Inter Press ServiceGlobalisation – Inter Press Service http://www.ipsnews.net News and Views from the Global South Wed, 16 Aug 2017 16:15:49 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Leadership Failure Perpetuates Stagnationhttp://www.ipsnews.net/2017/08/leadership-failure-perpetuates-stagnation/?utm_source=rss&utm_medium=rss&utm_campaign=leadership-failure-perpetuates-stagnation http://www.ipsnews.net/2017/08/leadership-failure-perpetuates-stagnation/#respond Wed, 09 Aug 2017 16:33:34 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=151629 Jomo Kwame Sundaram, a former economics professor and United Nations Assistant Secretary-General for Economic Development, received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007.

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Growing income inequality in most countries before the Great Recession has only made things worse, by reducing consumer demand and household savings, and increasing credit for consumption and asset purchases. Credit: IPS

By Jomo Kwame Sundaram
KUALA LUMPUR , Aug 9 2017 (IPS)

What kind of leadership does the world need now? US President Franklin Delano Roosevelt’s leadership was undoubtedly extraordinary. His New Deal flew in the face of the contemporary economic orthodoxy, begun even before Keynes’ General Theory was published in 1936.

Roosevelt’s legacy also includes creating the United Nations in 1945, after acknowledging the failure of the League of Nations to prevent the Second World War. He also insisted on ‘inclusive multilateralism’ – which Churchill opposed, preferring a bilateral US-UK deal instead – by convening the 1944 United Nations Conference on Monetary and Financial Affairs at Bretton Woods with many developing countries and the Soviet Union.

The international financial institutions created at Bretton Woods were set up to ensure, not only international monetary and financial stability, but also the conditions for sustained growth, employment generation, post-war reconstruction and post-colonial development.

Debt bogey
In resisting painfully obvious measures, the current favourite bogey is public debt. Debt has been the pretext for the ongoing fiscal austerity in Europe, which effectively reversed earlier recovery efforts in 2009. With private sector demand weak, budgetary austerity is slowing, not accelerating recovery.

Much has been made of sovereign debt on both sides of the north Atlantic and in Japan. In fact, US debt interest payments come to only 1.4 percent of annual output, while Japan’s very high debt-GDP ratio is not considered a serious problem as its debt is largely domestically held. And, as is now well known, the major problems of European debt are due to the specific problems of different national economies integrated sub-optimally into the Eurozone.

The international community has, so far, failed to develop effective and equitable debt workout, including restructuring arrangements, despite the clearly dysfunctional and problematic international consequences of past sovereign debt crises. The failure to agree to sovereign debt workout arrangements will continue to prevent timely debt workouts when needed, thus effectively impeding recovery as well.

Meanwhile, earlier international, including US tolerance of the Argentine debt workout of a decade and a half ago had given hope of making progress on this front. However, this has now been undermined by the Macri government’s recent concession, on worse terms and conditions than previously negotiated, to ‘vulture capitalists’.

Golden cages of the mind
Most major deficits now are due to the collapse of tax revenues following the growth downturn and costly financial bailouts. Slower growth means less revenue, and a faster downward spiral. While insisting on fiscal deficit reduction, financial markets also recognize the adverse growth implications of such ‘fiscal consolidation’.

Many policymakers are now insisting on immediate actions to rectify various imbalances, pointing not only to fiscal deficits, but also to trade and bank imbalances. While these undoubtedly need to be addressed in the longer term, prioritizing them now effectively blocks stronger, sustained recovery efforts.

Recent recessionary financial crises have been caused by bursting credit and asset bubbles. Recessions have also been deliberately induced by public policy, such as the US Fed raising real interest rates from 1980. Internationally, this contributed not only to sovereign debt and fiscal crises, but also to protracted stagnation outside East Asia, including Latin America’s ‘lost decade’ and Africa’s ‘quarter century retreat’.

Yet another distraction is exaggerating the threat of inflation. Much recent inflation in many countries has been due to higher international commodity, especially fuel and food prices. Domestic deflationary policies in response only slowed growth while failing to stem imported inflation. In any case, the collapse of most commodity prices since 2014 has rendered this bogey irrelevant.

Market vs recovery
Strident recent calls for structural reforms mainly target labour markets, rather than product markets. Labour market liberalization in such circumstances not only undermines worker protections, but is also likely to diminish real incomes, aggregate demand and, hence, recovery prospects. Nevertheless, these have become today’s priorities, detracting from the urgent need to coordinate and implement strong and sustained efforts to raise and sustain growth and job creation.

Meanwhile, cuts in social and welfare spending are only making things worse – as employment and consumer demand fall further. In recent decades, profits and rents have risen at the expense of wages, but also with much more accruing to finance, insurance and real estate (FIRE) compared to other sectors.

The outrageous increases in financial executive remuneration in recent years, which cannot be attributed to increased productivity by any stretch of the imagination, have exacerbated problems of financial sector short-termism. Regulations are urgently needed to limit short-termism, including the ability of corporations to reap greater profits in the short-term while worsening risk exposure in the longer term, thus exacerbating systemic macro-financial vulnerability.

Growing income inequality in most countries before the Great Recession has only made things worse, by reducing consumer demand and household savings, and increasing credit for consumption and asset purchases – instead of augmenting investments in new economic capacities and capabilities.

Reform bias
Current policy is justified in terms of ‘pro-market’ – effectively pro-cyclical – choices when counter-cyclical efforts, institutions and instruments are sorely needed instead. Unfortunately, global leadership today seems held to ransom by financial interests, and associated media, ideology and ‘oligarchs’ whose political influence enables them to secure more rents and pay less taxes in what must truly be the most vicious of circles.

John Hobson – the English liberal economist in the tradition of John Stuart Mill – noted that ‘economic imperialism’ emerged from the inherent tendency for economic power to concentrate and the related influence of oligopolistic rentiers on public policy. Selective state interventions to bail out and protect such interests nationally and internationally, while not subjecting them to regulation in the national interest, must surely remind us of the dangers of powerful, but unaccountable oligarchies in a systemically unstable market economy and politically volatile societies.

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Central America Fights Climate Change with Minimal Foreign Aidhttp://www.ipsnews.net/2017/07/central-america-fights-climate-change-minimal-foreign-aid/?utm_source=rss&utm_medium=rss&utm_campaign=central-america-fights-climate-change-minimal-foreign-aid http://www.ipsnews.net/2017/07/central-america-fights-climate-change-minimal-foreign-aid/#respond Mon, 31 Jul 2017 07:05:54 +0000 Diego Arguedas Ortiz http://www.ipsnews.net/?p=151490 Despite the fact that Central America is one of the regions most vulnerable to climate change, it has half-empty coffers when it comes to funding efforts against the phenomenon, in part because it receives mere crumbs in foreign aid to face the impacts of the rise in temperatures. According to a study released in June, […]

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China Seeks to Export Its Green Finance Model to the Worldhttp://www.ipsnews.net/2017/07/china-seeks-export-green-finance-model-world/?utm_source=rss&utm_medium=rss&utm_campaign=china-seeks-export-green-finance-model-world http://www.ipsnews.net/2017/07/china-seeks-export-green-finance-model-world/#respond Wed, 26 Jul 2017 03:05:44 +0000 Daniel Gutman http://www.ipsnews.net/?p=151431 Hand in hand with UN Environment and the Inter-American Development Bank (IDB), the People’s Bank of China (PBoC) disembarked in the Argentine capital to prompt this country to adopt and promote the agenda of so-called green finance, which supports clean or sustainable development projects and combats climate change. The PBOC, which as China’s central bank […]

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Ma Jun, chief economist at the People’s Bank of China, together with Rubén Mercado, from the United Nations’ Development Programme (UNDP) in Argentina. The high-ranking Chinese official promoted Beijing’s green finance while in Buenos Aires. Credit: UNDP

Ma Jun, chief economist at the People’s Bank of China, together with Rubén Mercado, from the United Nations’ Development Programme (UNDP) in Argentina. The high-ranking Chinese official promoted Beijing’s green finance while in Buenos Aires. Credit: UNDP

By Daniel Gutman
BUENOS AIRES, Jul 26 2017 (IPS)

Hand in hand with UN Environment and the Inter-American Development Bank (IDB), the People’s Bank of China (PBoC) disembarked in the Argentine capital to prompt this country to adopt and promote the agenda of so-called green finance, which supports clean or sustainable development projects and combats climate change.

The PBOC, which as China’s central bank regulates the country’s financial activity and monitors its monetary activity, has been particularly interested in Argentina, because next year it will preside over the Group of 20 (G20) industrialised and emerging economies.

In 2018, Buenos Aires will become the first Latin American city to organise a summit of the G20 forum, in which the major global powers discuss issues on the global agenda.

“China started to develop strategies to promote green finance international collaboration in the G20 framework in 2016, the year when it took over the presidency. And Germany took over this year the presidency and decided to continue. We are looking forward to Argentina to continue with this topic of green finance in 2018,” said Ma Jun, chief economist at the PBoC, in a meeting with a small group of reporters at the UNDP offices in Buenos Aires. “Once the companies begin to release the environmental information, we’ll see that money will begin to change direction. Some of the money which is invested in the polluting sector will be redirected to the green companies. And that costs governments zero. It’s only a requirement for the companies to disclose their environmental information.” -- Ma Jun

Ma, a distinguished economist who has worked at the International Monetary Fund (IMF), the World Bank and the Deutsche Bank, was the keynote speaker at the International Symposium on Green Finance, held Jul. 20-21 at IDB headquarters in Buenos Aires.

At that event, he told representatives of the public sector and private companies from a number of countries that over the past three years China has been making an important effort for its financial system to underpin a change in the development model, putting aside polluting industries and supporting projects that respect the environment and use resources more efficiently.

Ma, a high-ranking PBoC official since 2014, surprised participants in the Symposium stating that in 2015, China decided to change its development model because of the enormous environmental impact it had, which is reflected in the estimate he quoted: that “a million people a year die in China due to pollution-related diseases.“

He said four trillion yuan – approximately 600 billion dollars – will be needed to finance investments in environmentally sustainable projects over the next few years in China.

Simon Zadek, co-director of the UN Environment Inquiry into the Design of a Sustainable Financial System, concurred with Ma.

He explained that the UN agency he co-heads promotes the “mobilisation of private capital towards undertakings compatible with the UN’s Sustainable Development Goals and the commitments made in the Paris Agreement on climate change, by the financial markets, banks, investment funds and insurance companies.“

He added that “many countries have taken steps in that direction and China is one of the most inspiring, most ambitious at an internal level and most active in promoting international cooperation.“

“Financial markets and capital should take environmental and climate issues into account now, not tomorrow. We are hoping for Argentina’s leadership next year on this matter and we are ready to collaborate if it decides to do so,“ said the UN Environment official.

The Symposium was held a few days after this year’s G20 summit, which was hosted Jul. 7-8 by Hamburg, Germany.

During the summit the discrepancy became evident between the rest of the heads of government and U.S. President Donald Trump, who does not believe in climate change and withdrew his country from the Paris Agreement, which in December 2015 set commitments for all governments to reduce global warming.

In Hamburg, a meeting was held by the Green Finance Study Group (GFSG), created in 2016, the year China presided over the G20, and which is headed by Ma and Michael Sheren, senior advisor to the Bank of England, with UN Environment acting as its secretariat.

There are two main issues that the GFSG currently promotes for the financial industry to consider when deciding on the financing of infrastructure or productive projects: setting up an environmental risk analysis and using publicly available environmental data.

“PBoC, the largest Chinese bank, has verified that to invest too much in the polluting sector is not beneficial. The costs are higher and the profits lower, because lots of policies are more and more restrictive in the polluting sector,” Ma said, noting that the bank began to carry out environmental risk analysis two years ago.

For the chief economist, “the other focus is to allow financial markets to distinguish who is green and who is brown,” referring to the predominant model of development, based on draining natural resources and not preserving ecosystems.

“Once the companies begin to release the environmental information, we’ll see that money will begin to change direction. Some of the money which is invested in the polluting sector will be redirected to the green companies. And that costs governments zero. It’s only a requirement for the companies to disclose their environmental information,” added Ma.

An important part of the initiative is the promotion of the emission of so-called green bonds, to finance projects of renewable energy, energy saving, treatment of wastewater or solid waste, the construction of green buildings that emit less pollutants and reduce their energy consumption, and green transport.

But the promotion of green finance does not foresee the arrival of special funds for that purpose to countries of the developing South.

In fact, the “greening of the financial system“ mainly depends on the private sector, especially where the state has limited fiscal capacity, according to the conclusions of the G20’s GFSG.

For Rubén Mercado, UNDP economist in Argentina, governments can facilitate undertakings that are beneficial to the environment by changing policies, without the need for spending additional funds.

“The key issue is that of relative prices. In Argentina we have subsidised fossil fuels for years. Perhaps we would not even have to subsidise renewable forms of energy, but simply reduce our subsidies for fossil fuels so that the other sources can be developed,“ he said.

Ma took a similar approach, pointing out that “You don´t need to spend money, you just need to eliminate the subsidies” that are traditionally granted to fossil fuel producers, which hamper investments in clean energies.

In the Symposium in Buenos Aires a study was released about the economies of Germany, China and India, which revealed that in the last year they have invested in renewable energies just 0.7, 0.4 and 0.1 per cent of GDP, respectively.

“The massive demand for green financing simply cannot be met by the public sector or the fiscal system,” said Ma.

“In a country like China, 90 percent is being covered by the private sector. Globally, my feeling is that in the OECD countries the fiscal capacity is probably higher. Maybe more than 10 percent could be provided by governments,” he said.

“But in other economies with weaker fiscal capacity, the rate should be even lower than in China.”

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Early Death in Russiahttp://www.ipsnews.net/2017/07/early-death-russia/?utm_source=rss&utm_medium=rss&utm_campaign=early-death-russia http://www.ipsnews.net/2017/07/early-death-russia/#respond Thu, 20 Jul 2017 16:09:37 +0000 Vladimir Popov and Jomo Kwame Sundaram http://www.ipsnews.net/?p=151376 Vladimir Popov was a Senior Economics Officer in the United Nations Secretariat. Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development.

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The Russian mortality crisis underscores the impact of stress on life expectancy. Credit: Alexey Yakushechkin/IPS

By Vladimir Popov and Jomo Kwame Sundaram
MOSCOW and KUALA LUMPUR, Jul 20 2017 (IPS)

The transition to market economy and democracy in the Russian Federation in the early 1990s dramatically increased mortality and shortened life expectancy. The steep upsurge in mortality and the decline in life expectancy in Russia are the largest ever recorded anywhere in peacetime in the absence of catastrophes such as war, plague or famine.

During 1987-1994, the Russian mortality rate increased by 60%, from 1.0% to 1.6%, while life expectancy went down from 70 to 64 years. Although life expectancy declined from 1987, when Mikhail Gorbachev was still in charge, its fall was sharpest during 1991-1994, i.e., during Boris Yeltsin’s early years.

