Inter Press Service » Eye on the IFIs News and Views from the Global South Thu, 26 Nov 2015 09:24:57 +0000 en-US hourly 1 Toasting to a More Sustainable Planet with Argentine Wine Tue, 20 Oct 2015 21:37:50 +0000 Fabiana Frayssinet Vineyards belonging to the Dominio del Plata winery in Luján de Cuyo in the Argentine province of Mendoza. It is one of the companies taking part in the Federal Programme for Cleaner Production, which involves a sustainable reconversion inthe wine-growing industry. Credit: Fabiana Frayssinet/IPS

Vineyards belonging to the Dominio del Plata winery in Luján de Cuyo in the Argentine province of Mendoza. It is one of the companies taking part in the Federal Programme for Cleaner Production, which involves a sustainable reconversion inthe wine-growing industry. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
LUJÁN DE CUYO, Argentina , Oct 20 2015 (IPS)

The region of Cuyo in west-central Argentina is famous for its vineyards. But it is one of the areas in the country hit hardest by the effects of climate change, such as desertification and the melting of mountain top snow. And local winegrowers have come up with their own way to fight global warming.

In the cup, malbec, Argentina’s flagship red wine, still has the same intense flavour and colour.

But behind the production process is a new environmental reconversion, which began four years ago in the arid province of Mendoza, where vineyards bloom in the midst of oases created by human hands.

Only 4.8 percent of the desert province of Mendoza is green; 3.5 percent is dedicated to agricultural production, which uses 90 percent of the water consumed, and the rest is urban areas.“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case.” -- René Mauricio Valdés

“We are trying to maintain the same production levels, using less water and less energy, reducing waste, reusing waste products, and creating less pollution,” the provincial coordinator of the Federal Programme for Cleaner Production, Germán Micic, told Tierramérica.

The initiative, launched by the national Secretariat of the Environment and Sustainable Development, benefits some 1,250 small and medium-sized companies in Argentina.

It is carried out with technical and administrative support from the United Nations Development Programme (UNDP) and funds from the Interamerican Development Bank. In Mendoza, 210 companies – 60 percent of them wineries – are participating. They receive advice and up to 28,000 dollars in funds.

“We’re producing the same wine, but in a sustainable manner,” said Luis Romito, the head of the Sustainability Commission of the Bodegas de Argentina wineries association, while participating in the Climate Change Forum organised this month in Mendoza by the National University of Cuyo and the UNDP.

Some of these practices have begun to be implemented by Dominio del Plata, a family winery at the foot of the Andes mountains, in Agrelo, a town in the department of Luján de Cuyo.

By changing equipment and modifying processes, the family business has managed to use less water in the production of its wine.

In the wine production process, water is mainly used for washing, rinsing, heating and cooling.

One example of the changes introduced was the replacement of manual washing of the grape picking lugs, which took some 20 minutes per unit, by automated industrial washers.

“The lug is washed in five minutes with this machine,” Marcelo del Popolo, the winery’s adviser on quality and environmental responsability, told Tierramérica. “We have reduced water consuption by some 60,000 litres a month. In three months of harvest, that’s 180,000 litres of water saved.

“And the water used in the washing process goes down a drain and is carried to a treatment plant, and is then used to irrígate the vineyards,” he said.

And irrigation systems are being improved in Mendoza, where 90 percent of water is used in agricultural activities, and where water shortages are increasingly severe as a result of global warming.

“Water is vital to our province, and we are being seriously affected by this problem,” Ricardo Villalba, an expert in geosciences and former director of the Mendoza-based Argentine Institute of Snow Research, Glaciology and Environmental Sciences, told Tierramérica. “Water is the element that controls regional development.”

Wine storage tanks with special jackets maintain temperatures more efficiently in wineries in the wine-growing region of Luján de Cuyo in the Argentine province of Mendoza, which are taking part in a special programme to create more green-friendly processes to help combat the effects of climate change. Credit: Fabiana Frayssinet/IPS

Wine storage tanks with special jackets maintain temperatures more efficiently in wineries in the wine-growing region of Luján de Cuyo in the Argentine province of Mendoza, which are taking part in a special programme to create more green-friendly processes to help combat the effects of climate change. Credit: Fabiana Frayssinet/IPS

“Our province basically depends on the water that comes from the snow up in the mountains, and all of the global forecasts and models indicate that there will gradually be less and less snow,” said Villalba, who is a member of the Intergovernmental Panel on Climate Change (IPCC).

The wine-growing industry, which represents six percent of GDP in Mendoza and 1.3 percent of GDP nationwide, also aims to reduce energy consumption, which in Argentina is responsible for 43 percent of greenhouse gas emissions.

In the wineries, energy is used for heating, cooling, pumping of liquids and lighting.

“In each one of these stages we can incorporate modifications of equipment or processes, which make significant energy savings possible,” Micic said. “From jackets on the tanks to maintain temperatures more efficiently to the installation of advanced new pumps for a stronger water flow and lower energy consumption, through the change of compressors and lighting.”

Del Popolo said: “We keep track here of the water that comes in and the temperature we manage to achieve. By doing this we have reduced the energy used for heating by 15 percent.”

The company also uses green-friendly materials like lightweight wine bottles and lighter boxes that use less cardboard. Plastic and other waste products like broken bottles are classified, recycled and reused.

“We’re using boxes that we have already recycled many times over,” he said.

The benefits to the environment also bring considerable cost savings.

“We have addressed two fundamental questions: savings in energy and in water. And in both of them, we’re also seeing significant economic savings,” said the head of the winery, which plans in the future to invest in a solar thermal system for heating and fermentation.

This, according to UNDP representative in Argentina René Mauricio Valdés, is what makes the project self-sustainable.

“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case,” said Valdés during a visit to the winery.

Fincas Patagónicas Tapiz, an olive oil producer in the neighbouring department of Maipú, is another company taking part in the programme in Mendoza.

Among other measures, it implemented a system to circulate water heated by solar energy around the tanks of oil to eliminate that energy expense.

It also insulated the room holding the tanks of oil, to keep the temperature steady. This made it possible to avoid the need to use air conditioning in the entire plant, which consumed an enormous amount of energy.

“If the temperature of the oil drops below 14 or 15 degrees Celsius, it solidifies and I can’t filter it,” plant manager Sebastián Correas explained to Tierramérica. “Which means that in the (southern hemisphere) winter I have to keep heating the entire plant until the warmer temperatures of September and October make it possible to bottle the oil.”

Argentina is not one of the world’s top emitters of greenhouse gases. Producing 0.66 percent of all greenhouse gases released globally, it is 22nd in a ranking that counts the 28 European Union countries as a single bloc.

But Villalba, the scientific researcher, believes that Argentina, like Mendoza, has a role to play.

“We are going to have to prepare ourselves for this, for example to continue to be leaders in the production of malbec at a global level,” he said.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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G20 Finance Ministers Committed to Sustainable Development Wed, 09 Sep 2015 22:32:33 +0000 Jaya Ramachandran The Finance Ministers and Central Bank Governors of the G20. Credit: TCMB/cc by 2.0

The Finance Ministers and Central Bank Governors of the G20. Credit: TCMB/cc by 2.0

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

Finance ministers and central bank governors of the world’s 20 major economies, accounting for 66 percent of world population, have pledged to “promote an enabling global economic environment for developing countries as they pursue their sustainable development agendas”.

In this context, they are looking forward to “a successful outcome” of the U.N. Summit in New York for the adoption of the 2030 Agenda for Sustainable Development. The summit will be held from Sep. 25 to 27 in New York as a high-level plenary meeting of the General Assembly of the world body.

The G20, meeting in Turkey’s capital Ankara on Sep. 4-5, reviewed ongoing economic developments, their respective growth prospects, and recent volatility in financial markets and its underlying economic conditions. They welcomed “the strengthening economic activity in some economies” but said that global growth was falling short of their expectations.

To remedy the situation, they vowed to take decisive action to keep the economic recovery on track and expressed confidence that the global economic recovery would gain speed. With this in view, they would continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability.

The G20 welcomed “the positive outcomes of the Addis Ababa Conference on Financing for Development (FFD)”. In support of these, they aim to scale up their technical assistance efforts to help developing countries build necessary institutional capacity, particularly in the areas specified in the Addis Ababa Action Agenda.

The agreement was reached by the 193 U.N. Member States attending the Conference, following negotiations under the leadership of Ethiopian Foreign Minister Tedros Adhanom Ghebreyesus.

U.N. Secretary-General Ban Ki-moon said: “This agreement is a critical step forward in building a sustainable future for all. 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.”

The G20 includes 19 individual countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States – along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank.

The Group was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

It seeks to address issues that go beyond the responsibilities of any one organisation. Collectively, the G20 economies account for around 85 percent of the gross world product (GWP), 80 percent of world trade (or, if excluding EU intra-trade, 75 percent), and two-thirds of the world population. The G20 heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008.

The G20 are responsible for 84 percent fossil fuel emissions worldwide. To support the climate change agenda of 2015, they welcomed the Climate Finance Study Group (CFSG) report, took note of the inventory on climate funds developed by the OECD (Organisation for Economic Cooperation and Development), and the toolkit developed by the OECD and the GEF (Global Environment Facility) to enhance access to adaptation finance by the low income and developing countries, especially those that are particularly vulnerable to the adverse effects of climate change.

