Inter Press Service » Eye on the IFIs http://www.ipsnews.net News and Views from the Global South Thu, 25 Aug 2016 15:43:04 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.12 What can Development Banks do to Protect Human Rights?http://www.ipsnews.net/2016/07/what-can-development-banks-do-to-protect-human-rights/?utm_source=rss&utm_medium=rss&utm_campaign=what-can-development-banks-do-to-protect-human-rights http://www.ipsnews.net/2016/07/what-can-development-banks-do-to-protect-human-rights/#comments Sun, 17 Jul 2016 01:39:09 +0000 Phillip Kaeding http://www.ipsnews.net/?p=146090 Credit: Kristin Palitza/IPS

Credit: Kristin Palitza/IPS

By Phillip Kaeding
UNITED NATIONS, Jul 17 2016 (IPS)

In a petition signed by 150 NGOs, the Coalition for Human Rights in Development have called for development banks to make sure that human rights are respected by their beneficiaries.

Multilateral development banks like the World Bank or the European Investment Bank (EIB) often work with governments and corporations planning mega projects in developing countries. For example, Dutch, Finnish and Central American banks had all funded the Agua Zarca dam in Honduras, the same dam environmental activist Berta Cáceres, was murdered for protesting against.

Organizations like Human Rights Watch and Oxfam say that the financiers also bear responsibilities when local peoples’ rights are abused to help facilitate projects. The petitioners want the development banks to stand up for human rights in the regions where they fund projects.

The new petition states that “Global Witness identified 2015 as the worst year on record for killings of land and environmental defenders, with 185 killings across 16 countries.”

The prominent case of Berta Cáceres is no exception. Soleyana Gebremichael, Ethiopian blogger talked about the situation in her home country at a press conference on Thursday:

“For the last 10 years, the civil society space had been shrinking. Ethiopia enacted two laws in 2009: The first one is the civil society proclamation and the second one was the anti-terrorism proclamation. The civil society proclamation… basically limits the activities of civil society organisations by limiting their resources.”

Gebremichael, who received the International Press Freedom Award with her co-bloggers from Zone 9 in 2015, said that the development banks should work together with civil society organizations on the issues, as a way to work with governments without pressuring them directly.

Often, the banks argue that they do what they can,said Jessica Evans, senior international financial institutions advocate at Human Rights Watch.

“In the case of Uzbekistan, we have been told by World Bank officials that they have behind those doors raised concerns with the government of Uzbekistan about the attacks against the independent human rights defenders that are monitoring forced labor and other human rights abuses linked to the agriculture sector. This had no impact whatsoever,” she said.

How does such a constellation emerge? Mandeep Tiwana, Head of Policy and Research at Civicus, blames entanglements between politics and the economy:

“States are increasingly outsourcing their responsibilities… This leads to an increased avenue to corruption due to collusion among elites. Civil society organizations, when they try to expose these corrupt links between elites, are attacked.”

“What we are seeing is that the multilateral development banks are continuing on business as usual rather than working with the human rights defenders themselves to put pressure on governments and others that are attacking them.” -- Jessica Evans, HRW.

The development banks, Tiwana argues, support growth-oriented development programs as in Ethiopia and therefore ignore other issues. He sees a neoliberal paradigm at the bottom of the problem.

More than the historical and political causes, the practical solution is what international NGOs are now interested in. The petition addressing all major multilateral development banks suggests seven steps:

First, the banks “should systematically analyze the environment for freedoms of expression, assembly, and association, and the realization of other human rights critical for development. Once they have undertaken this analysis they should build it into their country development strategies,” said Evans.

Then, the Coalition emphasizes, policies to increase accountability and secure human rights considerations in every project must be implemented.

The agenda is quite ambitious. But according to Tiwana, it is essential to target the links between financial institutions and governments together with local civil society organizations.

“Development banks often work with large state-entities and state-entities often enable the participation of several private actors, some of them could be linked to very influential people.”

“So the public has a very important role to play in ensuring that the deals that are made… have gone through the constitutional and lawful discourse. And that’s why civil society is extremely important to shine a spotlight on these contracts and on these activities,” he says.

