong person to ask this question because I’m always really optimistic. When we started 2000 with the Millennium Development Goals (MDGs), everybody said that nothing there was realistic. Yet, we know that a lot has been achieved.

I do believe it is doable. Yes, it is very challenging. The point for me is not to say there is no more famine—that can happen as much as it is contained and eradicated quickly and that too is a challenge.

The most important thing for us to increase our chances to achieve the goal by 2030 is to make sure that one, we focus on long-term investment. Second, we also deal with the governance and the leadership dimension to minimize the risk of civil unrest—that’s the nexus of the common famine and the man-made crises.

But the long-term investment and scaling up what has been working really well is important. And I was hoping that with innovation, not only in technology, but among the small-scale or smallholder [farmers] we are focusing on—by adopting much more climate smart agricultural techniques and with innovation, it’s really doable.

Yes, the population is increasing. We need to increase food production by 60 percent by 2050. You have to see that as an opportunity for the smallholders to also increase [yields] and make money. Productivity for me and innovation is really the source.

Q: Would information and communication technologies (ICTs) be helping rural development in terms of food production?

A: Not only food production but also food transformation and access and the linkage to the food system. And to the market at the national level, regional level, or international level.

So we need to also look at agriculture not just as producing food but also business, as a way for the smallholders, for the rural citizens to earn in their daily lives a decent income, so that they don’t feel like they need to move to the city or move out of the country. So we are also talking about a rural transformation.

Q: Do you think advances in ICTs could threaten farmers because of the mechanization of certain jobs?

A: No, I don’t think so.

A couple of year ago a report issued not by IFAD but by the International Labour Organisation (ILO) demonstrated very clearly that yes there will be some jobs that will be lost in some sectors, but also when you think about the jobs that will be created, the net result is a positive. So we should not see that as an issue.

To the contrary, I do not think that commercial farms will ever replace the smallholder farms. In Africa, in Asia today, the smallholders are responsible for 80 percent of the [food] production. What we need to do is to bring technology that will help productivity and that will help with quick access to capital, access to the markets. By bringing that technology, coupled with what I call a rural transformation, then we will make it.

In other words, when you bring the technology here today, in a lot of low-income countries, agriculture contributes 25-35 percent to the gross domestic product (GDP) compared to most advanced economies where agriculture will contribute maybe 5 percent or 2 percent of the GDP.

So it’s true that over time, you will also expect the low-income countries’ agricultural contributions to decrease. That’s why people worry that there will be unemployment. But on the contrary, if you are doing the rural transformation instead of being at the production level, they might be at the transformation level or there may also be a vocational training in other domains yet remain at the rural level.

Q: Do you think that the United States’ announcement to withdraw from the Paris climate agreement is a setback? How are member states strategizing with IFAD to advance climate mitigation and adaptation?

A: First of all, we need to respect the decisions made by member states, whether it be the U.S. or any other country. I want to be very clear that we have to respect their decisions.

Secondly, our plan integrating climate-smart agriculture in our assistance to rural areas is very high on the agenda of all our member states. Obviously, I am concerned about the possible impact on the Green Climate Fund, and therefore the ability of the smallholders to access that financing.

I hope that one way or the other, the international community will find a way to overcome this new challenge.

Q: Do you have a message for the upcoming World Day to Combat Desertification and Drought?

A: For me, it is important that we start really thinking about the techniques that will help us in embedding climate-smart agriculture.

In Africa, for example, it is really affordable and basic irrigation systems and the use of climate or drought-resistant seeds and so forth—that will really help. But really it’s the irrigation dimension that I would like to encourage, to find ways to make it affordable, particularly in Africa because compared to Asia, Africa is very, very much behind.

IFAD is an international financial institution and a UN specialised agency which invests in rural areas of developing countries to help eradicate poverty and hunger.

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East Asian Miracle Myth Makinghttp://www.ipsnews.net/2017/06/east-asian-miracle-myth-making/?utm_source=rss&utm_medium=rss&utm_campaign=east-asian-miracle-myth-making http://www.ipsnews.net/2017/06/east-asian-miracle-myth-making/#respond Wed, 14 Jun 2017 10:28:19 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=150876 Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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At the World Bank, the Japanese Executive Director argued that the Washington Consensus menu of policy advice and conditionalities had resulted in the 1980s’ ‘lost decade’ in Latin America and Africa. In contrast, the East Asian region had seen rapid growth and industrialization. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR, Jun 14 2017 (IPS)

Even before the term ‘Washington Consensus’ (WC) was popularized, it was already coming under great criticism despite the ‘counter-revolutions’ against ‘development economics’ and Keynesian economics associated with Thatcherism and Reaganomics. At the World Bank, the Japanese Executive Director argued that the WC menu of policy advice and conditionalities had resulted in the 1980s’ ‘lost decade’ in Latin America and Africa. In contrast, the East Asian region had seen rapid growth and industrialization.

At Japanese government expense, the Bank published the East Asian Miracle (EAM) volume in 1993. But instead of recognizing that the WC was in fact the problem, the volume contributed to the myth-making which ensured its continued influence for years thereafter.

The EAM study’s eight high-performing Asian economies (HPAEs) consisted of Japan, Hong Kong and three first-generation newly industrializing economies (NIEs), namely South Korea, Taiwan and Singapore, and three second-generation South East Asian newly industrializing countries (NICs), namely Malaysia, Thailand and Indonesia, but excluded China.

It identified six types of state interventions in East Asia, only approving four ‘functional’ interventions, said to compensate for ‘market failures’, namely:
– ensuring macroeconomic discipline and balances;
– providing physical and social infrastructure;
– raising savings and investment rates; and
– providing good governance.

Macroeconomic balance
Although no one recommends reckless macroeconomic policies, there is little consensus on what constitutes sound macroeconomic policy. Although most ‘neoliberal’ economists insist on maintaining macroeconomic balances, they rarely agree on what this implies, while Keynesian economists favour counter-cyclical policies to address business cycles.

For instance, inflation was generally kept under 20 per cent in the HPAEs, but certainly not always below 10 per cent. Single digit inflation was not a common and consistent policy priority of all HPAEs during their high-growth periods. Hence, for example, Indonesia depreciated its currency regularly for many decades.

Similarly, the fiscal balance and the current account of the balance of payments were not always strictly maintained as the Bretton Woods institutions came to insist for the developing world. Many HPAEs ran large fiscal deficits to ensure high growth.

Infrastructure
Since the 1980s, the Bank has increasingly urged private provision of physical infrastructure. Except in Hong Kong, a British colony until 1993, most physical infrastructure in East Asia was provided by governments until fairly recently. HPAEs privatizing physical infrastructure provision became the basis for powerful private monopolies associated with ‘cronyism’, later blamed for the 1997-1998 Asian crisis.

Governments have been extremely important in providing social services in East Asia. But the Bank recommends universal and free primary education, and does not recommend subsidization beyond the primary level, when students should bear the full costs. Hence, about half the young people of age in Korea get tertiary education, while the shares are well over a quarter in other first-generation East Asian NIEs. If East Asian NIEs had listened to the Bank, their progress would have been slowed considerably.

Savings and investments
For some, the region’s rapid growth and industrialization were simply due to high investment and labour participation rates, rather than productivity gains: ‘perspiration rather than inspiration’. While conventional economic wisdom attributes high investment rates to high savings rates, savings rates have, in fact, followed – rather than determined – investment rates in East Asia.

After all, much of the high East Asian savings rates are due to firm savings, rather than just household savings. East Asian firms were generally able to enjoy high profits due to government interventions, subsidies, tax breaks and other incentives for favoured investments. Government policy also induced high reinvestment of these profits.

And contrary to the myth that East Asians are ‘culturally’ thrifty, unlike others, household savings in East Asia are not significantly higher than elsewhere, except for ‘forced savings’ – for employees’ retirement as mandated by law – and for children’s education.

Good governance
The notion of good governance is often used ambiguously, even tautologically. When the economy is doing well, it is attributed to good governance, and when it is not, governance is deemed to have been poor. Hence, governance does not really explain economic performance.

Instead, Mushtaq Khan has shown that developed countries generally score well on good governance indicators while developing countries do not. Governance indicators do not clearly distinguish developing countries growing rapidly from those which do not.

In the late 1960s, economics Nobel laureate Gunnar Myrdal argued, in his three volume Asian Drama, that ‘strong government’ was good for development. However, his notion of strong government is often misunderstood or misrepresented, and associated with despotic government rather than developmental governance, i.e., governance arrangements prioritizing acceleration of development.

Peter Evans’ notion of the ‘embedded autonomy’ of the developmental state has been used to explain developmental governance. Autonomy from powerful and influential ‘vested interests’, ‘distributional coalitions’ and ‘rent seekers’ ensures that ‘special interest groups’ do not usurp government for their own ends. Thus, Evans’ notion tries to explain conditions for developmental governance to better co-ordinate rapid progress.

Thus, the very policies that the Bank endorsed as ‘market friendly’ were actually quite ‘distortive’. Market outcomes had to be modified to support East Asia’s rapid growth and structural transformation. However, while some policies became less effective or even dysfunctional as circumstances changed, the Washington Consensus menu of economic liberalization and privatization largely undermined the region’s rapid progress.

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Renewing Commitment to SDGs: Private Sector Gets Activehttp://www.ipsnews.net/2017/06/renewing-commitment-to-sdgs-private-sector-gets-active/?utm_source=rss&utm_medium=rss&utm_campaign=renewing-commitment-to-sdgs-private-sector-gets-active http://www.ipsnews.net/2017/06/renewing-commitment-to-sdgs-private-sector-gets-active/#respond Tue, 06 Jun 2017 09:19:55 +0000 Paloma Duran http://www.ipsnews.net/?p=150766 Paloma Duran is Director of the Sustainable Development Goals Fund

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By Paloma Duran
UNITED NATIONS, Jun 6 2017 (IPS)

Just last month business representatives from around the world joined the United Nations Sustainable Development Goals Fund commemorate their work as part of the Private Sector Advisory Group (PSAG).

For much of the last two years, the group has been collaborating with the Fund on how the business community can work towards the 2030 Agenda for Sustainable Development, UN’s roadmap to promote inclusive economic growth, social justice and environmental protection.

This group of businesses committed to sustainability has accomplished a number of goals since it was formed in 2015, including establishing a set of pioneering public-private partnerships in areas such as food security, education, and employment for women and youth.

The group has served as an important link between the business sector and SDG Fund partners to raise awareness about the SDGs, participate in research on public-private partnerships and promote best practices. Under our ongoing strategy, the group will intensify its work on advancing and advocating for greater inclusion linked to the goals and helping us widen our private-sector approach.

Advocacy and outreach

The PSAG continues to play a vital role in informing the SDG Fund on how businesses can better work with partners at the UN, particularly how they can improve people’s living standards and make investments that will create more jobs. It’s also become clear that companies are slowly embracing and adopting the Sustainable Development Goals in their strategies — working on projects that align with their core business and interest and adhere to a larger framework

In fact, the SDG Fund has engaged new private sector partners to generate a number of key initiatives, including the Food Africa Project in Nigeria, an innovative partnership between private enterprise, UN and government agencies, and renowned chefs that aims to alleviate poverty through food security.

At the SDG Fund, it is clear that companies are eager to think more expansively on their role in development, and business of all sizes are demonstrating that they can effectively incorporate SDGs as a part of their strategic planning.

There are a few signs that we are on track, especially as members of the Private Sector Advisory Group continue to provide valuable perspective about building new partnerships to eradicate poverty, achieve food security and improve nutrition, water access and sanitation. Since joining the group, many companies have successfully incorporated the SDGs into their work and sustainability reports.

For example, Nutresa and Sahara Group now report annual results and sustainability activities using SDG goals and indicators. More than half of the members are engaging with the SDG Fund to create public-private partnerships and working to design and co-create programs in the field. Equally encouraging is that new companies, like Intel have joined the group.

It is probably worth noting that a business as usual approach is no longer possible. Thankfully, the number of businesses interested in joining forces on the SDGs has been encouraging. Companies like Ebro Foods have used the power of social media to raise awareness about a new initiative that brings together philanthropists, governments and academics.

Other milestones include the engagement of UN Goodwill Ambassadors – the Roca Brothers. The master chef brothers have committed to bringing attention to the SDGs and using their expertise to advocate for enhanced food security and access to nutritious food. They are working with local partners to provide guidance on how to improve food industry and agricultural practices to protect the environment and create jobs.

In 2017, working with our public and private sector partners we have witnessed how companies have continued to deepen their knowledge of the SDGs, asking key questions and exploring how their organizations can contribute to the global development agenda. This has come to mean everything from devising innovative partnership agreements to investing in large-scale infrastructure or improving agriculture inputs.

In fact, if imitation is the sincerest form of flattery building on this group’s experience, some countries have drawn lessons from our success and began replicating the model and creating national versions of the group.