While recognising developed countries’ ongoing efforts, they called on them to continue to scale up climate finance in line with their commitments.

“We are working together to reach a positive and balanced outcome at the 21st Conference of Parties of the UNFCCC (COP 21). Based on the outcomes and towards the objectives of the COP21, CFSG will continue its work in 2016 by following the principles, provisions and objectives of the UNFCCC,” they added.

UNFCC is the United Nations Framework Convention on Climate Change that emerged from the Earth Summit in June 1992 in Rio, Brazil, which is currently the only international climate policy treaty with broad legitimacy, due in part to its virtually universal membership.

The CFSG was established by Finance Ministers, in April 2012, and was welcomed by leaders in the Los Cabos Summit, in Jun 2012, with a view “to consider ways to effectively mobilize resources taking into account the objectives, provisions and  principles of the UNFCCC”.

In November 2012, Finance Ministers agreed to “continue working towards building a better understanding of the underlying issues among G20 members taking into account the objectives, provisions and principles of the UNFCCC”, and also recognised that the “UNFCCC is the forum for climate change negotiations and decision making at the international level”.

Following the mandate of the group, and building on the CFSG 2013 Report, the Group identified four areas to be studied in 2014, namely: (a) Financing for adaptation; (b) Alternative sources and approaches to enhance climate finance and its effectiveness; (c) Enabling environments, in developing and developed countries, to facilitate the mobilization and effective deployment of climate finance; (d) Examining the role of relevant financial institutions and MDBs in mobilizing climate finance.

This report aims to present to the G20 Finance Ministers and Leaders a range of non-exhaustive policy options (“toolbox”) for voluntary consideration, related to these four areas, and to suggest further work on other important issues on climate finance.

The G20 said they were “deeply disappointed” with the continued delay in progressing the 2010 International Monetary Fund (IMF) Quota and Governance Reforms. In their view, their earliest implementation is essential for the credibility, legitimacy and effectiveness of the Fund and “remains our highest priority”.

As part of continuing efforts to promote market confidence and business integrity, G20 Finance Ministers also endorsed a new set of G20/OECD corporate governance principles.

The G20/OECD Principles of Corporate Governance provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behaviour of institutional investors and how stock markets should function.

Sound corporate governance is seen as an essential element for promoting capital-market based financing and unlocking investment, which are keys to boosting long-term economic growth.

“In today’s global and highly interconnected world of business and finance, creating trust is something that we need to do together,” OECD Secretary-General Angel Gurría said during a presentation of the new Principles with Turkish Deputy Prime Minister Cevdet Yilmaz,‎ who chaired the G20 finance ministers meeting.

Edited by Kitty Stapp

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Europe Invaded Mostly by “Regime Change” Refugees Thu, 03 Sep 2015 20:23:40 +0000 Thalif Deen The migrants photographed here were being loaded on to a cargo plane in Kufra, located in southeastern Libya. Credit: Rebecca Murray/IPS

The migrants photographed here were being loaded on to a cargo plane in Kufra, located in southeastern Libya. Credit: Rebecca Murray/IPS

By Thalif Deen

The military conflicts and political instability driving hundreds of thousands of refugees into Europe were triggered largely by U.S. and Western military interventions for regime change – specifically in Iraq, Afghanistan, Libya and Syria (a regime change in-the-making).

The United States was provided with strong military support by countries such as Germany, Britain, France, Italy and Spain, while the no-fly zone to oust Libyan leader Muammar Gaddafi was led by France and the UK in 2011 and aided by Belgium, Denmark, Norway and Canada, among others.

“[European leaders] stay silent about the military intervention and regime change in which Europeans were major actors, interventions that have torn the refugees’ homelands apart and resulted in civil war and state collapse.” -- James A. Paul, former executive director of the New York-based Global Policy Forum
Last week, an unnamed official of a former Eastern European country, now an integral part of the 28-nation European Union (EU), was constrained to ask: “Why should we provide homes for these refugees when we didn’t invade their countries?”

This reaction could have come from any of the former Soviet bloc countries, including Hungary, Slovakia, Bulgaria, Romania, the Czech Republic, Slovakia or Latvia – all of them now members of the EU, which has an open-door policy for transiting migrants and refugees.

The United States was directly involved in regime change in Afghanistan (in 2001) and Iraq (in 2003) – and has been providing support for the ouster of Syrian President Bashar al-Assad battling a civil war now in its fifth year.

U.N. Secretary-General Ban Ki-moon, who says he is “horrified and heartbroken” at the loss of lives of refugees and migrants in the Mediterranean and Europe, points out that a large majority of people “undertaking these arduous and dangerous journeys are refugees fleeing from places such as Syria, Iraq and Afghanistan.”

James A. Paul, former executive director of the New York-based Global Policy Forum, told IPS the term “regime change refugees” is an excellent way to change the empty conversation about the refugee crisis.

Obviously, there are many causes, but “regime change” helps focus on a crucial part of the picture, he added.

Official discourse in Europe frames the civil wars and economic turmoil in terms of fanaticism, corruption, dictatorship, economic failures and other causes for which they have no responsibility, Paul said.

“They stay silent about the military intervention and regime change in which Europeans were major actors, interventions that have torn the refugees’ homelands apart and resulted in civil war and state collapse.”

The origins of the refugees make the case clearly: Libya, Syria, Iraq, Afghanistan are major sources, he pointed out.

Also many refugees come from the Balkans where the wars of the 1990s, again involving European complicity, shredded those societies and led to the present economic and social collapse, he noted.

Vijay Prashad, professor of international studies at Trinity College, Connecticut, and the George and Martha Kellner Chair in South Asian History, told IPS the 1951 U.N. Refugee Convention was dated.

He said the Covenant “was written up for the time of the Cold War – when those who were fleeing the so-called Unfree World were to be welcomed to the Free World”.

He said many Third World states refused this covenant because of the horrid ideology behind it.

“We need a new Covenant,” he said, one that specifically takes into consideration economic refugees (driven by the International Monetary Fund) and political (war) refugees.

At the same time, he said, the international community should also recognize “climate change refugees, regime change refugees and NAFTA [North American Free Trade Agreement] refugees.”

The 1951 Convention guarantees refugee status if one “has a well-founded fear of persecution because of his/her race, religion, nationality, membership in a particular social group or political opinion.”

Asked about the Eastern European reaction, Prashad said: “I agree entirely. But of course one didn’t hear such a sentiment from Lebanon, Turkey, Jordan and others – who also welcomed refugees in large numbers. Why say, ‘Why should we take [them]?’ Why not say, ‘Why are they [Western Europe and the U.S.] not doing more?’” he asked.

While Western European countries are complaining about the hundreds of thousands of refugees flooding their shores, the numbers are relatively insignificant compared to the 3.5 million Syrian refugees hosted by Turkey, Jordan and Lebanon – none of which invaded any of the countries from where most of the refugees are originating.

Paul told IPS the huge flow of refugees into Europe has created a political crisis in many recipient countries, especially Germany, where neo-Nazi thugs battle police almost daily, while fire-bombings of refugee housing have alarmed the political establishment.

The public have been horrified by refugees drowning in the Mediterranean, deaths in trucks and railway tunnels, thousands of children and families caught on the open seas, facing border fences and mobilized security forces.

Religious leaders call for tolerance, while EU politicians wring their hands and wonder how they can solve the issue with new rules and more money, Paul said.

“But the refugee flow is increasing rapidly, with no end in sight.  Fences cannot contain the desperate multitudes.”

He said a few billion euros in economic assistance to the countries of origin, recently proposed by the Germans, are unlikely to buy away the problem.

“Only a clear understanding of the origins of the crisis can lead to an answer, but European leaders do not want to touch this hot wire and expose their own culpability.”

Paul said some European leaders, the French in particular, are arguing in favour of military intervention in these troubled lands on their periphery as a way of doing something.

Overthrowing Assad appears to be popular among the policy classes in Paris, who choose to ignore how counter-productive their overthrow of Libyan leader Gaddafi was a short time ago, or how counter-productive has been their clandestine support in Syria for the Islamist rebels, he declared.

Paul also said “the aggressive nationalist beast in the rich country establishments is not ready to learn the lesson, or to beware the “blowback” from future interventions.”

“This is why we need to look closely at the ‘regime change’ angle and to mobilize the public understanding that this was a crisis that was largely ‘Made in Europe’ – with the active connivance of Washington, of course,” he declared.

Edited by Kanya D’Almeida

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Opinion: Misinformation Hides Real Dimension of Greek “Bailout” Thu, 20 Aug 2015 11:14:47 +0000 Roberto Savio

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

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

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

Roberto Savio

Roberto Savio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris   

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

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Opinion: Crisis, Emergency Measures and Failure of the ISDS System: The Case of Argentina Wed, 12 Aug 2015 05:40:36 +0000 Federico Lavopa

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

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

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

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

Federico Lavopa

Federico Lavopa

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris   

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

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

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Opinion: The Sad Historical Consequences of the Greek Bailout Sat, 01 Aug 2015 16:59:06 +0000 Roberto Savio

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, writes that what lies behind the recent convoluted negotiations over Greek debt is nothing other than a dramatic demonstration that Europe is no longer about solidarity, which was the original European dream, but all about fiscal and monetary considerations.

