Inter Press Service » Trade & Investment http://www.ipsnews.net Turning the World Downside Up Thu, 30 Jul 2015 18:08:23 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.6 Opinion: Developing Nations Set to Challenge Rich Ahead of SDG Summithttp://www.ipsnews.net/2015/07/opinion-developing-nations-set-to-challenge-rich-ahead-of-sdg-summit/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-developing-nations-set-to-challenge-rich-ahead-of-sdg-summit http://www.ipsnews.net/2015/07/opinion-developing-nations-set-to-challenge-rich-ahead-of-sdg-summit/#comments Mon, 27 Jul 2015 14:18:12 +0000 Soren Ambrose http://www.ipsnews.net/?p=141756

Soren Ambrose is Head of Policy, Advocacy & Research at ActionAid International

By Soren Ambrose
NEW YORK, Jul 27 2015 (IPS)

The final round of negotiations on the Sustainable Development Goals – the successor to the Millennium Development Goals, due to be inaugurated in September at the U.N. General Assembly – is now underway in New York.

Courtesy of Soren Ambrose/ActionAid

Courtesy of Soren Ambrose/ActionAid

The United Nations and many member governments want to conclude the debates by the end of July, so that there will not be open debate during the SDG Summit. But reports indicate that the atmosphere in the room is one of seething distrust.

That’s because of what happened during the Financing for Development (FfD) conference in Addis Ababa, Ethiopia last month.

The developing countries – those grouped together in the “G77,” which 50 years after its founding actually has 134 members – were pushing a proposal for a universal intergovernmental organisation, within the U.N., which would have as its mandate reform and maintenance of the international tax system.

While this proposal would not have immediately remedied any of the myriad ways that corporations dodge taxes in developing countries, it would be a decisive change to the system that has allowed such activities to flourish.

To the extent that there are international rules, or standards and guidelines, on taxation now, they are proposed and elaborated by the Organization for Economic Cooperation & Development (OECD), a club of 34 of the world’s richest countries. Every once in a while they make a show of consulting those other 134 countries, but those others never actually get a vote.Ultimately it’s the pressure of the people which will force their governments to be responsible. The movement to stand up to those who have hijacked our power is building.

In the new proposed way of making decisions on international tax rules, every country would have an equal voice and equal vote. This fight matters is because developing countries are confronting the need to change how the rules are made, and who makes the rules.

Until they manage that, they will always, at best, be running to stay in place. Changing who makes the rules is a necessary, although not sufficient condition, for creating permanent change.

Taxation is vital because wealthy companies and individuals get and stay rich by using a portion of their considerable resources to hire lawyers and accountants to guide them in dodging the taxes they should be paying in the countries where they excavate, grow, or purchase their raw materials, assemble their products, and make an increasing proportion of their sales.

If they don’t have such staff in-house, they can hire the services of big accounting firms for whom this is the most lucrative activity.

Most big companies manipulate “tax treaties” between countries and tax havens like Switzerland, Mauritius, and the Cayman Islands to create legal fictions that exempt them from paying most of the taxes they owe.

What they do is usually not technically illegal, because of the impossibility of keeping up with the tactics of the armies of experts dedicated to avoiding taxes. But neither is it quite ethical.

This deprives countries of the revenue – to the tune of at least 100 billion dollars every year – that they need to fund development, and ensures the perpetuation of the concentration of wealth in the hands of a very few. That wealth translates to power – a veritable global plutocracy.

The OECD, to be fair, has made some moves to clamp down on the most egregious forms of tax avoidance, including their “base erosion and profit shifting” (BEPS) process begun in 2013.

The corporate lawyers and accountants were a little nervous about BEPS, but with the process winding up, it appears that any reforms it demands will not be manageable. The promises at the outset of the process to include developing countries never amounted to much.

The FfD process in the U.N. was, of course, universal. The U.N. and national governments usually like to have the “outcome document” finalised before a summit meeting. The prospect of a messy negotiation with thousands of advocates just outside the door makes them nervous.

But after months of negotiations in New York and a series of missed deadlines, the big debate over the tax body was not resolved. The ministers would go to Addis facing open negotiations.

Bolstered by the support of hundreds of civil society groups, the G77 governments – a group that has to accommodate the interests of very disparate countries – held together. Three BRICS countries – South Africa as the chair of the G77, along with India and Brazil – were vocal actors on the side of the developing countries, something they can’t always be relied on to do as they ascend the global power ladder.

With negotiators starting to meet before the formal start of the meetings on July 13, there were several days filled with ever-shifting rumours. But on the evening of July 15, the eve of the scheduled end of the conference, the announcement came: there would be an outcome document little changed from the unsatisfactory draft they brought from New York.

Promises were made to expand the resources and prestige of the existing U.N. Committee of Tax Experts, but nothing more. No universal membership, and no mandate for reform.

The G77 held out to the end. But the rich countries, led by the United States with the steady support of the European Union, Canada, Japan, and Australia, refused to give up the regime of loopholes and havens and double-dealing that adds up to billions in lost revenue every year.

Make no mistake, ordinary people in rich countries also lose out as corporations dodge taxes. But with their territories serving as the leading facilitators of tax avoidance in the world, their governments showed they want the present system to endure.

The current global hyper-capitalism now puts no constraints on capital. Unlimited profits, unlimited wealth, and unlimited power have been accruing to the finance industry and the wealthy corporations and individuals it serves for over 40 years.

The rich countries’ politicians not only put up with it, they tout the “private sector” as the panacea for development in poor countries, with nearly no evidence to support them.

And at home, they cut public services and impose austerity, explaining that government just can’t afford to serve the people. Their priority has been corporations’ and investors’ bottomless appetite for profit and power.

As my colleague Ben Phillips has written about the FfD, it’s actually good news that the rich countries had to put an ugly stop to the negotiations, with barely a face-saving compromise to point to. Usually they manage to find a way to assign the blame to someone else.

Forcing them to show their hand is valuable; it’s clear that those making the rules are far more identified with a powerful few than with the public they claim to serve.

The next step is at the SDG Summit at the end of September, at the time of the annual U.N. General Assembly meetings. There we will learn whether and to what extent the developing countries will stand up to those who have monopolised power for so long. If they do, we may be on the road to reversing parts of the system that perpetuates the status quo.

Whatever happens, we aren’t going anywhere. Civil Society won’t change this global dynamic by attending these conferences, or through polite lobbying. We will have to endure many more meetings, and more setbacks.

But ultimately it’s the pressure of the people which will force their governments to be responsible. The movement to stand up to those who have hijacked our power is building.

Edited by Kitty Stapp

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Opinion: European Federalism and Missed Opportunitieshttp://www.ipsnews.net/2015/07/opinion-european-federalism-and-missed-opportunities/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-european-federalism-and-missed-opportunities http://www.ipsnews.net/2015/07/opinion-european-federalism-and-missed-opportunities/#comments Fri, 24 Jul 2015 07:32:41 +0000 Emma Bonino http://www.ipsnews.net/?p=141694

In this column Emma Bonino, a leading member of the Radical Party, former European Commissioner and a former Italian foreign minister, argues that serious problems affecting Europe, like the Greek crisis and waves of migration, could have been addressed more quickly and efficiently if the European Union had embraced federalism.

By Emma Bonino
ROME, Jul 24 2015 (IPS)

“A serious political and social crisis will sweep through the euro countries if they do not decide to strengthen the integration of their economies. The euro zone crisis did not begin with the Greek crisis, but was manifested much earlier, when a monetary union was created without economic and fiscal union in the context of a financial sector drugged on debt and speculation.”

Emma Bonino

Emma Bonino

These words, which are completely relevant today, were written by a group of federalists, including Romano Prodi, Giuliano Amato, Jacques Attali, Daniel Cohn-Bendit and this author, in May 2012.

Those with a federalist vision are not surprised that the crisis in Greece has dragged on for so many years, because they know that a really integrated Europe with a truly central bank would have been able to solve it in a relatively short time and at much lower cost.

In this region of 500 million people, another example of the inability to solve European problems was the recent great challenge of distributing 60,000 refugees among the 28 member countries of the European Union. Leaders spent all night exchanging insults without reaching a solution.

Unless the federalist programme – namely, the gradual conversion of the present European Union into the United States of Europe – is adopted, the region will not really be able to solve crises like those of Greece and migration.

It can be stated that European federalism – which would complete Europe’s unity and integration – is now more necessary than ever because it is the appropriate vehicle for overcoming regional crises and starting a new phase of growth, without which Europe will be left behind and subordinated not only to the United States but also to the major emerging powers.“Unless the federalist programme – namely, the gradual conversion of the present European Union into the United States of Europe – is adopted, the region will not really be able to solve crises like those of Greece and migration”

Furthermore, its serious and growing social problems – such as poverty, inequality and high unemployment especially among young people – will not be solved.

Within the federalist framework there is, at present, only the euro, while all the other institutions or sectoral policies (like defence, foreign policy, and so on) are lacking.

Excluding such large items of public spending as health care and social security, there are however other government functions which, according to the theory of fiscal federalism (the principle of subsidiarity and common sense), should be allocated to a higher level, that of the European central government.

Among them are, in particular: defence and security, diplomacy and foreign policy (including development and humanitarian aid), border control, large research and development projects, and social and regional redistribution.

Defence and foreign policy are perhaps considered the ultimate bastions of state sovereignty and so are still taboo. However, the progressive loss of influence in international affairs among even the most important European countries is increasingly evident.

To take, for instance, the defence sector: as Nick Witney, former chief executive of the European Defence Agency, has noted: “most European armies are still geared towards all-out warfare on the inner-German border rather than keeping the peace in Chad or supporting security and development in Afghanistan.

“This failure to modernise means that much of the 200 billion euros that Europe spends on defence each year is simply wasted,” and “the EU’s individual Member States, even France and Britain, have lost and will never regain the ability to finance all the necessary new capabilities by themselves.”

It should be noted that precisely because the mission of European military forces has changed so radically, it is nowadays much easier, in principle, to create new armed forces from scratch (personnel, armaments, doctrines and all) instead of persisting in the futile attempt to reconvert existing forces to new missions, while at the same time seeking to improve cooperation between them.

Why should it be possible to create a new currency and a new central bank from scratch, and not a new army?

Common defence spending by the 28 European Union countries amounts to 1.55 percent of European GDP. Hence, a hypothetical E.U. defence budget of one percent of GDP appears relatively modest.

However, it translates into nearly 130 billion euros, which would automatically make the E.U. armed forces an effective military organisation, surpassed only by that of the United States, and with resources three to five times greater than those available to powers like Russia, China or Japan.

It would also mean saving an estimated 60 to 70 billion euros, or more than half a percentage point of European GDP, compared with the present situation.

Transferring certain government functions from national to European level should not give rise to a net increase in public spending in the whole of the European Union, and could well lead to a net decrease because of economies of scale.

Taking the example of defence, for the same outlay a single organisation is certainly more efficient than 28 separate ones. Moreover, as demonstrated by experiences with the North Atlantic Treaty Organization (NATO) during the Cold War, efforts to coordinate independent military forces always produced disappointing results and parasitic reliance on the wealthier providers of this common good. (END/COLUMNIST SERVICE)

Translated by Valerie Dee/Edited by Phil Harris    

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

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Mideast Arms Build-up Negative Fallout from Iran Nuclear Dealhttp://www.ipsnews.net/2015/07/mideast-arms-build-up-negative-fallout-from-iran-nuclear-deal/?utm_source=rss&utm_medium=rss&utm_campaign=mideast-arms-build-up-negative-fallout-from-iran-nuclear-deal http://www.ipsnews.net/2015/07/mideast-arms-build-up-negative-fallout-from-iran-nuclear-deal/#comments Thu, 23 Jul 2015 21:02:36 +0000 Thalif Deen http://www.ipsnews.net/?p=141731 In an exercise, a Kuwaiti F18 Hornet fighter aircraft stages an attack on Royal Navy Type 23 frigate HMS St Albans. Currently, Israel and all six GCC countries are armed with state-of-the art fighter planes, mostly from the United States. Credit: Simmo Simpson/OGL license

In an exercise, a Kuwaiti F18 Hornet fighter aircraft stages an attack on Royal Navy Type 23 frigate HMS St Albans. Currently, Israel and all six GCC countries are armed with state-of-the art fighter planes, mostly from the United States. Credit: Simmo Simpson/OGL license

By Thalif Deen
UNITED NATIONS, Jul 23 2015 (IPS)

The nuclear agreement concluded last week between Iran and six big powers, the United States, Britain, France, Russia, China and Germany, is threatening to trigger a new Middle East military build-up – not with nuclear weapons but with conventional arms, including fighter planes, combat helicopters, warships, missiles, battle tanks and heavy artillery.