For example, Nigeria, recently launched a Private Sector Advisory Group. The private sector has come together to advise the government to share ideas across industry sectors and regions with the aim of creating a connective platform for more impactful and local-driven models and solutions to achieve the SDGs.

Projects in the pipeline

We believe there is a lot to do in the next 13 years, we know from our series of reports, there must also be more robust public-private collaboration across the UN to achieve SDGs start taking shape. We heard and we listed to companies as reflected in our “Business and the United Nations: How business can contribute to the SDGs,” which provided case studies and best practice advice for companies eager to engage in the SDGs.

A second report, “Universality and the SDGs: A Business Perspective,” put out this year was based on input from more than 100 companies during interactive workshops in Africa, Latin America, Europe and the United States. Looking forward, the SDG Fund is committed to bringing public and private institutions together to achieve development results.

Our private sector strategy has two objectives: to involve businesses in all of our 22 field programs and expand the reach of our global business advisory partners. We are also preparing a new report, taking a deep dive into how businesses can contribute to peace outlined as part of SDG 16 (Peace, Justice, and Strong Institutions).

As in much of our work, this will be a collaborative effort with the University of Pennsylvania Law School and McDermott Will & Emery LLP to analyze the links between inclusive growth, partnerships and peace.

As champions for promoting the SDGs, we also believe that policy, direction and action will be instrumental for setting the stage for SDG integration. We look forward to working with the private sector and continuing to explore ways to create an ongoing mechanism to boost cooperation and development through the SDGs in all industries.

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Global South Calls for International Body to Fight Tax Havenshttp://www.ipsnews.net/2017/06/global-south-calls-for-international-body-to-fight-tax-havens/?utm_source=rss&utm_medium=rss&utm_campaign=global-south-calls-for-international-body-to-fight-tax-havens http://www.ipsnews.net/2017/06/global-south-calls-for-international-body-to-fight-tax-havens/#comments Fri, 02 Jun 2017 12:56:30 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=150712 Tax havens are “one of the worst enemies of our democracies,” said state representatives during a meeting at the United Nations. Due to concerns over the impacts of illicit financial flows, the Missions of Ecuador, South Africa, and India convened an informal workshop to discuss the issue and potential solutions. “Tax revenues are said to […]

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Illicit financial flows. Credit: IPS

By Tharanga Yakupitiyage
UNITED NATIONS, Jun 2 2017 (IPS)

Tax havens are “one of the worst enemies of our democracies,” said state representatives during a meeting at the United Nations.

Due to concerns over the impacts of illicit financial flows, the Missions of Ecuador, South Africa, and India convened an informal workshop to discuss the issue and potential solutions.

“Tax revenues are said to be the lifeblood of a state. With integration of economies in a globalized world, actions taken on taxation in one country affect practically everybody within borders and across borders,” said Permanent Representative of India to the UN Syed Akbaruddin, adding that the trends in illicit financial flows are alarming.

While Oxfam suggests that 7.6 trillion dollars is held in offshore accounts, others estimate a much higher figure, including UN expert Alfred de Zayas who found that up to 32 trillion dollars could be in secret jurisdictions around the world.

This deprives developing nations of essential resources needed to achieve major social and economic goals as laid out in the internationally agreed 2030 Agenda for Sustainable Development, whose motto is to leave no one behind.

“[In] the commitment to leave no one behind…the issue of taxation is fundamental in that effort,” said Deputy Permanent Representative of South Africa to the UN Mahlatse Mminele.

According to the UN Conference on Trade and Development (UNCTAD), illicit financial flows cost developing countries more than 100 billion dollars per year. Africa bears the brunt of such outflows as it is estimated to be equivalent to all official development assistance received by the continent in the last 50 years.

In one case revealed by the Panama Papers in 2016, a company dodged a tax bill of 404 million dollars in Uganda, a figure representing more than the East African nation’s annual health budget.

Ecuadorian Foreign Minister Guillaume Long painted a similar picture in his country, estimating that one-third of its GDP is being “robbed” and stowed away in tax havens which limits opportunities for the creation of wealth and further widens societal inequality.

Long, whose country currently chairs an intergovernmental group of developing nations known as the Group of 77, called for international cooperation on tax issues.

“The issue of international tax cooperation is of crucial importance and is directly linked to the right of development and the possibility of implementing Agenda 2030, a link to guarantee human rights,” he told attendees.

Akbaruddin similarly noted the necessity of international cooperation in a world of cross-border trade and finance and criticised the lack of multilateral efforts on the issue, stating: “Those who champion multilateralism in areas such as biodiversity, in areas such as human rights, in areas such as peace and security, decide to stop championing them when it comes to matters of international tax cooperation…what accounts for this enigma?”

Currently, the Committee of Experts on International Cooperation on Tax Matters provides a framework for dialogue and cooperation on tax issues. Though it helped create the UN Code of Conduct on Cooperation in Combating International Tax Evasion, the committee has been insufficient. Long noted that the committee works in individual capacities rather than on a governmental level and does not have sufficient resources to tackle the issue.

The three representatives therefore called to strengthen and upgrade the committee, transforming it to an intergovernmental body that represents all.

Of the 25 seats in the committee,12 are occupied by the 35-member Organization for Economic Cooperation and Development (OECD) which includes countries like the United Kingdom and the United States, leaving the other 158 countries with only 13 seats.

“Every country, every state – rich or poor, big or small – does have the right to an inclusive place at the table to decide on an issue that impacts all of us,” said Akbaruddin.

The representatives called the UN and Secretary-General to take urgent action on the issue.

“The international community needs to urgently address this global test…the status quo should no longer be allowed to persist,” said Mminele.

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Why Do International Financial Crises Happen?http://www.ipsnews.net/2017/05/why-international-financial-crises/?utm_source=rss&utm_medium=rss&utm_campaign=why-international-financial-crises http://www.ipsnews.net/2017/05/why-international-financial-crises/#comments Wed, 31 May 2017 16:25:13 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=150686 Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Am underlying cause of international financial crises has been the ascendance, transformation and hegemony of the financial sector over the past three to four decades. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, May 31 2017 (IPS)

International currency and financial crises have become more frequent since the 1990s, and with good reason. But the contributory factors are neither simple nor straightforward. Such financial crises have, in turn, contributed to more frequent economic difficulties for the economies affected, as evident following the 2008-2009 financial crisis and the ensuing Great Recession still evident almost a decade later.

Why international coordination?
Why is global co-ordination so necessary? There are two main reasons. One big problem before the Second World War was the contractionary macroeconomic consequences of the ‘gold standard’.

In 1944, before the end of the Second World War, President Franklin Delano Roosevelt convened the United Nations Conference on Monetary and Financial Affairs – better known as the Bretton Woods Conference – even before the UN itself was set up the following year in San Francisco. After almost a month, the conference established the framework for the post-war international monetary and financial system, including the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (IBRD), or World Bank.

To be sure, the Bretton Woods system reflected sometimes poor compromises made among the negotiating government representatives. Nevertheless, it served post-war reconstruction and early post-colonial development reasonably well until 1971.

In September of that year, the Nixon Administration in the US – burdened with mounting inflation and unsustainable budget deficits, partly due to the costly Vietnam War – unilaterally withdrew from its core commitment to ensure full US dollar convertibility to gold at the agreed rate. Thus, the unilateral US action did not involve a transition from the Bretton Woods system to any coherent, internationally agreed alternative.

Birth of a ‘non-system’
The pre-1971 post-Second World War period has often been referred to as a Golden Age, a period of rapid reconstruction, growth and employment expansion after the devastation of the Second World War. It was also a period of development and structural transformation in many developing countries.

All this came to an end when coordination and multilateralism collapsed following President Nixon’s decision to renege on 1944 US commitments at Bretton Woods which became the basis for the post-war international monetary system.

The leading international monetary economist of the post-war period, Robert Triffin, described the post-1971 arrangements as amounting to a ‘non-system’. Now, with the international monetary system essentially the cumulative outcome of various, sometimes contradictory and ad hoc responses to new challenges, the need for coordination is all the more urgent.

A strong case for co-ordination has long been made by the United Nations. For example, soon after the global financial crisis exploded in late 2008, the 2009 mid-year update of the UN’s World Economic Situation and Prospects showed how better coordinated and more equitable fiscal stimuli would have benefited all parties – developed countries, developing countries, transition economies and, most of all, the least developed countries.

Anarchy and fragility

Since the collapse of the Bretton Woods system in 1971, a small handful of currencies – especially the US dollar, the international favourite by far – have been held by others as reserve currencies. This has allowed the issuers of these currencies – especially the US – to run massive trade deficits, contributing to unsustainable global imbalances in savings and consumption.

A second underlying cause of international financial crises has been the ascendance, transformation and hegemony of the financial sector – termed ‘financialization’ – over the past three to four decades. Partly as a consequence, many decision-makers are now often more concerned with short-term financial indicators than other key economic indicators, often presuming that the former reflect the latter despite the lack of such evidence.

A third factor has been growing ‘financial fragility’, partly due to the global financial ‘non-system’ in place since the collapse of the Bretton Woods system. Referring to this ‘non-system’ as an international financial ‘architecture’ is really insulting to architects. The lack of coherence and coordination has been exacerbated by financial deregulation, liberalization and globalization over the past three decades.

Finance calling the shots

The growing and spreading subordination of the real economy to finance in recent decades is a fundamental part of the problem. While finance is indeed a very important, if not an essential hand-maiden for the functioning of the real economy, the subordination of the real economy to finance has transformed macro-financial dynamics, with unproductive, contractionary, even dangerous consequences.

So, to address the root causes of crises, much better, including more appropriate regulation of the financial system is needed to ensure consistently counter-cyclical macro-financial institutions, instruments and policies, and to subordinate the financial sector to the real economy.

The 2008 financial crisis has catalyzed many debates on these issues – some old, some new – for instance, between Keynesian/Minskyian economists and their opponents; between Anglo-American and continental European worldviews; and between the global North and South. Any sustainable solution will clearly require much better international cooperation and co-ordination.

Hence, almost a decade since the 2008 global financial crisis began, there is no shared political commitment to much needed international financial reforms. It took fifteen years from the beginning of the Great Depression, a world war and Roosevelt’s extraordinary leadership before the world was able to reform the international financial system in 1944. But sadly, there is no Roosevelt for our times.

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Time To Focus On ‘Hidden Hunger’http://www.ipsnews.net/2017/05/time-to-focus-on-hidden-hunger/?utm_source=rss&utm_medium=rss&utm_campaign=time-to-focus-on-hidden-hunger http://www.ipsnews.net/2017/05/time-to-focus-on-hidden-hunger/#respond Fri, 26 May 2017 16:13:05 +0000 Bev Postma http://www.ipsnews.net/?p=150605 Bev Postma is the CEO of HarvestPlus. She has 25 years of experience as a policy expert in international food systems, nutrition and food security.

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Children, Kafue, Zambia. Credit: Brian Moonga/IPS

By Bev Postma
WASHINGTON DC, May 26 2017 (IPS)

As World Hunger Day May 28 approaches, it is time for us all to redouble our efforts to reach the goal of Zero Hunger by prioritizing the battle against micronutrient deficiency. If the international community pulls together this year to incorporate proven solutions such as biofortifying crops into the UN framework for sustainable development, we could reduce malnutrition on a truly global scale.

Previous UN-led efforts, including the Millennium Development Goals, and the current Sustainable Development Goals set targets for countries to lift themselves out of poverty and hunger. With the support of multiple UN initiatives and partners, the number of undernourished people in developing countries has decreased by nearly half since 1990. This is encouraging.

However, one-third of the world’s population continues to suffer from ‘hidden hunger,’ caused by a lack of essential vitamins and minerals. Even if people have enough calories to eat, they can still suffer from ‘hidden hunger’ if their only food options do not contain the necessary micronutrients.

Zinc, vitamin A and iron are three of the more important micronutrients for health, according to the World Health Organization. Each of these nutrients play a critical role in normal body functions. A diet lacking in these nutrients presents a major threat to human health, potentially causing stunting, decreased cognitive ability, diarrheal disease, auto-immune deficiency, blindness and early child mortality. Around 375,000 children go blind each year as a result of a lack of vitamin A; and zinc deficiency causes 450,000 deaths annually.

More than 2 billion people suffer from hidden hunger globally, and there is a ripple effect that has consequences for the entire population. The World Bank estimates that in Pakistan malnutrition costs the country $7.6 billion, or 3 percent of its GDP annually. Likewise, the African Union estimates that Rwanda loses more than 11 percent of its GDP due to child undernutrition alone.

Countries with high levels of malnutrition must contend with these cumulative effects of high healthcare costs and lost productivity wherever they are in the world.

There are a number of solutions to address micronutrient deficiency, but crop biofortification can reach communities where traditional supplementation and food fortification potentially cannot. Growing more nutritious versions of everyday food crops is a simple, sustainable and cost-effective solution that does not place any undue burden on farmers. These biofortified crops are also widely accepted by consumers, as extensive research is done to ensure the crops look and taste similar to the traditional varieties.