By Roberto Savio
SAN SALVADOR, Aug 1 2015 (IPS)

In recommendations to German Chancellor Angela Merkel at the end of July, the German Council of Economic Experts outlined how a weak member country could leave the Eurozone and called for strengthening the European monetary union.

German Finance Minister Wolfgang Schäuble wants Greece out because he does not believe that it will ever be able to refund the loans it has received so far, and because he thinks it is question of principle to be strict. In an interview with Der Spiegel a few days after the historical date of Jul. 13, at the end of negotiations on Greece, he said: “My grandmother used to say: benevolence comes before dissoluteness.”

Roberto Savio

Roberto Savio

Explaining the recommendations of the Council of Economic Experts, however, its chairman Christoph M. Schmidt expressed another opinion. “To ensure the cohesion of monetary union, we have to recognise that voters in creditor countries are not prepared to finance debtor countries permanently … A permanently uncooperative member state should not be able to threaten the existence of the euro.”

This is the best illustration of Germany’s Europe. Any country which does not fit into the German scenario will have to quit. Europe is no longer a question of solidarity, it is all about fiscal and monetary considerations.

Germany now says that federalism has exceptions – whenever a member of the Eurozone is perceived to be challenging the rules of the monetary union, it will be subject to complete annihilation of its state sovereignty and national democracy. This is the kind of federalism that Germany has now proclaimed.

This German position on its vision of Europe, where political and ideal considerations are no longer the basis of the European project, has triggered a strong response from a normally obedient France.“We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane. Monetary union is no longer just a step towards a democratic political union”

President François Hollande, who appears to have suddenly woken up, has come out with a call to reinforce European integration through the establishment of a “Eurozone government”, which run in the opposite direction from that of Berlin.

Germany will of course go ahead and pursue its own course, but the Paris-Berlin axis which was conceived as the fulcrum of European integration has now been seriously weakened after Germany’s imposed agreement on Greece on Jul. 13. So we have now a major realignment.

France has been the country which has always blocked any substantial progress on European integration, by continually voting against any radical step towards integration in order to preserve as much of its national sovereignty as possible.

Now it is Germany which is intent on changing the course of integration, from a political project to a fixed exchange monetary system based on creditor countries – a system in which some democracies are more equal than others.

Schäuble has been reported as expressing concern over the European Commission’s increased political role, interfering in political issues for which it has no mandate. And it is a stark fact that the Jul. 13 Brussels agreement has sought to remove politics and discretion from the functioning of the monetary union, an idea that has long been very dear to the French, and now are the French who want more European integration as protection from a German Europe.

We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane.

Monetary union is no longer just a step towards a democratic political union, as Helmut Kohl and François Mitterand sought at the reunification of Germany, and the creation of the Euro.

We are, in fact, going back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a mechanism which worked primarily for Germany, and which led to the exit of the British pound and the temporary exit of the Italian lira.

But the euro, as Nobel laureate in economics Paul Krugman says, “has turned into a Roach Motel, a trap that’s hard to escape.” Once you’re in, you cannot get out, and you have to accept the diktat of the creditors.

Another Nobel laureate in economics, Joseph Stigliz, who was Chief Economist of the World Bank, says that the current European policy of austerity at any cost, is like going back to a “19th century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.”

Of course, what is never said openly (except by Stigliz) is that in the Greek bailout one central reason for the extremism of the new package of conditions was to teach a lessons to a radical left-wing party, Syriza, and to the Greek people who had had the audacity to reject the calls from European leaders to vote against that party.

It is not by chance that countries like Poland, which were asking to be admitted to the Eurozone, have withdrawn their applications.  The euro has become a rallying political issue, with parties from all over Europe asking to withdraw. It has become the first line of action for those who oppose European integration.

Until now, the answer of European governments has been that withdrawal is impossible under the European constitution. But now that the German Council of Economic Experts has come out with a concrete proposal on how to do that, that line of defence is crumbling.

According to many analysts, Angela Merkel is playing with fire. Germany cannot remain a credible leader of a coalition of Northern and Eastern European countries and ignore the realities and needs of Southern Europe. This is unsustainable, even in the medium term.

Meanwhile, the world goes on. Within seven years India will have overtaken China as the most populous country in the world, while within a few decades Nigeria will have a larger population than the United States.

And Europe? Europe will have become the continent with most old people and lower productivity, and will have to face its four horses of the apocalypse:

  • a solution to relations with Russia;
  • common agreement on how to deal with the dramatic flow of immigrants, when countries are not even able to relocate 40,000 people in a region of 450 million;
  • a real policy on the explosive Middle East and terrorism; and soon
  • the request of United Kingdom for a new agreement on the European Union, or else it will exit Europe.

We can safely bet that those negotiations, which will be based purely on economic issues, will be the kiss of death for the original European dream. (END/COLUMNIST SERVICE)

Edited by Phil Harris    

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

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Opinion: A BRICS Bank to Challenge the Bretton Woods System? Wed, 22 Jul 2015 08:12:45 +0000 Daya Thussu

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 Mix Tue, 21 Jul 2015 10:31:18 +0000 Desmond Brown 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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Opinion: U.N. Can Help Reform the International Financial System Tue, 14 Jul 2015 10:03:21 +0000 Jomo Kwame Sundaram 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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IMF Steps Up Lending to Achieve Sustainable Development Mon, 13 Jul 2015 16:45:40 +0000 Zhai Yun Tan By Zhai Yun Tan
WASHINGTON, Jul 13 2015 (IPS)

As the Third International Conference on Financing for Development opens in the Ethiopian capital, Addis Ababa, Monday, all eyes are on the United Nation’s post-2015 development agenda, billed as the most ambitious and far-reaching poverty eradication plan in the organisation’s history.

On the eve of the conference, on Jul. 10, some of the world’s leading development banks announced plans to extend 400 billion dollars in financing towards the U.N.’s Sustainable Development Goals (SDGs) over a three-year period.

The African Development Bank, Asian Development Bank, European Bank for Reconstruction and Development, European Investment Bank, Inter-American Development Bank, World Bank Group (referred to as the MDBs), together with the International Monetary Fund (IMF), have also “vowed to work more closely with private and public sector partners to help mobilize the resources needed to meet the historic challenge of achieving the SDGs”, said a press release issued this past weekend.

Christine Lagarde, managing director of the IMF, announced here in Washington on Jul. 8 that the Fund has decided to increase developing nations’ access to credit to promote sustainable growth.

The changes, approved by the IMF executive board on Jul. 1, will expand concessional facilities – money-lending mechanisms – to developing countries by 50 percent.

More aid will be targeted at poor and vulnerable countries, and the IMF will maintain a zero-percent interest rate on rapid credit facility loans to fragile states and countries hit by natural disasters

Lagarde referred to three major international conferences – including the financing conference underway in Ethiopia, the U.N. summit slated to take place in New York City in September, and the year-end climate negotiations scheduled to be held in Paris – as “rare windows of opportunities” for the international community, including the IMF, to help developing countries achieve the SDGs.

“These three [meetings] combined can help us change the music,” she said. “We have a chance to collectively take a new approach.”

First laid out in the Rio+20 summit in 2012, the SDGs currently comprise 17 goals, ranging from reducing poverty and inequality to combating climate change. They are expected to form the global blueprint from which member states will derive their national policies over the next 15 years.

The goals come on the heels of the Millennium Development Goals (MDGs), eight poverty reduction targets set out in 2000 that will expire by the end of this year.

Many are worried that the SDGs are too broad and may be costly.

A United Nations report by the Intergovernmental Committee of Experts on Sustainable Development Financing released in August 2014 puts the estimate of eradicating extreme poverty in all countries, one of the goals, at around 66 billion dollars annually.

The cost of investments required to achieve “climate-compatible” scenarios may go up to several trillion dollars per year.

United Nations Under-Secretary General for Economic and Social Affairs Wu Hongbo said in an IMF Survey published on Apr. 18 that achieving the SDGs will cost more than the MDGs.

“In addition to eradicating poverty, this agenda will cover economic, social and environmental issues, so huge amounts of financial resources will be required for its implementation,” he said.

Other than international aid, the report calls for the use of private resources, partnerships and innovative mechanisms to finance implementation of the SDGs.

But international aid is still crucial for many least developed countries, especially nations on the African continent and landlocked developing states.

In 1970, a target was set for developed countries to allocate 0.7 percent of their Gross National Income (GNI) as Official Development Assistance (ODA) to developing countries. However, only five developed countries from the Organisation for Economic Cooperation and Development (OECD) have reached the target so far.

ODA is the measure of resource flows to developing countries for economic development and welfare.

Charles Kenny, senior fellow at the Center for Global Development in Washington, D.C. said in a blog post on Jul. 7 that aid flows alone could not float the multi-trillion-dollar price tag of the SDGs.

“The truth is that development is no longer mostly about aid,” he said.

He referred to remittances from migrants living overseas, foreign direct investment and private lending to developing countries as well as domestic government revenues as other lucrative sources of financing.

The IMF has contributed to the goals by providing advice, assistance and lending to the countries.

Lagarde said that the IMF will focus on mobilising domestic revenue, especially through increasing the tax ratios in developing countries. She said that tax ratios in developing countries are below 15 percent in comparison to the OECD average of 34 percent.