In fact, mortality increased to levels never observed during the 1950s to the 1980s, i.e., for at least four decades. Even in the last years of Stalin’s rule (1950-1953), mortality rates were nearly half what they were in the first half of the 1990s.

Economic output fell by 45% during 1989-1998, while negative social indicators, such as the crime rate, murder rate, suicide rate and income inequalities, rose sharply as well, but even these alone cannot adequately explain the unprecedented mortality spike.

Distress
This Russian mortality crisis underscores the impact of stress on life expectancy. Anne Case and Angus Deaton have linked deteriorating American white male real incomes to various distress indicators since the turn of the century. Their careful work helps us better understand the election of US President Trump, thanks to the electoral majorities he secured in the ‘rust belt’ states, so crucial in the American ‘electoral college’ system.

During the Enclosure movement and the Industrial Revolution in Britain from the 16th to the 18th century, mortality increased and life expectancy fell by about a decade – from about 40 to slightly over 30 – due to lifestyle changes, increased income inequalities and mass impoverishment.

Other instances of life expectancy reduction due to social changes – without wars, epidemics and natural disasters – are very few and never involved a fall in life expectancy by five years, from 69 to 64 years, in the three years from 1991 to 1994 for the entire population of a large country like Russia!

This dramatic fall has been obscured in much of the Western media coverage, although some academic research has been more accurate. Thus, the Economist implied that the fall was greater during Gorbachev’s final years (1987-1992) compared to Yeltsin’s early years (1992-1997).

Why premature death?
What kinds of stress did the transition induce, and why did they lead to premature death? Stress is correlated to the rise in unemployment, labour mobility, migration, divorce, and income inequalities.

These stress indicators turn out to be good predictors of changes in life expectancy in Russia during the ‘post-Soviet’ transition. Men in their forties and fifties who had lost their jobs, or had to move to another job and/or region, or lived in regions with greater inequality or higher divorce rates, were more likely to die prematurely in the 1990s.

The major popular alternative ‘explanation’ is increased alcoholism, which does not stand up to closer critical scrutiny for several reasons. First, during some periods, per capita alcohol consumption and death rates moved in opposite directions, e.g., during 2002-2007, death rates due to external causes – including murders, suicides and poisoning – fell as alcohol consumption rose.

Second, according to both official statistics and independent estimates, per capita alcohol consumption levels in the 1990s were equal to or lower than in the early 1980s, whereas death rates due to external causes doubled, and the total death rate increased by half. This simultaneous increase in indicators (total death rate, death rate due to external causes, and alcohol consumption) appear to be driven by another factor, namely stress.

Post-communist transitions varied
But not all post-communist transitions had equally traumatic consequences. Countries which proceeded more gradually – such as China, Uzbekistan and Belarus – managed to preserve institutional capacities and capabilities, thus avoiding or at least mitigating the output collapse and the sudden, dramatic increase in socio-economic stress indicators.

China and Vietnam did not experience any recession during their transitions, while life expectancy in both these countries continued to rise, although more slowly in China compared to before the 1980s, and to other countries with similar per capita GDPs and life expectancy levels.

In the case of Cuba, the 40% output reduction during 1989-1994 did not result in a mortality crisis. Instead, life expectancy in Cuba increased from 75 years in the late 1980s to 78 years in 2006.

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We Have to Reclaim the Public Policy Space for SDGshttp://www.ipsnews.net/2017/07/reclaim-public-policy-space-sdgs/?utm_source=rss&utm_medium=rss&utm_campaign=reclaim-public-policy-space-sdgs http://www.ipsnews.net/2017/07/reclaim-public-policy-space-sdgs/#respond Thu, 13 Jul 2017 14:28:36 +0000 Jens Martens http://www.ipsnews.net/?p=151286 Jens Martens is Executive Director of Global Policy Forum and coordinates the Reflection Group on the 2030 Agenda for Sustainable Development

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New report states that various forms of privatization and corporate capture have become obstacles to implement the 2030 Agenda and its SDGs

Open drains in Ankorondrano-Andranomahery, Madagascar. Credit: Lova Rabary-Rakotondravony/IPS

By Jens Martens
BONN, Jul 13 2017 (IPS)

At the High-Level Political Forum which currently takes place at the United Nations in New York several events, for instance a SDG Business Forum, are devoted to the critical role of business and public-private partnerships (PPPs) in implementing the 2030 Agenda for Sustainable Development.

New report states that various forms of privatization and corporate capture have become obstacles to implement the 2030 Agenda and its SDGsBut many civil society organizations and trade unions warn in their joint report Spotlight on Sustainable Development 2017 that the various forms of privatization and corporate capture have become obstacles to implement the 2030 Agenda and its goals.

Weakening the State: A vicious circle

The trend towards partnerships with the private sector is based on a number of assumptions, not least the belief that global problems are too big and the public sector is too weak to solve them alone.

But why is it apparently a matter of fact that the public sector is too weak to meet the challenges of the 2030 Agenda? Why are public coffers empty?

In fact, the lack of capacity and financial resources is not an inevitable phenomenon but has been caused by deliberate political decisions. To give just one example, over the past three decades corporate income tax rates have declined in both countries of the global North and South by 15 to 20 percent. Hundreds of billions of US dollars are lost every year through corporate tax incentives and various forms of tax avoidance.

Through their business-friendly fiscal policies and the lack of effective global tax cooperation, governments have weakened their revenue base substantially. This has been driven not least by corporate lobbying.

A recent analysis by Oxfam America estimates that between 2009 and 2015, the USA’s 50 largest companies spent approximately US$ 2.5 billion on lobbying, with approximately US$ 352 million lobbying on tax issues. In the same period, they received over US$ 423 billion in tax breaks.

What we see is a vicious circle of weakening the State: the combination of neoliberal ideology, corporate lobbying, business-friendly fiscal policies, tax avoidance and tax evasion has led to the massive weakening of the public sector and its ability to provide essential goods and services.

These failures have been used by the proponents of privatization and PPPs to present the private sector as the better alternative and to demand its further strengthening. This in turn further weakened the public sector – and so on….

In parallel, the same corporate strategies and fiscal and regulatory policies that led to the weakening of the public sector enabled an unprecedented accumulation of individual wealth and increasing market concentration, often at the expense of small and medium-sized enterprises.

Concentrated power

According to various statistics of the largest national economies, transnational corporations, banks and asset management firms, among the 50 largest global economic entities are more private corporations than countries. The assets under management by the world’s largest asset management company BlackRock are US$ 5.12 trillion (end of 2016), thus higher than the GDP of Japan or Germany.

Large institutional investors such as pension funds and insurance companies are also the drivers of a new generation of PPPs in infrastructure, forcing governments to offer ‘bankable’ projects that meet the needs of these investors rather than the needs of the affected population.

Particularly alarming for the implementation of SDG 2 on food security and sustainable agriculture are the announced mega-mergers in the food and agriculture sector, especially the acquisition of Syngenta by China National Chemical Corporation (ChemChina), the merger of Dow Chemical and DuPont and the takeover of Monsanto by Bayer.

If all of these mergers are allowed, the new corporate giants will together control at least 60 percent of global commercial seed sales and 71 percent of global pesticide sales.

Devastating impacts

The Spotlight Report 2017 clearly shows, that privatization, PPPs and the rise of corporate power affect all areas and goals of the 2030 Agenda. One example is the mushrooming of private, fee-charging, profit-making schools in Africa and Asia.

Detrimental corporate influence occurs in the energy sector with the still dominant role of coal and fossil fuel industries, undermining effective measures against climate change and the transformation towards sustainable energy systems.

But why is it apparently a matter of fact that the public sector is too weak to meet the challenges of the 2030 Agenda? Why are public coffers empty?
Studies by scholars, CSOs and trade unions like Public Services International (PSI) have shown that the privatization of public infrastructure and services and various forms of PPPs involve disproportionate risks for the affected people and costs for the public sector. They can even exacerbate inequalities, decrease equitable access to essential services, and thus jeopardize the fulfilment of human rights, particularly the rights of women.

Counter-movements and breaking ranks

Responding to the experiences and testimonies from the ground about the devastating impacts of privatization and PPPs, counter-movements emerged in many parts of the world. Over the past 15 years there has been a significant rise in the number of communities that have taken privatized services back into public hands – a phenomenon called “remunicipalization”. Remunicipalization refers particularly to the return of water supply and sanitation services to public service delivery. Between March 2000 and March 2015 researchers documented 235 cases of water remunicipalization in 37 countries, affecting more than 100 million people.

Furthermore, some pioneering companies are already on the path towards – at least environmentally – sustainable development solutions, for instance in the area of renewable energies.

The private sector is in no way a monolithic bloc. Firms in the social and solidarity economy, social impact investors and small and medium-sized businesses are already making a positive difference, challenging the proponents of global techno-fix solutions and the dinosaurs of the fossil fuel lobby.

Even the firm opposition to international corporate regulation in the field of business and human rights by those pretending to represent business interests is showing cracks. A survey by The Economist Intelligence Unit revealed that 20 percent of business representatives who responded to the survey said that a binding international treaty would help them with their responsibilities to respect human rights.

What has to be done?

To be sure, the business sector certainly has an important role to play in the implementation process of the 2030 Agenda, as sustainable development will require large-scale changes in business practices.

However, acknowledging corporations’ role should not mean promoting the accumulation of wealth and economic power, giving them undue influence on policy-making and ignoring their responsibility in creating and exacerbating many of the problems that the 2030 Agenda is supposed to tackle.

Instead of further promoting the misleading discourse of ‘multi-stakeholderism’ and partnerships between inherently unequal partners a fundamental change of course is necessary. In order to achieve the SDGs and to turn the vision of the transformation of our world, as proclaimed in the title of the 2030 Agenda, into reality, we have to reclaim the public policy space.

Governments should strengthen public finance at all levels, fundamentally rethink their approach towards trade and investment liberalization, reconsider PPPs, create binding rules on business and human rights, take effective measures to dismantle corporate power and prevent the further existence of corporate ‘too big to fail’ entities.

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Global Devaluation of Work Drives Up Unemployment in Brazilhttp://www.ipsnews.net/2017/06/global-devaluation-work-drives-unemployment-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=global-devaluation-work-drives-unemployment-brazil http://www.ipsnews.net/2017/06/global-devaluation-work-drives-unemployment-brazil/#respond Sat, 24 Jun 2017 03:04:37 +0000 Mario Osava http://www.ipsnews.net/?p=151034 In addition to driving up the number of unemployed people to 14.2 million, the severe recession of the last two years led Brazil to join the global trend of flexibilisation of labour laws in order to further reduce labour costs. Creating more jobs without affecting rights is the basic argument of the government and advocates […]

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In addition to driving up unemployment to 13.7%, the severe recession led Brazil to the flexibilisation of labour laws to further reduce labour costs

Police officers use tear gas to crack down on a May 24 trade union march heading towards the Brazilian Congress to protest the projected labour and social security reforms which cut social rights. Credit: UGT

By Mario Osava
RIO DE JANEIRO, Jun 24 2017 (IPS)

In addition to driving up the number of unemployed people to 14.2 million, the severe recession of the last two years led Brazil to join the global trend of flexibilisation of labour laws in order to further reduce labour costs.

Creating more jobs without affecting rights is the basic argument of the government and advocates of the reform that has made its way through the lower house of Congress but is pending a vote in the Senate, announced for the end of the month.

“Increasing job insecurity will be the consequence of this measure,” said Ricardo Antunes, sociology professor at the University of Campinas, in the southern state of São Paulo.

This process, which “completely undermines labour rights,” according to the academic, also includes a law on outsourcing in force since March, and a social security reform still in the initial stages in parliament, and whose approval is unlikely given the requirement of a special two-thirds majority in both houses.“Outsourcing does away with the employee-employer relationship, with workers frequently moved from one worksite or job to another. Workers lose their identity, no longer knowing if they are steelworkers or service providers, or to which category they belong.” -- Wagnar Santana

“This is a global trend that advances in a country depending on the level of resistance it runs into: slower where the trade union movement is strong, like in Germany and France, and faster where trade unionism is weaker, such as Great Britain and the United States,” Antunes told IPS.

In Brazil, workers are facing this offensive already weakened by unemployment, which is projected to remain high for a long time to come.

According to the state Brazilian Institute of Geography and Statistics (IBGE), unemployment stood at 13.7 per cent in the first three months of 2017, or 14.2 million people in a country of 207.6 million with a workforce of 103.1 million.

But underemployment amounted to 24.1 per cent, or 26.5 million people who work part-time or just a few hours a week or are considered only “potential” workers, the IBGE reported.

In addition, the lineup of forces in Congress is highly unfavourable to labour rights, with the government of President Michel Temer enjoying a vast majority, although it is vulnerable to allegations of corruption against the president and almost all of the leaders of the ruling coalition, who face possible prosecution in the Supreme Court.

The legislation proposed by the government “de-regulates labour relations, with arguments that reveal ignorance or bad faith,” argued Wagnar Santana, president-elect of the Union of Steelworkers of the ABC region, an industrial region in greater São Paulo that gave rise to the Workers’ Party (PT) and the CUT central union.

“This de-regulation did not increase employment in countries such as Spain, Mexico and Portugal, but instead drove up the rate of informal work. In Mexico, people who work for Volkswagen need another job as well to have a decent standard of living,” said the trade unionist, who works for the German car-maker.

Keeping formal labour rights such as a weekly day off and health coverage on the books means little without the possibility of enforcing them, due to the growth of informal work, employment instability and outsourcing, and the weakness of the trade union movement, he told IPS.

“Outsourcing does away with the employee-employer relationship, with workers frequently moved from one worksite or job to another. Workers lose their identity, no longer knowing if they are steelworkers or service providers, or to which category they belong,” complained Santana.

Trade unions have trouble organising, in the construction industry for example, where job rotation is frequent, he said.

If collective bargaining agreements between workers and employers trump labour laws, as the government’s proposed reform stipulates, the rights of workers would be undermined.

The strongest and best organised trade unions, such as the ones in large industrial cities, could negotiate better agreements and ensure that they are respected, but many others would not be able to. “That would end up weakening all of us, since we are not isolated,” said the trade unionist.

There are other factors that conspire against labour in Brazil, besides the high unemployment and the economic crisis aggravated by political troubles. The process of deindustrialisation weakens even the most combative trade unions, such as the steelworkers union.

The union of ABC, which represented up to 150,000 workers in the 1980s, currently has only 73,000 members, based in the municipalities of São Bernardo do Campo, Diadema, Ribeirão Pires and Rio Grande da Serra, after many ups and downs over the two past decades, Santana noted.

From the steelworkers of São Bernardo do Campo emerged trade unionist and political leader Luiz Inácio Lula da Silva, who founded the Workers Party (PT) in 1980, which he led to power the first day of 2003 and with which he governed Brazil until the last day of 2011, when he handed over the presidency to his fellow party member Dilma Rousseff, who was removed from office in August 2016.

The crisis and international competition also contributed to the rise in unemployment and to lower participation by industry in Brazil’s GDP.

But it is the devaluation of work at a global scale which Antunes attributes to the transnationalization of large companies, the new modes of production and the hegemony of finance capital, which has led to the setback in labour standards that is being pushed through in Brazil.