In many ways, the issued statement appeals to the conscience of Western bank managers and policy-makers. New conflict is likely to occur with multilateral banks from the East like the Asian Infrastructure Investment Bank (AIIB) entering the big stage of development financing. The AIIB is also addressed in the petition.

Months ago, Amnesty International and others pointed out that human rights standards are not the AIIB’s priority. A race to the bottom regarding human rights in development projects is a huge danger in the eyes of the Coalition for Human Rights in Development.

There is a “broader pattern which is emerging as the result of multilateral development banks failing to prioritize public participation in the work that they do and refusing to meaningfully work to prevent reprisals,” says Evans.

“What we are seeing is that the multilateral development banks are continuing on business as usual rather than working with the human rights defenders themselves to put pressure on governments and others that are attacking them.”

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What Does it Really Mean to “Leave No One Behind”? http://www.ipsnews.net/2016/07/what-does-it-really-mean-to-leave-no-one-behind/?utm_source=rss&utm_medium=rss&utm_campaign=what-does-it-really-mean-to-leave-no-one-behind http://www.ipsnews.net/2016/07/what-does-it-really-mean-to-leave-no-one-behind/#comments Wed, 13 Jul 2016 03:33:30 +0000 Aruna Dutt http://www.ipsnews.net/?p=146017 http://www.ipsnews.net/2016/07/what-does-it-really-mean-to-leave-no-one-behind/feed/ 0 China-led Development Bank Pledges $500 Million to Asian Projectshttp://www.ipsnews.net/2016/07/china-led-development-bank-pledges-500-million-to-asian-projects/?utm_source=rss&utm_medium=rss&utm_campaign=china-led-development-bank-pledges-500-million-to-asian-projects http://www.ipsnews.net/2016/07/china-led-development-bank-pledges-500-million-to-asian-projects/#comments Thu, 07 Jul 2016 15:11:20 +0000 Thalif Deen http://www.ipsnews.net/?p=145963 Credit: Alexandra Di Stefano Pironti/IPS.

Credit: Alexandra Di Stefano Pironti/IPS.

By Thalif Deen
UNITED NATIONS, Jul 7 2016 (IPS)

The Beijing-based Asian Infrastructure Investment Bank (AIIB), which was launched last year with the aim of funding projects on a continent with some of the world’s most populous nations, has pledged over $500 million in four concessional loans to Bangladesh, Indonesia, Pakistan and Tajikistan.

All projects, to be funded by the AIIB, will be “lean, green and clean”, according to the bank’s President Jin Liqun.

“The bank was born with the birthmark of China, but its upbringing is international,” he said, as the 57-member bank also includes Britain, France and Germany.

Martin Khor, Executive Director of the Geneva-based South Centre, told IPS: “The AIIB is a very important initiative whose time has come.”

For so many decades, he pointed out, the international development bank arena was led by the developed countries and there has been so much criticism about the governance system in which the developing countries have a minority of voting rights.

“The AIIB is an institution with a different governance structure with developing countries in the majority but with also participation from many developed countries that decided to join,” he added.

Moreover, said Khor, the AIIB is filling in a deficiency because it is funding the infrastructure needs of developing countries.

The first board meeting last month — and the first projects approval– show that the bank is finally operating, and smoothly too.

“The management has also proclaimed that global standards on environmental and social safeguards will be adopted for the projects.  I hope they keep to this promise.”

The whole operation of the new bank, he noted, will be a great challenge for the developing countries, especially China, which had conceptualized the bank and has the highest equity share, to demonstrate they can lead a successful development bank.

“I am confident the bank will be successful,” predicted Khor.

Last month, the Board of Directors approved the Bank’s first four project-loans financing investments in power distribution and expansion in Bangladesh; road improvements in Tajikistan; highway construction in Pakistan; and slum upgrading in Indonesia.

The Bangladesh project was the Bank’s first stand-alone operation, and the other three projects are co- financing operations with the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and World Bank, respectively.