HarvestPlus has spent the past 14 years working with leading research institutes to prove that biofortified crops, which contain greater quantities of vitamin A, iron and zinc than standard varieties, can reach communities that need them.

In India, iron-biofortified pearl millet provides children with 70 percent of daily iron requirements. More than a million Indian farmers have embraced the more nutritious variety, which is also high yielding and drought tolerant, providing farmers with a more stable income while simultaneously bolstering their family’s nutrition.

A study of iron-deficient women between the ages of 18 and 27 in Rwanda proved that eating biofortified beans high in iron reversed iron deficiency in just four-and-a-half months. In a region plagued by hot weather and drought, iron beans present the added benefit of being high yielding, drought resistant and heat tolerant.

Countries across the world are already embracing the science of biofortification. The government of Zambia launched a campaign to get schools to grow and feed their students vitamin A-biofortified orange maize, while Brazil is distributing biofortified crops to schools through its states’ school feeding programs.

In Uganda, five iron-rich bean varieties were released last year as part of the government’s strategy to tackle malnutrition and reduce anemia, especially in children and expectant mothers. These countries, among many others, have chosen to implement a proven, cost-effective solution to address micronutrient deficiency and they are relying on international organizations like the United Nations to provide additional support.

Earlier this year, HarvestPlus made a public commitment to work with UN agencies and member states to be part of the decade of action on nutrition. In line with our commitment, we are calling on all governments and institutions to help us scale up the introduction of biofortified foods by bridging the gap that exists between agriculture and nutrition.

If we can work with the UN, national governments and farming communities to encourage the adoption of this breakthrough innovation, we can help lift one billion people out of poverty and hidden hunger just by providing access to a diverse and nutritious diet.

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Why the G7 Must Fund Health & Nutritionhttp://www.ipsnews.net/2017/05/why-the-g7-must-fund-health-nutrition/?utm_source=rss&utm_medium=rss&utm_campaign=why-the-g7-must-fund-health-nutrition http://www.ipsnews.net/2017/05/why-the-g7-must-fund-health-nutrition/#respond Thu, 25 May 2017 21:42:57 +0000 Grace Virtue http://www.ipsnews.net/?p=150593 Grace Virtue, Ph.D., is a social justice advocate and senior communications advisor for ACTION global health partnership.

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By Grace Virtue
TAORMINA, Italy, May 25 2017 (IPS)

The G7 Summit, held annually among the leaders of the world’s most powerful economies (Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the EU), plays an important role in shaping responses to global challenges—theoretically at least.

The format of the Summit continues to be modeled off the first one, held in 1975 when French President Valéry Giscard d’Estaing invited his counterparts to an informal meeting in Rambouillet to discuss the economic crisis triggered by the oil shock of 1973–1974. Leaders adopt a relaxed approach, discussing candidly the main issues on the international agenda.

Their aides (the so-called Sherpas) draft a joint declaration which is signed by the leaders and enshrined as high-level political pledges. Before and during, the Sherpas are lobbied fiercely by civil society trying to get their issues of concern in the joint communiqué released by the Summit.

This year’s Summit begins May 26 in Taormina, Italy. It is arguably one of the most charged and uncertain atmosphere for a meeting of traditional western democratic political leaders. The United States, which normally plays a leading role, is hamstrung by its government, led by Republican President Donald Trump, who, among his many challenges, is currently under investigation by his own law enforcement agencies to determine whether his campaign was complicit in Russian interference in the general election of 2016, which landed him a shock victory over former secretary of state Hillary Clinton, the Democratic nominee.

Outside of ethical and perhaps legal challenges, Trump, since his inauguration in January, has unleashed a set of policy proposals deliberately targeted at rolling back social justice gains under Barack Obama, his predecessor and even before. From proposed cuts to signature programs like the Affordable Care Act and food stamps for needy families, and hostile policies toward immigrants, the administration’s programs are causing deep uncertainty and anxiety at home and abroad. Trump’s lack of interest and understanding of the outside world, rounds off a list of flaws that justifies completely questions about his capacity or suitability to lead the free world toward any progressive end.

This year’s summit also comes with the shadow of Brexit—the United Kingdom’s decision to exit the European Union; a French President, the youngest in the country’s history and a mere three weeks in his presidency; looming elections in the UK and Germany; a continued migrant crisis as desperate people flee wars and famines in Africa and the Middle East, and this week’s horrific terrorist attack in Manchester, England. Volatility, uncertainty, complexity and ambiguity like we have not seen since the height of the Cold War, are the watchword of this G7 Summit.

So, when the leaders gather at their hilltop hideaway tomorrow, there is much that is new and worrying to be discussed and great energy will likely be consumed navigating these new and unpredictable dynamics. This does not augur well for those concerns that are so devastating but so old and entrenched, that they are not news anymore—no longer sexy enough grab the headlines, if they ever were. I speak here of diseases of poverty like tuberculosis and chronic starvation and malnutrition in parts of Africa.

In 2015, 10.4 million people were sickened with TB; 1.8 million of them died—more than HIV and malaria combined. Tuberculosis is the world’s only airborne drug-resistant epidemic and is responsible for one-third of the world’s antimicrobial resistance (AMR) deaths. By 2050, estimates show drug-resistant TB (DR-TB) will claim an additional 75 million lives at a global economic cost of US$16.7 trillion.

Since its establishment in 2002 by G7 countries, the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) has saved more than 20 million lives through its support for AIDS, tuberculosis (TB), and malaria programs in countries and communities most in need. Vulnerable communities, including migrants and refugees, are at increased risk of diseases like TB and HIV/AIDS because of overcrowded living and working conditions, poor nutrition, and lack of access to care. The Sustainable Development Goals (SDGs), which all G7 countries signed on to, called for the eradication of HIV/AIDS, TB, and malaria by 2030.

To achieve this, G7 leaders must continue to invest in the Global Fund. Concerned civil society groups like ACTION global health partnership in Taormina advocating to the end, are hoping they will. Other major ask of G7 leadership include accelerated efforts to eradicate malnutrition and ensure proper nutrients for every child, particularly in the first 1000 days of life. Coupled with the inability to access proper healthcare by the world’s poorest people, malnutrition is one of the greatest barrier to human development and global prosperity

It is obvious that there are many complicated issues facing the G7 leaders, but, investing in health and nutrition should not be controversial—it should be fundamental.

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Slow Growth Stalls SDGs’ Progresshttp://www.ipsnews.net/2017/05/slow-growth-stalls-sdgs-progress/?utm_source=rss&utm_medium=rss&utm_campaign=slow-growth-stalls-sdgs-progress http://www.ipsnews.net/2017/05/slow-growth-stalls-sdgs-progress/#comments Thu, 25 May 2017 06:49:43 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=150582 The world will not be on track to eradicate poverty by 2030 if current growth trends continue, a UN task force found. The Inter Agency Task Force, comprising over 50 international institutions, launched a report assessing progress on the Addis Ababa Action Agenda, a global framework on development financing to help implement the internationally agreed […]

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By Tharanga Yakupitiyage
UNITED NATIONS, May 25 2017 (IPS)

The world will not be on track to eradicate poverty by 2030 if current growth trends continue, a UN task force found.

Wu Hongbo, Under-Secretary-General for Economic and Social Affairs, briefs journalists on the launch of the 2017 “Progress and Prospects” report of the Inter-Agency Task Force on Financing for Development. Credit: UN Photo/Kim Haughton

Wu Hongbo, Under-Secretary-General for Economic and Social Affairs, briefs journalists on the launch of the 2017 “Progress and Prospects” report of the Inter-Agency Task Force on Financing for Development. Credit: UN Photo/Kim Haughton

The Inter Agency Task Force, comprising over 50 international institutions, launched a report assessing progress on the Addis Ababa Action Agenda, a global framework on development financing to help implement the internationally agreed Sustainable Development Goals (SDGs).

Though there has been some progress in development financing, slow global economic growth and decreased trade and investment growth since the 2008 financial crisis has hampered progress on the SDGs, including the eradication of poverty by 2030.

“Despite expectations of improved growth in 2017 and 2018, the current global environment bodes poorly for the achievement of the SDGs,” said Under Secretary-General for Economic and Social Affairs Wu Hongbo.

In 2016, the world economy grew at its slowest rate since the crisis and the global GDP is projected to grow at less than 3 percent over the next two years. Such rates are likely to leave almost 7 percent of the world’s population extremely poor by 2030. Least developed countries (LDCs) will fall the farthest behind, Hongbo stated.

Though the number of people living on less than 1.25 dollars per day has decreased dramatically in the last few decades, the decline largely relied on strong economic growth in developing countries, the report notes.

Low economic growth is also contributing to rising levels of unemployment. The International Labor Organisation estimates that there will be 3.4 million more unemployed people in 2017 than in 2016, and further increases are expected in 2018.

The UN Conference on Trade and Development’s (UNCTAD) Director of the Division on Globalisation and Development Strategies Richard Kozul-Wright noted that these trends are partly due to the failure to develop sustainable growth strategies.

“A lot of people expected that the post financial crisis that there will be a serious reflection on the kinds of growth strategies forged prior to the crisis which were clearly unsustainable and not inclusive, but that hasn’t really happened,” he said.

Weak investment is another major challenge hindering the achievement of the SDGs and thus growth, he added.

Between 1 and 5 trillion dollars of additional investment is needed for infrastructure alone, a key element to help sustain growth in developing countries. Transportation infrastructure enables trade and economic development, which is particularly important in land-locked developing countries, while energy-related infrastructure is essential for climate change mitigation and adaptation.

However, public and private infrastructure investment has declined globally. Though official development assistance (ODA) increased by almost 9 percent in 2016 from 2015, escalating humanitarian needs have led to significant short-term and long-term financial gaps.

Uncertainty in key policies of major countries only heightens risks in the global economy, including the U.S.’ proposals to cut foreign aid and climate finance.

Hongbo noted that the creation of national policies that align with the SDGs as well as international cooperation to boost sustainable and inclusive growth is crucial.

“Many of the challenges that countries face, including slow economic growth, climate change, and humanitarian crises, have cross-border or global repercussions and it cannot be addressed by any one actor alone,” he stated.

The launch of the report coincided with the second annual forum on financing for development which brought together member states and international organizations to discuss the pressing issues laid out in the report and its potential solutions.

Participants reached an agreement on SDG financing, calling on governments to increase and adhere to their ODA commitments and improve tax policies, including international efforts to fight tax evasion, while urging development banks and private sector actors to help mobilize catalytic resources.

“We will have our voice heard whenever we can, we will speak loudly for the LDCs and the vulnerable countries and its people,” Hongbo concluded.

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Gateway Portals and the Quest for Sustainable Urbanizationhttp://www.ipsnews.net/2017/05/gateway-portals-and-the-quest-for-sustainable-urbanization/?utm_source=rss&utm_medium=rss&utm_campaign=gateway-portals-and-the-quest-for-sustainable-urbanization http://www.ipsnews.net/2017/05/gateway-portals-and-the-quest-for-sustainable-urbanization/#respond Wed, 24 May 2017 15:27:58 +0000 Joan Erakit http://www.ipsnews.net/?p=150570 On a busy Friday afternoon, the number 1 subway train heading north through Manhattan’s Westside comes out of a dark tunnel –and if one takes a minute to release oneself from communication devices—one can catch sight of the approaching 125th street in the distance, the crosswalk buzzing with yellow cabs. The train station at 125th […]

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125th Station, Broadway. Credit: Joan Erakit/IPS

By Joan Erakit
NEW YORK, May 24 2017 (IPS)

On a busy Friday afternoon, the number 1 subway train heading north through Manhattan’s Westside comes out of a dark tunnel –and if one takes a minute to release oneself from communication devices—one can catch sight of the approaching 125th street in the distance, the crosswalk buzzing with yellow cabs.

The train station at 125th street and Broadway that sits high above the commotion below on a green arch bridge is the first clue that a passenger has reached Harlem, the gateway portal to the historic New York City neighborhood.

Last week, the Consortium for Sustainable Urbanization and UN-Habitat organized a discussion at the United Nations headquarters that brought together stakeholders from the private sector, the UN system, government, academia and civil society to share ideas for creating and sustaining gateway portals — ultimately emphasizing the need to utilize urbanization as a tool for development.

Whilst many in the room were probably used to such discussions taking the route of creating bustling cities that could accommodate the highest number of urbanites in order to support political, economic and cultural agendas, it was refreshing to instead witness a focus on urban planning through gateway portals that put infrastructure center stage.

A gateway portal is an emblem of a city and can be everything from a bridge, plaza, or historic site that often welcomes one into a city or specific neighborhood. California’s Golden Gate Bridge is the most famous, linking Marin County to San Francisco in an architectural piece designed by engineer Joseph Strauss in the 1930s.

As one heads east of California, other gateway portals across the United States start popping up such as the Minneapolis Stone Arch Bridge that crosses the Mississippi River, connecting the southern and northern parts of the Midwest City. Arriving in New York, the Statue of Liberty and Ellis Island join the historic Manhattan Bridge as portals to the urban jungle – each depicting an intentional narrative of its own.