“Money raised in that simple, fair and broad-based system and well spent on the right policies can be a game changer,” she said.

Eliminating inefficiency by combating corruption and untargeted subsidies was another IMF goal. Around 30 percent of public spending is lost due to inefficiencies in the public investment process, she said.

“They [developing countries] can’t do it by themselves,” Lagarde said. “If the international community participates in that effort, it will go a lot further.”

Edited by Kanya D’Almeida

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Social Safety Net Not Wide Enough to Protect World’s Poor Tue, 07 Jul 2015 21:50:50 +0000 Zhai Yun Tan By Zhai Yun Tan
WASHINGTON, Jul 7 2015 (IPS)

Fifty-five percent of the world’s poor still have limited protection from hunger and economic, social or political crises despite expansion of social safety programmes in developing countries in recent years.

According to a report released by the World Bank on Jul. 7, most of the poor without a social safety net system are in lower-income countries, especially in sub-Saharan Africa and South Asia, where the vast majority of the world’s poor reside.

In these countries, safety schemes like cash transfers and school feeding programmes only cover 25 percent of the extreme poor, compared to 64-percent coverage in upper-middle-income countries.

Existing social welfare mechanisms are insufficient to close the poverty gap, leaving approximately 773 million people struggling to survive, experts say.

The report, the second in a series, was released following the World Bank Group and International Labor Organisation’s (ILO) announcement of their goals to provide universal social protection within the next 15 years.

A joint statement released by the two organisations on Jun.30 cited universal coverage and access to social protection as twin goals by 2030.

“The World Bank Group and the ILO share a vision of social protection for all, a world where anyone who needs social protection can access it at any time,” according to the joint statement by Jim Yong Kim, president of the World Bank Group, and Guy Ryder, executive director of the ILO.

“The new development agenda that is being defined by the world community – the sustainable development goals (SDGs) – provides an unparalleled opportunity for our two institutions to join forces to make universal social protection a reality, for everyone, everywhere.”

The report comes just ahead of the United Nations’ third Financing for Development (FfD) conference scheduled to take place in the Ethiopian capital Addis Ababa next week, where world leaders will discuss plans for funding the post-2015 development agenda, due to be launched in September.

The issue of providing universal social protection is slated to be at the centre of the agenda.

The five largest social safety programmes in the world are in China, India, South Africa and Ethiopia, where regular assistance reaches a combined total of 526 million people.

According to the report, all countries have at least one type of social security scheme, while the average developing country has about 20 such programmes. Globally, approximately 1.9 billion people benefit from these mechanisms.

On average, low-middle-income countries devote 1.6 percent of their gross domestic product (GDP) to these mechanisms, while richer countries devote 1.9 percent of their earnings to social programmes.

The World Bank reports that poor policy choices lie at the heart of inefficiencies in adequately providing for the poor. Fuel and electricity subsidies, for instance, reduce the portion of government spending allocated to social spending. These regressive subsidies disproportionately benefit the rich.

For example, Yemen spends nine percent of its GDP on energy and electricity subsidies, compared to the three percent it spends on social security net programs. The country, engulfed in political turmoil for the past few years, is already one of the poorest countries in the Arab World with up to 54.5 percent of its population living in poverty.

As developed countries like the United States and the European Union grapple with the balance between providing social security and maintaining economic growth in the slumping economy, developing countries have expanded their safety nets in a bid to reduce poverty.

Cash transfer programmes, recommended by the report as the most effective method, has “positive spillover effects on the local economy.” For each dollar transferred, the total income of the beneficiary increases from 1.08 dollars to 2.52 dollars.

“There is a strong body of evidence that these programmes ensure poor families can invest in the health and education of their children, improve their productivity, and cope with shocks,” said Arup Banerji, the World Bank Group’s senior director for social protection and labour.

“Going forward, more can be done to close the coverage gap and reach the world’s poorest by improving the effectiveness of these programmes underpinned by enhanced targeting, improved policy coherence, better administrative integration, and application of technologies.”

Edited by Kanya D’Almeida

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Will the New BRICS Bank Break with Traditional Development Models, or Replicate Them? Tue, 07 Jul 2015 21:10:17 +0000 Kanya DAlmeida 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

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: The End of the Greek Tragedy? Tue, 07 Jul 2015 11:54:24 +0000 Joaquin Roy

In this column, Joaquín Roy, Jean Monnet Professor of European Integration and Director of the European Union Centre at the University of Miami, argues that the decisive result of the Greek referendum has opened a new chapter not only for the future of Greece, but also in terms of the essence of the European Union itself, which will have to abandon its eternal habit of brinkmanship and coming to last-minute arrangements.

By Joaquín Roy
BARCELONA, Jul 7 2015 (IPS)

The decisive result of the Greek referendum held Jul. 5, in which voters overwhelmingly rejected (61.3 to 38.7 percent) the terms of an international bailout, has opened a new chapter not only for the future of Greece, but also in terms of the essence of the European Union itself.

Paradoxically, the future of the euro may become a secondary issue.

Joaquín Roy

Joaquín Roy

In the coming week, the pages will be turned on some chapters of European history that had been regarded as a fixed part of the script.

The fact that, in their time, previous Greek governments blatantly misrepresented the country’s financial situation in order to secure entry into the euro zone will have to be put aside.

The authorities in Brussels will have to be forgiven for turning a blind eye so that the country using the world’s oldest existing currency, and that had founded a mythical democracy, should not be excluded from the inaugural party of Europe’s spectacular expansion.

The eternal European habit of brinkmanship and coming to last-minute arrangements – so that summits produce neither winners nor losers, but everyone can go home feeling vindicated – will have to be given up for practical reasons.

This battle may still cause significant damage and a high number of casualties.

In the first place, although the voting reflects clear overall rejection of E.U. impositions, Greek society remains dangerously divided on the choice presented to it by Prime Minister Alexis Tsipras. The problems the Greek people face in their daily lives will not disappear after the referendum.“If there is no new bailout or a massive debt write-off, the [Greek] government may be forced by its inability to satisfy the citizenry’s demands to choose between two evils … the humiliation of urgent humanitarian aid from the European Union … [or] the dangerous path of seeking protection from external interests”

Those who voted in favour of accepting the conditions of the European institutions and the International Monetary Fund (IMF) will blame those who backed Tsipras for the costs they will all have to bear. Those who voted No and “won” the contest may well feel disappointed when they see the economic situation worsening, or not noticeably improving.

The referendum results indicate that conservatives and the middle classes decided to support the bailout conditions because they at least had some assets. On the other hand, the majority of people who have nothing, or who have lost nearly everything, preferred to carry on the struggle and reject E.U. pressures.

It is worth noting that the proportion of No votes in the referendum was higher than the proportion of ballots cast for the left-wing Tsipras in the recent elections that propelled his party to power.

If there is no new bailout or a massive debt write-off, the government may be forced by its inability to satisfy the citizenry’s demands to choose between two evils. On the one hand it may have to accept the humiliation of urgent humanitarian aid from the European Union, as has been suggested at the eleventh hour. On the other hand, it might take the dangerous path of seeking protection from external interests, as recent overtures towards Moscow appear to indicate.

E.U. leaders may pursue the threats they made in the final hours of the referendum campaign. The president of the European Parliament, Martin Schulz, might have found himself in the uncomfortable position of having to take action to back up his last-minute arguments about the dire consequences of exiting the euro. Now, however, he has backed down and appears to be leaning toward negotiation.

Other E.U. leaders are also in awkward positions. Where will European Council President Donald Tusk and Commission President Jean-Claude Juncker be if Berlin’s hard line prevails?

Or conversely, where will everyone be if traditional negotiation and classic compromise are now being reconsidered?

A traditional forecast is that the European leaders in Brussels, backed by the IMF, will opt for negotiation, because they do not want to go down in history as participants in a conflict with unpredictable consequences. It does not suit the Greek prime minister to overstep the mark, either, and he could therefore make the European Union an offer it cannot refuse. For their part, German Chancellor Angela Merkel and other holders of the enormous debt know that if Greece exits the euro, repayment will be impossible.

In the distance, the United States has expressed concern over the development of this process. Economic convulsion in Europe is not in the interests of Washington; moreover, from its standpoint, two issues are crucial for preventing damage from spilling over into other vital dimensions.

The first is the threat that Greece may be tempted to drift into the sphere of Russia’s protection.

The second is the disturbing sight of the European Union under a divided leadership and with damaged financial underpinnings at the height of negotiations for the proposed Transatlantic Trade and Investment Partnership (TTIP), a free trade agreement between the European Union and the United States.

Indecisive leaders in Europe will make it very difficult for U.S. President Barack Obama to exercise his negotiation mandate granted by Congress, increasing the likelihood that the project will be delayed until a new U.S. president takes office.