Both the United States and Japan have so far declined to join the bank.

Asked about the role of the US, State Department spokesman John Kirby told reporters last year: “We’ve noted that China has expressed an interest in leading this effort”.

Obviously, other countries are deciding for themselves the degree to which that they want to participate in this.

“What’s, I think, is important for us – and this was part of the discussion that we had with the Chinese when they were here – is that we welcome the rise of a peaceful, prosperous China; a China that contributes to stability and security, which does include economic dimensions in the region.”

“But the participation of other countries in this are obviously sovereign decisions they have to make. And we’ll just – we’ll see where it goes,” Kirby added.

“The AIIB was also going to play a part in China's efforts to project soft power. Importantly, many developing countries of the Asia-Pacific region had always wanted to see established a lending institution that did not lend with cumbersome and unacceptable strings attached." -- Palitha Kohona.

Palitha Kohona, the former Permanent Representative of Sri Lanka to the UN, told IPS the AIIB  was China’s response to some immediate practical challenges that were emerging in the Asia-Pacific region.

Despite acquiring the status of the world’s second biggest economy, China’s influence in the Bretton Woods institutions (the World Bank and the International Monetary Fund) was limited as the voting power and the senior staff positions in them were dominated by the US and its allies, said Kohona, who has a track record of successfully negotiating with the Chinese.

He said China naturally wished to secure a bigger role in global development and finance, commensurate with its newly acquired stature.

Furthermore, China had accumulated vast financial reserves which it was now seeking to deploy in a secure and mutually advantageous manner, he argued.

“The AIIB was also going to play a part in China’s efforts to project soft power. Importantly, many developing countries of the Asia-Pacific region had always wanted to see established a lending institution that did not lend with cumbersome and unacceptable strings attached. The AIIB was a response to these needs”.

“Although the US and some of its allies talked about the possibility of lending standards being diluted and political considerations influencing decisions, one needs to remember that the West always used the Bretton Woods institutions to advance their political objectives.”

The conditionality that accompanied IMF lending invariably resulted in street riots and deaths. Wikileaks famously revealed how Hillary Clinton as Secretary of State attempted to prevent the IMF from extending a standby loan facility to Sri Lanka which was at the time on the verge of militarily defeating the Tamil Tigers after 27 years of deadly conflict and who were designated as a foreign terrorist group by the US itself, said Kohona.

“The US lobbied hard to prevent its allies from joining the AIIB. But with the prospect of their own companies participating in infrastructure development projects, many Western countries with ailing economies, broke ranks and joined the Bank. Australia, New Zealand, Germany, the UK, and France being among them. China clearly established itself as a lead player in global finance and development through the AIIB, Kohona declared.

In June, AIIB President Jin Liqun and Chinese Vice Minister of Finance Shi Yaobin signed a Contribution Agreement on China’s $50 million contribution to the newly established AIIB Project Preparation Special Fund (the Fund).

The Fund is aimed at supporting Bank members in preparing “sound project proposals”. China’s contribution, the first to the Fund, will allow it to be operational in the fall of 2016.

According to AIIB, the Fund is expected to provide grants to the Bank’s low and middle income member countries for preparation activities, including environmental, social, legal, procurement and technical assessments and analyses, and advisory services. The Bank will seek additional contributions to ensure the Fund’s sustainability.

Although Asia faces a huge infrastructure financing gap, Jin said, there is a shortage of ‘shovel-ready’ bankable projects owing to the capacity limitations.

“Our members have highlighted these constraints during the Bank’s establishment process. I am delighted that our Board has responded to our members’ needs very quickly through the establishment of this Fund. We are very appreciative of China’s timely and generous contribution which will allow us to kick- start the Fund, and have it operational in the autumn.”