Famed architect Santiago Calatrava, a man known for his extraordinary body of work was invited to the discussion last week where he not only shared various projects, but also highlighted the necessity of portals. In his own words he mentioned that, “bridges are important pieces of infrastructure and gateway portals are to a city what infrastructure is to Sustainable Development.”

If this is true then city planners, architects and government officials are now tasked with the challenging job of thinking critically of where and how they place gateway portals. Instead of just creating entrances that mark an area and alert taxi drivers to charge toll fees, planners now have the opportunity to address issues of sustainability by utilizing smart, inclusive design that goes beyond just a pretty facade.

In 2013, author Charles Montgomery published a book called ‘Happy City: Transforming Our Lives Through Urban Design’, an anthropological text on what it meant to create sustainable spaces that were not only focused on developing a city, but also on underscoring the temperament of its citizens in relation to that development. If people were generally happy and continued to live happy lives within urban bustling communities, then was it possible that their surroundings would eventually be transformed socially, economically and politically?

“Urban spaces and systems do not merely reflect altruistic attempts to live the complex problem of people living close together, and they are more than an embodiment of the creative tensions between competing ideas,” he wrote. “They are shaped by struggles between competing groups of people. They apportion the benefits of urban life. They express who has power and who does not. In doing so, they shape the mind and soul of the city,” he concluded.

Citizen Driven Planning

The premise of the conversation last week was straightforward: development cannot succeed without conscious urbanization. This, meaning that urbanization for development needed to include a citizen driven approach to planning and design that accounted for inclusion, health, resiliency and equality.

According UN Habitat, it is estimated that around 54% of people now live in urban areas and as this number steadily grows, the question of how to sustainably house, provide and protect a large population in such dense spaces has become a top priority for both the UN system and government officials.

A timely discussion as Habitat III concluded last year in Quito, Ecuador with the goal of adopting a new urban agenda that would offer a set of action oriented global standards that would guide the way in which we designed and sustained our cities – citizen driven urbanization would need to prioritize these global standards when building or reshaping gateway portals.

Additionally, such plans would also need to uphold the fact that gateway portals established the economic and political power of the city, and to be citizen driven would essentially mean that the portals were of service to the people who used them daily, and not the other way around.

Frederick Douglas Plaza, Harlem.  Credit: Joan Erakit/IPS

Frederick Douglas Plaza, Harlem. Credit: Joan Erakit/IPS

What’s In A Narrative?

During the 5th and 6th centuries, grandiose gates and high towering walls that circled a city – sometimes serving as a safety barrier in the chance of attack – illustrated the gateway portal. The narrative of a powerful gate or great wall such as the one in China laid forth the cities ambitions and easily communicated its priorities.

In 2017 with more and more people moving into urban areas, we are forced to ask ourselves what sort of narrative we’d like to have. When one arrives in Harlem, what narrative is being shared once you’ve crossed the threshold of the gateway portal on 125th street and begin your descent into the colorful street below?

New York City Commissioner Feniosky Pena-Mora spoke during the panel last week about the plans that the De Blasio administration drawn up towards creating sustainable, healthy public spaces with the agenda of changing the narrative of its city.

“We often say that we want to create spaces that work for everyone – diversity is key,” he said, continuing, “We must design to invite, and design to delight.”

This – NYC’s actual design mantra – when applied to redefining gateway portals is to simply put the citizen at the center of the vision. Yes, happiness is key, sustainability is key but city planners must also focus on creating spaces that encourage openness.

In the end, it cannot be disputed: gateway portals emphasize the importance of a city. They provide a first impression and a lasting one if curated with intent. It is with this measure that city planners and government officials must consider portals as the ‘opening line’ of their cities narrative.

Sustainable urbanization can most certainly be an effective tool for development, but must not be approached with naiveté. As the Executive Director of UN Habitat Dr. Clos put during his remarks last week, “when you address one problem, you generate two more.”

Addressing one gateway portal at a time, a city’s quest for sustainable urbanization becomes an actual possibility rather than just a city plan.

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Community Seed Banks: Securing Diversity for Climate Change Adaptationhttp://www.ipsnews.net/2017/05/community-seed-banks-securing-diversity-for-climate-change-adaptation/?utm_source=rss&utm_medium=rss&utm_campaign=community-seed-banks-securing-diversity-for-climate-change-adaptation http://www.ipsnews.net/2017/05/community-seed-banks-securing-diversity-for-climate-change-adaptation/#respond Tue, 23 May 2017 16:13:30 +0000 Elena Pasquini http://www.ipsnews.net/?p=150552 The author is Editor in Chief Degrees of Latitude

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By Elena L. Pasquini
ROME, May 23 2017 (IPS)

For thousands of years, farmers have used genetic diversity to cope with weather variability and changing climate conditions. They have stored, planted, selected and improved seeds to continue producing food in a dynamic environment.

Community seed banks are mostly informal collections of seeds maintained by local communities and managed with their traditional knowledge, whose primary function is to conserve seeds for local use. They can play a major role in climate change adaptation, according to a recent article published by Bioversity International’s researchers Ronnie Vernooy, Bhuwon Sthapit, Gloria Otieno, Pitambar Shrestha and Arnab Gupta.

Based on various countries’ experiences, the article argues that, ‘community seed banks can enhance the resilience of farmers’ by securing ‘access to, and availability of, diverse, locally adapted crops and varieties’.

According to Ronnie Vernooy, genetic resources policy specialist at Bioversity International, ‘mostly because of climate change, there’s a stronger interest in establishing and supporting community seed banks’. However, many of them ‘are still quite fragile, organizationally and in terms of technical management’, he added.

Bioversity International, which is working in several countries on informal seed systems, has designed a project for community seedbanks Platform and is currently looking for donors interested in its implementation. The Platform aims at reinforcing farmers’ seed systems by supporting existing community seed banks as well as national or regional community seedbank networks around the world, scaling out their activities and contributing to their sustainability. It should have four key functions, covering documentation and analysis to practical experiences, capacity building, research agenda coordination and digitalization andmanagement of data.

But why do community seed banks matter?

Tools for adaptation

Seeds are stored in diverse types of collections, ranging from international and national genebanks, or ex situ collections where seeds remain often for years or decades, to small seed banks managed locally by farmers. ‘In the ex-situ collections … seeds are like frozen in time … That means there’s no chance [for them] to adapt in the field to changing conditions’, Ronnie Vernooy, explained to Degrees of Latitude.

In community banks, seeds usually remain for shorter terms, ‘ sometimes for one year’, Vernooy specified, to be then distributed to farmers: ‘Those plants are in the field and in the real conditions, so they are adapting themselves to changing circumstances. Then farmers usually select the best seeds of any given crop in the field. Part of those seeds goes back to the community seed banks and the next year the cycle continues’. Moreover, genebanks focus more on the major food crops, while community banks tend to conserve all the diversity farmers have on field, including minor crops, neglected varieties, medicinal plants, wild relatives and even trees.

Community banks not only conserve genetic diversity, they ‘have the potential … to become seed producers and it’s happening … but it requires support’, Vernooy said. Compared to the formal seed sector – which includes research institutions, genebanks, governmental bodies and private companies – the informal seed bank offers several advantages to small farmers, according to Vernooy. It provides not only ‘broader [genetic] diversity’, but seeds that are better adapted to farming systems that ‘tend to be diverse, [located] in marginal, very dry or mountainous areas, etc.’, he explained. ‘[Seeds from the formal sector] tend to require high level of inputs – fertilizers, chemical fertilizers, pesticides, herbicides … – and the price is often high’.

However, ‘it’s not a black and white system’, he stressed. The formal sector can help building farmers’ capacities. In fact, ‘in many countries we are trying to breach the gap between the formal and the informal systems with activities like participatory plant breeding, but also with the community seed banks … We try to bring the national genebanks work together with the community seed banks’, he said. In an ‘ideal world community seed banks could be part of what’s called a national conservation system. Right now, governments channel money into national genebanks … Our argument is why not also put a small amount of money into each of the community seed banks that exists or into the new ones that can be established?’, Vernooy said.

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An enabling legal environment
Strengthening community seed banks requires not only technical and financial support but also an enabling policy and legal environment. In many countries, apart from a few like Bhutan, Nepal, Uganda, South Africa, Brazil, “there is no or little recognition of and support for community seed banks …, [and] farmers are not allowed to sell farm-saved seed. In others, legislation to protect farmers’ genetic resources is lacking’, Vernooy’s article reports.

Laws and regulations that can conflict ‘on what community seed banks are trying to do, [for instance] the intellectual property rights policies …’ are also often in place, Vernooy explained. Community seed banks are ‘like collective enterprises’ managed cooperatively: ‘Laws that prohibit or restrain these collective uses are in contradiction to what community seeds banks do’, Vernooy explained.

From an international perspective, the Convention of Biological Diversity and the International Treaty on Plant Genetic Resources for Food and Agriculture have been ‘quite supporting’, according to Vernooy. A study out of the Norwegian Development Fund, suggests that community seed banks can also contribute to the implementation of farmers’ rights to save, use, exchange and sell farm-saved seeds. Those rights are recognized by ITPGRFA, which is legally-binding for 143 countries. The Treaty demands contracting parties not only to promote or support ‘farmers and local communities’ efforts to manage and conserve on-farm their plant genetic resources for food and agriculture’ but also ‘in situ conservation of wild crop relatives and wild plants for food production’.

‘ITPGRFA has the farmers’ rights and in principle the text is very much in support of community seed banks, but then it goes back to the national governments to implement those international agreements. So, we are back to the same situation’, Vernooy said.

However, the direction seems clear: ‘There’s quite a strong international movement of people working on these issues and the international treaty itself is quite interested in advancing on this’, he said.

Photo credits: Bioversity International – Bioversity International/C.Fadda – Seeds for Needs, Ethiopia

This story was originally published by Degrees of Latitude

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Ecuador Focuses on New UN Tax Body to Fight Illicit Financial Flowshttp://www.ipsnews.net/2017/05/ecuador-focuses-on-new-un-tax-body-to-fight-illicit-financial-flows/?utm_source=rss&utm_medium=rss&utm_campaign=ecuador-focuses-on-new-un-tax-body-to-fight-illicit-financial-flows http://www.ipsnews.net/2017/05/ecuador-focuses-on-new-un-tax-body-to-fight-illicit-financial-flows/#respond Mon, 22 May 2017 19:29:49 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=150523 The time is now to work together to fight illicit financial flows, according to Ecuador’s Foreign Minister Guillaume Long. Ecuador, having long advocated for tax justice, has shed light on the issue at the United Nations. As Chairman of the Group of 77, Long highlighted the need to end the financial secrecy of tax havens […]

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By Tharanga Yakupitiyage
UNITED NATIONS, May 22 2017 (IPS)

The time is now to work together to fight illicit financial flows, according to Ecuador’s Foreign Minister Guillaume Long.

Guillaume Long

Guillaume Long

Ecuador, having long advocated for tax justice, has shed light on the issue at the United Nations. As Chairman of the Group of 77, Long highlighted the need to end the financial secrecy of tax havens that often harm developing countries and to create an intergovernmental body to help regulate taxation and financial flows.

In an interview with IPS, Long explains the issues, challenges, and goals in achieving tax justice.

Q: The President of the General Assembly said that SDG financing is going to take 6$ trillion annually and $30 trillion through 2030. Do you think much-needed finances will be made available if the current rate of illicit financial flows is curbed?

A: I think it’s huge what you can get from curbing illicit flows and basically from tax dodging or tax evasion. In the case of Ecuador, we calculated that an approximate amount of $30 billion is held in tax havens. Just so you get a general idea of what that means, Ecuador’s gross domestic product (GDP) is roughly around $100 billion so $30 billion means almost 1/3rd of our GDP. Most countries struggle to grow, but here you’ve got 30 percent of GDP literally being robbed from us in tax havens.

That means less investment, less dynamism in the economy, less creation of jobs and also less taxes—it’s those taxes that are used for public policies to reduce poverty, reduce inequality, and create much needed infrastructure.

There are have been estimates that public infrastructure that is needed right now in the developing world is roughly $1.5 trillion. This includes hospitals, schools—the kind of infrastructure that the developing world needs to reduce huge rates of inequality, poverty, and some of the things we are trying to amend through, for example, the SDGs. And that’s only probably about 15% of illegal assets held abroad in tax havens and various offshore accounts.

[Curbing illicit financial flows] could revolutionize and dramatically transform the story and history of development. And it would certainly be one of the best sources of financing for development which is the big thing. Now that we have come to an agreement on the 2030 Goals and what it is that we want to do, the next question is how do we do this? And we have to do this with resources. Some resources are available to us, but many others aren’t and this is basically through tax dodging.