In conclusion, the decisions taken now in Brussels and other European capitals will determine whether or not there will be further harm to the essence of the European Union – and to the euro, the jewel in the crown and the cause of the whole drama. (END/COLUMNIST SERVICE)

Edited by Pablo Piacentini/Phil Harris   

Translated by Valerie Dee

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

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Opinion: BRICS for Building a New World Order? Wed, 01 Jul 2015 11:38:34 +0000 Daya Thussu

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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Critics of World Bank-Funded Projects in the Line of Fire Mon, 22 Jun 2015 23:16:41 +0000 Kanya DAlmeida The World Bank has increased financial support for the cotton sector in Uzbekistan, despite evidence that the industry is rooted in a system of forced labour. Credit: David Stanley/CC-BY-2.0

The World Bank has increased financial support for the cotton sector in Uzbekistan, despite evidence that the industry is rooted in a system of forced labour. Credit: David Stanley/CC-BY-2.0

By Kanya D'Almeida

For an entire month beginning in February 2015, a group of between 40 and 50 residents of the Durgapur Village in the northern Indian state of Uttarakhand would gather at the site of a hydroelectric power project being carried out by the state-owned Tehri Hydro Development Corporation (THDC).

All day long the protestors, mostly women and their children, would sit in defiance of the initiative that they believed was an environmental and social danger to their community, singing folk songs that spoke of their fears and hopes.

“I had expected a very constructive conversation with the World Bank. Instead all I am hearing are non-responses." -- Jessica Evans, senior advocate on international financial institutions at Human Rights Watch
Their actions were well within the bounds of the law, but the reactions of THDC employees to their peaceful demonstration were troubling in the extreme.

According to one of the women involved, THDC contractors and labourers routinely harassed them by hurling abusive slurs – going so far as to call the women ‘prostitutes’ and make derogatory comments about their caste – and attempted to intimidate them by threatening “severe” consequences if they didn’t call off their picket.

In a country where activists and communities demanding their rights are routinely subjected to identical or worse treatment at the hands of both state and private actors, this tale may not seem at all out of the ordinary.

What sets it apart, however, is that this hydroelectric project was not simply a government-led scheme; it is financed by a 648-million-dollar loan from the World Bank.

Governed by a set of “do no harm” policies, both the Bank and its private sector lending arm, the International Finance Corporation (IFC) have – on paper at least – pledged to consult with and protect local communities impacted by its funding.

But according to a new report by Human Rights Watch, the Bank has not only systematically turned a blind eye to reports of human rights abuses associated with its projects, it also lacks necessary safeguards required to avoid further violations in the future.

When silence and negligence equals complicity

Based on research carried out over a two-year period between May 2013 and May 2015, in Cambodia, India, Uganda and Kyrgyzstan – the latter following allegations of rights abuses in Uzbekistan – the report entitled ‘At Your Own Risk: Reprisals Against Critics of World Bank Group Projects’ found that Bank officials consistently fail to respond in any meaningful way to allegations of severe reprisals against those who speak out against Bank-funded projects.

In some cases, the World Bank Group has even turned its back on local community members working with its own officials.

Addressing the press on a conference call on Jun. 22, the report’s author, Jessica Evans, highlighted an incident in which an interpreter for the Bank’s Inspection Panel was flung into prison just weeks after the oversight body concluded its review process.

Withholding all identifying details of the case for the security of the victim, Evans stated that, besides questioning government officials “behind closed doors”, the Bank has so far remained completely silent on the fate of an independent activist working to strengthen the Bank’s own process.

Such actions, or lack thereof, “make a mockery out of [the Bank’s] own stated commitments to participation and accountability,” the report concluded.

HRW has identified dozens of cases in which activists claim to have been targeted – harassed, abused, threatened or intimidated – for voicing their objections to aspects of Bank or IFC-funded initiatives for a range of social, environmental or economic reasons.

Because the bulk of communities in close proximity to major development schemes tend to be among the poorest or most vulnerable, and therefore lack the access or ability to formally lodge their complaints, the true number of people who have experienced such reprisals is “sure” to be much higher than the figures stated in the report, researchers revealed.

Evans told IPS, “On this issue of reprisals the World Bank’s silence and inaction has already crossed the line” into the realm of compliance.

She added that the Inspection Panel raised the issue of retaliation back in 2009, giving the Bank ample time to take necessary steps to address a chronic and pervasive problem.

Instead, it continues to engage with governments that have a poor human rights track record, while remaining apparently deaf to pressures and demands from civil society to strengthen mechanisms that will protect powerless and marginalized communities from violent backlash.

Take the case of Elena Urlaeva, who heads the Tashkent-based Human Rights Alliance of Uzbekistan, and who was arrested in a cotton field on May 31, 2015, while documenting evidence of the Uzbek government’s massive system of forced labour in cotton production.

According to HRW, Urlaeva was detained, abused and sexually violated during an extremely violent cavity probe. On the grounds that they were searching for a data card from her camera, male doctors and policemen conducted such a rough and invasive search that the ordeal left her bleeding.

She was forbidden from using the bathroom and eventually forced to go outside the station in the presence of male officers who called her a “bitch”, filmed her in the act of relieving herself and threatened to post the video online if she complained about her treatment.

Evans told IPS all of this occurred against a backdrop of the World Bank’s increased financial support of the cotton sector – already it has pledged over 450 million dollars to three major agricultural projects of the Uzbek government – despite evidence that the industry is rooted in a system of forced labour.

In the absence of any robust mechanism within the World Bank to make continued funding conditional on compliance with international human rights standards, there is a “real risk” that independent monitors and rights activists will continue to face situations as horrific as the one Urlaeva recently endured, Evans stressed.

A ‘disappointing’ reaction

Both the World Bank and the United Nations have tossed the issue of development-related rights abuses from one forum to another.

In his May 2015 report to the U.N. Human Rights Council (HRC), Special Rapporteur on extreme poverty and human rights Philip Alston stressed the urgency of “putting questions of resources and redistribution back into the human rights equation.”

He decried several member states’ attempts to keep international economics, finance and trade “quarantined” from the human rights framework, and blasted international financial institutions (IFIs) for contributing to this culture of impunity.

“The World Bank can simply refuse to engage with human rights in the context of its policies and programmes, IMF does the same, and the World Trade Organisation is little different,” Alston remarked, adding that these bodies throw the issue at the HRC, while the latter simply knocks the ball back into the financiers’ court.

It is becoming akin to a game of political ping-pong, with the ball representing the human rights of some of the most impoverished people in the world – at whom multi-million-dollar development projects are ostensibly targeted.

Gretchen Gordon, coordinator of Bank on Human Rights, a global coalition of social movements and grassroots organisations working to hold IFIs accountable to human rights obligations, told IPS, “You can’t have successful development without robust civil society participation in setting development priorities, designing projects, and monitoring implementation.”

If development banks and their member states neglect to take leadership and implement the necessary protocols and policies, she said, “they will continue to see increasing development failures, human rights abuses, and conflict.”

If the World Bank Group’s initial reaction to HRW’s comprehensive research is anything to go by, however, Bank on Human Rights and other watchdogs of its ilk have their work cut out for them.

Though HRW’s researchers invited the Bank and the IFC’s input with an in-depth list of questions back in April, they have received nothing but a rather “bland response” that failed to address the issue of reprisals at all and simply stated that the Bank “is not a human rights tribunal.”

“I had expected a very constructive conversation with the World Bank,” Evans said. “Instead all I am hearing are non-responses. We have proposed really pragmatic recommendations for how the Bank can work effectively in challenging environments, but we are a long way from that at the moment.”

Both the Bank’s Inspection Panel and the IFC’s Compliance Advisor Ombudsman (CAO) have greeted the report with enthusiasm, but they are independent bodies and remain largely powerless to effect change at the management level of the World Bank Group.

This power lies with the Bank’s president, Jim Yong Kim, who will have to “take the lead and send a clear message to his staff that the question of reprisals is a priority issue,” Evans concluded.

Edited by Kitty Stapp

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Opinion: No Place to Hide in Addis Thu, 18 Jun 2015 16:16:38 +0000 Tamira Gunzburg

Tamira Gunzburg is Brussels Director of The ONE Campaign.

By Tamira Gunzberg
BRUSSELS, Jun 18 2015 (IPS)

My colleagues just got back from Munich, where we held a summit bringing together over 250 young volunteers from across Europe. These youngsters campaigned in the run-up to and at the doorstep of the G7 Summit in Schloss Elmau, as one of the key moments in a year brimming with opportunities to tackle extreme poverty.

It’s inspiring to work with these young activists – their enthusiasm and creativity are humbling. But the other thing about young people is that they don’t let anyone pull the wool over their eyes. Euphemisms don’t stick; skirting the point doesn’t get you very far. They keep us on our toes and that is not a bad thing at all.

Courtesy of Tamira Gunzburg

Courtesy of Tamira Gunzburg

But some phenomena I am simply at a loss to explain. One such paradox is the fact that only a third of aid goes to the very poorest countries, and that aid to those countries has been declining. Yet in the so-called ‘Least Developed Countries’, 43 percent of the population still lives in extreme poverty, compared to 13 percent in other countries.

This begs so many questions it is dizzying. How are we going to eradicate extreme poverty if we don’t prioritise the countries that need aid the most? What is aid for if not helping the poorest?

Why are we cutting aid to the poorest countries when it is the middle income countries that are becoming more able to mobilise their own sources of financing for development? And why aren’t leaders doing anything to reverse this perverse trend?

Instead, EU development ministers in May recommitted to the existing promise of providing 0.7 percent of national income in aid, and up to 0.2 percent of national income in aid to the least developed countries – this time “within the timeframe” of the post-2015 agenda to be adopted in September.

