Inter Press Service » Globalisation News and Views from the Global South Fri, 27 Nov 2015 08:53:55 +0000 en-US hourly 1 Leading Powers to Double Renewable Energy Supply by 2030 Thu, 12 Nov 2015 20:45:29 +0000 Diego Arguedas Ortiz China has become the world leader in wind energy, although it is still surpassed by many European countries in terms of per capita wind power generation. Credit: Asian Development Bank

China has become the world leader in wind energy, although it is still surpassed by many European countries in terms of per capita wind power generation. Credit: Asian Development Bank

By Diego Arguedas Ortiz
SAN JOSÉ, Nov 12 2015 (IPS)

Eight of the world’s leading economies will double their renewable energy supply by 2030 if they live up to their pledges to contribute to curbing global warming, which will be included in the new climate treaty.

A study published this month by the World Resources Institute (WRI) analysed the Intended Nationally Determined Contributions (INDCs) of the 10 largest greenhouse gas emitters to determine how much they will clean up their energy mix in the next 15 years.

Eight of the 10 – Brazil, China, the European Union, India, Indonesia, Japan, Mexico and the United States – will double their cumulative clean energy supply by 2030. The increase is equivalent to current energy demand in India, the world’s second-most populous nation.

“We looked at renewable energy because it’s a leading indicator for the global transition to a low-carbon economy. We won’t get deep emissions reductions without it,” WRI researcher Thomas Damassa, one of the report’s authors, told IPS.

More than 150 countries have presented their INDCs, most of which commit to actions between 2020 and 2030. They will be incorporated into the new universal binding treaty to be approved at the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC), to be held Nov. 30 to Dec. 11 in Paris.

Since energy production is the main source of greenhouse gases (GHG), accounting for around 65 percent of emissions worldwide, efforts to curb emissions are essential and must lie at the heart of the new treaty, especially when it comes to the biggest emitters, experts say.

Of the 10 largest emitters, Russia and Canada were not included in the study because they have not announced post-2020 renewable energy targets.

Currently, one-fifth of global demand for electric power is covered by renewable sources, according to a report by the Renewable Energy Policy Network for the 21st Century (REN21), and their cost is swiftly going down. Hydroelectricity still makes up 61 percent of all renewable energy.

But fossil fuels continue to dominate the global energy supply and power generation, making up 78.3 percent and 77.2 percent, respectively, according to REN21.

Studies indicate that in countries like India, where there are serious challenges in terms of access to energy, wind power is now as cheap as coal, and solar power will reach that level by 2019.

“The INDCs collectively send an important financial signal globally that renewables are a priority in the next two decades and a viable, pragmatic solution to the energy challenges countries are facing,” said Damassa.

Coordination between industrialised and emerging countries is crucial, especially the powerful BRICS (Brazil, Russia, India, China and South Africa) bloc.

That is because industrialised nations are historically responsible for GHG emissions but the BRICS and other emerging countries now produce a majority of global emissions.

Part of what will be the Belo Monte hydroelectric plant’s turbine room in the northern Brazilian state of Pará. The dam will be the third-largest in the world when it is completed in 2019. Climate change experts are worried about the impact of the megaproject in the vulnerable Amazon rainforest. Credit: Mario Osava/IPS

Part of what will be the Belo Monte hydroelectric plant’s turbine room in the northern Brazilian state of Pará. The dam will be the third-largest in the world when it is completed in 2019. Climate change experts are worried about the impact of the megaproject in the vulnerable Amazon rainforest. Credit: Mario Osava/IPS

China is the leading emitter of GHG emissions and the biggest consumer of energy. But it is also the largest producer of renewable energy, accounting for 32 percent of the world’s wind power production and 27 percent of hydroelectricity, followed in the latter case by Brazil, which produces 8.5 percent of the world’s hydropower.

The Asian giant aims to increase the proportion of non-fossil fuel sources by 20 percent by 2030. The country currently uses coal for 65 percent of its energy, while mega-dams represent just 15 percent.

In the first meeting of energy ministers of the Group of 20 industrialised and emerging nations, held Oct. 5 in Istanbul, the officials acknowledged the importance of renewable sources and their long-term potential and pledged to continue investing in and researching clean energy.

Of the 127 INDCs presented as of late October – the EU presented the commitments of its 28 countries as a bloc – 80 percent made clean energy a priority.