This is also fundamentally a practice that is carried out by elites and therefore it also means that you get greater rates of inequality. In a continent or a region like Latin America—if you do a per capita average then it is the middle class but we know that averages hide huge disparities and Latin America is actually the most unequal region in the world and a lot of that has to do with elites not being a willing part of the social contract. And a major aspect of the social contract is taxation and not participating in tax dodging.

Q: How much does the developing world, particularly Africa, Asia, and Latin America, lose to illicit financial flows?

A: There are huge numbers that are being reported. Oxfam talks of $7.6 trillion in tax dodging—I’m not even talking about illicit financial flows, not even talking about offshore accounts, I’m talking about $7.6 trillion in tax dodging.

This is why Ecuador has taken this issue so seriously. We’ve been talking about tax havens and tax avoidance for years, particularly in this government in the last ten years with the Presidency of Rafael Correa. But after the Panama Papers scandal last year, President Correa really launched this as his priority and as a major crusade. He even launched what he called an “Ethical Pact” which included a referendum in Ecuador to ban civil servants and elected officials from holding assets in tax havens. If you are found to hold assets in tax havens, you can be removed from office automatically.

I really think Ecuador is one of the countries, if not the country in the world, that’s done the most. This referendum, which was successful in terms of its results, is an example to the world. And I think Ecuador has been the most proactive country in the year that’s transpired since the revelations of the Panama Papers in taking concrete and bold steps.

Another major thing that we have been doing on the international front is from our presidency of the G77 which we currently chair. We have pushed for the creation of an intergovernmental body on tax justice. We had a workshop this morning which was co-chaired by Ecuador, India, and South Africa with huge participation exactly on this issue.

There is an opportunity—now that the issue is back at the forefront of the media, it means that we have to maximize that opportunity to try and create mechanisms, particularly inside the United Nations, that fight tax dodging. [This issue] we can deal with if we have the right tools and institutions to fight that.

Q: What are your thoughts on public disclosures on tax havens like the Panama Papers? Is that something that is needed more in order to increase transparency and action on tax havens?

A: Whistleblowing plays an important role. When information is public and people find out about these things, if their politicians have been hiding money and fog them—most politicians have a very patriotic discourse saying they’re going to create jobs and economic activity and bring foreign investment. But surely there is a paradox and a contradiction if you are saying ‘vote for me because I’ll bring loads of foreign investment into the country’ and then on the other hand you’ve got all your personal assets hidden away somewhere without paying taxes. I think when those contradictions and lies, and I would use the world ‘robbery’ especially if you are dodging taxes, are exposed then that’s a good thing. It creates greater consciousness.

I think this is a time of great opportunity because since the Panama Papers scandal, a lot of countries that could be considered to be tax havens are starting to take measures because they are under increasing pressure by people and by countries like Ecuador and other countries to do something about it. The fact that we are having this debate today and the fact that I am talking to you is not necessarily in the tax havens’ interest because it brings the spotlight onto their activities so generally speaking, those kinds of public disclosures are very important part of creating a general awareness that this must stop.

There are a lot of double standards too. On the one hand, developing countries are under pressure for all sorts of things. They’ve got to grow, they’ve got to be good economically, they’ve got to guarantee human rights—all of these things which we absolutely abide by and are very committed to—but surely there is a contradiction with having to do that and then on the other hand, all of these countries that are kind of sermonizing the rest of the world from their civilizational pedestal are reaping the benefits of all the crony and corrupt elites of the developing countries depositing their money in these bank accounts without paying taxes.

So there’s a hypocrisy there that has to be exposed. And if these public disclosures can help to do that, then so be it.

Q: Has there been any progress since the Economic and Social Council’s (ECOSOC) adoption of the ‘UN Code of Conduct on Cooperation in Combating International Tax Evasion’?

A: That was a very important step. It was the first piece of important legislation and regulatory result that came out of the Committee of Experts in a long time. So we are seeing progress, though still not enough, but still progress. And that has to do with [it being] back on the agenda.

Now there is a new step, which I think is very important, that the Secretary-General from June onwards is going to be naming the members of the Committee of Experts. So that’s also a positive development because it obviously raises the stakes and gives it more political clout.

Ecuador’s position is that we celebrate that the Committee of Experts was created with largely the fruit of debate that goes back to Monterrey in 2002. But now we think that the Committee of Experts is insufficient and that we need something else. We need something with more clout, with more accountability, with more relation with the United Nations system itself and the governmental nature of this organization.

You have it in other spheres—if you look at trade, the World Trade Organization is a regulatory body at the highest level for trade while the Intellectual Property Organization is a regulatory body for intellectual property at the highest level.

Those institutions exist because it is in the interest of big capital that they should exist. Big capital is in favor of free trade and if a country stands in the way of free trade, then you get reprimanded. But it’s not necessarily in the interest of big capital to have the equivalent in the field of taxation. This is an important concept that we should bear in mind. A lot of the institutions of global governance that we have inherited respond to specific interests and not always to the interests of the most powerless in society. They respond to the interests of the most powerful in society.

And why should trade be more important than taxation? Probably in terms of redistribution, taxation is more important than trade. Although, nobody is saying that trade isn’t important for the overall accumulation of wealth of different countries, but in terms of redistribution and in terms of capacity of the state to work towards the 2030 Agenda, then surely [taxation] plays a huge role.

It is great that we are getting closer but it is frustrating that we are still talking about a fight in order to create an institution that will then dedicate itself to fighting for a greater outcome which is tax justice. We are not even fighting for tax justice, we are fighting for the right to have the corresponding institutions just like you have them in the fields of trade and intellectual property and others.

Q: Are you proposing for a new UN tax body or are you hoping to transform the Committee of Experts into an intergovernmental body that you have proposed?

A: We are looking to transform the Committee of Experts but we are very open to different kinds of formats. We are trying to create consensus and if you are trying to create consensus—I mean, we preside over the G77 which is 134 nations so creating consensus between 134 nations is already a tall order—but at the end of the day, we are actually trying to create consensus between 193 nations of the United Nations and that includes tax havens, countries that have been a little pro-status quo particularly in the OECD, and a lot of countries that are not in the G77.

So we are open to all sorts of different outcomes. We just want to raise the hierarchy, the political clout, the visibility, the strength of the body. There are a number of initiatives. Some people have talked about keeping it within the ECOSOC while others want to elevate it to the General Assembly—there’s a huge debate within the G77 about it. But there is consensus between 134 nations of the G77 that it should be an intergovernmental body. And that’s something that we are trying to, through our presidency, express the will of the nations that are members of our group.

Q: How feasible is the proposal for an intergovernmental body for approval by the General Assembly?

A: I think multilateralism is a slow process always. I think we are getting closer. And I think that the big conference on financing for development in the next few weeks should make significant progress. I think we will find that there is much more consensus than there was in Addis Ababa in 2015.

Most countries from the Global South have these discussions about tax justice and the right to development. But a number of countries from the G20 or OECD or more industrialized countries have also started to be flexible in their position. We are seeing changes. In the workshop we had today, which would have been unthinkable a few years ago, we had loads of tax havens present. Not just tax havens that are blacklisted in the Global South by the Global North but tax havens from Europe and from other parts of the world. And they were there because they want to listen in on the debate which shows that at least they are concerned or interested and some of them actually spoke out and said they are making changes and showing a greater commitment.

There is another major thing which is the securitization of the issue. For some countries, issues of terrorism is a big thing. Where do terrorists hide their money? Well, increasingly in constituencies that enjoy banking secrecy and those tend to be tax havens. If we can all at least agree on the outcome which is greater accountability and greater regulations on that matter, even if it is for different reasons, it’s about consensus building and that’s what multilateralism is about.

Q: So would this proposed UN tax body help bring such international cooperation in tackling illicit financial flows?

A: That’s exactly right. It’s not just about naming and shaming tax havens. If suddenly you have two neighboring countries in a European setting, even if they are developed countries, and they start this kind of taxation war by lowering their taxes in order to try to suck capital and investment out of each other in this kind of race to the bottom, then a [UN tax] body like that should be able to intervene and make at least the right recommendations. Whether those recommendations become compulsory then that’s another debate, but it should be a body like you have in other fields that has the capacity to make clear recommendations.

Q: Have you faced or expect to face opposition for this proposal, especially from the Global North?

A: For sure. The G77 has been facing—basically with the same position I am presenting to you is not a new position, the position has been going on for decades and there has been clear language on behalf of the G77.

It is interesting because within the G77, you actually have tax havens as well. But even those tax havens have accepted that an intergovernmental body, which doesn’t exclude them, is quite a good measure if you want to have a serious debate and discussion between member States on this issue. This has been the position of the G77 which has been resisted for decades. There has been loads of opposition. We saw it in Addis Ababa, particularly members of the G7 or the G20 and lots of opposition from the OECD countries and oppositions from countries that are not always considered to be tax havens in the kind of stereotypical manner.

Countries like the United Kingdom has been opposed to this very much, not only because of its own policies but also because of what is euphemistically called non-autonomous territories. The five biggest tax havens in relative terms of the offshore assets per GDP index are non-autonomous territories and four of the five are British while one is the U.S. They are not sovereign nations and they are not members of the United Nations. That’s an important issue and it’s not surprising that there is opposition when we are trying to move away from this.

The Panama Papers singled out Panama and actually Panama is making quite significant efforts to move away from that image. We are very happy to see them move away from such practices but actually, Panama is not necessarily in the top five in terms of the GDP index. The very people who even write up the black lists are not free of tax malpractice themselves.

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Norwegian Trade Union Boycott Israelhttp://www.ipsnews.net/2017/05/norwegian-trade-union-boycott-israel/?utm_source=rss&utm_medium=rss&utm_campaign=norwegian-trade-union-boycott-israel http://www.ipsnews.net/2017/05/norwegian-trade-union-boycott-israel/#comments Mon, 22 May 2017 11:23:38 +0000 Linda Flood http://www.ipsnews.net/?p=150514 The Norwegian Confederation of Trade Unions (LO) has voted in favour of a boycott against Israel, which is expected to affect cultural, economical and academic ties. Condemnation has come from Isreali politicians, diplomats and unions. By a vote of 197 for and 117 against, the LO congress passed the motion even though the representative General […]

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Israel's separation barrier as seen from Al Ram. Credit: Jillian Kestler-D'Amours/IPS

Israel's separation barrier as seen from Al Ram. Credit: Jillian Kestler-D'Amours/IPS

By Linda Flood
STOCKHOLM, May 22 2017 (IPS)

The Norwegian Confederation of Trade Unions (LO) has voted in favour of a boycott against Israel, which is expected to affect cultural, economical and academic ties. Condemnation has come from Isreali politicians, diplomats and unions.

By a vote of 197 for and 117 against, the LO congress passed the motion even though the representative General Council has not been in support of such a step.

According to Norwegian media organisation NRK, the newly elected president of LO, Hans-Christian Gabrielson, had warned delegates that a boycott could have negative consequences for Palestinian workers and trade unions.

Hans-Christian Gabrielsen. Photo: LO Norge

Hans-Christian Gabrielsen. Photo: LO Norge

Histadrut, Israel’s largest federation of trade unions, reacted with great disappointment.

In correspondence with Arbetet Global, the Director of international relations,  Avital Shapira-Shabirow, expressed:

”It would have been better for the organization to concentrate on promoting positive agendas between the parties rather than to adopt this miserable resolution, which is in utter contradiction to the cooperation of the Histadrut and PGFTU”.

She continues:

”Once again this emphasizes the unbalanced and discriminatory policy of LO-Norway towards the Histadrut and its workers.”

LO has also encouraged the Norwegian government to recognize a Palestinian state within the borderlines of 1967.

”Precisely at this time when there is another attempt to renew the negotiations between the parties, it would have been appropriate to show more responsibility and avoid adopting a unilateral resolution that does not contribute at all to promoting a possible solution to the conflict”, Avital Shapira-Shabirow writes to Arbetet Global. 

”Norwegian government strongly opposes Norwegian Labour Union’s decision” stated Norwegian Minister of Foreign Affairs on Twitter, adding:  ”We need more cooperation and dialogue, not boycott”

LO’s close political ally, the social democratic Norwegian Labour Party (Arbeiderpartiet) were also critical to the result of the vote. Party leader Jonas Gahr Støre told news agency NTB:

”I am against the boycott. I do not believe it will move us closer to a political solution for Israelis and Palestinians, with the establishment of a Palestinian state and a strengthening of human rights”

The Israel embassy in Oslo condemned the decision. Ambassador Raphael Schutz wrote in an e-mail to news agency AFP:

”This immoral resolution reflects deeply rooted attitudes of bias, discrimination and double standard towards the Jewish state”

Swedish LO though have no plans to follow suit. ILO expert Oscar Ernerot explains their position:

”In Sweden we actively support a two state solution and that Israel will cease to occupy Palestine.  That is why we collaborate with the Isreali labour union Histadrut”

The Norwegian LO has 900 000 members which is about one-fourth of the national workforce.