But even if they achieved both targets by say, 2025, that would still mean a share of only 28.6 percent of total aid going to the poorest countries. In other words: business as usual. This is where any young person would detect the glaring no-brainer, and unapologetically probe “… but isn’t that too little, too late?”Ending extreme poverty by 2030 and leaving no one behind will become harder as we near the zero zone.

Whereas the Millennium Development Goals – global anti-poverty goals agreed in the year 2000 – allowed us to pick the ‘low-hanging fruit’ in terms of bringing down average levels of extreme poverty and child mortality, this year’s new set of ‘Global Goals’ is all about finishing the job.

Ending extreme poverty by 2030 and leaving no one behind will become harder as we near the zero zone. We need to frontload our efforts and put the poorest and most vulnerable at the centre of our approach from the get-go.

That is why donors must commit to spending at least half of their aid on the poorest countries, and to doing this by 2020, so that those countries have time to tackle the Global Goals in time for the 2030 deadline.

This is but one of the debates that are heating up in the final weeks before the Summit in Addis Ababa in July, where world leaders will come together to decide on how to finance development. Negotiations touch upon topics that go well beyond aid, and rightly so, in an attempt to unlock new sources of financing such as domestic resource mobilisation and private sector investment.

Sadly though, many of the discussions are still being held hostage by the impasse on aid commitments. Indeed, donor countries’ laborious reaffirmation of decade-old broken promises does not inspire confidence that they are committed to doing things differently this time.

What, then, can change the game at this point? For one, let’s kick things up a level and bring in the big bosses. We fully expect heads of state to be in attendance in Addis – but even before then, the leaders of all 28 EU Member States are getting together for their own summit at the end of June.

Here they have the authority to agree on a more ambitious commitment than the development ministers managed to broker last month. Announcing an EU-wide intent to direct at least half of collective aid to the least developed countries would send a strong political message that could spark a much-needed race to the top in the final sprint towards Addis.

Another sure way to guarantee the success of this Summit is to inject more political will into the discussions that go beyond aid. For example, several countries are coming together to harness the “Data Revolution” to ensure that we collect the statistics needed to track progress and achieve the new Global Goals.

Right now, the world’s governments do not have more than 70 percent of the data they need to measure progress. Clearly, we need to aim for more with the new Global Goals.

Further, it will be crucial to agree on minimum per capita spending levels on essential services to deliver, by 2020, a basic package for all. In order to fund these efforts, governments should increase domestic revenues towards ambitious revenue-to-GDP targets and halve the gap to those targets by 2020 by implementing fair tax policies, curbing corruption and stemming illicit flows.

The list is long and time is running out, but as our youth activists would unwaveringly note, there is still ample opportunity for leaders in both North and South to rise to the occasion and throw their weight behind ending extreme poverty. Pesky questions aside, leaders really should take note of these young voices, because it is quite literally their future world that leaders are shaping this year.

Edited by Kitty Stapp

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Opinion: Greece – A Sad Story of the European Establishment Tue, 09 Jun 2015 11:40:11 +0000 Roberto Savio

In this column, Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News, writes that the latest development in the tug of war which has been going on between Greece and a German-dominated Europe is the desire to punish an anti-establishment figure like Greek Prime Minister Alexis Tsipras and show that the radical left cannot run a country.

By Roberto Savio
ROME, Jun 9 2015 (IPS)

Only 50 years of Cold War (and the fact that German Chancellor Angela Merkel grew up in East Germany) can possibly explain the strange political power of the United States over Europe.

After a bilateral meeting between Merkel and U.S. President Barack Obama (so much for transparency and participation), the Jun. 7-8 G7 summit opened in Germany and we found out that there had been a trade-off.

Roberto Savio

Roberto Savio

Merkel agreed that Europe should continue the sanctions against Russia – and so the other members of the G7 duly agreed – and Obama toned down the U.S. position on Greece.

That position had been forcefully expressed by U.S. Treasury Secretary Jacob Lew a few days earlier to European leaders: solve the Greek problem, or this will have a global impact that we cannot afford. This had suddenly accelerated negotiations, with the hope then that everything would be solved before the G7 summit.

But Greece did not accept the plan of the President of the European Commission, Jean-Claude Juncker, which was suspiciously close to International Monetary Fund (IMF) positions.

At the G7 summit, Obama softened the U.S. position on Greece, and even said that “Athens must implement the necessary reforms.”

Obstinacy on sanctions against Russia ignores the fact that, in a very delicate economic moment, Europe has lost a considerable part of its exports because of Russia’s retaliatory block on European imports. It is also difficult to see what advantage there is for Europe in pushing Russia into the arms of China. We will soon be seeing joint naval exercise between the two countries, which will only escalate tensions.

But let us look at Greece given that its tug of war with Europe has now been going on for five years.

Let us recall briefly. Greece had been spending much more than it could by distributing public jobs under any government, by giving easy pensions to everyone, and so on. Then, in 2009, the centre-left Panhellenic Socialist Movement (PASOK) won the elections and we found out that the figures Athens had been giving Brussels were false.

The real deficit stood at almost 12.5 percent of gross domestic product (GDP), confirmation of what the European Union and its bodies had long suspected but which it had done nothing about.“Europe is now led by Germany and the Germans are convinced that what they did at home is valid everywhere. Together with the countries of northern Europe, they look on the people of southern Europe as unethical, people who want to enjoy life beyond their means”

To avoid going into the agonising details of the continuous negotiations between Greece and the European Union, I jump to the January elections this year which the left-wing Syriza party won and its leader Alexis Tsipras was named Prime Minister on a clear programme: stop the austerity programme imposed by the “Troika” – IMF, EU and the European Central Bank (ECB) – on behalf of the European countries, led by Germany, Netherlands, Austria and Finland.

Greece is on its knees. Officially, unemployment has gone from 11.9 percent in 2010 to 25.5 percent today, but it is widely considered to be around 30 percent. Among young people, it is close to 60 percent. GDP has gone into a 25 percent decline, Greek citizens have lost about 30 percent of their revenues and public spending has been slashed to the point that hospitals have great difficulty in functioning.

Yet, the request (order) of the “Troika” is simple – cut everything the deficit has been eliminated.

So, for example, cut pensions, which have been already been cut twice. In any case, this would reap a paltry 100 million euros but would cripple people who are living on less than 685 euro a month. Or, raise VAT on tourism, from the present 6.5 percent to 13.6 percent, which would be a deadly blow to Greece’s only important source of income.

This is the plan presented by Juncker, whose arrival as head of the European Commission was accompanied by a grandiose Marshall Plan for Europe, a plan which has since disappeared totally from the scene.

In an article a few days ago titled ‘Europe’s Last Act?”, Joseph E. Stiglitz, Nobel laureate in economics, argues that the idea of austerity as a uniform recipe for Europe is missing reality.

“The troika badly misjudged the macroeconomic effects of the program that they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.

“The troika’s forecasts have been wrong, and repeatedly so. And not by a little, but by an enormous amount. Greece’s voters were right to demand a change in course, and their government is right to refuse to sign on to a deeply flawed program.”

It is on austerity that the paths of the United States and the European Union divide.

The United States has embarked on investing for growth, despite pressure from the Republican party for austerity, and the U.S. economy is picking up again.

But Europe is now led by Germany and the Germans are convinced that what they did at home is valid everywhere. Together with the countries of northern Europe, they look on the people of southern Europe as unethical, people who want to enjoy life beyond their means. As The Economist put it in an article on the Greek crisis: “In German eyes this crisis is all about profligacy”.

It did not help that another very minor crisis – that of Cyprus between 2012 and 2013 – confirmed Germany’s view about the profligacy of the south of Europe. In the case of Cyprus, the “Troika” settled the crisis at a cost of 10 billion euros.

There is widespread agreement that the crisis of Greece, which represents just two percent of the total European budget, could have been settled at the beginning with a 50-60 billion euro loan. But only since Tsipras became prime minister, and with popular support started to refuse to accept the creditors’ plan, has Greece has become a very important issue.

There is now talk of a “Grexit”, or Greece’s exit from the European Union. This would have a cascade effect, and it would mean the end of Europe as a common dream, of a Europe based on solidarity and communality.

In the G7, Obama has insisted on investments and demand as a way out of the crisis. Merkel has again repeated that Europe does not need stimulus financed by debt, but stimulus coming from the reform of inefficient economies. At this point, perhaps “everything is always about something else”, as the late award-winning Sri Lankan journalist Tarzie Vittachi once told me.

An enlightening comment on the Greek situation has come from Hugo Dixon writing in The New York Times of Jun. 7. The Greek prime minister “will have to choose between saving his country and sticking to a bankrupt far-left ideology. If he is smart, he can secure a few more concessions from creditors and a goodish deal for Greece. If not, he will drag the country into the abyss.”

And then, it is interesting to note that one of the main reasons for being so hard with Syriza is that the citizens of Spain, Portugal and Ireland, who were the first to swallow the bitter pill of austerity, would revolt if they saw a different path for Greece, and it just happens that those countries have conservative governments.

The entire European political system reeled with shock at the victory of Syriza, and again a few days ago at the victories of the left-wing anti-establishment Podemos party in municipal elections in Spain.