The writer can be contacted at thalifdeen@aol.com

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The Case for Cash in Humanitarian Emergencieshttp://www.ipsnews.net/2016/06/the-case-for-cash-in-humanitarian-emergencies/?utm_source=rss&utm_medium=rss&utm_campaign=the-case-for-cash-in-humanitarian-emergencies http://www.ipsnews.net/2016/06/the-case-for-cash-in-humanitarian-emergencies/#comments Tue, 28 Jun 2016 22:23:50 +0000 Phillip Kaeding http://www.ipsnews.net/?p=145860 Credit: Servaas van den Bosch/IPS

Credit: Servaas van den Bosch/IPS

By Phillip Kaeding
UNITED NATIONS, Jun 28 2016 (IPS)

Currently only six percent of humanitarian aid worldwide comes in the form of cash handouts, yet many aid organisations believe that cash transfers should be seen as the rule, not the exception.

Both the World Food Program (WFP) and World Vision International, who work together in Somalia, South Sudan and other crisis-ridden countries, stressed the advantages of cash instead of in kind allowances at a meeting held here Monday.

“There is no longer a question about ‘does cash work’ or ‘is cash the right tool’,” said Amir Mahmoud Abdulla, Deputy Executive director of the WFP.

George Fenton of World Vision explained:

“Digital humanitarian cash transfers are one of the most significant and most exciting innovations of today. They offer… a greater dignity, choice and flexibility for crisis-affected people.”

Due to increasingly widespread mobile phone ownership, cash transfers are now often made digitally. In some circumstances, including refugee camps, aid organisations may hand out cash directly.

The transfers are usually given unconditionally, since this is considered an effective way to provide assistance to a person in need. Whereas in-kind assistance such as food or materials, may not suit the specific needs of the recipient, cash transfers allow recipients to spend money on their most urgent needs, while also supporting local markets.

“Cash transfers turn notions of aid and charity on their head. Rather than the giver deciding that people need food or clothes, the choice is with the people themselves," -- Sarah Bailey.

However, while cash transfers have been considered successful in the settings where they have so far been rolled out, humanitarian organisations, such as the World Bank now want to work out how to make wider use of the concept. As Amir Abdulla put it: “How do we take it to scale?”

In order to do this, some obstacles need to be overcome, methods of delivery have to be streamlined and there has to be a response to the “need to marry cash and technology,” as Fenton puts it.

Colin Bruce, senior advisor to the World Bank President, told the meeting about upcoming challenges: “Until we can better coordinate those processes (needs assessments and response analyses), it’s going to be very difficult to get the kind of upstream thinking, funding and programming necessary to take cash to scale.”

Secondly, a “change in mindsets” has to take place, as Sarah Bailey told IPS this week. Bailey is a Research Associate at the Overseas Development Institute (ODI) and Secretariat Manager of the High Level Panel on Humanitarian Cash Transfers which produced the report Doing Cash Differently. She explained to IPS that “cash transfers turn notions of aid and charity on their head. Rather than the giver deciding that people need food or clothes, the choice is with the people themselves.”

The desired shift to cash-based aid is closely linked to the fund-raising side of humanitarian programs. Charlotte Lattimer of the non-profit research organization Development Initiatives emphasized that although funding increased in the last year, there still exists “an enormous shortfall in terms of meeting humanitarian needs”.

Donors are increasingly asking for more transparency and more precise reporting on exactly how funds are spent, which is difficult if it is spent by the recipients instead of the aid organization.

Still “cash transfers are a tangible opportunity for more aid transparency because it’s easier to track the movement of money than the movement of food and buckets. Far from cash transfers being a risk to accountability, cash can be a vehicle for it,” Bailey told IPS.

Further research may help determine whether cash transfers can provide the transparency donors ask for. With innovations in the field of digital transactions and mobile banking and payment, the infrastructure for new aid delivery concepts improves year by year.

It is this development that aid organizations hope will catch the attention of donors. Bailey explained to IPS why she is convinced that cash transfers will become more and more important. At the end of the day, financial arguments decide financial questions: “Delivering cash is cheaper than delivering in-kind aid. You do not need to rent a warehouse and hire a driver to get money to people. As aid agencies use cash more it will become even cheaper with economies of scale.”