It is a return to “archaic” labour relations that is almost like a return to slavery, according to the expert in the sociology of labour. “Slaves used to be sold, now they are rented” through outsourcing, he said.

In 1995, Antunes published the book “Goodbye to Work?”, in which he discusses the trend towards increasing informality and precariousness of labour, and “21st century slavery”. “Precarious work used to be an exception, now it has become the rule,” he said.

One example is the British “zero-hour contract” where the employer is not required to provide any minimum working hours. One million people in the UK are working under these contracts, which puts them at the disposal of the company, to be called in to work when needed, and earning only for the hours they work, without full labour rights, said Antunes.

In Brazil this modality was included in the labour reform as “intermittent employment”.

The incorporation to the labour market of China’s huge reserves of labour power contributed to the devaluation of work around the world.

“They are qualified workers that the revolution fed and educated. Five years ago China offered poor quality industrial goods, today they have cutting-edge technology,” said the sociologist, adding that Asia has an enormous cheap labour force in countries like India, Vietnam, Bangladesh and Indonesia.

The reduction of costs is widespread. “In Italy they are closing factories that are reopening in Poland or Hungary, cutting monthly wages from 2,000 to 300 euros,” he said, to illustrate.

“There is a new morphology of labour. In Brazil we have 1.5 million workers in ‘telemarketing’ that did not exist before. Remote work, through on-line connection by cellphone or computer, has become widespread,” he pointed out.

But the working class has grown, although it is “more fragmented and diverse than before, and subjected to online work”. New forms of protest are emerging, including “picketing and roadblocks”, in Argentina for example, instead of strikes, he said.

“The outlook for the future is one of struggle, rebellions, as well as repression, massacres. The 21st century will be one of social upheavals”, concluded Antunes.

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Crisis in the Gulf: Escalation or negotiation?http://www.ipsnews.net/2017/06/crisis-in-the-gulf-escalation-or-negotiation/?utm_source=rss&utm_medium=rss&utm_campaign=crisis-in-the-gulf-escalation-or-negotiation http://www.ipsnews.net/2017/06/crisis-in-the-gulf-escalation-or-negotiation/#respond Thu, 08 Jun 2017 15:37:23 +0000 James M. Dorsey http://www.ipsnews.net/?p=150821 *Dr. James M. Dorsey is a senior fellow at the S. Rajaratnam School of International Studies & co-director of the University of Würzburg’s Institute for Fan Culture

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By James M. Dorsey
SINGAPORE, Jun 8 2017 (IPS)

Turkey’s parliament is this week fast tracking the dispatch of up to 3,000 troops to Qatar, home to the country’s military base in the Middle East. Certain to stiffen Qatar’s resolve to resist Saudi and UAE-led pressure to force it to change policies, the Turkish move comes amid hints that the kingdom and its allies may seek to undermine the rule of Qatari emir Sheikh Tamim bin Hamad Al Thani.

The stakes for both sides of the Gulf divide could not be higher. Saudi Arabia and the UAE cannot afford to fail in their effort to force Qatar’s hand after leading several Arab and non-Arab states in a rupture of diplomatic relations and declaring an economic boycott that also targets Qatar’s food supplies. By the same token, Qatar cannot afford a cave-in to Saudi and UAE demands that would humiliate the country and effectively turn it in to a Saudi vassal.

The dispatch of Turkish troops as well as Turkish and Iranian offers to help Qatar offset the impact of the boycott by ensuring that its food and water needs are met positions the Gulf crisis and Saudi Arabia’s proxy war with the Islamic republic as a political rather than a sectarian battle. Sunni Turkey and Shiite Iran countering of the Saudi-UAE campaign undermines the kingdom’s effort to project its rivalry with Iran as both a sectarian conflict and a power struggle.

The dispatch of troops and the emergence of a pro-Qatari alliance opposed to that of Saudi Arabia also eases pressure on non-Arab Muslim states to take sides. By raising the stakes, Turkey and Iran could potentially contribute to efforts to find a political solution to the crisis.

The move to quickly dispatch troops to Qatar came a day after Turkish President Recep Tayyip Erdogan condemned the Saudi-UAE effort to isolate sanctions and cripple it with sanctions. Mr. Erdogan warned that the moves would fail to solve problems and said he would do what he could to end the crisis.

Kuwait is already attempting to bridge the gap between the Gulf states and Qatar while the United States and Germany have called for a political solution. Iranian Foreign Minister Javad Zarif was scheduled to visit Ankara to discuss ways of resolving the Gulf crisis.

That may prove to be easier said than done. Saudi Arabia and the UAE are bent on avoiding a repeat of 2014 when Qatar failed to respond to the withdrawal of the Saudi, Emirati and Bahraini ambassadors from Doha by caving in to their demands that it halts its support for Islamists and militants. The three countries were forced to return their ambassadors after an absence of nine months with little to show for their action.

Leaders of Saudi Arabia and the UAE have moreover put their credibility on the line by not only breaking off diplomatic relations but also imposing a harsh boycott. The UAE, apparently concerned that the boycott, and particularly the targeting of food supplies, could spark domestic criticism, made expressions of sympathy with Qatar a criminal offense punishable with up to 15 years in prison and/or a fine of at least US$ 136,000. Up to 40 percent of Qatar’s approximately $1 billion in food exports a year were trucked to Qatar from Saudi Arabia until this week’s eruption of the crisis.

Also raising the stakes is the fact that a Qatar capable of resisting Saudi and UAE pressure would effectively contribute to a Muslim bloc in the Middle East that stands for everything Saudi Arabia and the UAE are seeking to defeat.

Inevitably, closer Qatari ties with Turkey as well as Iran, with which the Gulf state shares the world’s largest gas field, would become a fixture of Middle Eastern geopolitics. Iran is already helping Qatar not only with food but also by allowing Qatar Airways flights to Asia to cross Iranian airspace in their bid to circumvent Saudi, UAE and Bahrain airspace that has been closed to them.

Beyond demonstrating that Qatar is not alone in its fight, the dispatch of Turkish troops would also seek to dissuade Saudi Arabia and the UAE from intervening directly in the Gulf state.

Turkey and Qatar have long pursued similar policies. Both countries supported the 2011 popular Arab revolts.

By contrast, Saudi Arabia and the UAE went to great length to thwart their success., including helping engineer the military coup that in 2013 toppled Mohammed Morsi, a Muslim brother and Egypt’s first and only democratically elected president. Saudi and UAE troops also helped Bahrain brutally squash its 2011 popular uprising.

Turkey and Qatar moreover both support the Muslim Brotherhood, rebels fighting Syrian President Bashar al-Assad, and Islamist groups in divided Libya. The UAE and Saudi Arabia alongside Egypt back the internationally recognized Tobruk-based Libyan government that joined them in breaking off relations with Qatar.

Turkey set up a military base in Qatar with some 150 troops, its first in the Middle East, as part of an agreement signed in 2014. Turkish officials have since said Turkey’s presence would be increased to some 3,000 troops.

Turkey’s move to expedite the dispatch of additional troops to Qatar came as UAE state minister for foreign affairs Anwar Gargash said that one “cannot rule out further measures. We hope that cooler heads will prevail, that wiser heads will prevail and we will not get to that.”

Accusing Qatar of being “the main champion of extremism and terrorism in the region,” Mr. Gargash insisted that “this is not about regime change — this is about change of policy, change of approach.”

Egyptian, Emirati and Saudi newspapers, none of which are known to be truly independent, reported in recent days that domestic opposition to Qatari emir sheikh Tamim was mounting.

“We have long been silent about the irrational practices of the regime in Qatar,” Sheikh Saud bin Nasser Al-Thani, a little known member of the ruling family which is believed to account for up to 20 percent of Qatar’s citizens, told Egypt’s Youm7 newspaper.

The newspaper reported that opponents of Sheikh Tamim would form a London-based opposition paper headed by Sheikh Abdelaziz Bin Khalifa Al-Thani, an uncle of the emir and former oil and finance minister, who was accused of involvement in a failed effort in 2011 by Qatari military officers to overthrow Sheikh Tamim’s father and predecessor, Sheikh Hamad bin Khalifa Al Thani.

Abu Dhabi’s The National newspaper reported that the party would advocate a Qatari policy in line with Saudi and UAE demands, including curbing the activities of Sheikh Hamad’s wife, Sheikha Mozah Al-Misnad, who heads Qatar Foundation; freezing Qatar’s relations with Iran, ending Qatari support for Islamists in Libya and Egypt, and expelling Islamist leaders from the Gulf state.

“On behalf of the Qatari people, we offer the highest apology to the people of Saudi Arabia, the UAE, Kuwait, Bahrain, Egypt, Yemen and other countries that have been abused and harmed by the Qatari regime. We inform you that the Qatari people do not approve of the national policies that seek to shatter the Arab unity,” Sheikh Saud said in a statement carried by Egypt Today.

“Qataris are questioning whether this is going to end up in seeing a change in leadership itself in Qatar,” added Sultan Sooud Al Qassemi, a prominent liberal intellectual, art collector and businessman who is a member of the ruling family of the UAE emirate of Sharjah.

Earlier, Salman al-Ansari, the head of the Saudi American Public Relation Affairs Committee (SAPRAC), a Washington-based lobby, warned Sheikh Tamim that he could meet the same fate as Mr. Morsi, the toppled Egyptian president.

The Arab press reports notwithstanding, there is little by which to gauge possible support for opposition to Sheikh Tamim among the military or the public in Qatar, which like others in the region controls its media but has not imposed the kind of draconic penalties on freedom of expression introduced this week in the UAE.

Whatever the case, Qatar and Turkey hope that a substantial presence of Turkish troops rather than the fact that Qatar also hosts 10,000 US troops on the largest US military facility in the Middle East, would complicate, if not dampen, any plans to force Sheikh Tamim’s exit.

Said Mr. Al Qassemi: “The Qataris should not count on that base as being a guarantee or sort of American protection when it comes to conflict with Saudi Arabia. I think the Americans would choose to side with Saudi Arabia over any other country in the region.”

The statements and views expressed in this article are those of the author and do not necessarily represent those of IPS.

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In Volatile Times, the U.A.E. calls for Tolerancehttp://www.ipsnews.net/2017/06/in-volatile-times-the-u-a-e-calls-for-tolerance/?utm_source=rss&utm_medium=rss&utm_campaign=in-volatile-times-the-u-a-e-calls-for-tolerance http://www.ipsnews.net/2017/06/in-volatile-times-the-u-a-e-calls-for-tolerance/#respond Thu, 08 Jun 2017 06:23:08 +0000 Rose Delaney http://www.ipsnews.net/?p=150804 With terror attacks on the increase worldwide, there are more people today who believe that it has something to do with the religion of Islam. Seeds of misinformation are taking root and the divide between peoples and cultures is ever increasing. The promotion of tolerance is critically important now more than ever. Undoubtedly, bigotry has […]

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By Rose Delaney
MIAMI, Jun 8 2017 (IPS)

With terror attacks on the increase worldwide, there are more people today who believe that it has something to do with the religion of Islam.

Sheikha Lubna Al-Qasimi

Sheikha Lubna Al-Qasimi

Seeds of misinformation are taking root and the divide between peoples and cultures is ever increasing. The promotion of tolerance is critically important now more than ever.

Undoubtedly, bigotry has increased worldwide and violent hate crimes have risen exponentially. The recent epidemic of “fake news” utilized by major media outlets and the outbreak of anti-Islamic sensationalism have only worsened the situation and fueled further conflict and division.

The United Arab Emirates (U.A.E..) is widely considered to be a multicultural “marvel” of the Middle East. The country proudly hosts an ethnically diverse population with over 200 nationalities living in harmony.

The U.A.E.’s leadership promotes a positive image of Islam but also sets an example of peace and tolerance of all world religions in the country.

The U.A.E. and its multi-ethnic population aim to be an international role model for “acceptance, coexistence, and understanding.”

The U.A.E. today is considered a globalized symbol of acceptance and progression. Recently, an anti-discriminatory law was passed which forbids citizens and residents alike from discriminating against anyone on the grounds of caste, creed, culture or religion.

In 2016, U.A.E.’s first Ministry of Tolerance was officially established with Sheikha Lubna Al-Qasimi as its minister. Al-Qasimi believes that the Arab world has a great responsibility when it comes to ensuring the universal spread of tolerance and acceptance. She emphasizes the pivotal role youth and the global media play in the understanding and celebration of religious and ethnic diversity.

To instill values of cultural and religious acceptance everywhere, the government of the U.A.E. believes institutions of tolerance should be established on a global scale, especially in volatile times of terror and extremism.

The proliferation of these institutions would act as symbols of peace and co-existence, ensuring global societies that universal tolerance is achievable and can become a tangible reality.

Al-Qasimi recognizes that transparency in the media is vital during periods of fear and instability and emphasizes that the global dissemination of positive and tolerant news content is a critical form of “protection against extremism”.

At the 16th Arab Media Forum (AMF) held in Dubai last month, Al Qasimi highlighted that the media played a key role in the universal perception of Islam. The rise of “fake news” has proven detrimental to the promotion of universal tolerance. The media has a duty to “correct misconceptions about the image of the Arab world,” Al Qasimi said.

This ties in with the fact that global media content has lately been used as a weapon of divisive manipulation, rather than a method of progressing and sustaining universal harmony and acceptance.

The U.A.E.’s President, Sheikha Khalifa bin Zayed Al Nahyan, also considers the media to be a key player in the advancement of universal tolerance.

For this reason, Al Nahyan has committed to providing full support for the development of transparent media in his home nation. The U.A.E. encourages its media to disseminate, along with other institutions, the values of acceptance and open dialogue across all walks of society.

“Responsible media that fully understands its role and mission is a fundamental tool in countering extremist and terrorist ideology amid the widespread digital media that has a powerful influence on people’s thoughts and orientations,” Al Nahyan says.

Al Nahyan recognizes that the future development of tolerance rests largely on the perceptions and messages spread by the global media. “The media is not just a profession“, Al Nahyan stated. It is rather, in his belief, a vital means to spread the message of global justice and truth. In other words, it is high time the media stop being used a sensationalized tool to stir divisive controversy and “boost ratings” based on the plight of the stigmatized.

Al Nahyan highlighted the fact that the proliferation of positive media could only lead to effective nation-building and progress. Furthermore, it can help break down the negative perceptions surrounding Islam and the Middle East itself by drawing back to the multicultural and accepting values, ethics and traditions of Emirati society.

In an increasingly globalized world dominated by the trends of social media, the voice of youth undoubtedly holds a tremendous degree of power. The multicultural array of young professionals and students that make up U.A.E.’s fast growing population are actively encouraged to act as tomorrow’s leading voices in the pursuit of universal tolerance.

In the U.A.E., “the sky really appears to be the limit” for its young adult population. Its ministry of youth is led by the youngest minister in the world, 23-year-old Shamma bint Suhail Faris Al Mazrui. For many Emirati youths, spreading the principles of harmonious unity and actively condemning all forms of divisive extremism are a core objective, especially for the protection and benefit of upcoming generations.