For some reason, the very authoritarian and conservative government of Viktor Orbán in Hungary, the victory of the very conservative Andrzej Duda as president in Poland, as well as the rise of Matteo Salvini’s anti-European and anti-immigration Lega Nord party in Italy create no panic, not even if Salvini looks to Russian President Vladimir Putin and Marine Le Pen, leader of France’s right-wing Front National, as figures of reference.

So, the real issue now in the case of Greece is to punish an anti-establishment figure like Tsipras and show that the radical left cannot run a country.

Who really believes that there will masses of citizens in Madrid, Lisbon or Dublin taking to the streets to protest if Europe does a somersault of solidarity and idealism, and lowers its requests or dilutes them over more time? (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

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Climate Fund Rolls Out Amid Hopes It Stays “Green” Wed, 03 Jun 2015 18:01:28 +0000 Kitty Stapp Civil society groups argue that fossil fuels should not be eligible for climate funding in any form. Credit: Bigstock

Civil society groups argue that fossil fuels should not be eligible for climate funding in any form. Credit: Bigstock

By Kitty Stapp

After a difficult infancy, the Green Climate Fund is finally getting some legs. The big question now is what direction it will toddle off in.

Local ownership, sustainability and a firm commitment to clean energy are a few of the non-negotiable items if the Fund is to be a success, civil society groups stress."Allowing so-called climate financing for projects that are slightly less dirty than a hypothetical alternative is a sure way to game the system." -- Karen Orenstein

“The GCF board is aiming to have at least a few projects in the pipeline in time for COP21 [the high-level climate change summit in Paris in December] – to show the world that the fund is open for business and that developed countries are putting their money where their mouths are,” Karen Orenstein of Friends of the Earth told IPS. “Of course, this will be more credible once substantially more of the money pledged to the GCF is legally committed.

“It is essential that those first GCF projects set the appropriate precedent for future-financed activities. The GCF must showcase the best of what it has to offer,” she added.

“This means directly addressing the adaptation and mitigation needs of the vulnerable through environmentally-sound initiatives that promote human rights and benefit local economies, rather than Wall Street-type transactions that may theoretically have trickle-down benefit for the poor.”

The Fund is the United Nations’ premier mechanism for funding climate change-related mitigation and adaptation in developing countries.

At the Copenhagen climate summit in 2009, donors agreed to mobilise 100 billion dollars a year by 2020, in an undefined mix of public and private funding, to help developing countries. The GCF is to be a cornerstone of this mobilisation, using the money to fund an even split between mitigation and adaptation projects.

Actual funding has trickled in slowly. But delivery of a pledge by the government of Japan late last month for 1.5 billion dollars carried the Fund over the required 50 percent threshold to begin allocating resources for projects and programmes in developing countries.

The Fund aims to finalise its first set of projects for approval by the GCF Board at its 11th meeting in November.

It has also identified strategic priority areas and global investment opportunities that are not adequately supported by existing climate finance mechanisms, and can be used to maximise the GCF’s impact, especially investments in efficient and resilient cities, land‐use management and resilience of small islands.

“Projects must be genuinely country-driven, which means not only government-driven but also driven by communities, civil society and local private sector. And, of course, there must be no trace of support for dirty energy,” Orenstein said.

To date, 33 governments, including eight developing countries, have pledged close to 10.2 billion dollars equivalent, with 21 of them signing a part or all of their contribution agreement. But how to maintain and accelerate that funding in the long term remains to be seen.

In a new analysis, the World Resources Institute (WRI) notes that more than five years after Copenhagen, the sources, instruments, and channels that should count toward the 100-billion-a-year goal remain ambiguous.

It suggests four possible scenarios: developed country climate finance only; developed country finance plus leveraged private sector investment; developed country finance, multilateral development bank (MDB) climate finance (weighted by developed countries’ capital share) and the combined leveraged private sector investment; and all the first three sources, plus climate-related official development assistance (ODA) as compiled by the Organisation for Economic Co-operation and Development (OECD).

In terms of which is most likely to be adopted, as governments negotiate a comprehensive new climate change agreement for the post-2020 period, Michael Westphal, a senior associate on WRI’s Sustainable Finance team, told IPS that parties have not agreed yet on even what finance sources should count.

“Our scenario analysis is focused on assessing how likely is it that each scenario could reach 100 billion dollars, given different assumptions of growth and leverage,” he explained.

“One of the main conclusions, not surprisingly, is that the more sources that are included, the more realistic is it for the 100 billion dollars to be reached – i.e., it would require lower growth rates and assumptions about how much private finance is leveraged per public dollar.”

Supplemental funding could flow from new and innovative sources, such as the redirection of fossil fuel subsidies, carbon market revenues, financial transaction taxes, export credits, and debt relief, the analysis says.

The International Monetary Fund (IMF) estimates that pre-tax fossil fuel subsidies for OECD countries – long derided as irrational and destructive by environmental groups and many economists – amounted to 13.3 billion dollars in 2012.

Budgetary support and tax expenditures to fossil fuels totalled 76.4 billion dollars in 2011 for the OECD’s 34 member countries.

“On fossil fuel subsidies, the G20 has agreed to phase them out over the medium term, so we think it is likely to have progress on this front over the next five years,” Westphal told IPS.

“The IMF has written extensively about the costs of fossil fuel subsidies, so the issue is now a front burner issue for multilateral finance institutions.  As for ETS [emission trading system], governments would have to agree to divert some of the revenues from the allowances into their budgets for international climate finance.”

But even should the funding goal be reached, observers will be watching closely to see where the money goes.

Karen Orenstein has compared the push by some governments and financial institutions for “less dirty” fossil fuels to fight climate change to a doctor telling his cancer-ridden patient that “it’s fine to smoke, as long as the cigarettes are filtered.”

She notes that the list of activities that can currently be counted under the Common Principles (approved by multilateral development banks and the International Development Finance Club in March) as “climate mitigation finance” includes “energy-efficiency improvement in existing thermal power plants” and “thermal power plant retrofit to fuel switch from a more GHG-intensive fuel to a different, less GHG-intensive fuel type.”

“In the broad spectrum of fossil fuels, there is always going to be a project or fuel type that is relatively more or less dirty than another,” Orenstein says. “Allowing so-called climate financing for projects that are slightly less dirty than a hypothetical alternative is a sure way to game the system.”

Also on her watchlist? The GCF funding false solutions like so-called “climate smart” agriculture, biofuels, waste incineration, nuclear energy and big dams – many of which are included in the Common Principles.

Edited by Kanya D’Almeida

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Jamaican Gov’t Sees IMF Successes but No Benefits for the Poor Tue, 02 Jun 2015 18:13:34 +0000 Zadie Neufville Seventy-year old Elise Young’s small box of mixed sweets and biscuits and the plastic bucket containing some ice and a handful of drinks is hardly enough to pay the 18-dollar electricity bill each month and buy food. Credit: Zadie Neufville/IPS

Seventy-year old Elise Young’s small box of mixed sweets and biscuits and the plastic bucket containing some ice and a handful of drinks is hardly enough to pay the 18-dollar electricity bill each month and buy food. Credit: Zadie Neufville/IPS

By Zadie Neufville
KINGSTON, Jun 2 2015 (IPS)

For Jamaicans like Roxan Brown, the Caribbean nation’s International Monetary Fund (IMF) successes don’t mean a thing. Seven consecutive tests have been passed but still, the mother of two can’t find work and relies instead on the kindness of friends and family.

The 32-year-old has been in several government-sponsored training programmes and has even filed for help under the Programme of Advancement Through Health and Education (PATH), a safety net set up to assist the poor. But she fails to qualify and can’t understand why.In the long history of Jamaica's on-again off-again relationship with the IMF, it is the poorest of this nation’s 2.8 million people who suffer the heaviest burden. With most earnings going to pay loans, there is nothing left for government assistance.

The single mother spends each day making phone calls, sending messages and making as many trips as she can afford, hopeful that one will result in a job. Roxan is desperate to help her son who graduated high school last year and has qualified for college. Her daughter is in secondary school and is preparing to sit exams.

Several miles away in the south coast village of Denbigh, the two elderly women sitting outside the May Pen Health Centre tell their stories of hardship. Five days a week, they scratch out a meagre living selling a few sweets, biscuits, some bottled water, drinks and fruits to make ends meet. Neither have pensions and none qualify for even the basic of government assistance under PATH.

Seventy-year old Elise Young’s small box of mixed sweets and biscuits and the plastic bucket containing some ice and a handful of drinks is hardy enough to pay the 18-dollar electricity bill each month and buy food.

“It’s very rough but I still have to live,” she said, noting that her daughter, who generally helps out with a few dollars a week, is now unemployed.

Next to her sits Iona Samuels, an on-again-off again vendor who sells a few dozen oranges and bananas to make ends meet. Iona is lucky: she lives rent-free, house-sitting for a friend who lives in Canada. Her on-again off-again business is due to the many times she is unable to restock the plastic crates that serve as her stall because she uses all the cash to buy food and pay water and light bills.

“Sometime I buy two dozen oranges and two dozen bananas and I only sell half. Sometimes I don’t make a profit because I have to sell them for what I pay for them and I have to eat and pay the bills,” she explains.

Iona admits that advancing age has slowed her ability to do more strenuous work. She is concerned that government has no programmes for  “the poor and vulnerable” people like her.