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Making Sustainability Part of the Corporate DNAhttp://www.ipsnews.net/2016/06/making-sustainability-part-of-the-corporate-dna/?utm_source=rss&utm_medium=rss&utm_campaign=making-sustainability-part-of-the-corporate-dna http://www.ipsnews.net/2016/06/making-sustainability-part-of-the-corporate-dna/#comments Sat, 25 Jun 2016 17:26:44 +0000 Phillip Kaeding http://www.ipsnews.net/?p=145814 http://www.ipsnews.net/2016/06/making-sustainability-part-of-the-corporate-dna/feed/ 0 Least Developed Countries’ Vulnerabilities Make Graduation Difficulthttp://www.ipsnews.net/2016/06/least-developed-countries-vulnerabilities-make-graduation-difficult/?utm_source=rss&utm_medium=rss&utm_campaign=least-developed-countries-vulnerabilities-make-graduation-difficult http://www.ipsnews.net/2016/06/least-developed-countries-vulnerabilities-make-graduation-difficult/#comments Sat, 25 Jun 2016 02:25:40 +0000 Ahmed Sareer http://www.ipsnews.net/?p=145797 An aerial view of the Village of Kolhuvaariyaafushi, Mulaaku Atoll, the Maldives, after the Indian Ocean Tsunami. UN Photo/Evan Schneider

An aerial view of the Village of Kolhuvaariyaafushi, Mulaaku Atoll, the Maldives, after the Indian Ocean Tsunami. UN Photo/Evan Schneider

By Ahmed Sareer
UNITED NATIONS, Jun 25 2016 (IPS)

Last month, over two thousand high-level participants from across the world met in Antalya, Turkey for the Midterm Review of the Istanbul Programme of Action, an action plan used to guide sustainable economic development efforts for Least Developed Countries for the 2011 to 2020 period. The main goal was to understand the lessons learnt by the world’s Least Developed Countries (LDCs) over the past five years and apply the knowledge moving forward.

For my country, the Maldives, the past five years have been a chance to experience first-hand the realities of life after graduation from LDC status. In January 2011, the Maldives was officially removed from the list of LDCs, the culmination of decades of hard work and determined efforts of developing the country. The Fourth UN Conference on LDCs, held in May 2011, was the last for the Maldives as an LDC, but last month in Antalya, we went back because we believed it was important to share the lessons we had learnt since 2011.

While our graduation was naturally a moment of pride and cause for celebration for a country only 50 years old, it was accompanied by a sense of uncertainty about the challenges we would face following the withdrawal of the protections and special preferences afforded to LDCs.

Ultimately, we were able to forge ahead in spite of these difficulties and adapted to the new realities. We ensured that our economy, driven by a world-class tourism sector, and a robust fisheries industry, would continue to be competitive and dynamic. We focused on fostering a business-friendly climate, while making prudent investments for future growth.

However, we remain conscious of the degree to which the gains we have made are vulnerable to exogenous shocks. On 20 December 2004, the United Nations General Assembly (UNGA) decided to graduate the Maldives effective 1 January 2008. But just four days before the UNGA decision, a catastrophic tsunami swept across the Indian Ocean, claiming the lives of over 275,000 people in fourteen countries.

The 2004 tsunami was especially devastating in the Maldives. With the highest point in our country being just 2.5 metres high, virtually all of it was, for a few harrowing minutes, underwater.

Several islands were rendered uninhabitable; nearly one in ten people were left homeless.

Farms were destroyed, the fresh water lens corrupted, with large-scale loss to infrastructure. The economic cost of the destruction was equivalent to close to 70 percent of GDP, a blow from which it took us over a decade to recover.

The Maldives is not alone in facing such vulnerabilities. For many countries, particularly Small Island Developing States (SIDS) such as our own, an end to LDC status does not necessarily herald the disappearance of structural barriers to growth—such as limited access to markets, geographical isolation, environmental pressures, or difficulty achieving economies of scale.

By 1997, the Maldives had already exceeded two of the three thresholds that determine LDC status—GNI per capita, and the Human Capital Index, measured in terms of undernourishment, child mortality rates, secondary school enrolment rates, and adult literacy.