“They certainly help but clearly countries still need to go farther, faster – and in sectors outside of energy as well – to drive emissions down to the level that is needed,” said Damassa.

The pledges made so far would keep global warming down to a 2.7 degree Celsius increase, according to the UNFCCC secretariat, although other studies are more pessimistic, putting the rise at 3.5 degrees.

To avoid irreversible effects for the planet, global temperatures must not rise more than two degrees C above preindustrial levels, although even with that increase, severe effects would be felt in different ecosystems.

Because of that it will be essential to reassess the national pledges during the climate talks in Paris, and establish a clear mechanism for ongoing follow-up of the actions taken by each country.

“I see all of the BASIC (the climate negotiating group made up of Brazil, South Africa, India and China) pledges as ‘first offers’ that will have to be reassessed after the Paris deal is finalised,” Natalie Unterstell, the negotiator on behalf of Brazil at the UNFCCC, told IPS.

The expert, who is now a Louis Bacon Environmental Leadership Fellow at the John F. Kennedy School of Government at Harvard in the U.S., points to key differences between these four countries and Russia, the fifth member of BRICS.

She also explained that while these four countries agreed to reduce the proportion of fossil fuels in their energy mix, there are differences in how they aim to do so.

Adaptation is a large component in South Africa’s INDCs – a signal that the carbon-based economy understands the need to build a more resilient future. India is putting a strong emphasis on solar energy, and Brazil pledged to raise the share of renewable sources in its energy mix to 45 percent by 2030.

Brazil’s proposal is based partly on large hydropower dams, some of which are in socially and environmentally sensitive areas, like the Amazon rainforest.

Meanwhile, the actions that China takes can, by themselves, facilitate or complicate the talks. According to Untersell, the country “has a comparative advantage as it has committed itself to develop renewables technology and is delivering its promise.”

Ties between these emerging economies and the industrialised powers were strengthened over the last year by a series of bilateral accords that began to be reached in November 2014, with the announcement that China and the United States had agreed on joint actions in the areas of climate and energy.

“These agreements are good signals for the industry to transition (to a cleaner model). However, the private sector needs more than aspirational goals to base their operations,” said the expert.

But she said it was a good thing that the agreement between the two countries was based on actions on an internal level, because this shows concrete changes in the energy policies of both nations.

Besides the agreement with Washington, China has signed another with France, Brazil did the same with Germany, and India did so with the United States, in an effort by these countries to speed up their internal transition before COP21.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Refugee Crisis May Threaten Development Aid to World’s Poor Wed, 11 Nov 2015 21:52:23 +0000 Thalif Deen By Thalif Deen

As the spreading refugee crisis threatens to destabilize national budgets of donor nations in Western Europe, Secretary-General Ban Ki-moon Wednesday appealed to the international community not to forsake its longstanding commitment for development assistance to the world’s poorer nations.

Ban’s appeal comes two days after a UN pledging conference reported a “dramatic decline” in donor commitments: from 560 million dollars in 2014 to 77 million dollars in the most recent pledges, largely covering 2015.

Asked if the Secretary-General’s appeal was the result of the decline in commitments, UN Deputy Spokesman Farhan Haq told IPS: “It’s in response to many factors, including concerns expressed by some states about maintaining aid levels.”

The secretary-general said resources for one area should not come at the expense of another.

Redirecting critical funding away from development aid at this pivotal time could perpetuate challenges that the global community has committed to address, he warned.

“Reducing development assistance to finance the cost of refugee flows is counter-productive and will cause a vicious circle detrimental to health, education and opportunities for a better life at home for millions of vulnerable people in every corner of the world,” Ban declared.

At a summit meeting of political leaders from Europe and Africa in Malta Wednesday, the European Union (EU) was expected to announce plans to create a Special Trust Fund, initially estimated at 1.9 billion dollars, to address the financial problems arising out of the refugee crisis.

Since European countries are expected to boost this fund over the next few months, there are fears these contributions may be at the expense of development assistance.

According to figures released by the Paris-based Organisation for Economic Cooperation and Development (OECD), development aid flows were stable in 2014, after hitting an all-time high in 2013.

But aid to the poorest countries continued to fall, according to official data collected by the OECD Development Assistance Committee (DAC).

Net official development assistance (ODA) from DAC members totalled 135.2 billion dollars, with a record 135.1 billion dollars in 2013, though marking a 0.5% decline in real terms.