The United States is proposing to beef up the military forces of some of its close allies, such as Saudi Arabia, United Arab Emirates (UAE), Kuwait, Qatar, Bahrain and Oman, with additional weapons systems to counter any attempts by Iran to revitalise its own armed forces when U.N. and U.S. sanctions are eventually lifted releasing resources for new purchases.“Even though the agreement was just signed on July 14th, countries are apparently already jockeying to see what U.S. conventional weapons they can get out of the deal." -- Dr. Natalie J. Goldring

All six countries, members of the Gulf Cooperation Council (GCC), are predominantly Sunni Muslims as against Shia Iran.

According to one news report, the administration of President Barack Obama is also considering an increase in the hefty annual 3.0-billion-dollar military grant – free, gratis and non-repayable – traditionally provided to Israel over the years to purchase U.S weapons systems.

The proposed increase is being described as a “consolation prize” to Israel which has denounced the nuclear deal as a “historic mistake.”

Dr. Natalie J. Goldring, a Senior Fellow with the Security Studies Programme in the Edmund A. Walsh School of Foreign Service at Georgetown University, told IPS although the nuclear agreement with Iran is likely to aid nuclear nonproliferation efforts, it may also result in a dangerous increase in the proliferation of conventional weapons to the region.

“Even though the agreement was just signed on July 14th, countries are apparently already jockeying to see what U.S. conventional weapons they can get out of the deal,” she said.

On the other hand, the longstanding sanctions against transfers of major conventional weapons, missiles, and missile systems to Iran will continue for several years under the nuclear agreement, she pointed out.

Even so, Gulf states and Israel are reportedly already lining up for more weapons from the United States.

As usual, their argument seems to be that the weapons are needed for their own defence, she added.

“But who are they defending against? Is the presumed adversary Iran, which remains under a conventional weapons embargo? And who has the military advantage?” asked Dr Goldring, who also represents the Acronym Institute at the United Nations on conventional weapons and arms trade issues.

According to The New York Times, she said, Iran’s military budget is only about a tenth of the combined military budgets of the Sunni states and Israel.

The Times said the Arab Gulf nations spend a staggering 130 billion dollars annually on defence while Iran’s annual military budget is about 15 billion dollars.

Israel spends about 16 billion dollars annually on its defence, plus the 3.0 billion it receives as U.S. military grants.

Nicole Auger, Middle East & Africa Analyst and International Defense Budgets Analyst at Forecast International, a leading U.S. defence research company, told IPS the Times figures are pretty much on target.

Furthermore, she said, the Sunni dominated nations (read: Gulf states) and Israel have strengths that their Iranian rival does not.

“Despite Iran’s manpower advantage and large arsenal of rockets and missiles, the GCC combined and Israel have far greater air power capabilities, not to mention superior aircraft platforms,” said Auger, author of International Military Markets, Middle East & Africa.

The modern, Western hardware purchased through the past decade stands in direct contrast to the ageing inventory of Iranian forces, she added.

Currently, Israel and all six GCC countries are armed with state-of-the art fighter planes, mostly from the United States.

Israel’s air force is equipped with F-16s, Saudi Arabia, with F-15s and Eurofighter Typhoons, UAE, with F-16s. Kuwait, with Boeing F/A-18C Fighters and Qatar, with Dassault-Mirage 2000-5, eventually to be replaced with the Rafale fighter plane both from France.

Auger said Iran’s most modern fighter is the MiG-29, delivered in the early 1990s.

The rest of the fighter force includes aged U.S.-supplied F-14s, F-4s, and F-5s, as well as Russian-supplied Su-24 attack jets and Dassault Aviation Mirage F-1AD fighter-bombers.

But most of them have remained grounded for lack of spares due to economic and military sanctions by the United States, the European Union and the United Nations.

Dr Goldring told IPS it has to be acknowledged that the United States and its negotiating partners have secured an important agreement with Iran, which should make it more difficult for Iran to develop nuclear weapons.

This agreement should also significantly reduce the likelihood of a U.S. war with Iran. The agreement is a good deal for the United States, its negotiating partners, its allies in the Middle East, and Iran, she added..

Still, the U.S. government is once again contemplating providing highly sophisticated weapons to Middle Eastern nations, even though some of the prospective recipients have horrendous human rights records and questionable internal stability.

Continuing to sell our most modern weapons and technologies also makes it more likely that U.S. military officials will soon be testifying before Congress that they need new weapons systems because the current technologies have already been dispersed around the world, she noted.

“We’ve seen this script before. This approach ignores the risks posed by weapons transfers, and increases the risk that our military personnel will end up fighting our own weapons,” said Dr Goldring.

She pointed out that the prospect of increasing conventional weapons sales as a result of the Iran agreement “looks like a sweet deal for the arms merchants, but not for the rest of us. “

It’s long past time to break out of the traditional pattern of the U.S. government using conventional weapons transfers as bargaining chips.

“Middle Eastern countries need to reduce their stockpiles of conventional weapons, not increase them,” she declared.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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Opinion: Addis Outcome Will Impact Heavily on Post-2015 Agenda – Part 2http://www.ipsnews.net/2015/07/opinion-addis-outcome-will-impact-heavily-on-post-2015-agenda-part-2/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-addis-outcome-will-impact-heavily-on-post-2015-agenda-part-2 http://www.ipsnews.net/2015/07/opinion-addis-outcome-will-impact-heavily-on-post-2015-agenda-part-2/#comments Thu, 23 Jul 2015 13:00:31 +0000 Bhumika Muchhala http://www.ipsnews.net/?p=141719 Bhumika Muchhala of Third World Network. Credit: UN Photo/Paulo Filgueiras

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

By Bhumika Muchhala
ADDIS ABABA, Jul 23 2015 (IPS)

The United Nations is the only universal forum that connects systemic issues to the global partnership for development. The latter recognises North-South cooperation based on historical responsibility and varying levels of development and capacity among member states of the U.N.

And there is a vital acknowledgement of the global rules and drivers that determine national policy space for development.While prospects are uncertain for now, what is increasingly clear is the stark fact that the geopolitical offensive in the U.N. has not abated. If anything, it has become even more pronounced.

With regard to such systemic reforms, the Addis Ababa outcome on Financing for Development (FfD) explicitly ignores a landmark initiative in the U.N. itself to establish an international statutory legal framework for debt restructuring.

Instead, it reaffirms the dominance of creditor-led mechanisms, such as the Paris Club, whose inequitable governance was criticised in the Doha Declaration of 2008.

The Addis outcome also welcomes existing OECD and IMF initiatives which do not address the scale of debt problems afflicting many developing countries today, such as Jamaica, which according to its finance minister’s intervention in Addis Ababa, won’t be able to finance its SDGs until its external debt can achieve sustainability in 2025.

Clearly, servicing creditors has to precede development goals. Reversing this order by incorporating national development financing needs into debt sustainability analyses was neglected by most member states in the FFD negotiations.

In spite of the global recognition that capital controls are crucial to developing countries ability to protect themselves from financial crises, the outcome document demotes the use of “capital flow management measures” as a last resort “after necessary macroeconomic policy adjustment.”

This is a regression from the 2002 Monterrey Consensus, which recognised that “Measures that mitigate the impact of excessive volatility of short-term capital flows are important and must be considered.” Financial regulations, particularly on derivatives trading, goes unheeded.

Similarly, the Addis outcome makes no call for special drawing rights (SDR) allocations. Again, this is a step back from Monterrey, which addressed SDR allocations in two clauses. SDR allocations, if carried out on the basis of need, could serve as a development finance tool by boosting developing countries foreign exchange reserves without creating additional dependency on primary reserve currencies.

Unlike most global economic arenas, FfD has the mandate to address international monetary system reform in a development-oriented manner. The Addis outcome, again, missed this chance entirely.

Despite these critical retrogressions, there are two beacons of light in the Addis outcome: the establishment of a Technology Facilitation Mechanism (TFM) in the UN that supports SDG achievement, and an institutionalized FFD follow-up mechanism that will involve up to five days of review every year to generate “agreed conclusions and recommendations.”

However, this follow-up forum is to be shared with the review of MOI for the post-2015 development agenda, going against developing countries call for the FFD follow-up to be distinct and independent from that for the post-2015 development agenda in order to maintain focus on the specificities of the FFD agenda.

While the TFM has positive potential, especially if it address intellectual property rights and endogenous technological development in developing countries and does not become a platform to facilitate the ‘green economy’ through the , it is at the same time not tantamount to the financing items that comprise the development agenda. As such, the TFM helps obscure the paucity of political ambition on the FFD agenda.

A crisis of multilateralism

Perhaps the most sordid mark of a process that occurred in bad faith is the fact that negotiations never transpired in Addis Ababa. There was no official plenary, no proposals articulated and no document projected onto a screen to amend.

Instead, what took place over four days in Addis Ababa was a behind-the-scenes pressure campaign exerted by the most powerful countries onto most developing countries. One developing country delegate revealed that the pressure included bullying and blackmailing to silence many developing countries who can’t afford to be politically defiant.

Another delegate disclosed that he had never before experienced such an absence of transparency within the U.N. Some observers commented that what transpired in Addis Ababa was akin to a ‘Green Room’ style of discussions, where private talks are held in small groups without any gesture of openness or transparency.

A central strategy of developed countries was the distortion of developing country narratives and the creation of new narratives to undermine the longstanding arguments of developing countries. Throughout the FFD negotiations in New York, the European Union (EU) created a narrative of ‘the world has changed.’

They argued that developing countries’ emphasis on international public finance as the primary source for financial resources and developing countries’ red line on the Rio principle of CBDR does not reflect a world that has changed since Monterrey in 2002.

Much of the FfD text is still premised on an outdated North-South construct, the EU said, which does not reflect the complexity of today’s world. Germany reinforced the EU’s position, adding that the G77’s positions do not consider the reality that emerging economies are now capable of taking on some of the financing burdens for development.

In response to this challenge laid on middle-income countries, India provided a succinct response. India pointed out that the 30 richest countries of the world account for only 17 percent of the global population, but over 60 percent of global GDP, more than 50% of global electricity consumption and nearly 40 percent of global CO2 emissions.

The UN report on “Inequality Matters – World Social Situation 2013,” said that in 2010, high-income countries generated 55 percent of global income, while low-income countries created just above 1 percent of global income even though they contained 72 percent of the global population. India clarified that despite the relatively faster rates of growth in developing countries, international inequality has not fallen.

The above UN report on inequality shows that that excluding one large developing country (e.g. China), the Gini coefficient of international inequality was higher in 2010 than as compared to 1980. India concluded that these figures attest to the fact of the North-South gap, saying that member states will be doing themselves a disservice if reality is misrepresented.

Implications for post-2015 and climate change

The ways in which key words such as “transformative,” “ambitious,” “rule of law” and “enabling environment” were used, or misused, by developed country negotiators in the FFD negotiations have made their developing country counterparts wary of the gap between actual meaning and rhetorical application.

The phrase ‘enabling environment’ is used by developing countries to refer to an enabling environment for development. This involves development-oriented reforms in the international financial and trade architecture, such as addressing unfair agricultural subsidies in developed countries or pro-cyclical macroeconomic conditions attached to financial loans.

However, developed countries also use the phrase ‘enabling environment’ with equivalent vigor. Except that they are referring to an enabling environment for private investment, such as business-friendly taxes and labour market deregulation.

The experience of the FfD negotiations suggests that when these terms are tossed about in the post-2015 and COP 21 negotiations, they will be associated with limiting the policy space of developing countries. For the most part, this limitation is linked to facilitating private sector activity through multi-stakeholder or public-private partnerships that involve shared financing between multiple entities while most decision-making remains in the seat of the private sector.

Meanwhile, an implicit ebbing, if not a reneging, takes place on the public and international financing obligations of developing countries. Consequently, financing and decision-making shifts to institutions where developing countries have to compete with representatives of the private sector and private foundations for voice and representation.

As the last two weeks of post-2015 development agenda negotiations conclude in New York, the repercussions of the FFD experience remain to be witnessed. Will developing countries unite with renewed strength and determination to bring multilateralism back? Or will the retrogression in commitments and actions induced by Addis Ababa drag the post-2015 outcome down to its lowly ambition?

While prospects are uncertain for now, what is increasingly clear is the stark fact that the geopolitical offensive in the U.N. has not abated. If anything, it has become even more pronounced.

In fact, the current geopolitical dynamics in the U.N. renders a troubling irony to the international community as it embarks on its most ambitious sustainable development paradigm for the next 15 years.

Part of this Op-Ed can be read here.

Edited by Kitty Stapp

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Opinion: A BRICS Bank to Challenge the Bretton Woods System?http://www.ipsnews.net/2015/07/opinion-a-brics-bank-to-challenge-the-bretton-woods-system/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-a-brics-bank-to-challenge-the-bretton-woods-system http://www.ipsnews.net/2015/07/opinion-a-brics-bank-to-challenge-the-bretton-woods-system/#comments Wed, 22 Jul 2015 08:12:45 +0000 Daya Thussu http://www.ipsnews.net/?p=141689

Daya Thussu is Professor of International Communication at the University of Westminster in London.