But we did not exceed the threshold for the third criterion, the Economic Vulnerability Index (EVI), which measures the structural vulnerability of countries to exogenous economic and environmental shocks – we did not meet this threshold to date. It is not necessary to meet all three thresholds to in order to graduate—meaning we were considered ready for graduation.

As the tragedy of 2004 taught us, persistent vulnerabilities have the potential to undermine, if not reverse, gains made towards development. Despite meeting the formal requirements, we were not yet ready. The lessons of our own experiences have meant that the Maldives has been consistent in calling for a smoother and more holistic approach to the graduation process.

Firstly, the criteria for graduation must account for the structural vulnerabilities of developing countries. The fact that economic vulnerability can be disregarded in determining whether a country is ready to graduate from LDC status represents a critical oversight.

Second, the Economic Vulnerability Index itself must also be redesigned to better account for vulnerability. At present, the index fails to account for key considerations such as geographic and environmental vulnerability, import dependency, and demographic pressures.

With greater attention being paid to the effects of climate change on developing countries, most notably in the Sustainable Development Goals (SDGs), evaluating vulnerabilities more comprehensively is a task that has acquired even greater importance.

Lastly, the extension of support and assistance to countries must be determined on the basis of their individual capabilities and challenges, rather than their mere place on a list. We would be remiss to overlook the role that development assistance, including that provided by the UN, has played in helping the Maldives progress—as it has for many others—particularly in regards to our work in disaster preparedness and climate change mitigation.

The withdrawal of such assistance—including preferential trade access and concessionary financing—following our graduation from the ranks of the LDCs has meant increased fiscal challenges. This disregards the unique challenges faced by countries like the Maldives due to their specific structural constraints—constraints ignored under the present graduation regime.

While efforts have been made to smooth the graduation process for LDCs—in 2004, and most recently in 2012—the process remains deeply flawed and in need of comprehensive reform. To this end, the Maldives has called for the World Trade Organization (WTO) to extend the application of TRIPS (trade-related aspects of intellectual property rights) for all LDCs, in addition to the exploration of a “small and vulnerable economy” category at the United Nations, which would recognize the particular needs of such countries.

Similarly, we must move towards devising measures of development that do more than just record national income, and instead provide a more meaningful assessment of national capability and capacity, for which GDP can often be a poor proxy.

No country wishes to be called “least developed”, much less remain in that classification indefinitely, but the factors driving underdevelopment must be meaningfully dealt with if we wish to attain genuinely sustainable development. It is for this reason that we believe that the desire by countries to eradicate poverty and achieve economic development must be met with commitment on part of the United Nations and other organizations to chart a realistic and holistic path towards that end.