Linda Flood

This story was originally published by Arbetet Global

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Africa and India – Sharing the Development Journeyhttp://www.ipsnews.net/2017/05/africa-and-india-sharing-the-development-journey/?utm_source=rss&utm_medium=rss&utm_campaign=africa-and-india-sharing-the-development-journey http://www.ipsnews.net/2017/05/africa-and-india-sharing-the-development-journey/#respond Fri, 19 May 2017 06:40:13 +0000 Akinwumi Adesina http://www.ipsnews.net/?p=150475 Akinwumi Adesina, is President of the African Development Bank

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Djibouti Port. Credit: James Jeffrey/IPS

Djibouti Port. Credit: James Jeffrey/IPS

By Akinwumi Adesina
ABIDJAN, Côte d'Ivoire, May 19 2017 (IPS)

Africa, like India, is a continent of rich and compelling diversity. Both continents share a similar landscape, a shared colonial history, and similar economic and demographic challenges. This helps both India and Africa work especially well with each other.

This cooperation is both a mutual privilege and priority. At the end of the 2015 India-Africa Forum Summit, Indian Prime Minister Modi announced very substantial credits and grant assistance which benefitted our relationship. In addition to an India-Africa Development Fund, an India-Africa Health Fund and 50,000 scholarships for African students in India were established.

India’s bilateral trade with Africa has risen five-fold in the last decade, from $11.9 billion in 2005-6 to $56.7 billion in 2015-16. It is expected to reach $100 billion by 2018. This is attributed largely to initiatives by India’s private sector, and here again we are on the same wave length. We understand and appreciate that the private sector will be the critical element in Africa’s transformation.

African countries are targeted by Indian investors due to their high-growth markets and mineral rich reserves. India is the fifth largest country investing in Africa, with investments over the past 20 years amounting to $54 billion, 19.2% of all its total Foreign Direct Investment.

Akinwumi Adesina

Akinwumi Adesina

At the same time a transformed Africa is taking shape. Despite a tough global economic environment, African countries continue to be resilient. Their economies, on average, grew by 2.2% in 2016, and are expected to rise to 3.4% this year. But the average does not tell the true picture. Indeed, 14 African countries grew by over 5% in 2016 and 18 countries grew between 3-5%. That’s a remarkable performance in a period when the global environment has been impeded by recession.

By 2050, Africa will have roughly the same population as China and India combined today, with high consumer demand from a growing middle class and nearly a billion ambitious and hard-working young people. The cities will be booming, as the populations (and economic expectations) rise exponentially around the continent.

This is the busy and bustling future that Africa and India must shape together in a strategic partnership. And nowhere is this partnership more needed than on the issue of infrastructure.

At the top of the list is power and electricity. Some 645 million Africans do not have access to electricity. It’s why the African Development Bank launched the New Deal on Energy for Africa in 2016. Our goal is to help achieve universal access to electricity within ten years. We will invest $12 billion in the energy sector over the next five years and leverage $45-50 billion from the private sector. We plan to connect 130 million people to the grid system, 75 million people through off grid systems and provide 150 million people with access to clean cooking energy.

India’s bilateral trade with Africa has risen five-fold in the last decade, from $11.9 billion in 2005-6 to $56.7 billion in 2015-16. It is expected to reach $100 billion by 2018.
The African Development Bank is also in the vanguard of renewable energy development and the remarkable “off-grid revolution” in Africa. We host the Africa Renewable Energy Initiative, jointly developed with the African Union, which has already attracted $10 billion in investment commitments from G7 countries.

Universal access requires large financial investments. By some estimates, Africa needs $43-$55 billion per year until the 2030s, compared to current energy investments of about $8-$9.2 billion.

We must close this gap. And to do so, the mobilization of domestic resources will play a major role. Pension funds in Africa will reach $1.3 trillion by 2025. Already tax revenues have exceeded $500 billion per year. Sovereign wealth funds in Africa stand at $164 billion.

To attract significant investment by institutional investors, infrastructure should become an asset class. The African Development Bank has launched Africa50, a new infrastructure entity, now capitalized by African countries at over $865 million, to help accelerate infrastructure project development and project finance. Also, later this year, the African Development Bank will be launching the ‘Africa Investment Forum’ to leverage African and global pension and sovereign wealth funds into investments in Africa.

Moreover, the African business environment keeps improving, with easier regulations and more conducive government policies to attract the global investors. In 2015, Africa alone accounted for more than 30% of the business regulatory reforms in the world.

The fact is, we have already started to transform Africa. This is the territory of the High 5s: Light up and Power Africa; Feed Africa; Industrialize Africa; Integrate Africa; and Improve the Quality of life of Africans.

We can forge winning partnerships investing in power generation, energy, agro-aligned industrialisation and food processing. In doing so we can work on the synergies that exist between infrastructure, regional integration, the regulation of enterprises, employment, health and innovation.

In each of these areas I see the prospect for cooperation and collaboration with Indian partners. For example, we are partnering with the EXIM Bank of India and others to establish the Kukuza, a company based in Mauritius, to help develop and support public-private partnership (PPP) infrastructure project development and finance.

India is already one of the top bidders for Bank projects. This is a reflection of its immense expertise in a diverse range of areas from engineering to education; from ICT to railway development; skills development to regional integration; and from manufacturing to industrialisation.

It is our pleasure to partner with such an inveterate and committed investor in Africa. And may this investment be lucrative and justified, and may our mutual interest and cooperation continue for many years to come.

Dr Akinwumi Adesina is President of the African Development Bank. The 2017 AfDB Annual Meetings will be held in Ahmedabad, India, 22-26 May.

904 words

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Unlocking the Diaspora Development Potentialhttp://www.ipsnews.net/2017/05/unlocking-the-diaspora-development-potential/?utm_source=rss&utm_medium=rss&utm_campaign=unlocking-the-diaspora-development-potential http://www.ipsnews.net/2017/05/unlocking-the-diaspora-development-potential/#respond Fri, 12 May 2017 13:11:47 +0000 Elena Pasquini http://www.ipsnews.net/?p=150417 ‘Diaspora is the biggest development community that exists in the world’, according to Pedro De Vasconcelos, manager of IFAD‘s Financial Facility for Remittances. However, its potential is still largely untapped. In 2015, over 200 million migrants sent home about 450 billion dollars in remittances. An amount which is three times the official development assistance and […]

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By Elena L. Pasquini
ROME, May 12 2017 (degrees of latitude)

‘Diaspora is the biggest development community that exists in the world’, according to Pedro De Vasconcelos, manager of IFAD‘s Financial Facility for Remittances. However, its potential is still largely untapped.

In 2015, over 200 million migrants sent home about 450 billion dollars in remittances. An amount which is three times the official development assistance and exceeds foreign direct investments in most countries. Recent estimates by the World Bank suggest a decline of 2.4 percent in 2016, whilst a growth of 3.3 percent is expected in 2017.

De Vasconcelos strongly believes that the money migrants send back to their home countries can be leveraged to stimulate investments, boost development and pull people out of poverty.

How to exploit migration-related inflow of capital to spur growth and build prosperity? Reducing transaction costs is not enough to, according to De Vasconcelos. Migrants and their families need financial inclusion, which is access to basic financial services, such as payments, savings, including current accounts, credit and insurance. Senders and recipients of remittances need options to the cash-to-cash system.

Where cash is king

A World Bank and IFAD report indicates that ‘two billion or 38 per cent of working-age adults globally have no access to financial services delivered by regulated financial institutions, with 73 per cent of poor people unbanked’. However, millions of them receive remittances.

‘The reason they are not banked is because those who provide financial services think that these people are poor and have no money. That’s it’, De Vasconcelos told Degrees of Latitude in an exclusive interview.

That’s a ‘cliché’, he said. They get regularly what is equivalent to a monthly salary. ‘The majority of them want financial democracy, [but] they are living in a world where cash is king… They are equipped to some extent, with a little more of help, to be part of a financial democratic revolution’, he added. ‘Give them the options and see if cash remains king’.

When remittances received through regulated financial institutions, families plan for long-term investment goals, savings can be reinvested in the local community and they can “function as a buffer against instability at the macroeconomic level”, according to IFAD and World Bank. ‘Think of you’, without a banking account where to credit wages, without a credit card, no access to online banking services or without a credit history: ‘What do you do? You are going back to cash and hopefully you have it, but that’s it. How can you leverage anything? What you are having in your hands is what you have and what you will get’, De Vasconcelos said.

In the agricultural sector, for instance, financial institutions do not provide services or loans to farmers on the assumption that agriculture is a risky business without taking into consideration the remittances they receive. ‘Financial institutions just don’t see the opportunities that exist [with remittances]’, he said. ‘It is a sector of complete missed opportunity over missed opportunity … and it’s not just doing good, doing the right thing, it’s a win-win situation.’

De Vasconcelos has no doubt: ‘Financial inclusion is the biggest opportunity that exists.’

Learning, saving and investing

Financial inclusion requires the implementation of strategies to let offer and demand meet each other. Families need financial literacy to manage financial services, but financial institutions need to understand that banking senders and recipients of remittances is possible.

With the Financial Facility for Remittances established ten years ago, IFAD aims at testing mechanisms for accessing remittances in rural areas, but also promoting investment and entrepreneurship, as well as diaspora engagement in their countries of origin. ‘We are a laboratory’, De Vasconcelos said. ‘We saw dramatic changes’ testing new financial products with financial literacy programmes.

In Sri-Lanka, for instance, a project in collaboration with the Hatton National Bank helped senders and recipients gain access to financial services. The bank designed an account targeted for the migrants’ needs, linking savings to remittances and then providing housing or business loans. After the pilot, demand increased and Hatton Bank opened several branches offering remittance services.

In Italy, IFAD engaged Philippine diaspora with a training to learn how to budget, manage daily expenses, and increase savings. ‘That was a paradigm change … Now that [they] have saved, that know how to save, we showed that there are other options … Don’t give the money away, maybe you can invest.’ Many decided to actually invest in agricultural businesses in their communities.

Scaling up

IFAD’s projects are pilots designed to show what works and what doesn’t. Scaling up requires the involvement of multiple actors, from private sector to governments, and the mainstreaming of remittances into the programmes of many international organizations, according to De Vasconcelos. ‘Ministries of agricultures, [for instance]. It is imperative they understand that their target groups receive remittances. And the majority of them not even know or care. They think that it’s not their problem’, he said.

On 16 June, the International Day of Family Remittances will be celebrated at the United Nations headquarters, in the context of the fifth Global Forum on Remittances just one month before the High-Level Political Forum that will assess the advancement in the implementation of the first 10 Sustainable Development Goals. ‘…. If you want to achieve the SDGs, you have to look at this phenomenon that is affecting one out of ten people in planet.… One remittance affects five people on average’, De Vasconcelos stressed.

Maybe remittances are not the silver bullet, but while policymakers try to find solutions on ‘how to transform billion into trillions, and that’s what you need to achieve the goals’, migrants have sent trillions of dollars back home, according to De Vasconcelos. ‘Can you maximise that dollar when they send it? Can you try to make that dollar convert into two … by offering more options? You could do that. That’s the beautiful part of this story, it’s not a question of money for once. It’s a question of will, it’s [the] question of facilitating. The money is there, what you need is just the actors to make it happened’, he said.

‘Remittances are tricky’, De Vasconcelos noted. The risk of doing nothing, of remaining in a cash-to-cash system is to keep families dependent on what they receive from abroad.

This story was originally published by Degrees of Latitude

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Using Agriculture and Agribusiness to Bring About Industrialisation in Africahttp://www.ipsnews.net/2017/05/using-agriculture-and-agribusiness-to-bring-about-industrialisation-in-africa/?utm_source=rss&utm_medium=rss&utm_campaign=using-agriculture-and-agribusiness-to-bring-about-industrialisation-in-africa http://www.ipsnews.net/2017/05/using-agriculture-and-agribusiness-to-bring-about-industrialisation-in-africa/#comments Fri, 12 May 2017 06:24:42 +0000 Akinwumi Adesina http://www.ipsnews.net/?p=150388 Akinwumi Adesina is President of the African Development Bank

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Rice fields in Northern Ghana. Credit: Isaiah Esipisu/IPS

Rice fields in Northern Ghana. Credit: Isaiah Esipisu/IPS

By Akinwumi Adesina
ABIDJAN, Côte d'Ivoire, May 12 2017 (IPS)

No region of the world has ever moved to industrialised economy status without a transformation of the agricultural sector. Agriculture, which contributes 16.2% of the GDP of Africa, and gives some form of employment to over 60% of the population, holds the key to accelerated growth, diversification and job creation for African economies.

But the performance of the sector has historically been low. Cereal yields are significantly below the global average. Modern farm inputs, including improved seeds, mechanisation and irrigation, are severely limited.

In the past, agriculture was seen as the domain of the humanitarian development sector, as a way to manage poverty. It was not seen as a business sector for wealth creation. Yet Africa has huge potential in agriculture – and with it huge investment potential. Some 65% of all the uncultivated arable land left in the world lies in Africa. When Africa manages to feed itself, as – within a generation – it will, it will also be able to to feed the 9 billion people who will inhabit the planet in 2050.