Net ODA as a share of gross national income was 0.29%, also on a par with 2013. ODA has increased by 66% in real terms since 2000, when the Millennium Development Goals were agreed, according to OECD.

The secretary-general said that with the world facing the largest crisis of forced displacement since the Second World War, the international community should meet this immense challenge without lessening its commitment to vitally needed official development assistance. (ODA)

He underscored the importance of fully funding both efforts to care for refugees and asylum seekers in host countries as well as longer-term development efforts.

The Secretary-General said he recognized the financial demands faced by host communities and partner governments as they seek to support the international response.

He expressed his “sincere gratitude to governments and their citizens for their generosity.”

Nick Hartmann, Director of the Partnerships Group at UN Development Programme (UNDP) told delegates Monday the important agreements that Member States had come to in 2015 called for increased policy support.

To deliver that, adequate and predictable resources were required.

He said core resources were the foundation of UNDP’s support to the poorest and most vulnerable.

UNDP, he pointed out, had responded to a range of crises over the past year and had ensured that 11.2 million people benefited from improved livelihoods. Almost a million jobs were created in 77 countries, with half of those reaching women.

“However, he said reduced contributions from many top partners and unfavourable exchange rate movements had caused a downward trend in funding.”

Hartmann said a number of partners faced overwhelming pressures, including the migrant crisis, he thanked those who had submitted pledges at Monday’s pledging conference.

The UNDP is described as the UN’s global development network covering 177 countries and territories.

The writer can be contacted at

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Central America Seeks Recognition of Its Vulnerability to Climate Change Fri, 30 Oct 2015 23:21:17 +0000 Diego Arguedas Ortiz In its national contribution, Costa Rica said the sector most vulnerable to climate change is road infrastructure. This highway, which connects San José with the Caribbean coast, and which crosses the central mountain chain, is closed several times a year due to landslides. Credit: Diego Arguedas Ortiz/IPS

In its national contribution, Costa Rica said the sector most vulnerable to climate change is road infrastructure. This highway, which connects San José with the Caribbean coast, and which crosses the central mountain chain, is closed several times a year due to landslides. Credit: Diego Arguedas Ortiz/IPS

By Diego Arguedas Ortiz
SAN JOSE, Oct 30 2015 (IPS)

For decades, the countries of Central America have borne the heavy impact of extreme climate phenomena like hurricanes and severe drought. Now, six of them are demanding that the entire planet recognise their climate vulnerability.

An initiative that has emerged from civil society in Central America wants the new binding universal climate treaty to acknowledge that the region is especially vulnerable to climate change – a distinction currently given to small island developing states (SIDS) and least developed countries (LDCs).

In the climate Oct. 19-23 talks in Bonn, Germany, the proposal found its way into the draft of the future Paris agreement. If it is approved, Central America could be given priority when it comes to the distribution of climate financing for adaptation measures – which would be crucial for the region.

“Civil society – and I would dare to say the governments – have been demanding this because it could give the region access to windows of financing, technology and capacity strengthening,” said Tania Guillén, climate change officer at Nicaragua’s Humboldt Centre.“Civil society – and I would dare to say the governments – have been demanding this because it could give the region access to windows of financing, technology and capacity strengthening.” -- Tania Guillén

These contributions, the expert told IPS, “should go towards the benefit of vulnerable communities” in this region. But for now, only SIDS and LDCs have a priority.

Semantic disputes have taken on great importance, a month before the start of the Nov. 30-Dec. 11 21st session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC) in Paris, where the new climate treaty is to be approved.

That is because the language used will form part of the foundations on which the legal bases of the agreement will be set.

Central America’s 48 million people live on the isthmus that separates the Pacific Ocean from the Caribbean Sea, along whose length stretches a mountain chain and an arid dry corridor.

Nearly half of the region’s inhabitants – 23 million, or 48 percent – live below the poverty line, according to official statistics.

The issue of climate vulnerability – the set of conditions that make a society or ecosystem more likely to be affected by extreme climate events – has been on Central America’s agenda for years, since Hurricane Mitch’s devastating passage through the region in 1998 forced a rethinking of risk management.

As part of this process, the Vulnerable Central America, United for Life Forum was born in 2009 – a civil society collective that has pushed for the region to be declared particularly subject to the consequences of climate change.