By Daya Thussu
LONDON, Jul 22 2015 (IPS)

The formal opening of the BRICS Bank in Shanghai on Jul. 21 following the seventh summit of the world’s five leading emerging economies held recently in the Russian city of Ufa, demonstrates the speed with which an alternative global financial architecture is emerging.

The idea of a development-oriented international bank was first floated by India at the 2012 BRICS summit in New Delhi but it is China’s financial muscle which has turned this idea into a reality.

Daya Thussu

Daya Thussu

The New Development Bank (NDB), as it is formally called, is to use its 50 billion dollar initial capital to fund infrastructure and developmental projects within the five BRICS nations – Brazil, Russia, India, China and South Africa – though it is also likely to support developmental projects in other countries.

According to the 43-page Ufa Declaration, “the NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS and other developing countries and emerging market economies and for enhancing economic cooperation between our countries.”

The NDB is led by Kundapur Vaman Kamath, formerly of Infosys, India’s IT giant, and of ICICI Bank, India’s largest private sector bank. A respected banker, Kamath reportedly said during the launch that “our objective is not to challenge the existing system as it is but to improve and complement the system in our own way.”

The launch of the NDB marks the first tangible institution developed by the BRICS group – set up in 2006 as a major non-Western bloc – whose leaders have been meeting annually since 2009. BRICS countries together constitute 44 percent of the world population, contributing 40 percent to global GDP and 18 percent to world trade.“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way” – Kundapur Vaman Kamath, head of the New Development Bank (NDB)

In keeping with the summit’s theme of ‘BRICS partnership: A powerful factor for global development’, the setting up of a developmental bank was an important outcome, hailed as a “milestone blueprint for cooperation” by a commentator in The China Daily.

The Chinese imprint on the NDB is unmistakable. The Ufa Declaration is clear about the close connection between the NDB and the newly-created Asian Infrastructure Investment Bank (AIIB), also largely funded by China. It welcomed the proposal for the New Development Bank to “cooperate closely with existing and new financing mechanisms including the Asian Infrastructure Investment Bank.” China is also keen to set up a regional centre of the NDB in South Africa.

If economic cooperation remained the central plank of the Ufa summit, there is also a clear geopolitical agenda.

The Global Times, China’s more nationalistic international voice, pointed out that the establishment of the NDB and the AIIB will “break the monopoly position of the International Money Fund (IMF) and the World Bank (WB) and motivate [them] to function more normatively, democratically, and efficiently, in order to promote reform of the international financial system as well as democratisation of international relations.”

The reality of global finance is such that any alternative financial institution has to function in a system that continues to be shaped by the West and its formidable domination of global financial markets, information networks and intellectual leadership.

However, China, with its nearly four trillion dollars in foreign currency reserves, is well-placed to attempt this, in conjunction with the other BRICS countries. China today is the largest exporting nation in the world, and is constantly looking for new avenues for expanding and consolidating its trade relations across the globe.

China is also central to the establishment of the Shanghai Cooperation Organisation (SCO), a Eurasian political, economic and security grouping whose annual meeting coincided with the seventh BRICS summit. Founded in 2001 and comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the SCO has agreed to admit India and Pakistan as full members.

Though the BRICS summit and the SCO meeting went largely unnoticed by the international media – preoccupied as they were with the Iranian nuclear negotiations and the ongoing Greek economic crisis – the economic and geopolitical implications of the two meetings are likely to continue for some time to come.

For host Russia, which also convened the first BRICS summit in 2009, the Ufa meeting was held against the background of Western sanctions, continuing conflict in Ukraine and expulsion from the G8. Partly as a reaction to this, camaraderie between Moscow and Beijing is noticeable – having signed a 30-year oil and gas deal worth 400 billion dollars in 2014.

Beijing and Moscow see economic convergence in trade and financial activities, for example, between China’s Silk Road Economic Belt initiative for Central Asia and Russia’s recent endeavours to strengthen the Eurasian Economic Union. The expansion of the SCO should be seen against this backdrop. Moscow has also proposed setting up SCO TV to broadcast economic and financial information and commentary on activities in some of the world’s fastest growing economies.

Whatever the outcome, it is clear that a new international developmental agenda is being created, backed by powerful nations, and to the virtual exclusion of the West.

China is the driving force behind this. Despite its one-party system which limits political pluralism and thwarts debate, China has been able to transform itself from a largely agricultural self-sufficient society to the world’s largest consumer market, without any major social or economic upheavals.

China’s success story has many admirers, especially in other developing countries, prompting talk of replacing the ‘Washington consensus’ with what has been described as the ‘Beijing consensus’. The BRICS bank, it would seem, is a small step in that direction.

Edited by Phil Harris    

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

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Caribbean Seeks Funding for Renewable Energy Mixhttp://www.ipsnews.net/2015/07/caribbean-seeks-funding-for-renewable-energy-mix/?utm_source=rss&utm_medium=rss&utm_campaign=caribbean-seeks-funding-for-renewable-energy-mix http://www.ipsnews.net/2015/07/caribbean-seeks-funding-for-renewable-energy-mix/#comments Tue, 21 Jul 2015 10:31:18 +0000 Desmond Brown http://www.ipsnews.net/?p=141677 St Kitts and Nevis has launched a 1-megawatt solar farm at the country’s Robert L Bradshaw International Airport. A second solar project is also nearing completion. Credit: Desmond Brown/IPS

St Kitts and Nevis has launched a 1-megawatt solar farm at the country’s Robert L Bradshaw International Airport. A second solar project is also nearing completion. Credit: Desmond Brown/IPS

By Desmond Brown
FORT-DE-FRANCE, Martinique, Jul 21 2015 (IPS)

A leading geothermal expert warns that the small island states in the Caribbean face “a ticking time bomb” due to the effects of global warming and suggests a shift away from fossil fuels to renewable energy is the only way to defuse it.

President of the Ocean Geothermal Energy Foundation Jim Shnell says to solve the problems of global warming and climate change, the world needs a new energy source to replace coal, oil and other carbon-based fuels.  OGEF’s mission is to fund the R&D needed to tap into the earth’s vast geothermal energy resources."You need to have a balance of your resources but it is quite possible to have that balance and still make it 100 percent renewable and do without fossil fuels altogether." -- Jim Shnell

“With global warming comes the melting of the icecaps in Greenland and Antarctica and the projection is that at the rate we are going, they will both melt by the end of this century,” Shnell told IPS, adding “if that happens the water levels in the ocean will rise by approximately 200 feet and there are some islands that will disappear altogether.

“So you’ve got a ticking bomb there and we’ve got to defuse that bomb and if I were to rate the issues for the Caribbean countries, I would put a heavyweight on that one.”

It has taken just eight inches of water for Jamaica to be affected by rising sea levels, with one of a set of cays called Pedro Cays disappearing in recent years.

Scientists have warned that as the seas continue to swell, they will swallow entire island nations from the Maldives to the Marshall Islands, inundate vast areas of countries from Bangladesh to Egypt, and submerge parts of scores of coastal cities.

In the Caribbean, scientists have also pointed to the likelihood of Barbuda disappearing in 40 years.

Shnell said countries could “essentially eliminate” the threat by turning to renewable energy, thereby decreasing the amount of fossil fuels or carbon-based fuels they burn.

“The primary driver of climate change is greenhouse gasses and one of the principal ones in terms of volume is carbon dioxide,” he said.

“For a long time a lot of electricity, 40 per cent of the electricity produced in many countries, would come from coal because it was a very inexpensive, plentiful form of carbon to burn.

“But now countries have seen that they need to move away from that and in fact the G7 just earlier this month got together and in their meeting, the leaders declared that they were going to be 100 percent renewable, that is completely stop burning carbon, coals and other forms of fossil fuels by the end of this century. The only problem is that for global warming purposes that’s probably too late,” Shnell added.

Shnell was among some of the world’s leading renewable energy experts who met here late last month to consider options for renewable energy development in the Caribbean.

The Martinique Conference on Island Energy Transitions was organised by the International Renewable Energy Agency (IRENA) and the French Government, which will host the United Nations International Climate Change Conference, COP 21, at the Le Bourget site in Paris from Nov. 30 Dec. 11 2015.

Senior Energy Specialist at the World Bank Migara Jaywardena said the conference was useful and timely in bringing all the practitioners from different technical people, financial people and government together.

“There’s a lot of climate funds that are being deployed to support and promote clean energy…and we talked about the challenges that small islands, highly indebted countries have with mobilising some of this capital and making that connection to clean energy,” Jaywardena told IPS.

“They want to do it but there isn’t enough funds and remember there’s a lot of other competing development interests, not just energy but non-energy interests as well. Since this conference leads to the COP in Paris, I think being a part of that climate dialogue is important because it creates an opportunity to begin to access some of those funds.”

“As an example, for Dominica we have an allocation of 10 million dollars from the clean technology fund to support the geothermal and that’s a perfect example of where climate funds could be mobilised to support clean energy in the islands,” Jaywardena added.

Shnell said Caribbean economies are severely affected by the cost of fuel but that should be an incentive to redouble their efforts to get away from importing oil.

“The oil that you import and burn turns right around and contributes to global warming and the potential flooding of the islands, whereas you have some great potential resources there in terms of solar and wind and certainly geothermal,” he said.

“What we’re advocating is the mixture of those resources. We feel it would be a mistake to try to select one and make that your 100 percent source of power or energy but it’s the mix, because of different characteristics of each of them and different timing of availability and so forth, they work much better together.”

He noted that wind and solar are intermittent while utility companies have to provide power all the time.

“So you need something like geothermal or hydropower that works all the time and provides enough energy to keep the grid running even when there is no solar energy. So you need to have a balance of your resources but it is quite possible to have that balance and still make it 100 percent renewable and do without fossil fuels altogether,” Shnell said.

A legislator in St. Kitts and Nevis said the twin island federation has gone past fossil fuel generation and is now adopting solar energy with one plant on St. Kitts generating just below 1 megawatt of electricity and another being developed which would produce 5 megawatts.

“In terms of solar we’ll be near production of 1.5 megawatts of renewable energy. As a government we are going full speed ahead in relation to ensuring that there’s renewable energy, of course, where the objective is to reduce electricity costs in St. Kitts and Nevis,” Energy Minister Ian Liburd told IPS.

In late 2013 legislators in Nevis selected Nevis Renewable Energy International (NREI) to develop a geothermal energy project, which they said would eventually eliminate the need for existing diesel-fired electrical generation by replacing it with renewable energy.

Edited by Kitty Stapp

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Security Council Defies U.S. Lawmakers by Voting on Iran Nuke Dealhttp://www.ipsnews.net/2015/07/security-council-defies-u-s-lawmakers-by-voting-on-iran-nuke-deal/?utm_source=rss&utm_medium=rss&utm_campaign=security-council-defies-u-s-lawmakers-by-voting-on-iran-nuke-deal http://www.ipsnews.net/2015/07/security-council-defies-u-s-lawmakers-by-voting-on-iran-nuke-deal/#comments Mon, 20 Jul 2015 22:06:29 +0000 Thalif Deen http://www.ipsnews.net/?p=141659 The Security Council unanimously adopts resolution 2231 (2015), following the historic agreement in Vienna last week between the E3+3 (France, Germany and the United Kingdom, as well as the European Union; plus China, Russia and the United States) on one hand, and Iran, on the other, on a Joint Comprehensive Plan of Action (JCPOA) regarding Iran’s nuclear programme. Credit: UN Photo

The Security Council unanimously adopts resolution 2231 (2015), following the historic agreement in Vienna last week between the E3+3 (France, Germany and the United Kingdom, as well as the European Union; plus China, Russia and the United States) on one hand, and Iran, on the other, on a Joint Comprehensive Plan of Action (JCPOA) regarding Iran’s nuclear programme. Credit: UN Photo

By Thalif Deen
UNITED NATIONS, Jul 20 2015 (IPS)

When all 15 members of the Security Council raised their collective hands to unanimously vote in favour of the recently-concluded nuclear agreement with Iran, they were also defying a cabal of right-wing conservative U.S. politicians who wanted the United Nations to defer its vote until the U.S. Congress makes its own decision on the pact.

By U.N. standards, in a relatively early morning nine a.m. vote on Monday, the Security Council gave its blessings to the international agreement crafted by its five permanent members – the United States, Britain, France, China and Russia, plus Germany (P5+1) – which was finalised in Vienna last week after months of protracted negotiations.“Some people just can't accept the fact that we are in an increasingly pluralistic and complex world in which the United States simply cannot assert its will whenever and wherever it feels like." -- Stephen Zunes

Stephen Zunes, professor of politics and Coordinator of Middle Eastern Studies at the University of San Francisco, told IPS the United States is the only one of the seven signatory countries (P5+1 and Iran) where there is serious opposition to the agreement, which a broad cross-section of strategic analysts worldwide recognise as the best realistically possible.