As the rise of extremism threatens global security, the U.A.E. aims to encourage all forms of tolerance with the belief that through open dialogue and a strong sense of unity, the global community could overcome adversity.

However, the question remains, are other countries willing to follow the U.A.E.’s model of peaceful co-existence, or will ongoing extremism and divisive Islamophobic media campaigns hinder the U.A.E.’s idealistic vision of universal tolerance? Only time will tell.

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Secret Companies Allow Corrupt Cash to Flood Key Real Estate Marketshttp://www.ipsnews.net/2017/03/secret-companies-allow-corrupt-cash-to-flood-key-real-estate-markets/?utm_source=rss&utm_medium=rss&utm_campaign=secret-companies-allow-corrupt-cash-to-flood-key-real-estate-markets http://www.ipsnews.net/2017/03/secret-companies-allow-corrupt-cash-to-flood-key-real-estate-markets/#comments Thu, 30 Mar 2017 12:33:32 +0000 IPS World Desk http://www.ipsnews.net/?p=149703 The governments of Australia, Canada, the UK and the US need to close glaring legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets, a major anti-corruption watchdog urges. The Berlin-based Transparency International (TI), a global anti-corruption movement working in over 100 countries, on March […]

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"Caution Bribe Coming Through." March in Washington, DC, April 13, 2013, by Represent.Us. Credit: Djembayz. Creative Commons Attribution-Share Alike 3.0 Unported license.

By IPS World Desk
ROME/BERLIN, Mar 30 2017 (IPS)

The governments of Australia, Canada, the UK and the US need to close glaring legal loopholes to prevent the corrupt elite from laundering the proceeds of grand corruption in their local real estate markets, a major anti-corruption watchdog urges.

The Berlin-based Transparency International (TI), a global anti-corruption movement working in over 100 countries, on March 29 issued a new report, Doors Wide Open: Corruption and Real Estate in Key Markets, in which it identifies the 10 main problems related to real estate and money laundering in those four countries and makes recommendations on how to address them.

The report focuses on four countries that are known hot-spots for the corrupt to invest and launder money.

“Governments must close the loopholes that allow corrupt politicians, civil servants and business executives to be able to hide stolen wealth through the purchase of expensive houses in London, New York, Sydney and Vancouver,” said José Ugaz, Chair of Transparency International.

“The failure to deliver on their anti-corruption commitments feeds poverty and inequality while the corrupt enjoy lives of luxury,” Ugaz added.

Real estate has long provided a way for individuals to secretly launder or invest stolen money and other illicitly gained funds, TI informs, adding that according to the Financial Action Task Force (FATF), real estate accounted for up to 30 per cent of criminal assets confiscated worldwide between 2011 and 2013.

“Not only do expensive apartments in New York, London or Sydney raise the social status of their owners and allow them to live in luxury, they are also an easy and convenient place to hide hundreds of millions of dollars from criminal investigators, tax authorities or others tracking criminal behaviour and the proceeds of crime.”

Failure to Detect, Prevent Money Laundering in Real State

The international anti-corruption group found that despite anti-corruption promises by government in the countries covered in the report, current rules and practices have failed to detect and prevent money laundering in the real estate sector.

“Strikingly, Australia, Canada and the US rely almost exclusively on banks to stop money laundering, even though a slew of middlemen including real estate agents, accountants, tax planners, lawyers and others participate in deal-making.“

This makes all-cash deals, which do not require the involvement of a bank and which represent a significant proportion of high-end sales made to overseas investors, especially difficult to track, says TI.

Only the UK requires that checks are made on people selling real estate in order to identify suspicious activity and identify the real owners of the property.

However, TI emphasises that the same checks by real estate agents are not required on the buyers – where the highest risk of money laundering exists – leaving a gaping hole in the sector’s defences against corrupt money.

The report also finds that offshore companies pose a serious risk in all four countries because they are able to purchase property without needing to disclose any information relating to who ultimately owns and controls them to any government authority. The UK has committed to establish a registry to collect and publish this information.

None of the countries analysed have tests in place for professionals working in the real estate sector in order to assess whether they are aware of their anti-money laundering obligations, TI informs and adds that very little information is published regarding any sanctions applied to real estate agents, lawyers, accountants and notaries for facilitating money laundering into the real estate sector.

Transparency International makes the following recommendations:
• Governments should require all middlemen to identify and keep records of the real, beneficial owners of legal entities, trusts and other legal arrangements in real estate sales.
• Governments should require that both domestic and foreign politically-exposed-persons, their family members and close associates purchasing property be automatically identified as high-risk clients. Additional preventive measures such as enhanced due diligence should be implemented.
• Governments should require foreign companies that wish to purchase property to provide beneficial ownership information. This information should be kept in a central beneficial ownership registry and made available to competent authorities and the public in open data format.
• Governments should require real estate agents to register with a designated public authority for anti-money laundering supervision in order to operate in the real estate sector, and be tested to show they know the rules. Anti-money laundering training should be made compulsory upon registration.
• Governments and professional associations should introduce rules requiring lawyers, accountants and other professionals who are not registered with the relevant anti-money laundering supervisor to be prohibited from engaging in real estate deals.

Click here to access both the full report and the full list of the top 10 money laundering loopholes.

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The Robots are Coming, your Job is at Riskhttp://www.ipsnews.net/2017/03/the-robots-are-coming-your-job-is-at-risk/?utm_source=rss&utm_medium=rss&utm_campaign=the-robots-are-coming-your-job-is-at-risk http://www.ipsnews.net/2017/03/the-robots-are-coming-your-job-is-at-risk/#respond Wed, 15 Mar 2017 11:23:54 +0000 Martin Khor http://www.ipsnews.net/?p=149421 Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva.

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Credit: John Greenfield/Flickr

Credit: John Greenfield/Flickr

By Martin Khor
PENANG, Mar 15 2017 (IPS)

Last year Uber started testing driver-less cars, with humans inside to make corrections in case something goes wrong. If the tests go well, Uber will presumably replace their present army of drivers with fleets of the new cars.

Some personally owned cars can already do automatic parking.   Is it a matter of time before Uber, taxi and personal vehicles will all be smart enough to bring us from A to B without our having to do anything ourselves?

But in this application of “artificial intelligence”, in which machines can have human cognitive functions built into them, what will happen to jobs?   It is estimated that in the US alone, 4 to 5 million drivers of trucks and taxis could be rendered unemployed.

The driver-less vehicle is just one example of the technological revolution that is going to drastically transform the world of work and living.

The risk of automation to jobs in developing countries is estimated to range from 55 to 85 per cent, according to a study in 2016 by Oxford University’s Martin School and Citi. Major emerging economies will be at high risk, including China (77%) and India (69%), higher than the OECD developed countries’ average risk of 57%.
There is concern that the march of automation tied with digital technology will cause dislocation in many factories and offices, and eventually lead to mass unemployment.

Just a day before he left office, former US President Barrack Obama warned in a farewell interview that “jobs are going away because of automation and that’s going to accelerate,” pointing to “driverless Uber” and “displacement that’s going to take place in office buildings across the country.”

Also voicing concern about the social impact of automation, Microsoft founder Bill Gates recently proposed that governments should impose a tax on robots.  Companies using robots should have to pay taxes on the incomes attributed to the use of robotics.

That proposal has caused an uproar, with mainstream economists like Lawrence Summers, a former US treasury secretary, condemning it for putting brakes on technological advancement.  One critic suggested that the first company to pay taxes for causing automation should be Microsoft.

However, the tax on robots idea is one response to growing fears that the automation revolution will increase inequality as many lose their jobs while a few reap the benefits of increased productivity and profitability.

The new technologies will cause uncontrollable disruption and add to the social discontent and political upheaval in the West which had fuelled the anti-establishment votes for Brexit and Donald Trump.

Recent studies are showing that deepening use of automation will cause widespread disruption in many sectors and even whole economies.  Worse, it is the developing countries that are estimated to lose the most, and this will exacerbate the already great global inequalities.

The risk of automation to jobs in developing countries is estimated to range from 55 to 85 per cent, according to a study in 2016 by Oxford University’s Martin School and Citi.  Major emerging economies will be at high risk, including China (77%) and India (69%), higher than the OECD developed countries’ average risk of 57%.

The Oxford-Citi report, “The future is not what it used to be”, provides many reasons why the automation revolution will be particularly disruptive in the developing countries.

First, there is “premature deindustrialisation” taking place as manufacturing is becoming less labour-intensive and many developing countries have reached the peak of their manufacturing jobs.  Manufacturing processes are more automated today, also in low and middle income developing countries.

Martin Khor

Martin Khor

Second, while 20th century technologies allowed companies to shift production abroad to take advantage of cheap labour, recent developments in robotics and additive manufacturing now enable firms to locate production closer to domestic markets in automated factories.

Seventy per cent of clients surveyed believe automation and 3D printing developments will encourage companies to move their manufacturing close to home.  China, ASEAN and Latin America have the most to lose from this relocation, while North America, Europe and Japan are the main winners.

Thirdly, “the impact of automation may be more disruptive for developing countries, due to lower levels of consumer demand and limited social safety nets” as compared to the developed countries, according to a summary of the Oxford Martin School report.

The report warns that developing countries may even have to rethink their overall development models as the old ones that were successful in generating growth in the past will not work anymore.

“In the light of these technological developments, industrialization is likely to yield substantially less manufacturing employment in the next generation of emerging economies than in the countries preceding them.  Hence it will be increasingly difficult for African and South American manufacturing firms to create jobs in the same numbers that Asian countries have done.  In other words, today’s low-income countries will not have the same possibility of achieving rapid growth by shifting workers from farms to higher-paying factory jobs.”

Instead of export-led manufacturing growth, developing countries will need to search for new growth models, said the report.  “Service-led growth constitutes one option, but many low-skill services are now becoming equally automatable.”

It cites a World Bank report showing developing countries are highly susceptible to their workforce being affected by increasing automation, even relative to advanced economies where labour costs are high.

Moreover, countries with lower levels of GDP per capita typically have a higher share of their workforce “at risk”.   “Thus there are reasons to be concerned about the future of income convergence, as low income countries are relatively vulnerable to automation,” concludes the report.

Another series of reports, by McKinsey Global Institute, found that 49% of present work activities can be automated with currently demonstrated technology, and this translates into US$15.8 trillion in wages and 1.1 billion jobs globally.

About 60% of all occupations could see 30% or more of their activities automated and 5% of jobs can be entirely automated.  But more reassuringly an author of the report James Manyika says the changes will take decades.   How automation affects jobs will not be decided simply by what is technically feasible.   Other factors include economics, labour markets, regulations and social attitudes.

Which jobs are most susceptible to be affected?  While most people think they would be in manufacturing, in fact many jobs in services will also be disrupted.   The McKinsey study lists accommodations and food services as the most vulnerable sector in the US, followed by manufacturing and retail business.

In accommodations and food, 73% of activities workers perform can be automated, including preparing, cooking or serving food; cleaning food-preparation areas, preparing beverages and collecting dirty dishes.

In manufacturing, 59% of all activities can be automated, especially physical activities or operating machinery in a predictable environment.  Activities range from packaging products to loading materials on production equipment to welding to maintaining equipment.

For retailing, 53% of activities are automatable.  They include stock management, packing objects, maintaining sales records, gathering customer and product information, and accounting.

A technology specialist writer and consultant, Shelly Palmer, has also listed elite white-collar jobs that are at risk from “robots” which she defines as technologies, such as machine learning algorithms running on purpose-built computer platforms, that have been trained to perform tasks that currently require humans to perform.

Those she assessed would be displaced include middle managers, salespersons, report writers, journalists and announcers, accountants, bookkeepers and doctors.

While some analysts are enthusiastic about the positive effects of the automation revolution, others are alarmed by its adverse effects.

Certainly, the technological trend will improve productivity per worker that remains, and increase the profitability of companies that survive.

While there are benefits at the micro level for those companies and individuals that thrive in the new environment, there are adverse effects at macro level, especially retrenchment for those whose jobs are no longer needed.

What can be done to slow down automation or at least to cope with its adverse effects?

The Bill Gates proposal to tax robots is one of the most radical.   The tax could slow down the technological changes and the funds generated by the tax could be used to mitigate the social effects.

Another radical idea which is generating a lot of debate is to provide “universal income” to everyone irrespective of whether they are working.  The high productivity will allow everybody to be paid a comfortable income, and thus there is no need to worry that automation will displace jobs.

Governments can also take the attitude of “join them if you can’t beat them.”  For example, China is seeing major opportunities in joining the technological revolution and has drawn up plans to invest in robotics and artificial intelligence.

Other more conventional proposals include upgrading the education of students and present employees to take on the new jobs required in managing or working with the automated production process, and training workers to be made redundant with the new skills needed to work in the new environment.

Overall, however, there is likely to be a net loss of employment, at least in the short term, and thus the potential for social discontent.

As for the developing countries in general, there will have to be much thinking of the implications of the new technologies for their immediate and long-term economic prospects, and a major rethinking of economic and development strategies is also called for.

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Gender Disparity at UN: Three Out of 71, Zero out of Ninehttp://www.ipsnews.net/2017/03/gender-disparity-at-un-three-out-of-71-zero-out-of-nine/?utm_source=rss&utm_medium=rss&utm_campaign=gender-disparity-at-un-three-out-of-71-zero-out-of-nine http://www.ipsnews.net/2017/03/gender-disparity-at-un-three-out-of-71-zero-out-of-nine/#comments Wed, 08 Mar 2017 08:51:43 +0000 Thalif Deen http://www.ipsnews.net/?p=149314 The United Nations has frequently been accused of vociferously preaching gender empowerment and women’s rights to the outside world — but failing miserably to practice what it preaches in its own political backyard. The charge is usually made against the 193-member General Assembly, which has elected only three women as presidents – Vijaya Lakshmi Pandit […]

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By Thalif Deen
UNITED NATIONS, Mar 8 2017 (IPS)

The United Nations has frequently been accused of vociferously preaching gender empowerment and women’s rights to the outside world — but failing miserably to practice what it preaches in its own political backyard.

The charge is usually made against the 193-member General Assembly, which has elected only three women as presidents – Vijaya Lakshmi Pandit of India (1953), Angie Brooks of Liberia (1969) and Sheikha Haya Rashed Al-Khalifa of Bahrain (2006).

And that’s three out of 71 Presidents, 68 of whom were men.

The 15-member Security Council’s track record is probably worse because it has continued to elect men as UN Secretaries-General, rubber-stamped by the General Assembly, and most recently late last year– despite several outstanding women candidates.

And that’s zero out of nine male UN chiefs (Trygve Lie of Norway, Dag Hammarskjold of Sweden, U. Thant of Burma (now Myanmar), Kurt Waldheim of Austria, Javier Perez de Cuellar of Peru, Boutros Boutros-Ghali of Egypt, Kofi Annan of Ghana, Ban Ki-moon of South Korea and, currently, Antonio Guterres of Portugal).