The good fortune that allows Iona to live rent-free also goes against her in her quest for government assistance with her daily expenses.

“I live in a house that is fully furnished, so I am unable to qualify for anything. There is no consideration that the house is not mine. It is my friend’s house. There is a gas stove, and a television so I don’t qualify for help,” Iona complains.

Iona Samuels (left) and her friend Pearl. Credit: Zadie Neufville/IPS

Iona Samuels (left) and her friend Pearl. Credit: Zadie Neufville/IPS

In the long history of Jamaica’s on-again off-again relationship with the IMF, it is the poorest of this nation’s 2.8 million people who suffer the heaviest burden. With most earnings going to pay loans, there is nothing left for government assistance.

Media reports cite information from the U.S.-based Centre for Economic Policy and Research, which states that three years into its latest IMF programming, Jamaica’s economy is suffocating, struggling to reach its current quarterly growth rate of between 0.1 and 0.5 percent.

After 20 years of improvement to the country’s poverty rate, the number of Jamaicans living below the poverty line has ballooned in recent years from 9.9 percent in 2007, to 12.3 in 2008, 16.5 percent in 2009 and 19.9 percent in 2012. And if the 2014 research by the local Adventist Church is correct, today there are 1.1 million Jamaicans living in poverty.

The most pressing problem is the country’s debt, which the government readily admits has severely hampered its economic growth. According to the World Bank website, Jamaica’s debt to GDP (Gross Domestic Product) ratio, estimated at 140 percent at the end of March 2015, is among the highest in the developing world.

For the Portia Simpson Miller-led administration that won the 2011 general elections on a ticket of being a friend of the poor, there is not much caring left, at least not under the IMF. The Planning Institute of Jamaica (PIOJ) reports that while the IMF programme is necessary, it is still not sufficient to unlock the kind of growth necessary to boost the economy and grow jobs.

According to the PIOJ,  “Economic recovery remains fragile” even as the country successfully completed the IMF assessments with improvements in most macro-economic indicators and outlook for growth.

The World Bank states on its website that, “For decades, Jamaica has struggled with low growth, high public debt and many external shocks that further weakened the economy. Over the last 30 years real per capita GDP increased at an average of just one percent per year, making Jamaica one of the slowest growing developing countries in the world.”

Simply put, Jamaica continues to spend far more than it earns. But while individual sectors continue to show improvements, manufacturers and the international community blame the cost of fuel, high energy costs and crime as impediments to growth.

Last year, Jamaica paid the IMF over 136 million dollars more than it received, and the country still owes the World Bank and Inter-American Development Bank over 650 million dollars through 2018. Even so, government continues to struggle to maintain social gains such as free healthcare and free primary and secondary education.

There are those who believe government is not doing enough to create jobs and that the available jobs are going to government supporters. There are those who blame the private sector, and they in turn point to a depreciating dollar, high cost of fuel and high-energy costs. And of course there is crime.

With unemployment rate at an alarming 14.2 percent and youth unemployment estimated at twice the national rate, things are not looking good for Roxan, who falls into that category.

Edited by Kitty Stapp

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Opinion: The Bumpy Road to an Asian Century Mon, 01 Jun 2015 08:06:03 +0000 Shyam Saran “Just as the world is moving towards multi-polarity, so is Asia … The economic fragmentation of the region and the competitive pursuit of security interests may well consign the Asian Century into a brief interlude rather than a millennial transformation”. Photo credit: Public domain via Wikimedia Commons

“Just as the world is moving towards multi-polarity, so is Asia … The economic fragmentation of the region and the competitive pursuit of security interests may well consign the Asian Century into a brief interlude rather than a millennial transformation”. Photo credit: Public domain via Wikimedia Commons

By Shyam Saran
NEW DELHI, Jun 1 2015 (IPS)

It has been apparent for some time that we are in the midst of a historic shift of the centre of gravity of the global economy from the trans-Atlantic to what is now becoming known as the Indo-Pacific.  

This is an emerging centre of economic dynamism and comprises what was earlier confined to the Asia-Pacific but now includes the South Asian region as well.

This is a region which now accounts for nearly 40 percent of world gross domestic product (GDP), which is likely to rise to 50 percent or more by 2050.  Its share of world trade is now 30 percent and growing.

Shyam Saran

Shyam Saran

This year, the region has become the largest source of foreign direct investment (FDI), surpassing the European Union (EU) and the United States. China has been the main driver of this historic shift, but other Asian economies have also made significant contributions.

As the Chinese economy begins to slow, India shows promise of regaining an accelerated growth trajectory under a new and decisive political leadership. This will help extend the scale and direction of this shift. Its geopolitical consequences will be profound.

It must be recognised that the economic transformation of Asia, in particular the spectacular growth of China, has been enabled by an unusually extended and liberal global economic environment, underpinned by the faith in globalisation and open markets.

It has also been enabled by a U.S.-led security architecture in the region which kept in check, though did not resolve, the long-standing political fault lines and regional conflicts over competing territorial claims and unresolved disputes.

This relatively benign and supportive economic and security environment is in danger of unravelling precisely at a time when the situation in the region is becoming more complex and challenging.  Paradoxically, this is partly a consequence of the very success of the region in achieving relative economic prosperity.“The danger is that instead of an inclusive and regionally integrated Asia, we may end up with exclusive and competing clusters, moving at different speeds, with different norms and standards. This may well undermine the very basis of Asia’s economic dynamism”

We are witnessing new trends in the region which, unless managed with prudence and foresight, may well sour the prospects of an Asian Century.

The relatively open and liberal trade and investment regime, in particular access to the large consuming markets of the United States, European Union and Japan, is now under serious threat.

Protectionist trends are already visible in these advanced economies as they struggle with prolonged economic stagnation which is the fall-out of the global financial and economic crisis of 2007-2008.

Instead of the consolidation and expansion of the open and inclusive economic architecture that had hitherto been the hallmark of the regional and global economy, we are witnessing its steady fragmentation.

In the Indo-Pacific region, there are competing regional trade arrangements and investment regimes, with no clarity on the contours of a new and emerging economic architecture.

The United States is spearheading its Trans-Pacific Partnership (TPP) which will include some Asian economies, but not India and China.

China has countered by proposing a free trade area encompassing the current Asia-Pacific Economic Cooperation (APEC) membership.  This will include China and the United States but not India and some of the Association of Southeast Asian Nations (ASEAN) economies.

The Regional Cooperation Economic Partnership (RCEP) would include all ASEAN countries plus China, Japan, Republic of Korea, India, Australia and New Zealand, but not the United States.

And finally, there is the East Asia Summit process (EAS) which includes all the above-mentioned countries but also the United States and Russia.

The danger is that instead of an inclusive and regionally integrated Asia, we may end up with exclusive and competing clusters, moving at different speeds, with different norms and standards.  This may well undermine the very basis of Asia’s economic dynamism.

In the security field, too, we are witnessing a growing salience of inter-state tensions and competitive military build-up.

The U.S.-led security architecture remains in place formally but its erstwhile predominance is diminished.

The gap between the military capabilities of China and the United State is closing steadily. As China’s security footprint expands beyond its shores, it will inevitably intersect with the existing deployment of the forces of the United States and its allies and partners.

Faced with an increasingly uncertain security environment and threatened by a more insistent assertion of territorial claims by China, the countries of the region, including Japan, Republic of Korea, members of ASEAN, Australia and India are building up their own defences, in particular maritime capabilities, and this itself is escalating tensions.

There is as yet no emerging regional security architecture which could help manage inter-state tensions in the region. This includes the growing possibilities of confrontation between the United States and China.

In the absence of such a regional security architecture, based on a broad political consensus and a mutually acceptable Code of Conduct, the region may well witness a heightening of tension and even conflict.  These developments would inevitably and adversely impact on the dense network of trade and investment relations that bind the countries of the region together and erode the very basis of their prosperity.

In this context, mention may be made of the Chinese One Belt One Road (OBOR) initiative which seeks to deploy China’s surplus capital to build a vast network of transport and infrastructural links not only across the Indo-Pacific but also straddling the Eurasian landmass.

The newly established Asian Infrastructure Investment Bank (AIIB) initiated and led by China would become a key financing instrument for the OBOR.  China has also recently come out with a new Defence White Paper, which puts forward a new strategy of Open Seas, shifting the emphasis from coastal and near sea defence to an expanding naval presence which matches China’s growing global profile and world-wide location of Chinese-controlled economic assets.

While China’s investment in regional infrastructure in Asia may be welcome, it will inevitably be accompanied by a security dimension which may heighten anxieties among countries in the Asian region and beyond.

It is apparent from the above analysis that it is no longer possible for any major power in the Indo-Pacific to unilaterally seek a position of overweening economic dominance or military pre-eminence of the kind that the United States enjoyed over much of the post-Second World War period.

Just as the world is moving towards multi-polarity, so is Asia.  It is now home to a cluster of major powers with significant economic and security capabilities and interests. The only practical means of avoiding a unilateral and potentially destructive pursuit of economic and security interests would be to put in place an inclusive economic architecture underpinned  by a similarly inclusive security architecture which provides mutual reassurance and shared opportunities for promoting prosperity.

The economic fragmentation of the region and the competitive pursuit of security interests may well consign the Asian Century into a brief interlude rather than a millennial transformation. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

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

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