“Some people just can’t accept the fact that we are in an increasingly pluralistic and complex world in which the United States simply cannot assert its will whenever and wherever it feels like,” he added.

Successful negotiations require compromises from both sides rather than simply capitulation by one side, said Zunes, who has written extensively on the politics of the Security Council.

U.S. Secretary of State John Kerry, one of the prime negotiators of the agreement, responded over the weekend to demands by some U.S. Congressmen that the United States should take political and diplomatic precedence over the United Nations – even on an agreement that was international, not bilateral.

“It’s presumptuous of some people to suspect that France, Russia, China, Germany and Britain ought to do what the (U.S.) Congress tells them to do,” he said during a TV interview.

“They have the right to have a vote,” he said, “but we prevailed on them to delay the implementation of that vote out of respect for our Congress, so we wouldn’t be jamming them,” Kerry added.

According to the New York Times, Senator Bob Corker, Republican of Tennessee, chairman of the Senate Committee on Foreign Relations, and Senator Benjamin Cardin of Maryland, a ranking Democrat on the panel, sent a joint letter to President Barack Obama last week asking him to postpone the Security Council vote until the U.S. Congress has taken its own decision.

Norman Solomon, executive director of the Washington-based Institute for Public Accuracy, told IPS “it’s often a difficult concept to get across to many members of Congress, but the U.S. government can’t run the world — and sometimes official Washington can’t even run the U.N. Security Council.”

This comes as a shock, or at least an affront, to Republicans and quite a few Democrats on Capitol Hill who may never use the word hegemony but fervently believe that the U.S. is a light onto all nations and should not hide that light under such a dubious bushel as international law, he pointed out.

“In this case, it’s hard to know whether to laugh or scream at the dangerous U.S. congressional arrogance that is seeking to upend the Iran deal,” said Solomon, who is also founder and coordinator of RootsAction.org, an online action group with some 600,000 active supporters.

Historically, U.S. government policies have been responsible for a great deal of nuclear proliferation in the world, he said.

“Washington still won’t officially acknowledge that Israel now possesses nuclear weapons, and U.S. leaders have turned aside from any and all proposals to seek a nuclear-weapons-free zone in the Middle East,” said Solomon.

On Monday, the 28-member European Union (EU) also approved the Iran nuclear deal paving the way for the lifting of Europe’s economic sanctions against Tehran.

“It is a balanced deal that means Iran won’t get an atomic bomb,” said French Foreign Minister Laurent Fabius. “It is a major political deal.”

The permanent representative of Britain to the United Nations, Ambassador Matthew Rycroft, expressed similar sentiments Monday when he said “the world is now a safer place in the knowledge that Iran cannot now build a nuclear bomb.”

Solomon told IPS the United States is among the leading countries that have promulgated commercial nuclear power in dozens of nations, steadfastly denying the reality that nuclear energy for electricity generation is a major pathway for the development of nuclear weapons.

“We have seen no acknowledgement of this fact in Washington’s high places, let alone steps to move the world away from such dangerous nuclear-power extravaganzas,” he said.

The Iran nuclear agreement now on the table is one of the few big diplomatic achievements that the Obama administration can legitimately claim some credit for, he argued.

But many of the most chauvinistic forces in Washington, he noted, are now doing their best to undermine it.

“In the context of the United Nations, as well as in political arenas of the United States, this dynamic should be fully recognised for what it is — a brazen attempt by, frankly, warmongers in the U.S. Congress to rescue their hopes for war with Iran from the jaws of a peaceful solution.”

After the vote, Secretary-General Ban Ki-moon said Security Council Resolution 2231, adopted Monday, will ensure the enforcement of the Joint Comprehensive Plan of Action (JCPOA) on the Iran nuclear agreement.

He said it establishes procedures that will facilitate the JCPOA’s implementation, enabling all States to carry out their obligations contained in the Agreement.

“The resolution provides for the eventual removal of all nuclear-related sanctions against Iran. It guarantees that the International Atomic Energy Agency will continue to verify Iran’s compliance with its nuclear-related commitments under the JCPOA.”

The United Nations, he assured, stands ready to provide whatever assistance is required in giving effect to the resolution.

Zunes told IPS as nuclear treaties between the United States and the Soviets demonstrated, you can be geopolitical rivals and strongly oppose the other’s system of government and still recognise there is such a thing as a win/win solution on arms control.

Most agreements regarding nuclear weapons have required reciprocity, but none of Iran’s nuclear-armed neighbours — Israel, Pakistan, or India — will be required to eliminate or reduce their weapons or become open to inspections despite the fact that they continue to be in violation of U.N. Security Council resolutions regarding their nuclear programmes, he added.

And none of the other nuclear powers, including five of the six nations that led the negotiations, will be required to reduce their arsenals either.

“Any notion that Iran could somehow be gaining an unfair advantage through this agreement is utterly absurd,” declared Zunes.

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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Opinion: Strengthen Tax Cooperation to End Hunger and Poverty Quicklyhttp://www.ipsnews.net/2015/07/opinion-strengthen-tax-cooperation-to-end-hunger-and-poverty-quickly/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-strengthen-tax-cooperation-to-end-hunger-and-poverty-quickly http://www.ipsnews.net/2015/07/opinion-strengthen-tax-cooperation-to-end-hunger-and-poverty-quickly/#comments Mon, 20 Jul 2015 16:57:47 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=141653 Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Jul 20 2015 (IPS)

By the end of this year, the 15-year time frame for the Millennium Development Goals will end, with good progress on several indicators, but limited achievements on others.

But public interest has already moved on to the post-2015 Sustainable Development Goals.Recent experience has amply demonstrated that investment and growth alone cannot eliminate hunger and poverty by 2030.

Despite uneven success with the MDGs, the level of ambition has risen, with SDG1 seeking to eradicate poverty and SDG2 to eliminate hunger and malnutrition, all by 2030. Last week, the Addis Ababa Action Accord began with: “Our goal is to end poverty and hunger.”

Almost four-fifths of the world’s poor live in rural areas, which have less than half the world’s population. Hence, raising rural incomes sustainably is necessary to achieve the first two SDGs.

Ending poverty and hunger sustainably will need a combination of social protection and ‘pro-poor’ investments.

As food costs 50 to 70 percent of the World Bank’s poverty line income, poverty and hunger are intimately inter-related, although poverty and hunger measurement generates different numbers.

Agricultural investments generally have the biggest impact on reducing poverty, all the more so, if pro-poor, as well as designed and implemented well. Yet, while farmers themselves are the major source of agricultural investments, most formal financial institutions discriminate against them, especially smallholder family farmers, landless tenants and labourers, with little bankable collateral to offer.

Recent experience has amply demonstrated that investment and growth alone cannot eliminate hunger and poverty by 2030. Most developing countries have long suffered high unemployment and underemployment, with youth unemployment growing rapidly. With current economic prospects uncertain, especially after the recent slowing of the world economy, and widespread insistence on fiscal austerity and economic liberalisation, things are likely to get worse.

With sufficient political will and fiscal resources, poverty and hunger can be ended very quickly with adequate, well-designed and sufficient social protection, in fact, well before 2030. (This is why the G77 group of developing countries insisted last week on strengthening the U.N. committee on international tax cooperation — surely of interest to most developed countries as well.)

The world can currently produce enough food to feed everyone, but most of the hungry simply do not have the means to access enough food.

Social protection can not only ensure adequate food consumption, but also enable investments by those assisted to enhance their nutrition, health and other productive capacities, thus raising their incomes and, in turn, further increasing investments to expedite the transition from the vicious cycle of poverty and hunger, in which they have been trapped, to a more virtuous cycle free of want.

According to a recent World Bank report, a billion people in 146 low (LICs) and middle income countries (MICs) currently get some form of social protection. Yet, 870 million of the world’s extreme poor – most recently estimated at 836 million for 2015 – remained uncovered, mainly in the countryside. Not surprisingly, the greatest shortfalls are in the LICs.

In the LICs, 47 percent of the population are the extreme poor, with social protection covering less than a tenth of the population. In the lower MICs, social protection reaches about a quarter of the extreme poor, but half a billion remain uncovered. In the upper MICs, about 45 percent of the extreme poor is covered by social protection.

Last week, the Director-General of the Food and Agricultural Organization (FAO), and his counterparts from the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP), presented their new estimates on investments for sustainable hunger and poverty eradication by 2030.

While some may quibble over details, they made the compelling case that ending hunger and poverty in a sustainable way is eminently viable, feasible and affordable, costing about 0.3 per cent of world economic output in 2014. Most MICs can afford the needed financing, but most LICs face serious fiscal constraints and will need budgetary support and technical assistance.

Enough social protection could end hunger and poverty very quickly, but it is not sustainable without higher earned incomes for those of the extreme poor able to work. An early big investment push will reduce longer term financing costs besides providing a much needed boost to aggregate demand in the face of the world economy’s ongoing economic doldrums.

The joint proposal by the Rome-based U.N. agencies not only shows that with the requisite political commitment, we can end hunger and poverty very quickly while creating the conditions for keeping both permanently in the catacombs of history.

Despite the poor compromise in Addis Ababa, quick real progress to enhance countries’ fiscal capacities through more effective international tax cooperation under U.N. auspices can be the third Financing for Development conference’s biggest contribution to this effort.

Edited by Kitty Stapp

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Opinion: Unrestrained ‘Privatisation of Poverty-Reduction’ Puts Human Rights at Riskhttp://www.ipsnews.net/2015/07/opinion-unrestrained-privatisation-of-poverty-reduction-puts-human-rights-at-risk/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-unrestrained-privatisation-of-poverty-reduction-puts-human-rights-at-risk http://www.ipsnews.net/2015/07/opinion-unrestrained-privatisation-of-poverty-reduction-puts-human-rights-at-risk/#comments Thu, 16 Jul 2015 13:54:44 +0000 Savio Carvalho http://www.ipsnews.net/?p=141612

Savio Carvalho is Senior Advisor, Campaigning on International Development and Human Rights, Amnesty International, International Secretariat, London, and has worked for two decades in the Development and Human Rights sector in South and Central Asia, East Africa and Europe.

By Savio Carvalho
LONDON, Jul 16 2015 (IPS)

Corporate lobbyists are unusual guests at development meetings, but when the United Nations held its Financing for Development conference in Addis Ababa this week to decide who pays for its new “Sustainable Development Goals”, some governments laid out the red carpet for the private sector.

Photo Courtesy of Amnesty International

Photo Courtesy of Amnesty International

Unfortunately, the conference failed to agree on any mechanism for making sure the role of companies in development is kept transparent and accountable.

Some see giving companies a bigger role in development as a simple win-win. Governments get access to financing to take the pressure off aid budgets and come up with the 2.5 trillion dollars needed to respond to poverty and climate change, while meeting the housing, health, education and infrastructure targets in the post-2015 agenda.

On the other hand, companies get a potential say in policy making and access to juicy public contracts.

But before governments allow companies to shoulder significant responsibility for fighting poverty, climate change and other global challenges, they will have to convince critics who warn that they are putting the fox in charge of the henhouse.

While getting companies involved in development has the potential to provide important sources of funding to improve lives, experience equally shows that when companies are not held to account, people and communities can be seriously harmed. If private sector involvement in development is going to pay off for the people who need it and not just corporate shareholders, states have to leave impunity at the door.

Increasing the role of the private sector in the delivery of crucial public services such as water, education and health is fraught with risk. On July 2, the U.N. Human Rights Council warned that without proper regulation the privatisation of education could put the right to education at risk for countless children, especially if it means those children who cannot afford to pay lose out on quality education.

Around the world, Amnesty International has documented too many cases of marginalised communities waiting to see justice done, sometimes for decades, for human rights abuses perpetrated after a multinational company rolled into town. States who seek the involvement of the private sector in advancing development goals without putting effective safeguards in place, forget these cases at their peril.

The more than 570,000 victims of the 1984 Bhopal toxic gas leak, India’s worst industrial disaster, are still waiting for justice more than 30 years later. The firm responsible, Union Carbide, is now owned by U.S.-based Dow Chemical. A Bhopal court is pursuing criminal charges against Dow but the company has failed to even show up to multiple hearings over the last year. Meanwhile, survivors have tried and failed to seek justice in both India and the U.S.

While Union Carbide paid some compensation to those affected under a 1989 settlement agreement with the Indian government, it was wholly inadequate to cover the harm caused and there were serious issues with the way it was paid out to victims. At the time, the Indian government lacked the leverage to effectively hold a powerful global company to account.

Foreign companies operating in countries that are rich in natural resources and poor in regulation can reap huge profits at the expense of vulnerable people.

Earlier this year Amnesty International warned that Canadian and Chinese mining giants have profited from, and in some cases colluded, with  human rights abuses by the Myanmar authorities to exploit one of the country’s most important copper mines, with thousands of people being illegally driven off their lands, serious environmental risks going unchecked, and peaceful protest brutally suppressed.