The two highest ranking political positions at the UN– one of them with the status of a head of state in terms of diplomatic protocol– have long been identified as the intellectual birth right of men.

The General Assembly, the highest policy making body at the United Nations, and the Security Council, the most powerful veto-wielding body in the Organization, have continued to overwhelmingly opt for men over women during the 71-year existence of the world body.

And still, both UN organs continue to relentlessly—and hypocritically– pay lip service to the cause of women’s rights and gender empowerment in the endless debates on life’s inequalities.

On the other hand, the UN Secretariat and 35 of its affiliated agencies worldwide have been labouring, with limited success, to implement a longstanding UN resolution which has called for 50:50 gender parity between men and women – and specifically on senior high-ranking, decision-making jobs.

As the UN commemorated its annual International Women’s Day on March 8, a recently-released 36-page study on the “Status of Women in the UN System” focuses on where the 50:50 gender parity stands – and where it falters.

Dr Phumzile Mlambo-Ngcuka, Under-Secretary-General and Executive Director of UN Women, points out that the study not only profiles the status of women at the UN but also singles out “the challenges to the achievement of the 50:50 culture”

“There is some encouraging progress towards gender parity throughout the UN system, although it is not uniform, and insufficiently rapid. The change we need will not happen without a committed, multi-pronged approach.”

“Equality is not a statistic,” she rightly declares, “It is a mindset” – even as the UN has launched a campaign to achieve 50:50 gender party in all walks of life worldwide by the year 2030.

On the UN’s current payroll are a staggering 94,000 staffers and 78,000 consultants worldwide.

The UN staff is largely divided into two categories: the General Service, which includes mostly the clerical staff and secretaries, and the Professional Service (equivalent to an executive staff in the private sector).

The Professionals move up the ladder as P-1, P-2, P-3, P-4 and P-5 rising to “Director” levels D-1 and D-2 and theoretically vying for the posts of Assistant-Secretary-General (rarely achievable), Under-Secretary-General (very rarely achievable) and Deputy Secretary-General (never).

The three most senior positions in the UN hierarchy — ASGs, USGs, and DSGs– are mostly appointments made by the Secretary-General, primarily caving into political pressure by the big powers at the UN.

As laid down in the UN staff regulations and staff rules, the authority for the selection of staff members at D-2 level and above rests with the Secretary-General, including the retention of staff members beyond the retirement age, should the need arise.

According to the study, only five out of 35 UN “entities” have reached the 50:50 parity and beyond: UN Women (78.9 percent), International Court of Justice (57.1 percent), UNAIDS (50.8 percent), the UN Educational, Scientific and Cultural Organisation (50.6 percent) and the UN World Tourism Organisation (50 percent).

Listed on a scale are 17 other UN entities with 40-49 percent parities, including the Secretariat, and 13 UN entities with 40 percent parities.

“As the largest entity in the UN System, the UN Secretariat (in New York) has the potential to greatly impact overall system progress towards 50:50 gender balance. However, the UN Secretariat has a lower representation of women at every level than the overall UN System,” says the study.

“A negative correlation exists between the representation of women and seniority – as grade levels increase, the proportion of women decreases. The sharpest declines occur between the P-2 and P-3, and P-4 and P-5 levels, with drops of 12.2 and 5.9 percentage points, respectively. Such decreases indicate there are blockages in the pipeline hindering the career advancement of women within the UN,” the study notes.

Mavic Cabrera-Balleza, International Coordinator, Global Network of Women Peacebuilders, told IPS: “We may recall that Secretary-General Kofi Annan strongly promoted women’s rights; and Ban Ki-moon championed gender equality. Yet, as current Secretary-General Antonio Guterres himself said, the initial target for equal representation of women and men in the UN was in the year 2000.”

While Guterres would have a pivotal role in achieving gender parity, she said, “we cannot rely on him alone”.

The Member States have a key role to pay in nominating women candidates to key UN positions. Civil society has an equally critical role in proposing criteria for selection; or recommending individuals who have the expertise and track record on women’s empowerment, women’s rights and gender equality, she added.

In some of his initial appointments last January, Guterres named several women to senior UN positions, including Amina J. Mohammed of Nigeria as his Deputy; Ambassador Maria Luiza Ribeiro Viotti of Brazil as his Chef de Cabinet; Kyung-wha Kang of South Korea as his Transition Team Chief; Melissa Fleming of the United States as his Senior Advisor/Spokesperson; and Michelle Gyles-McDonnough of Jamaica as Senior Advisor.

Ban Ki-moon did break many glass ceilings during his 10 year tenure ending December 2016. In his annual report to the General Assembly last December, he pointedly said: “When I took office, there were no women heading peacekeeping operations in the field. Now, nearly a quarter of UN missions are headed by women. I also appointed the first woman Legal Counsel, the first woman Police Adviser, the first woman Force Commander and more than 100 women at the ASG or USG levels.”

Sanam Naraghi-Anderlini, co-founder and Executive Director of International Civil Society Action Network (ICAN) told IPS that in a world with an increasing number of women in tertiary education and in the workplace, it seems inconceivable that the UN has not or cannot reach parity between women and men in all levels across the system.

“If the policies and rhetoric we hear are correct, then it is not a problem of demand. Is it then a supply problem? Not really, not if we look at the hard numbers: to get parity at the USG level — the SG needs to recruit an additional 67.5 women — for D2s — he needs another 109 women; and for D1s another 848.5 women.”

“These may sound like large numbers but look around the world of civil society, the private sector, and many governments — the women are present, ready and willing,” she pointed out.

But the question is how would the system deal with the very human realities?

In this case, she argued, today’s generation of men in existing posts, with hopes and expectations of moving up the ladder – will have to experience the glass ceiling that generations of women have faced in the past.

If parity is to be a reality, many of today’s male P4s, P5s, D1s, D2s, USGs will be paying the price for the many earlier generations of men who advanced and filled those posts — often regardless of their abilities, said Naraghi-Anderlini, the first Senior Expert on Gender and Inclusion on the UN’s Mediation Standby Team.

Ian Richards, President, Coordinating Committee of International Staff Unions and Associations described the study as “a comprehensive report” on the status of women in the UN system.

“And we can certainly take heart from the finding that 82.4% of the workforce that completed the Exit Survey indicated that gender did not have an impact on their career.”

However, he said, “We believe much more needs to be done in terms of facilitating the careers of women at the UN. The organization is in the dark ages when it comes to flexible working arrangements, few of its offices provide or wish to provide assistance with childcare, and the promotion system lacks objectivity thereby entrenching unconscious biases and preferences.”

Richards said one area the report doesn’t examine but should, is the 30 percent of the UN workforce that is made up of consultants. He said their fees are negotiated individually with managers, instead of being set by a salary scale, and there has been no study of whether women and men are paid the same for equivalent work.

Finally it’s interesting to note that in the International Civil Service Commission (ICSC), which sets conditions of service and decides against providing assistance for childcare, only two of its 15 members are women, he pointed out.

Cabrera-Balleza said she was pleased about Guterres’ appointment of women in top level UN positions.

“I am also happy to see that on the call for nomination of candidates for Under Secretary-General positions, the UN Secretariat stated that it would especially welcome nomination of women candidates”.

“However, I am disappointed that the qualifications for those positions do not include track record on gender equality. The call only states “high commitment to the values and guiding principles of the UN and familiarity with the UN system…” Track record on gender equality should be explicit. It should be explicit during recruitment and hiring; and it should be explicit in Terms of Reference for all UN officials. It cannot and should not be assumed,” she declared.

“We should also bear in mind that advancing the status of women and achieving gender equality in the UN system is not just a numbers game. We need to have women and men who represent women’s interests; who fight for women’s rights–not just their own self interest or self advancement. Hence, we need track record; and not just commitment. Anyone can claim commitment to women’s rights and gender equality but only few have track record,” she added.

Naraghi-Anderlini said to be perfectly fair, it would seem the UN needs to up its recruitment of junior men in P1 and P2 positions to ensure parity at the base too. So parity will also benefit a younger generation of men, alongside the multi-generations of women who could fill the more senior posts.

In an ideal world, she said, the Secretary-General would take on this challenge and focus on ensuring that the very best of women and men enter, remain and advance in the system across all levels.

“They must all adhere to the core UN values – of equal human rights, pluralism and peace. But the skills and knowledge required, should be as varied and diverse as the societies in which the UN seeks to be present and effective,” said Naraghi-Anderlini.

“Imagine what a UN that would be? Probably the best place in the world to work in,” she added.

The writer can be contacted at thalifdeen@aol.com

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In Asia Pacific, 900 Million People Pay Bribes for Public Serviceshttp://www.ipsnews.net/2017/03/in-asia-pacific-900-million-people-pay-bribes-for-public-services/?utm_source=rss&utm_medium=rss&utm_campaign=in-asia-pacific-900-million-people-pay-bribes-for-public-services http://www.ipsnews.net/2017/03/in-asia-pacific-900-million-people-pay-bribes-for-public-services/#comments Tue, 07 Mar 2017 18:47:23 +0000 IPS World Desk http://www.ipsnews.net/?p=149304 Around 900 million – or just over one in four – people living in 16 countries in Asia Pacific, including some of its biggest economies, are estimated to have paid a bribe to access public services, with governments failing to stop corruption, according to a new public opinion poll from a major anti-corruption watchdog. The […]

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A billboard in Zambia exhorting the public to "Just say no to corruption". Photo: Lars Plougmann. Creative Commons Attribution-Share Alike 2.0 Generic license.

By IPS World Desk
ROME/BERLIN, Mar 7 2017 (IPS)

Around 900 million – or just over one in four – people living in 16 countries in Asia Pacific, including some of its biggest economies, are estimated to have paid a bribe to access public services, with governments failing to stop corruption, according to a new public opinion poll from a major anti-corruption watchdog.

The Berlin-based Transparency International (TI), a global anti-corruption movement working in over 100 countries, spoke to nearly 22,000 people about their recent experiences with corruption for People and Corruption: Asia Pacific, part of the Global Corruption Barometer series.

The results show lawmakers across the region “need to do much more to support whistle-blowers; governments must keep promises to combat corruption.”

In China, nearly three-quarters of the people surveyed said corruption has increased over the last three years, suggesting people do not see the major offensive on corruption is working, TI reports.

Only one in five people surveyed thought the level of corruption had decreased, while half of people polled said their government was doing a bad job fighting corruption.

“Governments must do more to deliver on their anti-corruption commitments. It’s time to stop talking and act. Millions of people are forced to pay bribes for public services and it is the poor who are most vulnerable,” said José Ugaz, chair of Transparency International, on March 7.

Thirty-eight per cent of the poorest people surveyed said they paid a bribe, the highest proportion of any income group.

“Without proper law enforcement corruption thrives. Bribery is not a small crime, it takes food off the table, it prevents education, it impedes proper healthcare and ultimately it can kill,” Ugaz said.

Police Top the List

Police top the list of public services most often demanding a bribe, with just under a third of people who had come into contact with a police officer in the last 12 months saying they paid a bribe.

People said that the most important action to stop corruption is speaking out or refusing to pay bribes. But more than one in five said they felt powerless to help fight corruption.

Transparency International recommends that governments integrate anti-corruption targets into all Sustainable Development Goals including hunger, poverty, education, health, gender equality and climate action, and develop mechanisms to reduce corruption risks.

It also recommends that legislatures adopt and enforce comprehensive legislation to protect whistle blowers, based on prevailing international standards, including those developed by Transparency International.

The anti-corruption watchdog also exhorts authorities to prevent and sanction bribe paying/taking to end impunity related to bribery, and that anti-corruption agencies engage with and encourage large numbers of citizens who are willing to refuse paying bribes and report corruption.

The surveys were carried out face-to-face or by telephone between July 2015 and January 2017. They were sampled and weighted to be nationally representative of all adults.

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Let Women Speak and Give Them a Hearinghttp://www.ipsnews.net/2017/03/let-women-speak-and-give-them-a-hearing/?utm_source=rss&utm_medium=rss&utm_campaign=let-women-speak-and-give-them-a-hearing http://www.ipsnews.net/2017/03/let-women-speak-and-give-them-a-hearing/#comments Tue, 07 Mar 2017 16:31:32 +0000 Farhana Haque Rahman http://www.ipsnews.net/?p=149297 Basic rights always need champions, and that’s truer today than it ought to be as around the world we see an unwelcome pattern of reaction to modern complexities ranging from globalization and automation to austerity and dwindling wages. One alarming example is how the agenda of promoting women’s rights, so far from completion, is being […]

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By Farhana Haque Rahman, Director General, Inter Press Service
ROME, Mar 7 2017 (IPS)

Basic rights always need champions, and that’s truer today than it ought to be as around the world we see an unwelcome pattern of reaction to modern complexities ranging from globalization and automation to austerity and dwindling wages. One alarming example is how the agenda of promoting women’s rights, so far from completion, is being pushed back rather than forward.

Farhana Haque Rahman

Farhana Haque Rahman

IPS has long strived for gender equality and reported from every corner of the world on women’s conditions and their desire for equality on multiple fronts. Expected progress risks reversal, at times due to implicit bias in access to emerging technologies and at times due to outright political reaction.

Things cannot be taken for granted. Protectionism and populism are not going to contribute to the world we all need, one that rises to respond to the threats posed by climate change and to the pledge to eradicate extreme poverty and hunger once and for all. Women’s rights are key to progress on all fronts.

To celebrate International Women’s Day on March 8, 2017, IPS has invited people from all quarters, from policy makers and political and cultural influencers to ordinary people with challenging daily lives, to offer their opinions, news and views on how the women of the world – able as we’ve seen to take to the streets and argue their own case – should navigate a time of such uncertainty.

This article is part of a series of stories and op-eds launched by IPS on the occasion of this year’s International Women’s Day on March 8.

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Corruption: Promises, But Not Enough Progress from G20 Countrieshttp://www.ipsnews.net/2017/02/corruption-promises-but-not-enough-progress-from-g20-countries/?utm_source=rss&utm_medium=rss&utm_campaign=corruption-promises-but-not-enough-progress-from-g20-countries http://www.ipsnews.net/2017/02/corruption-promises-but-not-enough-progress-from-g20-countries/#comments Mon, 27 Feb 2017 08:07:16 +0000 IPS World Desk http://www.ipsnews.net/?p=149120 ///UPDATE to IPS article: Five Key G20 Powers Break Promise to Help Tackle Corruption

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Credit: Transparency International

By IPS World Desk
ROME/BERLIN, Feb 27 2017 (IPS)

Open data is a pretty simple concept: governments should publish information about what they do to fight corruption– data that can be freely used, modified and shared by anyone for any purpose, according to two major international anti-corruption watchdogs. This is particularly important in the fight against corruption.

In 2015 the Group of 20 (G20) governments agreed on a set of G20 Anti-Corruption Open Data Principles. These principles aim to make crucial data public specifically because they can help stop corruption, a joint research published by Transparency International (TI) and the Web Foundation has revealed.

“In 2015 the G20 (Group of the 20 most industrialised countries) agreed that in order to help stop corruption, governments should publish data on open data platforms so that civil society could monitor the use of public resources, including how taxes are spent, how contracts are awarded and how money is funnelled into political campaigns.”