However, Africa is wasting vast amounts of money and resources by underrating its agriculture sector. For example, it spends $35 billion in foreign currency annually importing food, a figure that is set to rise to over $100 billion per year by 2030.

Akinwumi Adesina

Akinwumi Adesina

In so doing, Africa is choking its own economic future. It is importing the food that it should be growing itself. It is exporting, often to developed countries, the jobs it needs to keep and nurture. It also has to pay inflated prices resulting from global commodity supply fluctuations.

The food and agribusiness sector is projected to grow from $330 billion today to $1 trillion by 2030, and remember that there will also be 2 billion people looking for food and clothing. African enterprises and investors need to convert this opportunity and unlock this potential for Africa and Africans.

Africa must start by treating agriculture as a business. It must learn fast from experiences elsewhere, for example in south east Asia, where agriculture has been the foundation for fast-paced economic growth, built on a strong food processing and agro-industrial manufacturing base.

This is the transformation formula: agriculture allied with industry, manufacturing and processing capability equals strong and sustainable economic development, which creates wealth throughout the economy.

Africa must not miss opportunities for such linkages whenever and wherever they occur. We must reduce food system losses all along the food chain, from the farm, storage, transport, processing and retail marketing.

To drive agro-industrialization, we must be able to finance the sector. Doing so will help unlock the potential of agriculture as a business on the continent. Under its Feed Africa strategy, the African Development Bank will invest $24 billion in agriculture and agribusiness over the next ten years. This is a 400% increase in financing, from the current levels of $600 million per year.

A key component will be providing $700 million to a flagship program known as “Technologies for African Agricultural Transformation” for the scaling up of agricultural technologies to reach millions of farmers in Africa in the next ten years.

This is the transformation formula: agriculture allied with industry, manufacturing and processing capability equals strong and sustainable economic development, which creates wealth throughout the economy.
Finance and farming have not always been easy partners in Africa. Another pillar of the Bank’s strategy is to accelerate commercial financing for agriculture. Despite its importance, the agriculture sector receives less than 3% of the overall industry financing provided by the banking sector.

Risk sharing instruments may resolve this, by sharing the risk of lending by commercial banks to the agriculture sector. Development finance institutions and multilateral development banks should be setting up national risk-sharing facilities in every African country to leverage agricultural finance. And the African Development Bank is setting the pace based on a very successful risk sharing scheme that I promoted while Agriculture Minister in Nigeria.

Rural infrastructure development is critical for the transformation of the agriculture sector, including electricity, water, roads and rail to transport finished agricultural and processed foods.

The lack of this infrastructure drives up the cost of doing business and has discouraged food manufacturing companies from getting established in rural areas. Governments should provide fiscal and infrastructure incentives for food manufacturing companies to move into rural areas, closer to zones of production than consumption.

This can be achieved by developing agro-industrial zones and staple crop processing zones in rural areas. These zones, supported with consolidated infrastructure, including roads, water, electricity and perhaps suitable accommodation, will drive down the cost of doing business for private food and agribusiness firms.

They will create new markets for farmers, boosting economic opportunities in rural areas, stimulating jobs and attracting higher domestic and foreign investments into the rural areas. This will drive down the cost of doing business, as well as significantly reduce the high level of African post-harvest losses. As agricultural income rises, neglected rural areas will become zones of economic prosperity.

Our goal is simple: to support massive agro-industrial development all across Africa. When that happens, Africa will have taken its rightful place as a global powerhouse in food production. It could well also be feeding the world. At this point the economic transformation that we are all working for will be complete.

Dr Akinwumi Adesina is President of the African Development Bank. The 2017 AfDB Annual Meetings in Ahmedabad, India, 22-26 May, will focus on ‘Transforming agriculture for wealth creation in Africa’.

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World Bank Must Stop Encouraging Harmful Tax Competitionhttp://www.ipsnews.net/2017/04/world-bank-must-stop-encouraging-harmful-tax-competition/?utm_source=rss&utm_medium=rss&utm_campaign=world-bank-must-stop-encouraging-harmful-tax-competition http://www.ipsnews.net/2017/04/world-bank-must-stop-encouraging-harmful-tax-competition/#comments Wed, 26 Apr 2017 14:33:16 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=150163 Anis Chowdhury, a former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008–2015 in New York and Bangkok.

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Anis Chowdhury, a former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008–2015 in New York and Bangkok.
Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Apr 26 2017 (IPS)

One of the 11 areas that the World Bank’s Doing Business (DB) report includes in ranking a country’s business environment is paying taxes. The background study for DB 2017, Paying Taxes 2016 claims that its emphasis is “on efficient tax compliance and straightforward tax regimes”.

The World Bank has been promoting tax cuts and tax competition as magic bullets to boost investment. As a result, tax revenues in developing countries continue to fall. Credit: IPS

The World Bank has been promoting tax cuts and tax competition as magic bullets to boost investment. As a result, tax revenues in developing countries continue to fall. Credit: IPS

Its ostensible aim is to aid developing countries in enhancing the administrative capacities of tax authorities as well as reducing informal economic activities and corruption, while promoting growth and investment. All well and good, until we get into the details.

Tax less
First, the Report advocates not only administrative efficiency, but also lower tax rates. Any country that reduces tax rates, or raises the threshold for taxable income, or provides exemptions, gets approval.

Second, it exaggerates the tax burden by including, for example, employees’ health insurance and pensions and charges for public services like waste collection and infrastructure or environmental levies that the businesses must pay. The IMF’s Government Financial Statistics Manual correctly treats these separately from general tax revenues.

Third, by favourably viewing countries that lower corporate tax rates (or increase threshold and exemptions) and negatively considering those that introduce new taxes, DB is essentially encouraging tax competition among developing countries.

Thus, the Bank is ignoring research at the OECD and IMF which has not found any convincing evidence that lower corporate tax rates or other fiscal concessions have any positive impact on foreign direct investment.

Instead, they found net adverse impacts of tax concessions and fiscal incentives on government revenues. According to the research, factors such as the availability and quality of infrastructure and human resources were more important for investment decisions than taxes.

The World Bank’s Enterprise Surveys also do not find paying taxes to be high on the list of factors that enterprise owners perceive as important barriers to investment. For example, the Enterprise Survey for the Middle East and North Africa found political instability, corruption, unreliable electricity supply, and inadequate access to finance to be important considerations; paying taxes or tax rates were not.

Yet, the World Bank has been promoting tax cuts and tax competition as magic bullets to boost investment. Not surprisingly, thanks to its still considerable influence, tax revenues in developing countries are not rising enough, or worse, continue to fall. According to some estimates, between 1990 and 2001, reduction in corporate taxes lowered countries’ tax revenue by nearly 20%.

Instead of encouraging tax competition, therefore, the World Bank should help developing countries improve tax administration to enhance collection and compliance, and to reduce evasion and avoidance. According to OECD Secretary-General Angel Gurria, “developing countries are estimated to lose to tax havens almost three times what they get from developed countries in aid”.

Global Financial Integrity has estimated that illicit financial flows of potentially taxable resources out of developing countries was US$7.85 trillion during 2004-2013 and US$1.1 trillion in 2013 alone!

Conflicts of interest

However, the Bank’s Paying Taxes and DB reports do little to strengthen developing countries’ tax revenues. This should come as no surprise as its partner for the former study is Pricewaterhouse Cooper (PwC), one of the ‘Big Four’ leading international accounting and consultancy firms. PwC competes with KPMG, Ernst & Young and Deloitte for the lucrative business of helping clients minimize their tax liabilities. PwC assisted its clients in obtaining at least 548 tax rulings in Luxembourg between 2002 and 2010, enabling them to avoid corporate income tax elsewhere.

How are developing countries expected to finance their infrastructure investment needs, increase social protection coverage, or repair their damaged environments? Instead of helping, the Bank’s most influential report urges them to cut corporate tax rates and social contributions to improve their DB ranking, contrary to what then Bank Chief Economist Kaushik Basu observed: “Raising [tax] allows developing countries to invest in education, health and infrastructure, and, hence, in promoting growth.”

How are they supposed to achieve the internationally agreed Agenda 2030 for the Sustainable Development Goals in the face of dwindling foreign aid. After all, only a few donor countries have fulfilled their aid commitment of 0.7% of GNI, agreed to almost half a century ago. Since the 2008 financial crisis, overseas development assistance has been hard hit by fiscal austerity cuts in OECD economies except in the UK under Cameron.

The Bank would probably recommend public-private partnerships (PPPs) and borrowing from it. Countries starved of their own funds would have to borrow from the Bank, but loans need to be repaid. Governments lacking their own resources are being advised to rely on PPPs, despite predictable welfare outcomes – e.g., reduced equity and access due to higher user fees – and higher government contingent fiscal liabilities due to revenue guarantees and implicit subsidies.

Financially starved governments boost Bank lending while PPPs increase the role of its International Finance Corporation (IFC) in promoting private sector business. Realizing the Bank’s conflict of interest, many middle-income countries ignore Bank advice and seek to finance their investments and other activities by other means. Thus, there are now growing demands that the Bank stop promoting tax competition, deregulation and the rest of the Washington Consensus agenda.

Bank must support SDGs
However, nothing guarantees that the Bank will act accordingly. It has already ignored the recommendation of its independent panel to stop its misleading DB country rankings. While giving lip service to the International Labour Organization (ILO) and others who have asked it to stop ranking countries by labour market flexibility, the Bank continues to promote labour market deregulation by other means.

If the Bank is serious about being a partner in achieving Agenda 2030, it should align its work accordingly, and support UN leadership on international tax cooperation besides enhancing governments’ ability to tax adequately, efficiently, and equitably. In the meantime, the best option for developing countries is to ignore the Bank’s DB and Paying Taxes reports.

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Reclaiming the Bandung Spirit for Shared Prosperityhttp://www.ipsnews.net/2017/04/reclaiming-the-bandung-spirit-for-shared-prosperity/?utm_source=rss&utm_medium=rss&utm_campaign=reclaiming-the-bandung-spirit-for-shared-prosperity http://www.ipsnews.net/2017/04/reclaiming-the-bandung-spirit-for-shared-prosperity/#respond Mon, 24 Apr 2017 07:17:03 +0000 Noeleen Heyzer and Anis Chowdhury http://www.ipsnews.net/?p=150094 Noeleen Heyzer, former Executive Secretary of UN-ESCAP and Under-Secretary-General of the UN. She was also special advisor to the UN-Secretary-General for Timor Leste.

Anis Chowdhury, former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008-2015 in New York and Bangkok.

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Noeleen Heyzer, former Executive Secretary of UN-ESCAP and Under-Secretary-General of the UN. She was also special advisor to the UN-Secretary-General for Timor Leste.

Anis Chowdhury, former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008-2015 in New York and Bangkok.

By Noeleen Heyzer and Anis Chowdhury
Bangkok and Sydney, Apr 24 2017 (IPS)

“The despised, the insulted, the hurt, the dispossessed—in short, the underdogs of the human race were meeting. … Who had thought of organizing such a meeting? And what had these nations in common? Nothing, it seemed to me, but what their past relationship to the Western world had made them feel. This meeting of the rejected was in itself a kind of judgment upon the Western world!.”

—Richard Wright, The Color Curtain [University Press of Mississippi, 1956].

This is how Richard Wright, a novelist saw the gathering of leaders from 29 African and Asian nations at Bandung (Indonesia) on 18-25 April, 1955 of 29.

Noeleen Heyzer

Noeleen Heyzer

The leaders, prominent among them Jawaharlal Nehru (India), Kwame Nkrumah (Ghana), Gamal Abdel Nasser (Egypt), Chou En Lai (China), Ho Chi Minh (Viet Nam), and Adam Clayton Powell (Congressman from Harlem, USA), considered how they could help one another in achieving social and economic well-being for their large and impoverished populations. Their agenda addressed race, religion, colonialism, national sovereignty, and the promotion of world peace. In opening the conference, the President of Indonesia, Ahmed Sukarno asked,

“What can we do? We can do much! We can inject the voice of reason into world affairs. We can mobilize all the spiritual, all the moral, all the political strength of Asia and Africa on the side of peace. Yes, we! We, the peoples of Asia and Africa, …, we can mobilize what I have called the Moral Violence of Nations in favour of peace.

The Bandung declaration

The final communiqué expressed, “general desire for economic co-operation among the participating countries on the basis of mutual interest and respect for national sovereignty”; “agreed to provide technical assistance to one another”; “recognized the vital need for stabilizing commodity trade”; recommended that: “Asian-African countries should diversify their export trade by processing their raw material, wherever economically feasible, before export”; promote “intraregional trade”; and provide “facilities for transit trade of land-locked countries”.