Far from investigating the abuses, one multinational company involved used an opaque trust fund in the British Virgin Islands to divest its investment, in a manner which possibly breached economic sanctions applicable at the time. Reducing their exposure to the problem, rather than fixing it, has often been the mantra of companies faced by scandalous abuses.

For residents of Niger Delta, the legacy of half a century of oil production in Nigeria is the devastation of their farming and fishing lands. Today the oil spills continue unabated. In Shell’s operations alone, there were 204 spills in 2014. Shell blames sabotage and theft, but old pipelines and badly maintained infrastructure are a major cause of pollution.

This year one local community in Bodo has finally won 80 million dollars in compensation from Shell for the impacts of a massive spill, but only after a lengthy court battle in the UK and years of false claims by the company.

These are cautionary tales world leaders should consider as they plan to entrust the private sector with responsibility for funding and carrying out development projects. In all these cases, corporate political and financial clout created barriers to local communities accessing justice and accountability.

Governments have watched corporate political power grow for decades, often doing their best to get out of its way instead of properly regulating it to ensure that human rights are not violated.

Corporate lobbyists, meanwhile, have done everything possible to ensure that the important international standards addressing these risks remain entirely voluntary.  Voluntary codes of conduct and standards that have no enforcement mechanism ultimately lack the teeth to really change corporate behaviour, and when abuses occur, they can leave victims with little or no hope of remedy.

If private sector involvement in development is going to pay off for the people who need it and not just corporate shareholders, states have to leave impunity at the door. Companies that want to make a profit through work on sustainable development must be required to show they have a clean track record when it comes to human rights.

They must demonstrate that they have internal systems that ensure they do not cause human rights abuses. They must disclose information to communities about any local operations that impact them, as well as any payments they make to the authorities.

Crucially, governments must be ready to hold companies to account when abuses happen. The failure of all but five countries to meet the U.N.’s official aid targets is a crying shame, but if filling the gap by giving the private sector free rein leads to human rights abuses in already vulnerable communities, it will only rub salt in the wounds that sustainable development is supposed to heal.

Edited by Kitty Stapp

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Civil Society Sceptical Over “Action Agenda” to Finance Developmenthttp://www.ipsnews.net/2015/07/civil-society-sceptical-over-action-agenda-to-finance-development/?utm_source=rss&utm_medium=rss&utm_campaign=civil-society-sceptical-over-action-agenda-to-finance-development http://www.ipsnews.net/2015/07/civil-society-sceptical-over-action-agenda-to-finance-development/#comments Wed, 15 Jul 2015 23:38:10 +0000 Thalif Deen http://www.ipsnews.net/?p=141608 Secretary-General Ban Ki-moon (left) addresses a press conference before departing from Addis Ababa, after attending the Third International Conference on Financing for Development. At his side is Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs. Credit: UN Photo/Eskinder Debebe

Secretary-General Ban Ki-moon (left) addresses a press conference before departing from Addis Ababa, after attending the Third International Conference on Financing for Development. At his side is Wu Hongbo, UN Under-Secretary-General for Economic and Social Affairs. Credit: UN Photo/Eskinder Debebe

By Thalif Deen
UNITED NATIONS/ADDIS ABABA, Jul 15 2015 (IPS)

Despite high expectations, the third International Conference on Financing for Development (FfD) ended on a predictable note: the United Nations proclaimed it a roaring success while most civil society organisations (CSOs) expressed scepticism over the final outcome.

Hours after the conclusion of the conference in the Ethiopian capital, the United Nations trumpeted the Addis Ababa Action Agenda (AAAA) as a “ground-breaking agreement that provides a foundation for implementing the global sustainable development agenda that world leaders are expected to adopt this September.”“The outcome will not deliver the reforms we need in areas like tax, that most in civil society had hoped for and, that are needed to increase the resources available for development." -- Dr. Danny Sriskandarajah

U.N. Secretary-General Ban Ki-moon sounded optimistic when he said the agreement was a critical step forward in building a sustainable future for all since it provides a global framework for financing sustainable development.

He added, “The results here in Addis Ababa give us the foundation of a revitalized global partnership for sustainable development that will leave no one behind.”

But Dr. Danny Sriskandarajah, Secretary-General of the Johannesburg-based CIVICUS, was blunt: “This week we saw a further sign that we are at the beginning of the end of the post-World War II (WWII) development world order.”

Rich countries seem unable or unwilling to increase official aid flows, which stand at a fraction of what they themselves promised years ago, he said.

“We are disappointed that the FfD process has not yielded new resources to fund the investments needed to end poverty or taken meaningful steps to address problems in the international financial system,” he said at the conclusion of the conference Wednesday.

He added: “The outcome will not deliver the reforms we need in areas like tax, that most in civil society had hoped for and, that are needed to increase the resources available for development.”

Asked about the failed proposal for the creation of a global tax body, ActionAid’s international tax power campaign manager, Martin Hojsik, told IPS: “The decision is an appalling failure and a great blow to the fight against poverty and injustice.”

He said it means that developing countries, which are losing billions of dollars a year to tax dodging, are not being given an equal say in fixing unjust global tax rules.

“This lost money could have gone to the provision of education, healthcare and other poverty-reducing public services. While the multinationals prosper, the poor and marginalised will suffer,” he said. “The fight for a fair global tax system should not and cannot falter.”

In a statement released here, Oxfam International said unresolved rigged tax rules and privatised development are the major drawbacks of the FfD outcome.

However, after such tense negotiations there can be no doubt that developing countries’ determination to call for true global tax reform and tax cooperation has been noted, and cannot go unheeded for long.

Oxfam International Executive Director Winnie Byanyima said: “Today, one in seven people live in poverty and Addis was a once in a decade chance to find the resources needed to end this scandal. But the Addis Action Agenda has allowed aid commitments to dry up, and has merely handed over development to the private sector without adequate safeguards.”

She said developing countries held firm in Addis on the need to set up an intergovernmental tax body that would give them an equal say in how the global rules on taxation are designed.

“Instead they are returning home with a weak compromise meaning rigged rules and tax avoidance will continue to rob the world’s poorest people.”

Byanyima said fair taxation is vital in the fight against poverty and inequality.

“Citizens must be able to depend on their own governments to deliver the services they need. But it is just not logical to ask developing countries to raise more of their own resources without also reforming the global tax system that prevents them doing this,” she added.

Eric LeCompte, executive director of the Jubilee USA Network, told IPS “while compromised language on a tax committee was reached, we have the first global agreement that notes the harm of illicit financial flows and calls to stop them by 2030.”

Right now the developing world is losing a trillion dollars a year to corruption and tax evasion, he said, pointing out, “those are resources we need to end poverty.”

In a joint statement released late Wednesday, Global Financial Integrity (GFI), the Africa Progress Panel (APP) and Jubilee USA applauded the global commitment to reduce the massive flow of illicit funds from developing country economies.

For the first time international consensus was reached on the importance of an issue that has been at the forefront of efforts by hundreds of research and development organisations for the last 10 years.

Specifically, the FfD3 Outcome Document requires member states to “redouble efforts to substantially reduce illicit financial flows (IFFs) by 2030, with a view to eventually eliminate them, including by combatting tax evasion and corruption through strengthened national regulation and increased international cooperation.”

Additionally, the final text calls on “appropriate international institutions and regional organizations to publish estimates of IFF volume and composition”

The statement said the ability to measure illicit flows was at the heart of significant disagreement during the FfD3 preparatory negotiations in New York earlier this year with the 132-member Group of 77 developing countries calling for country-level estimates of illicit flow volumes.

In its statement, the United Nations said the Addis Ababa Action Agenda contains more than 100 concrete measures.

It also addresses all sources of finance, and covers cooperation on a range of issues including technology, science, innovation, trade and capacity building.

The Action Agenda builds on the outcomes of two previous Financing for Development conferences, in Monterrey, Mexico, and in Doha, Qatar.

Wu Hongbo, the Secretary-General of the Conference, said, “This historic agreement marks a turning point in international cooperation that will result in the necessary investments for the new and transformative sustainable development agenda that will improve the lives of people everywhere.”

Edited by Kitty Stapp

The writer can be contacted at thalifdeen@aol.com

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Opinion: What Will It Take to Bring a Second Green Revolution to India?http://www.ipsnews.net/2015/07/opinion-what-will-it-take-to-bring-a-second-green-revolution-to-india/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-what-will-it-take-to-bring-a-second-green-revolution-to-india http://www.ipsnews.net/2015/07/opinion-what-will-it-take-to-bring-a-second-green-revolution-to-india/#comments Wed, 15 Jul 2015 17:20:32 +0000 Bijay Singh http://www.ipsnews.net/?p=141598 A woman farmer using the treadle pump in Orissa. Credit: Manipadma Jena/IPS

A woman farmer using the treadle pump in Orissa. Credit: Manipadma Jena/IPS

By Bijay Singh
LUDHIANA, India, Jul 15 2015 (IPS)

Long-term agricultural growth in India is slowing down. The lands that saw remarkable increases in productivity in the 1970s and 80s, thanks to the technology rolled out as part of the first “Green Revolution”, are not yielding the same results today.

India still has the second highest number of undernourished people in the world. To confront this problem, Prime Minister Narendra Modi has called for a Second Green Revolution on Indian soils. But what does this mean and what will it take to make this happen?The first Green Revolution did its job in an unprecedented way, averting a disastrous famine and preventing millions from going hungry. Now, we need an equally weighty intervention fit for the complexities of the 21st century.

The challenges Indian agriculture faces today are vastly more complex than those it faced 40 years ago. The technologies used in the first Green Revolution involved improved high yielding varieties of rice and wheat, irrigation, fertilisers, and pesticides.

But an increasingly varied climate and mismanagement of agricultural inputs are changing the agricultural landscape. Our Second Green Revolution needs to be refreshed to match this new complexity.

A data driven approach is going to be key. Sophisticated technology is now being developed to equip farmers with the information they need to protect their harvests in the face of scarce water and soil degradation.

So farmers in the North Indian states of Punjab and Haryana, who have access to the new tools like the Leaf Colour Chart and the handheld GreenSeeker optical sensor, can analyse the health of their crops, and apply the right amount of nitrogen to the soil to boost production of cereals like rice and wheat.

Land can also be levelled into a flat service, using last controlled devices that are mounted on tractors, to help farmers save up to 30 percent of water.

A considered plan for fertiliser use is also going to be essential. Just like humans, soils need a balanced diet of the right kind of nutrients in order to be healthy, a fact which has been overlooked by government subsidy programmes that only favoured urea for a long time.

The right kind of nutrients for the specific soil area needs to be applied, at the right rate, at the right time and in the right place for optimal soil health – we call this the 4Rs or nutrient stewardship. Modi’s call to reopen fertiliser plants in Sindri and Gorakhpur, and open new ones in West Bengal must take into account this need for a “smart” approach, and make optimal use of key inputs such as fertiliser.

We cannot feed India, or indeed the world, without mineral (man-made) fertilisers. Although the debate has raged for many years pitting organic and mineral fertilisers against one another, science tells us that there is no conflict between these nutrient sources; quite the contrary, their use is complementary.

Mineral fertilisers actually increase soil organic matter content as a result of the greater root growth you get when crop yields improve. For example, over a 25-year period in Punjab, where mineral fertilisers have been consistently applied, soil organic carbon content rose by 38 percent.

Fertilisers also encourage enhanced microbial activity – a process that is vital for the long-term productivity of the soil and its ability to process nutrients. The effects are even greater when mineral and organic fertilisers are used together.

More research into technologies like these, that will help farmers make the most efficient use of scarce resources, whilst leaving minimal impact on the environment should be an essential element of India’s Second Green Revolution.

Investment in rural infrastructure, improving market access and credit facilities will all need to be considered in conjunction with this. We cannot expect smallholders to take on new technologies without ensuring they can afford to use them, and get their increased amount of produce to market.

South Asia has long been a champion in the field of microfinance, that enables the rural poor to get access to credit and vital inputs like seed and fertiliser. Indeed, the 2015 World Food Prize Laureate, Sir Fazle Hasan Abed of BRAC in Bangladesh, has been awarded this prestigious prize for recognising that the poorest need an entire package of interventions in order to graduate to a sustainable livelihood.

Improved technologies must be distributed hand in hand with financing to buy them, training on how to use them, and encouragement to join farmer co-operatives and savings groups, both to improve their social standing and increase their bargaining power when selling their crops on. Without these supporting interventions, upcoming technologies cannot succeed.

The first Green Revolution did its job in an unprecedented way, averting a disastrous famine and preventing millions from going hungry. Now, we need an equally weighty intervention fit for the complexities of the 21st century, and India could lead the way.

As one of the most populous nations, with a high percentage working in agriculture, the time is now. If we follow these steps diligently, a Second Green Revolution for India is not out of reach.