Publishing this data would allow civil society to monitor things like the use of public resources and taxes, the awarding of public contracts, and the sources of political party finance, the research underlines, explaining that this would make it easier to hold governments to account and deter criminal activities like bribery and nepotism, adds the research.

“Alongside the overview report, five country-level studies (Brazil, France, Germany, Indonesia and South Africa) revealed a range of shortcomings in national commitments to G20 open data principles. The graphics below summarise the main finding and recommendation for improvement per country.”

Transparency International and the Web Foundation examined the extent to which five G20 countries – Brazil, France, Germany, Indonesia and South Africa – are living up to these principles. There are individual country reports (see below) as well as an overall report.

The basic conclusion: there isn’t enough progress. No country released all the data-sets required, and much of the information proved either hard to find or difficult to use.

 

Access the Brazil report

brazil_

 

Access the France report

france_

 

Access the Germany report

germany_

 

Access the Indonesia report

indonesia_

 

Access the South Africa report

south-africa_

 

Read previous IPS article: Five Key G20 Powers Break Promise to Help Tackle Corruption

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Five Key G20 Powers Break Promise to Help Tackle Corruptionhttp://www.ipsnews.net/2017/02/five-key-g20-powers-break-promise-to-help-tackle-corruption/?utm_source=rss&utm_medium=rss&utm_campaign=five-key-g20-powers-break-promise-to-help-tackle-corruption http://www.ipsnews.net/2017/02/five-key-g20-powers-break-promise-to-help-tackle-corruption/#comments Thu, 23 Feb 2017 15:09:45 +0000 IPS World Desk http://www.ipsnews.net/?p=149086 Five key G20 countries are failing to meet commitments to publish data that helps tackle corruption, warns a new report by international anti-corruption watchdogs. “If the data was publicly available it could be used to curb criminal activities, including money laundering and tax evasion,” according to the joint research, published on February 23 by Transparency […]

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Credit: IPS

By IPS World Desk
ROME/BERLIN, Feb 23 2017 (IPS)

Five key G20 countries are failing to meet commitments to publish data that helps tackle corruption, warns a new report by international anti-corruption watchdogs.

“If the data was publicly available it could be used to curb criminal activities, including money laundering and tax evasion,” according to the joint research, published on February 23 by Transparency International (TI) and the Web Foundation.

“In 2015 the G20 (Group of the 20 most industrialised countries) agreed that in order to help stop corruption, governments should publish data on open data platforms so that civil society could monitor the use of public resources, including how taxes are spent, how contracts are awarded and how money is funnelled into political campaigns.”

Connecting the Dots: Building the Case for Open Data to Fight Corruption looked at how much progress Brazil, France, Germany, Indonesia and South Africa have made in implementing the G20 Anti-Corruption Open Data Principles, according to the research. These countries were chosen as a representative global and economic cross-section of G20 countries.

The conclusion is clear: there is not enough progress, says the report, adding that no country has released all the information and much of the information that has been released is hard to find and use.

According to the report, none of the countries posted any information about who owns companies (beneficial ownership information). France was the only country to publish some information on lobbying activities and only Brazil published information about government spending.

“Governments need to step up their game if open data is to put a dent in global corruption. ..They must work to change attitudes among civil servants, invest in vital technology and the development of skills, and crucially, they must enshrine G20 Principles into national law,” said Robin Hodess, interim Internal Managing Director of Transparency International and a co-author of the report.

“The Panama Papers showed us the scale of corruption happening in the shadows that datasets can help reveal. These developments called for urgent solutions. That governments are instead dragging their feet on mobilising open data raises questions about their commitment to transparency,” said Craig Fagan, Web Foundation Policy Director.

Transparency International and the Web Foundation analysed ten data sets linked to anti-corruption measures. These included public information on lobbying, land registrations, government spending, beneficial ownership of companies and political financing.

According to the report, researchers scored the quality of each data set using a nine-point checklist that includes an assessment of the timeliness for publication and updates, ease of access, provision of supporting documents, and the ability to cross-reference data sets.

“France performed best, scoring an average of 5.4 out of a possible 9 points. Indonesia received the lowest score, managing just 1.5 points.”

The dataset that had the most information was on government budgets with an average score of 7.8 across the five countries, says the report.

However, government spending and lobbying registers each scored 1.6 and land registers scored 1.8. This shows that governments are not collecting or disseminating crucial information in key areas prone to corruption.”

Key Findings:

No country released all anti-corruption datasets
• France showed the most progress, publishing eight of ten datasets identified as key to anti-corruption
• Brazil was the only country to publish data on government spending
• No country has a beneficial ownership register – despite all showing some level of commitment to do so at last year’s Anti-Corruption Summit in London.

When released, data is not always useful and useable
• In many cases the data is stale and lacks granularity – making meaningful insights difficult to draw
• Access is a problem in all countries, with datasets hard to find and not all available from a single platform, meaning those looking to identify corruption need to dig further to find critical information

Data not published to open data standards
• Only France published the majority of its datasets in line with open data standards
• This lack of adherence to open data standards makes merging and comparing datasets difficult, particularly between countries

Lack of open data skills

• Although some countries do offer some level of open data training for staff, these rarely incorporate an anti-corruption focus

Transparency International and the Web Foundation call for governments to take immediate steps to publish more information that can be used to fight corruption.

The report makes recommendations on the required legal measures needed to enforce open data and for commitments to invest in training.

Finally, the report suggests that in order for governments to make open data the default option, there will need to a change of culture, which will only come about when there are formal incentives for openness.

The full report can be downloaded here. The five country case studies: Brazil, France, Germany, Indonesia and South Africa.

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Trump Marks the End of a Cyclehttp://www.ipsnews.net/2017/02/trump-marks-the-end-of-a-cycle/?utm_source=rss&utm_medium=rss&utm_campaign=trump-marks-the-end-of-a-cycle http://www.ipsnews.net/2017/02/trump-marks-the-end-of-a-cycle/#comments Tue, 21 Feb 2017 18:14:27 +0000 Roberto Savio http://www.ipsnews.net/?p=149052 Roberto Savio is co-founder of Inter Press Service (IPS) news agency and its President Emeritus. He is also publisher of OtherNews.

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Roberto Savio is co-founder of Inter Press Service (IPS) news agency and its President Emeritus. He is also publisher of OtherNews.

By Roberto Savio
ROME, Feb 21 2017 (IPS)

Let us stop debating what newly-elected US President Trump is doing or might do and look at him in terms of historical importance. Put simply, Trump marks the end of an American cycle!

Roberto Savio

Roberto Savio

Like it or not, for the last two centuries the entire planet has been living in an Anglophone-dominated world. First there was Pax Britannica (from the beginning of the 19th century when Britain started building its colonial empire until the end of the Second World War, followed by the United States and Pax Americana with the building of the so-called West).

The United States emerged from the Second World War as the main winner and founder of what became the major international institutions – from the United Nations to the World Bank and the International Monetary Fund (IMF) – with Europe reduced to the role of follower. In fact, under the Marshall Plan, the United States became the force behind the post-war reconstruction of Europe.

As winner, the main interest of the United States was to establish a ‘world order’ based on its values and acting as guarantor of the ‘order’.

Thus the United Nations was created with a Security Council in which it could veto any resolution, and the World Bank was created with the US dollar as the world’s currency, not with a real world currency as British economist and delegate John Maynard Keynes had proposed. The creation of the North Atlantic Treaty Organisation (NATO) – as a response to any threat from the Soviet Union – was an entirely American idea.

The lexicon of international relations was largely based on Anglo-Saxon words, and often difficult to translate into other languages – terms such as accountability, gender mainstreaming, sustainable development, and so on. French and German disappeared as international languages, and lifestyle became the ubiquitous American export – from music to food, films and clothes. All this helped to reinforce American myths.

The United States thrust itself forward as the “model for democracy” throughout the world, based on the implied assertion that what was good for the United States was certainly good for all other countries. The United States saw itself as having an exceptional destiny based on its history, its success and its special relationship with God. Only US presidents could speak on behalf of the interests of humankind and invoke God.

The economic success of the United States was merely confirmation of its exceptional destiny – but the much touted American dream that anyone could become rich was unknown elsewhere.

The first phase of US policy after the Second World War was based on multilateralism, international cooperation and respect for international law and free trade – a system which assured the centrality and supremacy of the United States, reinforced by its military might,

The United Nations, which grew from its original 51 countries in 1945 to nearly 150 in just a few decades, was the forum for establishing international cooperation based on the values of universal democracy, social justice and equal participation.

In 1974, the UN General Assembly unanimously adopted the Charter of Economic Rights and Duties of States – the first (and only) plan for global governance – which called for a plan of action to reduce world inequalities and redistribute wealth and economic production. But this quickly became to be seen by the United States as a straitjacket.

The arrival of Ronald Reagan at the White House in in1981 marked an abrupt change in this phase of American policy based on multilateralism and shared international cooperation. A few months before taking office, Reagan had attended the North-South Economic Summit in Cancun, Mexico, where the 22 most important heads of state (with China as the only socialist country) had met to discuss implementation of the General Assembly resolution.

Reagan, who met up with enthusiastic British Prime Minister Margaret Thatcher, stopped the plan for global governance dead in its tracks. I was there and saw how, to my dismay, the world went from multilateralism to the old policy of power in just two days. The United State simply refused to see its destiny being decided by others – and that was the start of the decline of the United Nations, with the United States refusing to sign any international treaty or obligation.

America’s dream and its exceptional destiny were strengthened by the rhetoric of Reagan who even went as far as slogan sing “God is American”.

It is important to note that, following Reagan’s example, all the other major powers were happy to be freed of multilateralism. The Reagan administration, allied with that of Thatcher, provided an unprecedented example of how to destroy the values and practices of international relations and the fact that Reagan has probably been the most popular president in his country’s history shows the scarce significance that the average American citizen gives to international cooperation.

Under Reagan, three major simultaneous events shaped our world. The first was deregulation of the financial system in 1982, later reinforced by US President Bill Clinton in 1999, which has led to the supremacy of finance, the results of which are glaringly evident today.

The second was the creation in 1989 of an economic vision based on the supremacy of the market as the force underpinning societies and international relations – the so-called Washington Consensus – thus opening the door for neoliberalism as the undisputed economic doctrine.

Third, also in 1989, came the collapse of the Berlin Wall and the end of the “threat” posed by the Soviet bloc.

It was at this point that the term “globalisation” became the buzzword, and that the United States was once again going to be the centre of its governance. With its economic superiority, together with the international financial institution which it basically controlled, plus the fact that the Soviet “threat” had now disappeared, the United States was once again placing itself at the centre of the world.

As Henry Kissinger, Secretary of State under presidents Richard Nixon and Gerald Ford, once said, “Globalisation is another term for U.S. domination.”

This phase ran from 1982 until the financial crisis of 2008, when the collapse of American banks, followed by contagion in Europe, forced the system to question the Washington Consensus as an undisputable theory.

Doubts were also being voiced loudly through the growing mobilisation of civil society /the World Social Forum, for example, had been created in 1981) and by the offensive of many economists who had previously remained in silence.

The latter began insisting that macroeconomics – the preferred instrument of globalisation – looked only at the big figures. If microeconomics was used instead, they argued, it would become clear that there was very unequal distribution of growth (not to be confused with development) and that delocalisation and other measures which ignored the social impact of globalisation, were having disastrous consequences.

The disasters created by three centuries of geed as the main value of the “new economy” were becoming evident through figures showing an unprecedented concentration of wealth in a few hands, with many victims – especially among the younger generation.

All this was accompanied by two new threats: the explosion of Islamic terrorism, widely recognised as a result of the invasion of Iraq in 2003, and the phenomenon of mass migration, which largely came after the Iraq war but multiplied after the interventions in Syria and Libya in 2011, and for which the United States and the European Union bear full responsibility.

Overnight, the world passed from greed to fear – the two motors of historical change in the view of many historians.

And this is brings us to Mr. Trump. From the above historical excursion, it is easy to understand how he is simply the product of American reality.

Globalisation, initially an American instrument of supremacy, has meant that everyone can use the market to compete, with China the most obvious example. Under globalisation, many new emerging markets entered the scene, from Latin America to Asia. The United States, along with Europe, have become the victims of the globalisation which both perceived as an elite-led phenomenon.

Let us not forget that, after the collapse of the Berlin Wall, ideologies were thrown by the wayside. Politics became mere administrative competition, devoid of vision and values. Corruption increased, citizens stopped participating, political parties became self-referential, politicians turned into a professional caste, and elite global finance became isolated in fiscal paradises.

Young people looked forward to a future of unemployment or, at best temporary jobs, at the same time as they watched over four trillion dollars being spent in a few years to save the banking system.

The clarion call from those in power was, by and large, let us go back to yesterday, but to an even better yesterday – against any law of history. Then came Brexit and Trump.

We are now witnessing the conclusion of Pax Americana and the return to a nationalist and isolationist America. It will take some time for Trump voters to realise that what he is doing does not match his promises, that the measures he is putting in place favour the financial and economic elites and not their interests.

We are now facing a series of real questions.

Will the ideologue who helped Trump be elected – Stephen Bannon, chief executive officer of Trump’s presidential campaign – have the time to destroy the world both have inherited Will the world will be able to establish a world order without the United States at its centre? How many of the values that built modern democracy will be able to survive and become the bases for global governance?

A new international order cannot be built without common values, just on nationalism and xenophobia.

Bannon is organising a new international alliance of populists, xenophobes and nationalists – made up of thee likes of Nicholas Farage (United Kingdom), Matteo Salvini and Beppe Grillo (Italy), Marine Le Pen (France) and Geert Wilders (Netherlands) – with Washington as their point of reference.

After the elections in the Netherlands, France and Germany this year, will know how this alliance will fare, but one thing is clear – if, beyond its national agenda, the Trump administration succeeds in creating a new international order based on illiberal democracy, we should start to worry because war will not be far away.

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The Planned US Border Tax Would Most Likely Violate WTO Rules – Part 2http://www.ipsnews.net/2017/02/the-planned-us-border-tax-would-most-likely-violate-wto-rules-part-2/?utm_source=rss&utm_medium=rss&utm_campaign=the-planned-us-border-tax-would-most-likely-violate-wto-rules-part-2 http://www.ipsnews.net/2017/02/the-planned-us-border-tax-would-most-likely-violate-wto-rules-part-2/#respond Fri, 17 Feb 2017 15:52:20 +0000 Martin Khor http://www.ipsnews.net/?p=148999 Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva.

The post The Planned US Border Tax Would Most Likely Violate WTO Rules – Part 2 appeared first on Inter Press Service.