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World Bank Slightly Downgrades Global Economic Prospects for 2016http://www.ipsnews.net/2016/06/world-bank-slightly-downgrades-global-economic-prospects-for-2016/?utm_source=rss&utm_medium=rss&utm_campaign=world-bank-slightly-downgrades-global-economic-prospects-for-2016 http://www.ipsnews.net/2016/06/world-bank-slightly-downgrades-global-economic-prospects-for-2016/#comments Tue, 07 Jun 2016 23:03:57 +0000 Valentina Ieri http://www.ipsnews.net/?p=145492 http://www.ipsnews.net/2016/06/world-bank-slightly-downgrades-global-economic-prospects-for-2016/feed/ 0 Mega Dams Remain Controversial Source of Energyhttp://www.ipsnews.net/2016/06/mega-dams-remain-controversial-source-of-energy/?utm_source=rss&utm_medium=rss&utm_campaign=mega-dams-remain-controversial-source-of-energy http://www.ipsnews.net/2016/06/mega-dams-remain-controversial-source-of-energy/#comments Mon, 06 Jun 2016 03:04:47 +0000 Lyndal Rowlands http://www.ipsnews.net/?p=145454 http://www.ipsnews.net/2016/06/mega-dams-remain-controversial-source-of-energy/feed/ 0 Toasting to a More Sustainable Planet with Argentine Winehttp://www.ipsnews.net/2015/10/argentine-wine-to-toast-for-a-more-sustainable-planet/?utm_source=rss&utm_medium=rss&utm_campaign=argentine-wine-to-toast-for-a-more-sustainable-planet http://www.ipsnews.net/2015/10/argentine-wine-to-toast-for-a-more-sustainable-planet/#comments Tue, 20 Oct 2015 21:37:50 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=142748 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 Developmenthttp://www.ipsnews.net/2015/09/g20-finance-ministers-committed-to-sustainable-development/?utm_source=rss&utm_medium=rss&utm_campaign=g20-finance-ministers-committed-to-sustainable-development http://www.ipsnews.net/2015/09/g20-finance-ministers-committed-to-sustainable-development/#comments Wed, 09 Sep 2015 22:32:33 +0000 Jaya Ramachandran http://www.ipsnews.net/?p=142339 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” Refugeeshttp://www.ipsnews.net/2015/09/europe-invaded-mostly-by-regime-change-refugees/?utm_source=rss&utm_medium=rss&utm_campaign=europe-invaded-mostly-by-regime-change-refugees http://www.ipsnews.net/2015/09/europe-invaded-mostly-by-regime-change-refugees/#comments Thu, 03 Sep 2015 20:23:40 +0000 Thalif Deen http://www.ipsnews.net/?p=142262 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
UNITED NATIONS, Sep 3 2015 (IPS)

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

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

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

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

Roberto Savio

Roberto Savio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris   

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

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

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

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

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

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

Federico Lavopa

Federico Lavopa

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris   

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

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

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Opinion: The Sad Historical Consequences of the Greek Bailouthttp://www.ipsnews.net/2015/08/opinion-the-sad-historical-consequences-of-the-greek-bailout/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-the-sad-historical-consequences-of-the-greek-bailout http://www.ipsnews.net/2015/08/opinion-the-sad-historical-consequences-of-the-greek-bailout/#comments Sat, 01 Aug 2015 16:59:06 +0000 Roberto Savio http://www.ipsnews.net/?p=141832

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

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

By Daya Thussu
LONDON, Jul 22 2015 (IPS)

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

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

Daya Thussu

Daya Thussu

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Kitty Stapp

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

Jomo Kwame Sundaram. Credit: FAO

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Kitty Stapp

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IMF Steps Up Lending to Achieve Sustainable Developmenthttp://www.ipsnews.net/2015/07/imf-steps-up-lending-to-achieve-sustainable-development/?utm_source=rss&utm_medium=rss&utm_campaign=imf-steps-up-lending-to-achieve-sustainable-development http://www.ipsnews.net/2015/07/imf-steps-up-lending-to-achieve-sustainable-development/#comments Mon, 13 Jul 2015 16:45:40 +0000 Zhai Yun Tan http://www.ipsnews.net/?p=141557 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 Poorhttp://www.ipsnews.net/2015/07/social-safety-net-not-wide-enough-to-protect-worlds-poor/?utm_source=rss&utm_medium=rss&utm_campaign=social-safety-net-not-wide-enough-to-protect-worlds-poor http://www.ipsnews.net/2015/07/social-safety-net-not-wide-enough-to-protect-worlds-poor/#comments Tue, 07 Jul 2015 21:50:50 +0000 Zhai Yun Tan http://www.ipsnews.net/?p=141473 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?http://www.ipsnews.net/2015/07/will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them/?utm_source=rss&utm_medium=rss&utm_campaign=will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them http://www.ipsnews.net/2015/07/will-the-new-brics-bank-break-with-traditional-development-models-or-replicate-them/#comments Tue, 07 Jul 2015 21:10:17 +0000 Kanya DAlmeida http://www.ipsnews.net/?p=141467 The heads of state of three of the five BRICS countries - Russia, India and Brazil – pose for a photograph during the 2014 BRICS Summit. Credit: Official Flickr Account for Narendra Modi/CC-BY-SA-2.0

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Kitty Stapp

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