Edited by Kitty Stapp

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Nuclear Deal Takes U.S.-Iran Ties Out of Deep Freeze – Partly, at Leasthttp://www.ipsnews.net/2015/07/nuclear-deal-takes-u-s-iran-ties-out-of-deep-freeze-partly-at-least/?utm_source=rss&utm_medium=rss&utm_campaign=nuclear-deal-takes-u-s-iran-ties-out-of-deep-freeze-partly-at-least http://www.ipsnews.net/2015/07/nuclear-deal-takes-u-s-iran-ties-out-of-deep-freeze-partly-at-least/#comments Tue, 14 Jul 2015 17:15:29 +0000 Jasmin Ramsey http://www.ipsnews.net/?p=141571 U.S. Secretary of State John Kerry meets one-on-one with Iranian Foreign Minister Javad Zarif amid nuclear talks in Vienna on July 1. Credit: State Department

U.S. Secretary of State John Kerry meets one-on-one with Iranian Foreign Minister Javad Zarif amid nuclear talks in Vienna on July 1. Credit: State Department

By Jasmin Ramsey
WASHINGTON, Jul 14 2015 (IPS)

A historic deal on Iran’s controversial nuclear programme was announced today during the early morning hours in Vienna over a decade after talks between Iran and world powers began.

“This deal demonstrates that American diplomacy can bring about real and meaningful change — change that makes our country, and the world, safer and more secure,” said U.S. President Barack Obama from the East Room of the White House “This is the beginning of what could be a process of the U.S. and Iran developing a better and more normal relationship. I don’t expect that to be instant…but you have to begin some place, and it’s a good beginning.” -- Gary Sick

“Put simply, no deal means a greater chance of more war in the Middle East,” he said.

The “Joint Comprehensive Plan of Action” (JCPOA), drafted during 18 consecutive days of intensive negotiations in the Austrian capital by Iran and the P5+1 (US, UK, France, China, Russia and Germany), freezes Iran’s nuclear programme for the next decade in exchange for gradual sanctions relief.

The agreement “establishes a strong and effective formula for blocking all of the pathways by which Iran could acquire material for nuclear weapons,” said Daryl Kimball, executive director of the Washington-based Arms Control Association.

“When implemented, the P5+1 and Iran agreement will establish long-term, verifiable restrictions on Iran’s sensitive nuclear fuel cycle activities—many of these restrictions will last for 10 years, some for 15 years, and some for 25 years,” he added.

New era

“With courage, political will, mutual respect and leadership, we delivered on what the world was hoping for: a shared commitment to peace and to join hands in order to make our world safer,” Iran’s top negotiator, Foreign Minister Javad Zarif, said Tuesday in a joint statement issued in Vienna with EU High Representative Federica Mogherini.

“This is a historic day also because we are creating the conditions for building trust and opening a new chapter in our relationship,” he added.

The deal was made between Iran and six world powers, but direct U.S.-Iranian engagement—jumpstarted after a historic phone call between Iranian President Hassan Rouhani and U.S. President Barack Obama in 2013—proved to be the key ingredient of success.

This is not the first time Tehran and Washington have cooperated.

Iran’s assistance—led by Zarif when he was ambassador to the U.N.—proved crucial to the U.S. mission to establish a post-Taliban government in Afghanistan.

But it is the first time since the 1979 Iranian revolution that Tehran and Washington have negotiated during an extended period of time, openly and directly at the highest level to bring about an internationally sanctioned accord.

“That’s what they mean by confidence-building measures,” said Gary Sick, a former national security official and Columbia University scholar who has been studying U.S.-Iran relations for decades.

“This is the beginning of what could be a process of the U.S. and Iran developing a better and more normal relationship,” he added. “I don’t expect that to be instant…but you have to begin some place, and it’s a good beginning.”

12 Years in the Making

The process that led to the deal has taken more than decade.

The Europeans, known then as the EU-3 (France, Germany, UK), began the negotiations with Iran in 2003 before the U.S., along with China and Russia, finally joined the talks in 2006 and formed the E3+3 (or P5+1).

It would take five more years of on-and-off talks, threats of war, “crippling” sanctions, sabotage, assassinations, cyber warfare, and a change of presidents in Tehran and Washington before an interim agreement was finally reached in 2013.

The U.S. and Iran have been enemies since 1979 when Iranians brought down their U.S.-backed monarch in a domestically supported revolution premised on the notion of independence from foreign exploitation.

Throughout the negotiations, chants of “Death to America” from Iranian hardliners and its supreme leader’s public disdain for the U.S. continued.

During the final round of talks in Vienna, while Iran’s foreign minister posed for photographs at one-on-one meetings with the U.S. Secretary of State—their nation’s flags side-by-side behind them—Iranian hardliners burned American flags at the government-sponsored Qod’s Day festivities.

The U.S. government meanwhile made no secret of its enmity with Iran.

The State Department has officially listed the Islamic Republic as a state sponsor of terrorism every year since the Iranian revolution. Both the George W. Bush and Obama administrations have repeatedly issued threats of war and imposed sanctions that have severely damaged Iran’s economy.

“[D]eception is part of the DNA,” said Under Secretary for Political Affairs Wendy Sherman, the U.S.’s top negotiator until Kerry stepped in, during testimony aimed at convincing Congress to delay imposing new sanctions on Iran in 2013.

Although Democratic President Obama adopted a softer stance than his Republican predecessor, some congressional hawks have also maintained a hard-line stance on Iran.

Iran is a “pariah nation” determined to acquire nuclear weapons to deploy “against us and our allies,” wrote GOP presidential candidate Lindsay Graham in the Wall Street Journal in May.

Nothing, however—not Zarif’s public outrage after the U.S. released “fact sheets” following the 2014 accord that he said “underplays concessions” to Iran and “overplays Iranian commitments,” nor vitriolic displays of anti-Americanism in Tehran, or the Israeli prime minister’s ongoing campaigning against deal—pushed either side away from the negotiating table.

Critics voice discontent

Israeli Prime Minister Benjamin Netanyahu, who has been warning about an impending Iranian nuclear weapon since 1995, called the deal “a bad mistake of historic proportion” today.

“Our concern, of course, is that the militant Islamic state of Iran is going to receive a sure path to nuclear weapons,” he said, adding that Iran, which he has repeatedly likened to the Islamic State—a terrorist group operating in Iraq and Syria—would get a “jackpot of cash bonanza of hundreds of billions of dollars.”

But the accord will likely face its harshest criticism in the U.S. Congress where lawmakers have 60 days to review it after the official date of submission.

Influential Republicans have already threatened to block it.

“This ‘deal’ will only embolden Iran – the world’s largest sponsor of terror – by helping stabilize and legitimize its regime as it spreads even more violence and instability in the region,” said House Speaker John Boehner in a statement.

“We will fight a bad deal that is wrong for our national security and wrong for our country,” he added.

President Obama vowed, however, to veto any bill that delays its implementation.

“This is not the time for politics or posturing,” he said Tuesday. “The world would not support an effort to permanently sanction Iran into submission.”

The Iranian parliament, which has expressed consistent criticism of the negotiations, will also review the deal though no timeframe has been set.

Rapprochement?

Even before the final deal was announced, officials on both sides were already hinting that a successful conclusion to the talks could lay the groundwork for further US-Iranian cooperation.

“It’s clear to me that if an agreement is successfully reached, satisfactory to everybody, a conversation might be able to begin,” Secretary of State John Kerry told the Boston Globe three days before the deal was announced.

“[The] #IranDeal is not a ceiling but a solid foundation,” wrote Foreign Minister Zarif on Twitter the day the accord was announced. “We must now begin to build on it.”

But while official statements from both countries have become increasingly suggestive in the last two years, hopes for a Nixon-to-China historical replay between the long-time adversaries are likely premature.

“Thirty-five years of mistrust and hostilities cannot be resolved through only the nuclear issue,” Hossein Mousavian, who served as the spokesman for Iran’s nuclear negotiating team when Rouhani was its chief, told IPS.

“A deal is a success and big step toward lessening tension…but the wall of mistrust is so thick that breaking it down would take some years,” he said.

Edited by Kitty Stapp

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Opinion: U.N. Can Help Reform the International Financial Systemhttp://www.ipsnews.net/2015/07/opinion-u-n-can-help-reform-the-international-financial-system/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-u-n-can-help-reform-the-international-financial-system http://www.ipsnews.net/2015/07/opinion-u-n-can-help-reform-the-international-financial-system/#comments Tue, 14 Jul 2015 10:03:21 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=141569 Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Jul 14 2015 (IPS)

The growth in global interdependence poses greater challenges to policy makers on a wide range of issues and for countries at all levels of development.

Yet, the mechanisms and arrangements put in place over the past three decades have not been adequate to the challenges of coherence and coordination of global economic policy making. The recent financial crises have exposed some such gaps and weaknesses.The U.N. was among the very few warning Mexico in 1994 and the East Asian countries in 1997 that excessive liberalisation threatened crisis.

Reforming the international economic governance architecture, through the United Nations system, can address these problems.

Although sometimes seemingly slow, the U.N. has a clear advantage in driving discussion on reform because of its more inclusive and open governance.

Lop-sided influence in the current international financial system is a principal reason why many countries lack confidence in the existing arrangements. Rebuilding confidence in such arrangements will require that all parties feel they have a stake in the reform agenda.

But the U.N. is also suited to drive the discussion because of its long tradition of reliable work on international economic issues.

The United Nations secretariat has developed and maintained an integrated approach to trade, finance and sustainable development, with due attention to equity and social justice issues.

The ongoing ‘secular stagnation’ has again highlighted the interdependence of global economic relations, exposing a series of myths and half-truths about the global economy.

These include the idea that the developing world has become “decoupled” from the developed world; that unregulated financial markets and the new financial instruments have ushered in a new era of “great moderation” and “stability”; and that macroeconomic imbalances — due to decisions made in the household, corporate and financial sectors — are less dangerous than those involving the public sector.

The U.N. secretariat has long doubted such arguments, and warned that any unravelling of global macroeconomic imbalances would be unruly.

Also, persistent asymmetries and biases in global economic relations have particularly hit developing countries, both emerging and least developed.

Not surprisingly, the U.N. Secretariat has also drawn attention to the close links between the financial crisis and the food and energy crises.

A more integrated approach to handling these threats is needed, particularly to alleviate the downside risks for the poorest and most vulnerable communities.

The U.N. Secretariat has a strong track record of identifying systemic threats from unregulated finance, warning against a misplaced faith in self-regulating markets and offering viable solutions to gaps and weaknesses in the international financial system.

Special drawing rights (SDRs), the 0.7 per cent aid target and debt relief, for example, were all conceived within the U.N. system during the 1960s and 1970s.

From the 1980s, the U.N. secretariat – both in New York and Geneva — have consistently warned against the excessive conditionalities attached to multilateral lending, promoted the idea of rules for sovereign debt restructuring, and cautioned that the international financial institutions were moving away from their traditional mandates of guaranteeing financial stability and providing long-term development finance.

During the 1990s, U.N. agencies warned against the dangers to economic stability, particularly in developing countries, from volatile private capital flows and the speculative behaviour associated with unregulated financial markets.

The U.N. was among the very few warning Mexico in 1994 and the East Asian countries in 1997 that excessive liberalisation threatened crisis.

The U.N. system was also almost alone among international institutions to identify growing inequality as a threat to economic, political and social stability, and insisted early on measures for a fairer globalisation.

Many of these concerns culminated in the 2002 Financing for Development Conference in Monterrey, Mexico.

More recently, the U.N. has insisted on the importance of policy space for effective development strategies and particularly on the need for macroeconomic policies to support long-term growth, technological upgrading and diversification.

Some countries have sometimes resisted such work by the U.N. secretariat.

However, the combination of a strong track record and a core secretariat steeped in its tradition of an integrated approach to policy-oriented research places the U.N. secretariat in the best position to advance current discussions to reform the international financial architecture.

Edited by Kitty Stapp

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Will the New BRICS Bank Break with Traditional Development Models, or Replicate Them?http://www.ipsnews.net/2015/07/will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them/?utm_source=rss&utm_medium=rss&utm_campaign=will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them http://www.ipsnews.net/2015/07/will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them/#comments Tue, 07 Jul 2015 21:10:17 +0000 Kanya DAlmeida http://www.ipsnews.net/?p=141467 The heads of state of three of the five BRICS countries - Russia, India and Brazil – pose for a photograph during the 2014 BRICS Summit. Credit: Official Flickr Account for Narendra Modi/CC-BY-SA-2.0

The heads of state of three of the five BRICS countries - Russia, India and Brazil – pose for a photograph during the 2014 BRICS Summit. Credit: Official Flickr Account for Narendra Modi/CC-BY-SA-2.0

By Kanya D'Almeida
UNITED NATIONS, Jul 7 2015 (IPS)

Just days ahead of a summit of the BRICS group of emerging economies (Brazil, Russia, India, China and South Africa) in which the five countries are expected to formally launch their New Development Bank (NDB), 40 NGOs and civil society groups have penned an open letter to their respective governments urging transparency and accountability in the proposed banking process.