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The tax on US imports, without the same being applied to US-made products, discriminates against foreign products, and US exports being exempted from taxes is tantamount to being an export subsidy. How will this be taken at the WTO, the guardian of the multilateral trading system? Credit: Amantha Perera/IPS

The tax on US imports, without the same being applied to US-made products, discriminates against foreign products, and US exports being exempted from taxes is tantamount to being an export subsidy. How will this be taken at the WTO, the guardian of the multilateral trading system? Credit: Amantha Perera/IPS

By Martin Khor
PENANG, Feb 17 2017 (IPS)

As American lawmakers and the Trump administration prepare the ground for introducing a border adjustment tax, many controversial issues have emerged, including whether they go against the rules of the World Trade Organisation (WTO).

The border tax is part of the overhaul of the US corporate tax system proposed by Republican Congress leaders and appears to have the support of President Donald Trump.

If adopted, the tax measure is sure to attract the opposition of the United States’ trading partners, as their exports to the US will have the equivalent of a 20% tax imposed on them, whereas the exports from the US will be exempted from a 20% corporate tax.

The tax on US imports, without the same being applied to US-made products, discriminates against foreign products, and US exports being exempted from taxes is tantamount to being an export subsidy.

How will this be taken at the WTO, the guardian of the multilateral trading system?

US Congressman Kevin Brady, chairman of the House Ways and Means Committee, and the plan’s main advocate, is convinced the plan is WTO-consistent, but has yet to explain why.

On the other hand, many trade and legal experts think the plan violates the principles and rules of the WTO, although they caution that a final opinion is possible only when the language of the law is known.

Their general view is as follows: Firstly, the inability to deduct import expenses from a company’s tax (while allowing deductions for locally sourced products and services and wages) discriminates against imports vis-à-vis domestic products, and violates the national treatment principle of the WTO and the rules of the General Agreement on Tariffs and Trade (GATT) which specify that imports must be treated no less favourably than similar locally produced goods.

Secondly, the exemption of export revenues from the taxable income would be most likely assessed as a prohibited export subsidy under the WTO’s subsidies agreement.

The renowned international trade expert, Bhagirath Lal Das, says that there are two separate issues to be considered:  the differential treatment of domestic and imported materials, and the differential tax treatment of income based on whether the product is domestically consumed or exported.

Martin Khor

Martin Khor

Says Das:   “It appears that the proposal is to deduct the cost of domestic input (product) from a company’s income while computing the tax, whereas there is no such deduction if a like imported input is used in the production.

“If this be the case, such a provision will clearly violate the principle of national treatment contained in Article III of the GATT 1994.”     Under that article, imported products must be accorded treatment no less favourable than that given to similar domestic products in respect of laws and regulations.

Added Das:  “If the use of the domestic product results in tax reduction whereas the use of the like imported product does not get similar treatment, clearly the imported product will get “less favourable” treatment. And that will violate the principle of national treatment, and it can be successfully challenged in the WTO on this ground.”

On the second issue, the proposal is to differentiate between the earning from domestic sale and that from export in the matter of taxation in respect of a product.

Commented Das:  “Here it would appear that the exemption of the tax is conditional on export. This practice will clearly qualify for being categorised as export subsidy which is prohibited under Article 3 of the WTO’s Subsidy Agreement.”

Das cites a case of an American company, the Domestic International Sales Corporation (DISC).  A portion of its profit which was engaged in export was tax free.  The EEC, the predecessor of EC, raised a dispute in the GATT in 1973. The matter was delayed for a long time until in 1999 a panel at the WTO ruled that the US practice was in fact an export subsidy and was prohibited.

“This case may not be exactly the same as the currently anticipated proposal, but it does point to the fallibility of providing government benefit contingent on export,” says Das.

Das was formerly Chairman of the General Council of GATT,  Indian Ambassador to GATT, and subsequently Director of Trade in the UN Conference on Trade and Development, and has written many books on the WTO and its agreements.

According to another eminent expert on the WTO, Chakravarthi Raghavan, whether the US law is considered “legal” depends on the language of the law and its actual effects.

“There is little doubt that the “pith and substance” of the Republican border tax proposal or ideas will be in violation of Articles II and III of GATT and Article 3.1 of the Subsidies Agreement.”

Raghavan, Chief Editor Emeritus of the South-North Development Monitor, followed and analysed the negotiations of the Uruguay Round and of the WTO on a daily basis ever since.

There are many shortcomings with the WTO dispute system. Few countries have the courage or financial resources to take up cases against the US.
Countries can challenge the US at the WTO and if they succeed the US has to change its law or face retaliatory action.  The winning party can block US exports to it equivalent in value to the loss of its exports to the US.

However, there are many shortcomings with the WTO dispute system.  Few countries have the courage or financial resources to take up cases against the US.

If some countries do take up cases, it takes as long as three to four years for a case in the WTO to wind its way through panel hearings and to a final verdict at the Appellate Body, and for the winning Party to get the go-ahead to take retaliatory action.  During that period, the US can continue with its laws and practices.

If the US loses, it need not pay any compensation to the successful Party for having suffered losses.   Moreover, in the past, when it loses cases at the WTO, the US has typically not complied with the orders made on it.  Even if it does comply, it needs to do so only in respect of the Parties that brought the action against it; it need not do so for other Parties.

If it does not comply, the complainant countries are allowed to take retaliatory action by blocking US goods and services from entering their markets up to an amount equivalent to the losses they have suffered.  This retaliatory action can only be taken by those countries that successfully took up the cases.

Thus, the US may decide to implement the border adjustment taxes and wait two to four years before a final judgment is made at the WTO, and for retaliatory action to be allowed by the WTO.   It can meanwhile reap the benefits of its border tax measures.

Another possibility is that Trump may make good his threat to leave the WTO, if important cases go against it.  That would cause a major crisis for the WTO and for international trade.

With regard to the WTO process, Raghavan said:   “Apart from the difficulties of taking up cases in the WTO, including costs, the lengthy process and no retrospective damages when any WTO member, raises a dispute, the onus of proving the violation is on them.

“To the best of my knowledge, in none of the rulings against US, requiring changes in law or regulations, has the US implemented them, and even major trading partners have been chary of taking retaliation action.

“Countries that are affected, could act to unilaterally deny the US some rights; but they cannot justify that this is retaliation, until there is a ruling in their favour.”

American advocates of the border adjustment tax plan have claimed that it is similar to a value added tax (VAT) which is considered by the WTO to be a legitimate measure;  and thus that the border adjustment tax would also be compatible with the WTO.

Almost all major developed countries have instituted the VAT system, with the notable exception of the US.  The Republican Congress leaders and Trump have argued  that this places the US at a disadvantage in its trade relations because the VAT system imposes a tax on imports, whilst allowing companies to obtain a refund for taxes paid on their exports.

They claim the border tax would correct this disadvantage that the WTO should similarly recognise the border tax as legitimate.

However, several well-known economists and lawyers are of the opinion that there are important differences between the VAT and the border tax.

There are two parts of their arguments.  Firstly, the VAT imposes taxes on both imports and locally produced goods and services and therefore does not discriminate against imports;  whereas the border tax system imposes a tax on imports whilst excluding domestic inputs and wages from tax, which therefore discriminates against imports.  Secondly, the VAT system does not subsidise exports, whereas the border tax system does.

In a 1990 paper, Martin Feldstein and Paul Krugman found that the VAT does not improved the trade competitiveness of countries using it.  They said:  “The point that VATs do not inherently affect international trade flows has been well recognised in the international tax literature…A VAT Is not a protectionist measure.”

Krugman, in a recent blog, reiterated that “a VAT does not give a nation any kind of competitive advantage, period.”  But a destination-based cash flow tax like the border adjustment tax has a subsidy element that “would lead to expanded domestic production.”

In another paper, Reeven Avi-Yonah and Kimberly Clausing  from Michigan Law School and Reed College respectively analyse the difference between the VAT and the proposed border adjustment tax and why the former is WTO-consistent whereas the latter would violate WTO rules.

They said:   “U.S. trading partners are likely to be hurt in several ways. The effects of the wage deduction render the corporate cashflow tax different from a VAT, and these differences have the net effect of increasing the incentive to operate in the United States

“In addition, such a tax system would exacerbate the profit shifting problems of our trading partners, since the United States will appear like a tax haven from their perspective.”

Economists also agree that the border tax will raise the value of the US dollar but there is a debate as to how long this will take and by how much it will rise. If the dollar appreciation is significant, this may have an adverse effect on countries that hold debt in US dollars, as they would have to pay out more in their domestic currency to service their loans. This would include many developing countries with substantial dollar-denominated debts of the public or private sectors, and some of them may tip into new debt and financial crises.    According to former US Treasury Secretary Lawrence Summers:  “Proponents of the plan anticipate a rise in the dollar by an amount equal to the 15 to 20 per cent tax rate.  This would do huge damage to dollar debtors all over the world and provoke financial crises in some emerging markets.”           

This article is the second in a two-part series on the border adjustment tax, which would have the effect of taxing imports of goods and services that enter the United States, while also providing a subsidy for US exports which would be exempted from the tax. You can find Part 1 here

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Beware of the New US Protectionist Plan, the Border Adjustment Tax – Part 1http://www.ipsnews.net/2017/02/beware-of-the-new-us-protectionist-plan-the-border-adjustment-tax/?utm_source=rss&utm_medium=rss&utm_campaign=beware-of-the-new-us-protectionist-plan-the-border-adjustment-tax http://www.ipsnews.net/2017/02/beware-of-the-new-us-protectionist-plan-the-border-adjustment-tax/#comments Fri, 17 Feb 2017 12:37:51 +0000 Martin Khor http://www.ipsnews.net/?p=148990 Martin Khor is Executive Director of the South Centre, a think tank for developing countries, based in Geneva.

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For the time being the much anticipated US-China trade war is off the radar. But it is by no means off altogether. Credit: Bigstock

For the time being the much anticipated US-China trade war is off the radar. But it is by no means off altogether. Credit: Bigstock

By Martin Khor
PENANG, Feb 17 2017 (IPS)

A new and deadly form of protectionism is being considered by Congress leaders and the President of the United States that could have devastating effect on the exports and investments of American trading partners, especially the developing countries.

The plan, known as a border adjustment tax, would have the effect of taxing imports of goods and services that enter the United States, while also providing a subsidy for US exports which would be exempted from the tax.

The aim is to improve the competitiveness of US products, drastically reduce the country’s imports while promoting its exports, and thus reduce the huge US trade deficit.

On the other hand, if adopted, it would significantly reduce the competitiveness or viability of goods and services of countries presently exporting to the US.  The prices of these exports will have to rise due to the tax effect, depressing their demand and in some cases make them unsalable.

And companies from the US or other countries that have invested in developing countries because of cheaper costs and then export their products to the US will be adversely affected because of the new US import tax.

Some firms will relocate to the US.   Potential investors will be discouraged from opening new factories in the developing countries.  In fact this is one of the main aims of the plan – to get companies return to the US.

The plan is a key part of the America First strategy of US President Donald Trump, with his subsidiary policies of “Buy American” and “Hire Americans.”

The border adjustment tax is part of a tax reform blueprint “A Better Way” whose chief advocates are Republican leaders Paul Ryan, speaker of the House of Representatives and Kevin Brady, Chairman of the House Ways and Means Committee.

President Trump originally called the plan “too complicated” but is now considering it seriously.  In a recent address to congressional Republicans, Trump said:  “We’re working on a tax reform bill that will reduce our trade deficits, increase American exports and will generate revenue from Mexico that will pay for the (border) wall.”

Martin Khor

Martin Khor

The proposal has however generated a tremendous controversy in the US, with opposition coming from some Congress members (including Republicans), many economists and American companies whose business is import-intensive.

It however has the strong support of Republican Congress leaders and some version of it could be tabled as a bill.

Trump had earlier threatened to impose high tariffs on imports from countries having a trade surplus with the US, especially China and Mexico.

This might be a more simple measure, but is so blatantly protectionist that it would be sure to trigger swift retaliation, and would also almost certainly be found to violate the rules of the World Trade Organisation (WTO).

The tax adjustment plan may have a similar effect in discouraging imports and moreover would promote exports, but it is more complex and thus difficult to understand.

The advocates hope that because of the complexity and confusion, the measure may not attract such a strong response from US trading partners.  Moreover they claim it is permitted by the WTO are presumably willing to put it to the test.

In the tax reform plan, the corporate tax rate would be reduced from the present 35% to 20%.   The border adjustment aspect of the plan has two main components. Firstly, the expenses of a company on imported goods and services can no longer be deducted from a company’s taxable income.  Wages and domestically produced inputs purchased by the company can be deducted.

The effect is that a 20% tax would be applied to the companies’ imports.

This would especially hit companies that rely on imports such as automobiles, electronic products, clothing, toys and the retail and oil refining sectors.

The Wall Street Journal gives the example of a firm with a revenue of $10,000 and with $5,000 imports, $2 000 wage costs and $3,000 profit.  Under the present system, where the $5,000 imports plus the $2,000 wages can be deducted, and with a 35% tax rate, the company’s taxable total would be $3,000, tax would be $1,050 and after-tax profit would be $1,950.

Under the new plan, the $5,000 imports cannot be deducted and would form part of the new taxable total of $8,000.  With a 20% tax rate, the tax would be $1,600 and the after-tax profit $1,400.

Given this scenario, if the company wants to retain his profit margin, it would have to raise its price and revenue significantly, but this in turn would reduce the volume of demand for the imported goods.

For firms that are more import-dependent, or with lower profit margin, the situation may be even more dire, as some may not be financially viable anymore.

Take the example of a company with $10,000 revenue, $7,000 imports, $2,000 wages and $1,000 profit.   With the new plan, the taxable total is $8,000 and the tax is $1,600, so after tax it has a loss of $600 instead of a profit of $1,000.

The company, to stay alive, would have to raise its prices very significantly, but that might make its imported product much less competitive.  In the worst case, it would close, and the imports would cease.

The economist Larry Summers, a former Treasury Secretary, gives a similar example of a retailer who imports goods for 60 cents, incurs 30 cents in labour and interest costs and then earns a 5 cent margin.  With 20% tax, and no ability to deduct import or interest costs, the taxes will substantially exceed 100% of profits even if there is some offset from a stronger dollar.

On the other hand, the new plan allows a firm to deduct revenue from its exports from its taxable income.  This would allow the firm to increase its after-tax profit.

The Wall Street Journal article gives the example of a firm which presently has export sales of $10,000, cost of inputs $5,000, wages $2,000 and profit $3,000.  With the 35% corporate tax rate, the tax is $1,050 and after-tax profit is $1,950.

Perhaps the most vulnerable country is Mexico, where many factories were established to take advantage of tariff-free entry to the US market under the North American Free Trade Agreement. President Trump has warned American as well as German and Japanese auto companies that if they make new investments in Mexico, their products would face high taxes or tariffs on entry, and called on them to invest in the US instead.
Under the new plan, the export sales of $10,000 is exempt from tax, so the company has zero tax.  Its profit after tax is thus $3,000.   The company can cut its export prices, demand for its product increases and the company can expand its sales and export revenues.

At the macro level, with imports reduced and exports increased, the US can cut its trade deficit, which is a major aim of the plan.

On the other hand, the US is a major export market for many developing countries, so the tax plan if implemented will have serious adverse effects on them.