The rise of the Third World and demand for a New International Economic Order

Anis Chowdhury

Anis Chowdhury

It was the beginning of what came to be known as the “non-aligned” movement and the “Third World” and within the United Nations, the Group of 77 plus China. With this confidence they called for the establishment of a New International Economic Order (NIEO) recognized at the 1974 General Assembly, based on equity, sovereign equality, interdependence, common interest and cooperation among all States, to correct inequalities and redress existing injustices; to eliminate the widening gap between the developed and the developing countries; and to ensure steadily accelerating economic and social development and peace and justice for present and future generations.

The NIEO declaration was, in effect, a call for shared and differentiated responsibility for equitable development.

Unfortunately, many aspects of the NIEO were never implemented. While the developing countries sought strategic integration with the global economy using trade and industry policies, they were advised to accept unfettered liberalization and privatization, which saw increased volatility and financial crises often disproportionately disadvantaging them. The aid conditionality of the International Monetary Fund (IMF) and the World Bank included straight-jacketed package of so-called “sound policies” that emphasized deregulation and a diminished role for the State. This drastically reduced state capability and developing countries’ policy space to deal with crises, pursue their developmental aspirations and achieve structural transformation.

Through the experience of the Latin American debt crisis in the 1980s and the Asian financial crisis of 1997-98, the countries of the South have realized that they have to create their own policy space and craft out policies based on their own circumstances. Thus, they managed to grow steadily over the last two decades and were able to weather the 2008-2009 Great Recession remarkably well to anchor the global economic recovery.

The Global South is no longer a collection of “despised, the insulted, the hurt, the dispossessed—in short, the underdogs”; they are the drivers of global economy.

Global South’s fault-lines

However, the issues facing developing countries are more complex now. They are faced with issues of inequalities and insecurities which affect social cohesion; climate change and uneven competition in global markets when key global negotiations on trade and climate change have broken down. They also face the potential danger of weakening of solidarity as the members of the Global South seek different interests.

It does not help when governance failure occurs in a number of the developing countries; when some are ripped apart by violent internal or regional conflicts, or manipulated because of rising extremisms of many sorts. Corruptions, lack of accountability and trembling of human rights are affront to the aspirations of independence and hinder the fulfilment of development and dignity for all. The governance failures and divided societies within have also weakened the developing South’s ability to deal with issues of international governance in the globalizing world, and our common future even with “Rising Asia”.

Reclaiming the Bandung spirit

Time has come for the rising Global South to collectively work for the unfinished business of a new international economic order that today has to take a more integrated and universal approach for people, planet and prosperity as highlighted in the Agenda 2030 for sustainable development goals (SDGs); to stabilize commodity prices; to improve export incomes; to ensure food security; to demand improved access to markets in developed countries; to put a stop to siphoning off capital through dubious transfer pricing arrangements of multinational corporations and international tax havens; to eliminate the instability of the international monetary system; to ensue full and effective participation in all decision-making in all global bodies, including the IMF and the World Bank, and in formulating an equitable and durable monetary system.

However, the developing South must lead by putting its own house in order; improve democratic governance, respect human rights especially women’s human rights, and ensure wider freedom of its own citizen to re-establish legitimacy and trust through a new social contract that responds to the needs and hopes of all citizens, not just in form but in substance.

In the spirit of Bandung, they have to work together for the prosperity of their people and to protect humanity’s common good, especially our planet. They should recall the message, “All of us … are united by more important things than those which superficially divide us. … And we are united by a common determination to preserve and stabilize peace in the world. . . .”

It is time to come together and advance together to address the risks and challenges that confront our world and harness the opportunities to build a more inclusive and sustainable future of shared prosperity. Only then can we sing:

A cry of defiance, and not of fear,
A voice in the darkness, a knock at the door,
And a word that shall echo for evermore! (Longfellow; from President Sukarno’s opening speech).

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Dispute Settlement Becomes Speculative Financial Assethttp://www.ipsnews.net/2017/04/dispute-settlement-becomes-speculative-financial-asset/?utm_source=rss&utm_medium=rss&utm_campaign=dispute-settlement-becomes-speculative-financial-asset http://www.ipsnews.net/2017/04/dispute-settlement-becomes-speculative-financial-asset/#respond Wed, 19 Apr 2017 14:46:24 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=150047 Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Investor-state dispute settlement (ISDS) will thus strengthen perverse incentives for foreign investors at the expense of local businesses and the public interest. Credit: IPS

By Jomo Kwame Sundaram
KUALA LAMPUR, Apr 19 2017 (IPS)

Investor-state dispute settlement (ISDS) provisions in bilateral investment treaties (BITs) and free trade agreements (FTAs) have effectively created a powerful and privileged system of protections for foreign investors that undermines national law and institutions.

ISDS allows foreign corporations to sue host governments for supposedly causing them losses due to policy or regulatory changes that reduce the expected profitability of their investments. Very significantly, ISDS provisions have been and can be invoked, even when rules are non-discriminatory, or profits come from causing public harm. ISDS will thus strengthen perverse incentives for foreign investors at the expense of local businesses and the public interest.

New opportunity for speculation
In recent years, ISDS provisions of investment treaties, free trade and other agreements have increasingly provided an investment opportunity to make money by speculating on lawsuits, winning huge awards and forcing foreign governments, and taxpayers, to pay. Financial speculators have increasingly purchased corporations deemed capable of profitably bringing winnable ISDS claims, sometimes using ‘shell companies’.

Some hedge funds and private equity firms even finance ISDS cases as third parties, with ISDS itself the raison d’etre for such investments. Such ‘third-party funding’ of ISDS claims has been expanding quickly as financing such claims has proven to be very lucrative.

Third-party financing reduces litigation costs to the corporations themselves, making it easier, and thus encouraging them to sue. Foreign corporations typically do not have to declare receiving third-party funding for an ISDS case. Not surprisingly then, the ISDS claims-financing industry is booming as different types of investors have been attracted by and drawn into financing lawsuits, treating ISDS claims as speculative assets.

The International Council for Commercial Arbitration estimates that at least three fifths of those considering ISDS claims have inquired about possible third-party financing before pursuing them. Financing firms provide clients with litigation packages from the outset, advising on what treaties to exploit and which law firms to hire, even recommending arbitrators.

While bondholders do not actually develop productive capacities or sell services in a host country, they too can resort to ISDS arbitration to maximize returns to their debt purchases. Thus, bond-holders who have lost value can use the ISDS back door to sue countries for compensation, thus encouraging a new speculative investment option for ‘vultures’. Hence, ISDS allows investors with little connection to the ‘aggrieved’ initial investment to benefit financially as well.

Ripe for the picking
ISDS advocates claim that case outcomes remain uncertain, with foreign corporations only winning about a quarter of the cases they initiate. But this proportion does not include settlements agreed to before arbitration proceedings are concluded when the foreign corporations secure huge gains. ISDS arbitration is very attractive, even tempting to foreign investors who would otherwise not pursue claims in national courts against host governments.

Recent ISDS arbitrations have seen much greater delegation of authority to arbitrators in interpreting and applying agreements, without any option to appeal or otherwise challenge the arbitrators’ decisions. There is no way to ensure that arbitration tribunals will interpret and apply treaty provisions in ways consistent with governments’ understandings of what treaty obligations imply.

Those investing in ISDS cases recognize that the most vulnerable governments for investors to sue are typically those already in some trouble. For example, when a country resorts to emergency economic measures to protect its citizens, investors can easily claim that these undermine earlier understandings of international agreements. Ensuing lawsuits typically hurt the country’s credit rating, raising capital costs and undermining its ability to attract investment.

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Economic Recovery Crucial to Sustainable Developmenthttp://www.ipsnews.net/2017/04/economic-recovery-crucial-to-sustainable-development/?utm_source=rss&utm_medium=rss&utm_campaign=economic-recovery-crucial-to-sustainable-development http://www.ipsnews.net/2017/04/economic-recovery-crucial-to-sustainable-development/#comments Tue, 11 Apr 2017 14:08:49 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=149903 Anis Chowdhury, a former professor of economics at the University of Western Sydney, held senior United Nations positions during 2008-2015 in New York and Bangkok. Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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The World Economic Situation and Prospects (WESP) was the only such report to identify risks to the global economy before the 2008-2009 global financial crisis, while both the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) largely ignored them. Credit: IPS

By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Apr 11 2017 (IPS)

More than eight years after the global financial crisis exploded in late 2008, economic growth remains generally tepid, while ostensible recovery measures appear to have exacerbated income and other inequalities. Yet, despite the G-20 group of the world’s largest economies raising the level, frequency and profile of its meetings, effective multilateral cooperation and coordination remains a distant dream.

Little reason to cheer
The United Nations’ recent World Economic Situation and Prospects (WESP) 2017 offers little cause for comfort:
• the world economy has not yet emerged from the protracted slow growth following the 2008 financial crisis;
• significant uncertainties and risks weigh heavily on its projected modest global recovery for 2017-2018;
• despite modest economic growth, global carbon emissions have not declined in the last two years;
• more alarmingly, new investment in renewable energy dropped sharply in the first half of 2016, as progress in emissions mitigation in recent years could easily be reversed;
• growth in the least developed countries (LDCs) will remain well below the sustainable development goals (SDGs) target in the near term; and
• below-target growth and tax revenue threaten critical public expenditure on healthcare, education, social protection, and climate change adaptation.

Credibility
Unfortunately, the WESP does not attract as much media attention or fanfare as other similar global reports, such as the International Monetary Fund’s (IMF) World Economic Outlook or the OECD’s Global Economic Outlook. Nevertheless, WESP was the only such report to identify risks to the global economy before the 2008-2009 global financial crisis, while both the IMF and OECD largely ignored them.

Even after US sub-prime housing debt problems became apparent and Lehman Brothers had collapsed, both remained optimistic, predicting a soft-landing in the US at worst, which they suggested would be off-set by robust growth in Europe. Both supported the turn to ‘fiscal consolidation’ as soon as ostensible ‘green shoots of recovery’ were spotted in 2019. Despite greater consideration of ostensibly Keynesian policy options since, seriously Keynesian macroeconomic analysis remains largely off-limits.

Global recovery?
WESP 2017 identifies policy paralysis and lack of policy coordination as among the main factors holding back global economic recovery. Over-reliance on unconventional monetary policy and fiscal consolidation in major economies, especially in Europe, are contributing not only to policy uncertainty, but also to growing inequality.

Protracted weak global demand – due to fiscal contraction, high household debt and growing inequality – has reduced incentives for firms to invest. Political and policy uncertainties, due to events such as ‘Brexit’, have also discouraged private investment. Thus, investment has slowed significantly in major developed and emerging economies. The extended period of weak investment is driving the slowdown in productivity growth.

Meanwhile, international trade expanded by just 1.2 per cent in 2016, the third-lowest rate in the past three decades. Slow world trade growth is both contributing to and symptomatic of the global economic slowdown.

What needs to be done?
Thus, WESP 2017 calls for a more balanced policy mix – moving beyond excessive reliance on monetary policy – to restore a healthy growth trajectory over the medium-term for the global economy as well as to tackle some social and environmental dimensions of sustainable development.

Government support for public goods, such as combating climate change, remains crucial, as private investors tend to evaluate risk and return over short-term horizons and under-invest in public priorities. Investment in research and development, education and infrastructure would promote sustainable development as well as social and environmental progress, while supporting productivity growth.

WESP 2017 also calls for greater international coordination to ensure complementarities among trade, investment, and other public policies, and to better align the multilateral trading system with the 2030 Agenda for Sustainable Development to ensure inclusive growth and decent work for all.

Global Green New Deal

Any recession or economic crisis also offers the opportunity to weed-out lagging activities or obsolete practices, and to restructure the economy to put it on a more sustainable path. Thus, to tackle the global financial crisis, in early 2009, the UN proposed a Global Green New Deal (GGND) comprising of public work programmes and social protection, including in developing countries. This bold proposal remains relevant as the global economy struggles to recover, and achievement of the SDGs is threatened.

Most critically, public works programmes should be launched, not only in developed countries, which can resort to deficit financing, but also in developing countries, where resources are more limited and policies are generally more hostage to the global financial system. Thus, GGND can not only accelerate economic recovery and job creation, but also address sustainable development challenges more generally. To be more effective, GGND should be part of a broader international counter-cyclical effort comprising three main elements:
1. Financial support for developing countries, provided through the multilateral system, to prevent their economic slowdown.
2. National government-led investment packages in developed and developing countries to revive and ‘green’ national economies.
3. International policy coordination to ensure that developed countries’ investment packages not only create jobs in developed countries, but also have strong developmental impacts in developing countries. These should involve collaborative initiatives among governments of developed and developing countries.

The window of opportunity to restructure the global economy towards a more sustainable path has been closing as governments procrastinate, adopt self-defeating fiscal consolidation policies, and give up economic management responsibility to the monetary authorities. ‘Quantitative easing’ has not only failed to ensure a robust recovery, but has also exacerbated the inequalities and disparities breeding ethno-chauvinist populism. Bold, internationally well-coordinated actions are needed now more than ever.

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