“In terms of the type of development the bank delivers, we don't have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions." -- Gretchen Gordon, coordinator of Bank on Human Rights
The NDB is expected to finance infrastructure and sustainable development in the global South.

With an initial capital of 100 billion dollars, it was born from a combination of circumstances including emerging economies’ frustration with the largely Western-dominated World Bank Group (WBG) and International Monetary Fund (IMF).

According to a 2014 Oxfam Policy Brief, another factor leading to the creation of the BRICS Bank was a major gap in financing for infrastructure projects, with official development assistance (ODA) and funding from multilateral institutions meeting just two to three percent of developing countries’ needs.

Strained by economic sanctions as a result of the Ukrainian crisis, Moscow has been particularly keen to bring the fledgling lending institution to its feet and has been pushing international rating agencies to rate the bank’s debt, as a necessary first step for it to begin operations.

Even without counting the contributions of its newest member – South Africa – the four BRIC nations represent 25 percent of global gross domestic product (GDP) and 41.4 percent of the world’s population, or roughly three billion people.

In addition, the borders of these countries enclose a quarter of the planet’s land area on three continents.

But even as the five political leaders prepare to take centre stage in the Russian city of Ufa on Jul. 9, citizens of their own countries are already expressing doubts that the nascent financial body will truly represent a break from traditional, Western-led development models.

“The existing development model in force in many emerging and developing countries is one that favors export-oriented, commodity driven strategies and policies that are socially harmful, environmentally unsustainable and have led to greater inequalities between and within countries,” said the statement, released on Jul. 7

“If the New Development Bank is going to break with this history, it must commit itself to the following four principles: 1) Promote development for all; 2) Be transparent and democratic; 3) Set strong standards and make sure they’re followed; 4) Promote sustainable development,” the signatories added.

Gretchen Gordon, coordinator of Bank on Human Rights, a global network of social movements and grassroots organisations working to hold international financial institutions accountable to human rights obligations, told IPS, “[Although] the Bank’s Articles of Agreement have an article on Transparency and Accountability […] thus far we haven’t seen any indication of operational policies on transparency or anything relating to accountability mechanisms.”

“And unfortunately,” she added, “there is no open engagement with civil society on these questions.”

“In terms of the type of development the bank delivers, we don’t have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions,” Gordon told IPS in an email.

“That is why civil society groups in BRICS countries are calling for a participative and transparent process to identify strategies and policies for the NDB that can set it on a different path and actually deliver development.”

A primary concern among NGOs has been that the BRICS bank will replicate the old “mega-project” model of development, which has proven to be a failure both in terms of poverty eradication and increased access to basic services.

A recent international investigation revealed that in the course of a single decade, an estimated 3.4 million poor people – primarily from Asia, Africa and Latin America – were displaced by mega-projects funded by the World Bank and its private sector lending arm, the International Finance Corporation (IFC).

Though these projects were ostensibly aimed at strengthening transportation networks, expanding electric grids and improving water supply systems, they resulted in a worsening of poverty and inequality for millions of already marginalised people.

Following closely on the heels of this damning expose, a major report by the international watchdog Human Rights Watch (HRW) found that the Bank’s lax safeguards and protocols resulted in a range of rights violations against those who spoke out against the economic, social and environmental fallout of Bank-funded projects.

Behind this track record, rights groups and NGOs are concerned that a new development bank operating on within a broken framework will contribute to the spiral of violence and poverty that has marked the age of mega-projects.

At a time when one billion people lack access to an all-weather road, 783 million people live without clean water supplies and 1.3 billion people are not connected to an electricity grid, there is no doubt that the developing world stands to gain greatly from a Southern-led financial institution.

What remains to be seen is to what extent the new bank will move away from the old model of financing and truly set a standard for inclusive and pro-poor development.

Edited by Kitty Stapp

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Opinion: SDGs, FfD and Every Single Dollar in the Worldhttp://www.ipsnews.net/2015/07/opinion-sdgs-ffd-and-every-single-dollar-in-the-world/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-sdgs-ffd-and-every-single-dollar-in-the-world http://www.ipsnews.net/2015/07/opinion-sdgs-ffd-and-every-single-dollar-in-the-world/#comments Tue, 07 Jul 2015 17:15:53 +0000 Paul Ladd and Pedro Conceicao http://www.ipsnews.net/?p=141460 The answer to the question “How much money will it take to achieve the new SDGs?” is … drum-roll … every single dollar in the world. Credit: Bindalfrodo/cc by 2.0

The answer to the question “How much money will it take to achieve the new SDGs?” is … drum-roll … every single dollar in the world. Credit: Bindalfrodo/cc by 2.0

By Paul Ladd and Pedro Conceicao
UNITED NATIONS, Jul 7 2015 (IPS)

Ethiopia will host an important meeting on Financing for Development (FfD) Conference next week. One of the most-asked questions is:  How much will it cost us to achieve the Sustainable Development Goals (SDGs)?

The question sounds sensible at first glance and flows naturally from our experience of the Millennium Development Goals (MDGs).Everything we buy has little impacts across the SDGs. For example, when we buy a shirt we are also ‘buying’ the environmental waste and labour standards used when making that shirt.

The grand MDG deal was that poor nations would focus on reducing poverty and improving governance, in exchange for Official Development Assistance (ODA) that would top up resources mobilised by developing countries themselves.

This ‘gap filling’ logic led to expansive exercises in MDG costing, estimations of how quickly governments could improve their tax take, and campaigns to scale up aid.

Many governments responded, and a great deal of good has been done through development aid: Expanded vaccine programmes, more children in school, cleaner water for more people, and many more less measurable achievements like gradually strengthening institutional capacities.

But as we now move to a different development agenda – one that is more ambitious, complex, integrated and universal – our logic on financing also needs a radical overhaul.

While gap-filling will still be important for some countries with very low tax bases and underfunded challenges (like some communicable diseases), for the majority it will be much more about aligning existing resources.

So the answer to the question “How much money will it take to achieve the new SDGs?” is … drum-roll … every single dollar in the world.

This means that every dollar we spend as consumers should work in the direction of achieving the SDGs and not against them. This includes our spending on clothes, food, and travel.

Everything we buy has little impacts across the SDGs. For example, when we buy a shirt we are also ‘buying’ the environmental waste and labour standards used when making that shirt.

But voluntary action by consumers will not be enough. Companies will also have to play their part.

Some are starting to change their business models realising that building a sustainable business will require a sustainable world. Some are engaging in development impact investment.

But beyond these voluntary actions, governments will need to step up and play the critical role of creating the right incentives and regulations to align actions by all consumers, businesses and investors.

While aligning private finance is the big win, changing how we spend public monies will also require a major overhaul. The classic example is energy: If we continue to subsidise non-renewable energies, we are deliberately and consciously working against the Goals.

Globally, energy subsidies are estimated to reach five trillion dollars this year, approaching 20 percent of GDP in some countries. They are overwhelmingly directed towards fossils fuels.

Energy subsidy reform would increase government revenue globally by three trillion dollars a year, reduce carbon dioxide emissions by 20 percent, and cut premature air pollution deaths by half.

Sometimes incentives, regulation, and fiscal reform are seen as imposing costs. Attention is drawn to these costs by those directly affected, with less attention given to society-wide and long-term benefits.

And many inefficiencies that are staring us in the face can unlock trillions more in gains. For instance, advancing gender equality would directly advance the SDGs and generate economic benefits.

Arguing that aligning existing finance with sustainable development is more important than raising ever more money shouldn’t be interpreted as support for the anti-aid movement. Done well, aid has its place.

Donors should indeed meet their 0.7 percent commitments and make much faster progress on their commitments on improving how aid is done.

But if the Conference in Addis Ababa, scheduled to take place next week, only focuses on mobilizing more money and doesn’t do something about improving how that money is spent, then we will have missed the point, and will certainly miss the grand targets we have set for ourselves. This is why every dollar counts.

Edited by Kitty Stapp

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Putting the “Integrity of the Earth’s Ecosystems” at the Centre of the Sustainable Development Agendahttp://www.ipsnews.net/2015/07/putting-the-integrity-of-the-earths-ecosystems-at-the-centre-of-the-sustainable-development-agenda/?utm_source=rss&utm_medium=rss&utm_campaign=putting-the-integrity-of-the-earths-ecosystems-at-the-centre-of-the-sustainable-development-agenda http://www.ipsnews.net/2015/07/putting-the-integrity-of-the-earths-ecosystems-at-the-centre-of-the-sustainable-development-agenda/#comments Mon, 06 Jul 2015 22:22:31 +0000 Kanya DAlmeida http://www.ipsnews.net/?p=141446 Mangrove forests, like this one in western Sri Lanka, can store up to 1,000 tonnes of carbon per hectare in their biomass, yet they are being felled at three to five times the rate of other forests. Credit: Kanya D’Almeida/IPS

Mangrove forests, like this one in western Sri Lanka, can store up to 1,000 tonnes of carbon per hectare in their biomass, yet they are being felled at three to five times the rate of other forests. Credit: Kanya D’Almeida/IPS

By Kanya D'Almeida
UNITED NATIONS, Jul 6 2015 (IPS)

By 2050, we will be a world of nine billion people. Not only does this mean there’ll be two million more mouths to feed than there are at present, it also means these mouths will be consuming more – in the next 20 years, for instance, an estimated three billion people will enter the middle class, in addition to the 1.8 billion estimated to be within that income bracket today.

These changes are going to put unprecedented pressure on the world’s natural resources, according to a new report by the United Nations Environment Programme (UNEP)’s International Resource Panel (IRP).

Entitled ‘Policy Coherence of the Sustainable Development Goals: A Natural Resource Perspective’, the report warns that maintaining and restoring healthy ecosystems will be critical for the successful realisation of the U.N.’s post-2015 development agenda.

Unless the new development blueprint is centered on protecting and respecting the earth’s limited bounty, the goals of poverty eradication and ensuring decent lives for current and future generations will fall by the wayside, experts predict.

For instance, IRP studies have shown that annual global extraction increased “by a factor of eight in the 20th century” from seven billion tonnes of material in 1900 to 68 billion tonnes of resources by 2009.

Based on current trends, resource use and extraction could hit 140 billion tonnes by 2050 – three times what was extracted in the year 2000, according to UNEP data.

“Due to declining ore grades, depending on the material concerned, about three times as much material needs to be moved today for the same ore extraction as a century ago, with concomitant increases in land disruption, groundwater implications and energy use,” UNEP said in a press release on Jul. 6.

Meanwhile, pressures on biotic resources are also on the rise, with 20 percent of cultivated land, 30 percent of the world’s forests and 10 percent of its grasslands being degraded at a rate that far outstrips the ability of such earth systems to replenish themselves.

Deterioration of ecosystems also threatens to worsen the impacts of climate change, contribute to water scarcity and exacerbate world hunger, with environmental experts fearing that 25 percent of total global food production could be lost by 2050 as a result of converging land and resource issues.

“The core challenge of achieving the SDGs will be to lift a further one billion people out of absolute poverty and address inequalities, while meeting the resource needs – in terms of energy, land, water, food and material supply – of an estimated eight billion people in 2030,” U.N. Under-Secretary-General and UNEP Executive Director Achim Steiner said Monday.

“The fulfillment of the SDGs in word and spirit will require fundamental shifts in the manner with which humanity views the natural environment in relation to human development,” he added.

Representing over 30 renowned experts and scientists, and as many national governments, the IRP today called for the “prudent management and use of natural resources, given that several Goals are inherently dependent on the achievement of higher resource productivity, ecosystem restoration and resource conservation”.

The report also urged policy makers to introduce practices based on a ‘circular economy’ approach, whereby reusing, recycling and remanufacturing products and other materials reduces waste by “decoupling” natural resource use from economic progress.

While the SDGs represent a bold and wide-reaching framework for ending some of the world’s most pressing problems – among them hunger and extreme poverty – avoiding counter-productive results will depend on a “commitment to maintaining the integrity of the Earth’s systems while addressing the resource demands driven by individual goals,” UNEP experts cautioned.

As the world’s population increases, and more people climb into the ranks of the middle class (defined by increased income and a corresponding rise in consumption), it will become crucial for individuals to adopt consumption patterns – and governments and corporations to adopt production systems – that contribute to human well-being “without putting unsustainable pressures on the environment and natural resources”, the report said.