The countries range from China and Mexico, which sell hundreds of billions of dollars of manufactured products to the US; to Brazil and Argentina which are major agricultural exporters; to Malaysia, Indonesia and Vietnam which sell commodities like palm oil and timber and also manufactured goods such as electronic products and components and textiles, Arab countries that export oil, and African countries that export oil, minerals and other commodities, and countries like India which provide services such as call services and accountancy services to US companies.

American industrial companies are also investors in many developing countries. The tax plan if implemented would reduce the incentives for some of these companies to be located abroad as the low-cost advantage of the foreign countries would be offset by the inability of the parent company to claim tax deductions for the goods imported from their subsidiary companies abroad.

Perhaps the most vulnerable country is Mexico, where many factories were established to take advantage of tariff-free entry to the US market under the North American Free Trade Agreement.  President Trump has warned American as well as German and Japanese auto companies that if they make new investments in Mexico, their products would face high taxes or tariffs on entry, and called on them to invest in the US instead.

After the implications of the border adjustment plan are understood, it is bound to generate concern and outrage from the United States’ trading partners, in both South and North, if implemented.  They can be expected to consider immediate retaliatory measures.

A former undersecretary for international business negotiations of Mexico (2000-2006), Luis de la Calle, said  in a media interview:  “If the US wants to move to this new border tax approach, Mexico and Canada would have to do the same….We have to prepare for that scenario.”

In any case, it can be expected that countries will take up complaints against the US at the WTO.   The proponents claim the tax plan will be designed in a way that is compatible with the WTO rules.

But many international trade law experts believe the tax plan’s measures will violate several of the WTO’s principles and agreements, and that the US will lose if other countries take up cases against it in the WTO dispute settlement system.

This prospect may however not decisively deter Trump from championing the Republicans’ tax blueprint and signing it into law, should Congress decide to adopt it.

The President and some of his trade advisors have criticised the WTO’s rules and have mentioned the option of leaving the organisation if it prevents or impedes the new America First strategy from being implemented.  If the US leaves the WTO, it would of course cause a major crisis for international trade and trade relations.

There are many critics of the plan.  Lawrence Summers, a former US Treasury Secretary, warns that the tax change will worsen inequality, place punitive burdens on import-intensive sectors and companies, and harm the global economy.

The tax plan is expected to cause a 15-20% rise in the US dollar.  “This would do huge damage to dollar debtors all over the world and provoke financial crises in some emerging markets,” according to Summers.

While export-oriented US companies are supporters, other US companies including giants Walmart and Apple are strongly against the border tax plan, and an influential Republican, Steven Forbes, owner of Forbes magazine, has called the plan “insane.”

It is not yet clear what Trump’s final position will be. If he finds it too difficult to use the proposed border tax, because of the effect on some American companies and sectors, he might opt for the simpler use of tariffs.

In any case, whether tariffs or border taxes, policy makers and companies and employees especially in developing countries should pay attention to the trade policies being cooked up in Washington, and to voice their opinions.

Otherwise they may wake up to a world where their products are blocked from the US, the world’s largest market, and where the companies that were once so happy to make money in their countries suddenly pack up and return home.

This article is the first in a two-part series on the border adjustment tax, which would have the effect of taxing imports of goods and services that enter the United States, while also providing a subsidy for US exports which would be exempted from the tax. You can find Part 2 here

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Corruption Brings Down an Empire: Odebrecht in Brazilhttp://www.ipsnews.net/2017/02/corruption-brings-down-an-empire-odebrecht-in-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=corruption-brings-down-an-empire-odebrecht-in-brazil http://www.ipsnews.net/2017/02/corruption-brings-down-an-empire-odebrecht-in-brazil/#respond Thu, 16 Feb 2017 00:29:24 +0000 Mario Osava http://www.ipsnews.net/?p=148966 People in Brazil have been overwhelmed by the flood of news stories about the huge web of corruption woven by the country’s biggest construction company, Odebrecht, which is active in dozens of fields and countries. The business empire built by three generations of the Odebrecht family is falling apart after three years of investigation by […]

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The American Airlines Arena, a stadium and entertainment complex in Miami, Florida, is one of the many projects carried out by Odebrecht in the United States, where prosecutors have begun to produce figures reflecting the scope of the company’s corruption. Credit: Odebrecht

By Mario Osava
RIO DE JANEIRO, Feb 16 2017 (IPS)

People in Brazil have been overwhelmed by the flood of news stories about the huge web of corruption woven by the country’s biggest construction company, Odebrecht, which is active in dozens of fields and countries.

The business empire built by three generations of the Odebrecht family is falling apart after three years of investigation by the Lava Jato (car wash) operation launched by the Federal Public Prosecutor’s office in Brazil, which is investigating the corruption that diverted millions of dollars in bribes in exchange for major public works contracts from the state-run oil giant Petrobras.The business group had created a specialised bribe department. According to U.S. justice authorities, every dollar “invested” in bribes produced 12 dollars in contracts.

Marcelo Odebrecht, who headed the company from 2008 to 2015, was arrested in June 2015 and was initially sentenced to 19 years in prison.

In October he and the company reached plea bargain deals to cooperate with the investigation. A total of 77 former and present Odebrecht executives provided over 900 sworn statements to Lava Jato prosecutors, causing a political earthquake in Brazil and throughout Latin America.

In December, the U.S. Justice Department revealed that Odebrecht allegedly spent 1.04 billion dollars in bribes to politicians and government officials in ten Latin American and two African countries, including Brazil, which accounted for 57.7 per cent of the total.

The United States is carrying out its own investigation, which could end in criminal convictions, since several Odebrecht subsidiaries, such as the petrochemical company Braskem, operate there, and their shares are traded on the New York Stock Exchange.

That is also happening in the case of Petrobras, implicated in the corruption scandal and under investigation at the initiative of shareholders in the U.S.

The U.S. and Switzerland, where banks were allegedly used to funnel bribes or launder money, signed cooperation agreements with legal authorities in Brazil, as part of the ongoing offensive against corruption in Latin America’s giant.

The impacts are overwhelming. In Brazil, the revelations about Odebrecht are expected to provoke a tsunami in the political system. Two hundred parliamentarians and government officials may have received bribes, including senior members of the current administration and legislature.

The business group had created a specialised bribe department. According to U.S. justice authorities, every dollar “invested” in bribes produced 12 dollars in contracts.

That estimate is based on more than 100 projects carried out or in progress in Argentina, Brazil, Colombia, Dominican Republic, Ecuador, Guatemala, Mexico, Panama, Peru and Venezuela, plus Angola and Mozambique in Africa.

Part of the Caracas valley seen from the San Agustín Metrocable, one of the many works assigned to Odebrecht in Venezuela during the government of Hugo Chávez (1999-2013), when the Brazilian company became the biggest construction firm in the country. Credit: Raúl Límaco/IPS

Part of the Caracas valley seen from the San Agustín Metrocable, one of the many works assigned to Odebrecht in Venezuela during the government of Hugo Chávez (1999-2013), when the Brazilian company became the biggest construction firm in the country. Credit: Raúl Límaco/IPS

The arrest warrant issued by a court in Peru against former Peruvian president Alejandro Toledo (2001-2006), who has been living in the United States, and allegations implicating current Colombian President Juan Manuel Santos and Panamanian President Juan Carlos Varela, are just the tip of the iceberg.

What was revealed by Odebrecht executives and former executives, as well as former directors of different departments, such as external affairs, infrastructure, industrial engineering or logistics, has not yet been made public.

New figures involving alleged bribes are expected to come out over the next few months, added to those already disclosed in the United States, including 599 million dollars distributed in Brazil, 98 million in Venezuela, 92 million in the Dominican Republic, 59 million in Panama and 50 million in Angola.

In Peru the total revealed so far is “only” 29 million dollars since 2005. The sum is small, considering that for the Southern Peru pipeline – still under construction – alone, the projected investments amount to seven billion dollars. The Peruvian government has decided to terminate the contract with Odebrecht for the project.

Besides Odebrecht, the Inter-Oceanic Highway, which runs across southern Peru from the Brazilian border to Pacific Ocean ports, is being built by three other Brazilian construction firms – Camargo Correa, Andrade Gutierrez and Queiroz Galvão – which are also under investigation for suspicion of corruption.

During the presidency of Alan Garcia (2006-2011), Peru and Brazil signed an agreement for the construction of five large hydropower plants in Peru, which was cancelled by his successor, Ollanta Humala (2011-2016), who, however, is suspected of receiving three million dollars from Brazil for his election campaign.

Odebrecht, which has a concession to manage Chaglla, the third biggest hydroelectric plant in Peru, with a capacity of 462 MW, was to be the main construction company in charge of building the new plants.

The growing wave of local and industry scandals sheds light on the reach of Odrebrecht’s tentacles. Braskem is accused of distributing 250 million dollars in bribes to sustain its leadership position in the Americas in the production of thermoplastic resins, with 36 plants spread across Brazil, Mexico, the United States, as well as Germany.

The empire, born in 1944 as a simple construction company, started diversifying in the last half century into activities as diverse as the sugarcane business, the development of military technologies or oil services, logistics or shipbuilding companies.

In the early 1970s the group built the Petrobras headquarters in Rio de Janeiro, sealing a connection that led to the current disaster which destroyed the reputation of the company that was so proud of its “Entrepreneurial Technology”, a set of ethical and operational business principles to which its fast expansion was attributed.

But Odebrecht’s success could actually be attributed to a strategic vision and a modus operandi that proved successful until the Lava Jato operation. Part of its methods included being “friends with the king”.

Angola is the best example. The current chairman of the company’s board of directors, Emilio Odebrecht, son of founder Norberto Odebrecht, meets every year with Angolan President José Eduardo dos Santos in Luanda, to discuss projects for the country.

Officially, what they do is assess the projects carried out by the company and define new goals.

The explanation given for the special treatment received by Odebrecht is that it has such a strong presence in vital infrastructure works in the country in areas such as reconstruction, energy, water, highways and urbanisation.

Odebrecht has great prestige in Angola, since it built the Capanda hydroelectric plant on the Kwanza River between 1984 and 2007, facing delays and risks due to the 1975-2002 civil war. Now it is building the biggest plant in Angola, Lauca, also on the Kwanza River, with a capacity to produce 2,067 MW.

The conglomerate is ubiquitous in the country, managing the Belas Mall – an upscale shopping centre in the south of Luanda, Angola’s capital – implementing the water plan to supply the capital, developing the first part of the industrial district in the outskirts of Luanda, building housing developments and playing a key role in saving the national sugarcane industry.

In Cuba it also led the strategic project of expanding the Mariel Port and managing a sugar plant, to help boost the recovery of this ailing sector of the Caribbean nation’s economy.

In other countries, such as Panama, Peru and Venezuela, the number of works and projects in the hands of the Brazilian conglomerate is impressive, in fields as diverse as urban transport, roads and bridges, ports, power plants, fossil fuels, and even agriculture.

But that cycle of expansion came to an end. Heavily indebted, with a plummeting turnover and no access to loans, not even from Brazilian development banks, and carrying the stigma of corruption, the conglomerate is trying to cooperate with justice authorities in the involved countries, seeking agreements to allow it to keep operating and eventually recover.

Now it remains to be discovered whether Odebrecht is “too big to go bankrupt,” as was said of some banks at the start of the global crisis that broke out in 2008.

The post Corruption Brings Down an Empire: Odebrecht in Brazil appeared first on Inter Press Service.

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Mistrust Hindering Global Solutions, says Secretary Generalhttp://www.ipsnews.net/2017/02/mistrust-hindering-global-solutions-says-secretary-general/?utm_source=rss&utm_medium=rss&utm_campaign=mistrust-hindering-global-solutions-says-secretary-general http://www.ipsnews.net/2017/02/mistrust-hindering-global-solutions-says-secretary-general/#respond Mon, 13 Feb 2017 23:55:31 +0000 Tharanga Yakupitiyage http://www.ipsnews.net/?p=148935 The global lack of confidence and trust is undermining the ability to solve the world’s complex problems, said UN Secretary-General during an international conference. The 5th Annual World Government Summit (WGS), hosted by Dubai from February 12-14, has brought together over 4000 participants from more than 130 countries. Speaking at the second day of the […]

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By Tharanga Yakupitiyage
UNITED NATIONS, Feb 13 2017 (IPS)

The global lack of confidence and trust is undermining the ability to solve the world’s complex problems, said UN Secretary-General during an international conference.

UN Secretary-General António Guterres. Credit: UN Photo

UN Secretary-General António Guterres. Credit: UN Photo

The 5th Annual World Government Summit (WGS), hosted by Dubai from February 12-14, has brought together over 4000 participants from more than 130 countries.

Speaking at the second day of the conference, Secretary-General Antonio Guterres noted the growing lack of confidence in institutions, as many people feel left behind from progress.

“It is clear that globalisation has been an enormous progress…but globalisation had its losers,” Guterres said, pointing to the example of frustrated youth in countries unable to find jobs or “hope.”

“Lots of people [feel] they were left behind and that the political establishments of their countries have not taken care of them,” he continued.

The former High Commissioner for Refugees cited the migration crisis in Europe, stating that countries’ inability to implement a fair and coordinated response spurred a sense of abandonment, fear and frustration among the public.

“This is the best ground for populists, for xenophobes, for those that develop forms of anti-Muslim hatred, or anti-Semitism…to play a role in our societies. And I think that it is not enough to condemn xenophobia, it is not enough to condemn populism, I think we need to be able to engage in addressing the root causes that lead to the fact that to be populist is so simple in today’s world,” Guterres told delegates, urging for reform to reconcile people with political institutions and to empower citizens and young people.

He also noted that the deep mistrust between countries is contributing to the multiplication of conflicts and the difficulties in solving them.

Most recently, the U.S. blocked the Secretary General’s appointment of former Palestinian Prime Minister Salam Fayyad as the new UN peace envoy in Libya after U.S. Ambassador to the UN Nikki Haley said the UN has been “unfairly biased” for too long in favor of the Palestinian Authority.

Though he highlighted the need for impartiality, Guterres said that there was no valid reason to have rejected the nomination.

“[Fayyad] is the right person for the right job at the right moment…he has a competence that nobody denies and Libya requires the kind of capacity that he has and I think it’s a loss for the Libyan peace process and for the Libyan people that I am not able to appoint him,” he stated, adding that bringing an end to the conflict in Libya is in everybody’s interest.

When moderator and CNN anchor Becky Anderson asked about the new U.S. administration’s “America First” principle, Guterres noted the need for the UN to respect its values but also stressed the importance of multilateral solutions to global problems.

“In a world in which everything is global, in which the problems are global – from climate change to the movement of people – there is no way countries can do it by themselves. We need global responses, and global responses need multilateral institutions able to play their role,” Guterres stated.

“That is where the other gap of confidence becomes extremely important,” he continued, proposing reforms in the UN system to help build trust in such institutions.

Despite 2016 being a “chaotic” year, Guterres followed after French diplomat Jean Monnet in expressing his hope for the future.

“I’m not optimistic, I’m not pessimistic, I am just determined,” he concluded.

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