Edited by Kitty Stapp

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Sustainable Use of Biodiversity Could Fill Gap When Belo Monte Dam Is Finishedhttp://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/?utm_source=rss&utm_medium=rss&utm_campaign=sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished http://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/#comments Fri, 03 Jul 2015 15:20:00 +0000 Mario Osava http://www.ipsnews.net/?p=141408 http://www.ipsnews.net/2015/07/sustainable-use-of-biodiversity-could-fill-gap-when-belo-monte-dam-is-finished/feed/ 0 Financial Transaction Tax Could Boost New Development Goalshttp://www.ipsnews.net/2015/07/financial-transaction-tax-could-boost-new-development-goals/?utm_source=rss&utm_medium=rss&utm_campaign=financial-transaction-tax-could-boost-new-development-goals http://www.ipsnews.net/2015/07/financial-transaction-tax-could-boost-new-development-goals/#comments Thu, 02 Jul 2015 20:34:25 +0000 Nora Happel http://www.ipsnews.net/?p=141401 By Nora Happel
UNITED NATIONS, Jul 2 2015 (IPS)

Ever since the Monterrey Consensus on Financing for Development in March 2002 called for new and innovative strategies to complement traditional Official Development Assistance (ODA), various financial instruments have been discussed.

Bankers look down onto Robin Hood tax supporters gathered in New York City on Sept 17, 2013. Credit: Samuel Oakford/IPS

Bankers look down onto Robin Hood tax supporters gathered in New York City on Sept 17, 2013. Credit: Samuel Oakford/IPS

They include a solidarity levy on airplane tickets, debt swaps, measures to combat tax havens and capital flights – and the financial transaction tax (FTT).

With the finance ministers of 11 European countries, Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain, continuing negotiations on the modalities of a future FTT, proponents say it is an opportune moment to look at the controversial tax and its potential as innovative finance mechanism.

Most current discussions on FTTs, including plans on the European Union FTT, involve a small tax on the exchange of financial instruments, such as securities, bonds, shares and derivatives. It would apply to transactions on the wholesale market and not apply to the retail market.

The FTT has two main functions. It is designed to stabilise financial markets by curbing high-frequency trading and speculation, as well as serve as a tool to raise important amounts of revenue, which could be spent, at least in part, on development purposes.

However, there are ongoing debates on the efficiency of an FTT and its potentially damaging effects on the financial sector.

Opponents claim that an EU FTT would cause share-trading to emigrate as happened to Sweden, when it imposed a unilateral FTT about 30 years ago. Such fears have prevented countries with important financial sectors and asset-management industries like the United Kingdom and Luxembourg from consenting to an EU-wide FTT, resulting in the multilateral initiative of the 11 “willing” EU countries instead.“International targets to tackle poverty and climate were knocked badly off course by the reckless actions of the finance industry. It is only right the sector makes a fair contribution for the damage it caused." -- David Hillman

The London-based Institute of Economic Affairs argues in a 2011 report that the revenue an FTT raises is minimal due to falls in revenue from other taxes. Also, price volatility will increase as financial markets get smaller and decreasing income for companies will ultimately translate in higher prices and lower wages for workers in the whole country.

As reported by the Guardian, Matthew Fell, director for competitive markets at the Confederation of British Industries (CBI), said: “The UK government is right to reject a FTT as damaging for jobs and growth.”

“It is disappointing that eurozone economies are pursuing the FTT, whose costs ultimately fall on consumers and businesses, and will be a drag on the eurozone recovery.”

Proponents of the FTT, such as the Robin Hood Tax Campaign and Stamp Out Poverty, do not consider these arguments valid. They point to the fact that FTTs have already been successfully implemented in many countries and that an EU FTT would increase growth in Europe by 0.2 to 0.4 percent according to the European Commission’s most recent impact assessment.

Tackling climate change, ending poverty and malnutrition, enhancing social and economic development in a sustainable manner – the ambitious post-2015 development framework, which will be adopted this year in September at the U.N., requires considerable financial resources.

Those in favour of an FTT also acknowledge its potential as an innovative finance mechanism and confirm that chances to implement the Sustainable Development Goals (SDGs) will increase markedly if a sufficiently significant part of the money raised by means of the tax is spent on humanitarian purposes, climate change and development.

David Hillman, spokesperson for the United Kingdom’s Robin Hood Tax campaign, told IPS: “One of the great benefits of the Financial Transaction Tax is that it’s a proven revenue raiser. Many FTTs already exist around the world today that collectively raise at least 30 billion dollars a year.”

“International targets to tackle poverty and climate were knocked badly off course by the reckless actions of the finance industry. It is only right the sector makes a fair contribution for the damage it caused. Because financial markets have grown so large, the FTT is capable of raising the levels of finance needed to tackle these issues.”

Dorothea Schäfer, research director in the field of financial markets at the German Institute for Economic Research (DIW Berlin), also considers the FTT an effective innovative finance tool.

Commenting on the EU FTT, she told IPS: “Key benefits of the FTT are the considerable revenue it can generate and its steering effect, i.e. the fact that it reduces the profitability of high-frequency-trading, stimulates long-term orientation and thus helps to build a sustainable financial system.”

“I consider the FTT a win-win instrument: if the steering effect does not occur because trade with financial instruments remains lucrative, at least a decent amount of income will be raised. However, if the steering effect occurs, and trade with financial instruments, especially derivatives decreases, this will contribute to the stability of the financial system.”

“Provided that the FTT encompasses all financial instruments, it can generate a considerable revenue, even if the tax rates end up being lower than those provided for in the EU Commission draft.”

The proposal by the EU Commission currently requires the 11 participating member states to set tax rates to levels not lower than 0.1 percent on conventional transactions and 0.01 percent on derivatives in view of the notional value.

According to Bloomberg Business, the 11 EU member states continue quarreling over the details of a future EU FTT, especially over which trades to tax, the amount of revenue the tax should raise and modes of tax collection.

Another important point of debate is what the money raised should be spent on. In the past, both German Chancellor Angela Merkel and French President François Hollande have recognised the need to spend at least a part of the revenue on climate change and development objectives.

It remains to be seen if the potential of the FTT as Innovative Finance Mechanism will be taken advantage of to a greater extent in the future. Decisions regarding what share of the tax will be spent on development are made on the national level and depend on political will.

However, this year’s discussions on financing for development and the adoption of the SDGs at the U.N. might allow for a fruitful climate as a basis for further-reaching political decisions.

Edited by Kitty Stapp

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Panama and Nicaragua – Two Canals, One Shared Dreamhttp://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/?utm_source=rss&utm_medium=rss&utm_campaign=panama-and-nicaragua-two-canals-one-shared-dream http://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/#comments Wed, 01 Jul 2015 23:31:54 +0000 Iralis Fragiel http://www.ipsnews.net/?p=141388 http://www.ipsnews.net/2015/07/panama-and-nicaragua-two-canals-one-shared-dream/feed/ 1 Opinion: BRICS for Building a New World Order?http://www.ipsnews.net/2015/07/opinion-brics-for-building-a-new-world-order/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-brics-for-building-a-new-world-order http://www.ipsnews.net/2015/07/opinion-brics-for-building-a-new-world-order/#comments Wed, 01 Jul 2015 11:38:34 +0000 Daya Thussu http://www.ipsnews.net/?p=141375

Daya Thussu is Professor of International Communication at the University of Westminster in London.

By Daya Thussu
LONDON, Jul 1 2015 (IPS)

As the leaders of the BRICS five meet in the Russian city of Ufa for their annual summit Jul. 8–10, their agenda is likely to be dominated by economic and security concerns, triggered by the continuing economic crisis in the European Union and the security situation in the Middle East.

The seventh annual summit of the large emerging economies – Brazil, Russia, India, China and South Africa – also takes place with a background of escalating tensions between Russia and the West over Ukraine and the eastward expansion of the North Atlantic Treaty Organisation (NATO), as well as the growing economic power of Asia, in particular, China.

Daya Thussu

Daya Thussu

Nearly a decade and a half has passed since the BRIC acronym was coined in 2001 by Jim O’Neill, a Goldman Sachs executive, now a minister in David Cameron’s U.K. government, to refer to the four fast-growing emerging markets. South Africa was added in 2011, on China’s request, to expand BRIC to BRICS.

Although in operation as a formal group since 2006, and holding annual summits since 2009, the BRICS countries have escaped much comment in international media, partly because of the different political systems and socio-cultural norms, as well as stages of development, within this group of large and diverse nations.

The emergence of such groupings coincides with the relative economic decline of the West.

This has created the opportunity for emerging powers, such as China and India, to participate in global governance structures hitherto dominated by the United States and its Western allies.

That the centre of economic gravity is shifting away from the West is acknowledged in the view of the U.S. Administration of Barack Obama that the ‘pivot’ of U.S. foreign policy is moving to Asia.“The major countries of the global South have shown impressive economic growth in recent decades … [it is predicted that] by 2020 the combined economic output of China, India and Brazil will surpass the aggregated production of the United States, Britain, Canada, France, Germany and Italy”

And there is evidence of this shift. In the Fortune 500 ranking, the number of transnational corporations based in Brazil, Russia, India and China has grown from 27 in 2005 to more than 100 in 2015. China’s Huawei, a telecommunications equipment firm, is the world’s largest holder of international patents; Brazil’s Petrobras is the fourth largest oil company in the world, while the Tata group became the first Indian conglomerate to reach 100 billion dollars in revenues.

Since 2006, China has been the largest holder of foreign currency reserves, estimated in 2015 to be more than 3.8 trillion dollars. According to the International Monetary Fund (IMF), China’s gross domestic product (GDP) surpassed that of the United States in 2014, making it the world’s largest economy in purchasing-power parity terms.

More broadly, the major countries of the global South have shown impressive economic growth in recent decades, prompting the United Nations Development Programme to proclaim The Rise of the South (the title of its 2013 Human Development Report), which predicts that by 2020 the combined economic output of China, India and Brazil will surpass the aggregated production of the United States, Britain, Canada, France, Germany and Italy.

Though the individual relationships between BRICS countries and the United States differ markedly (Russia and China being generally anti-Washington while Brazil and South Africa relatively close to the United States and India moving from its traditional non-aligned position to a ‘multi-aligned’ one), the group was conceived as an alternative to American power and is the only major group of nations not to include the United States or any other G-7 nation.

Nevertheless, none of the five member nations are eager for confrontation with the United States – with the possible exception of Russia – the country with which they have their most important relationship. Indeed, China is one of the largest investors in the United States, while India, Brazil and South Africa demonstrate democratic affinities with the West: India’s IT industry is particularly dependent on its close ties with the United States and Europe.

Although the idea of BRIC was initiated in Russia, it is China that has emerged as the driving force behind this grouping. British author Martin Jacques has noted in his international bestseller When China Rules the World, that China operates “both within and outside the existing international system while at the same time, in effect, sponsoring a new China-centric international system which will exist alongside the present system and probably slowly begin to usurp it.”

One manifestation of this change is the establishment of a BRICS bank (the ‘New Development Bank’) to fund developmental projects, potentially to rival the Western-dominated Bretton Woods institutions, such as the World Bank and the IMF. Headquartered in Shanghai, China has made the largest contribution to setting it up and is likely that the bank will further enhance China’s domination of the BRICS group.

Beyond BRICS, Beijing has also established the Asian Infrastructure Investment Bank (AIIB), which already has 57 members, including Australia, Germany and Britain, and in which China will hold over 25 percent of voting rights. Two other BRICS nations – India and Russia – are the AIIB’s second and third largest shareholders.

Such changes have an impact on the media scene as well. As part of China’s ‘going out’ strategy, billions of dollars have been earmarked for external communication, including the expansion of Chinese broadcasting networks such as CCTV News and Xinhua’s English-language TV, CNC World.

Russia has also raised its international profile by entering the English-language news world in 2005 with the launch of the Russia Today (now called RT) network, which, apart from English, also broadcasts 24 hours a day, 7 days a week in Spanish and Arabic.

However, as a new book Mapping BRICS Media – which I co-edited with Kaarle Nordenstreng of the University of Tampere, Finland – shows, there is very little intra-BRICS media exchange and most of the BRICS nations continue to receive international news largely from Anglo-American media.

The growing economic cooperation between Moscow and Beijing – most notably in the 2014 multi-billion dollar gas deal – indicates a new Sino-Russian economic equation outside Western control.

Two key U.S.-led trade agreements being negotiated – the Transatlantic Trade and Investment Partnership (TTIP) and the Trans Pacific Partnership (TPP), and both excluding the BRICS nations – are partly a reaction to the perceived competition from nations such as China.

For its part, China appears to have used the BRICS grouping to allay fears that it is rising ‘with the rest’ and therefore less threatening to Western hegemony.

The BRICS summit takes place jointly with Shanghai Cooperation Organization (SCO) Heads of State Council meeting. The only other time that BRICS and the SCO combined their summits was also in Russia – in Ekaterinburg in 2009.

Apart from two BRICS members, China and Russia, the SCO includes Kazakhstan, Kyrgystan, Tajikistan and Uzbekistan. SCO has not expanded its membership since it was set up in 2001. India has an ‘observer’ status within SCO, though there is talk that it might be granted full membership at the Ufa summit.

Were that to happen, the ‘pivot’ would have moved a few notches further towards Asia.

Edited by Phil Harris    

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

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