Over the last year, climate impacts have caused human and material losses throughout Central America, from the catastrophic mudslide in Cambray on the outskirts of Guatemala City to the sea level rise threatening Panama’s Guna Yala archipelago in the Caribbean Sea.

The most widely extended of these impacts has been the drought associated with the El Niño Southern Oscillation (ENSO), a climate phenomenon which complicated agricultural conditions in Central America’s so-called dry corridor.

The corridor is an arid stretch of dry forest where subsistence farming is the norm and where rainfall was 40 to 60 percent below normal in the 2014-2015 dry season.

Central America accounts for just 0.6 percent of global greenhouse gas emissions. This means it sees reducing its vulnerability to climate change as more urgent than mitigation measures.

If successful, the call for the region to be recognised as especially vulnerable would make it a priority for climate change adaptation financing and technology.

But it will not be easy to reach this goal in the negotiations, as it is hindered by other countries of the developing South and even by some in this region itself.

The tension first arose within the Central American Economic Integration System (SICA), which held three meetings during the October climate change talks in Bonn, but failed to reach a consensus on the initiative, due to internal opposition from Belize.

“It must be pointed out that (SICA members) Belize and the Dominican Republic are SIDS, which means that to avoid problems with that negotiating bloc they did not back the proposal,” Guillén said.

In his view, “the painful thing is what Belize is doing, because the Dominican Republic is in a different situation,” since it is not actually part of the Central American isthmus, but is a Caribbean island nation.

Although Belize is on the mainland, it joined the SIDS in the climate talks.

The head of the Guatemalan government’s delegation to the climate talks, Edwin Castellanos, confirmed to IPS that no consensus was reached within SICA.

For that reason, “the proposal was made by El Salvador, as current president of SICA, but it was not made in the name of SICA because member countries did not back the motion.” It was also signed by Costa Rica, Guatemala, Honduras, Nicaragua and Panama.

Castellanos also noted that there are other countries seeking to be included on the list of the most vulnerable countries, an issue that was addressed within the powerful Group of 77 and China negotiating bloc, which represents the countries of the developing South.

“When Central America presented this initiative, Nepal followed it with a similar proposal for mountainous countries. The problem is that this starts off a list that could be interminable, and which already includes the LDCs, islands, and most recently, Africa,” the negotiator said.

He acknowledged that the initiative came from Central American civil society, and mentioned in particular the Mexico and Central America Civil Society Forum held Oct. 7-9 in Mexico City, ahead of COP21.

Alejandra Granados, a Costa Rican activist who took part in the civil society forum, told IPS that the proposal was set forth by Alejandra Sobenes of the Guatemalan Institute for Environmental Law and Sustainable Development (IDEADS), and that “each organisation sent it to the negotiators for their respective countries” prior to the meeting in Bonn.

The Central American countries that have already submitted their Intended Nationally Determined Contributions (INDCs) to the UNFCCC agreed on including adaptation components to which governments have committed themselves.

El Salvador and Nicaragua have not yet presented their INDCs, the commitments that each nation assumes to reduce carbon dioxide and other greenhouse gas emissions to fight global warming.

Granados said that, if Central America is recognised as especially vulnerable, the countries of the region will have to work hard together with local communities to improve their adaptation plans prior to 2020, when the new treaty will go into effect.

“This recognition is not an end in itself; it is a major responsibility that the region is assuming, because it is as if at an international level all eyes turned towards the region and said: ‘Ok, what are you waiting for, to do something? You wanted this recognition, now assume your responsibility to take action’,” said the Costa Rican activist, who heads the organisation

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Brazil’s Megaprojects, a Short-lived Dream Thu, 29 Oct 2015 23:34:58 +0000 Mario Osava Part of the Rio de Janeiro Petrochemical Complex (COMPERJ) in October, seen from the banks of the Caceribu river, the closest to the installations that the public can get. Credit: Mario Osava/IPS

Part of the Rio de Janeiro Petrochemical Complex (COMPERJ) in October, seen from the banks of the Caceribu river, the closest to the installations that the public can get. Credit: Mario Osava/IPS

By Mario Osava
ITABORAÍ, Brazil , Oct 29 2015 (IPS)

Working as a musician in a military band is the dream of 21-year-old Jackson Coutinho, since hopes that a petrochemical complex would drive the industrialisation of this Brazilian city near Rio de Janeiro have gone up in smoke.

“I’ll try out for the navy, army and even the military police, but only to be a musician, not a police officer,” said Coutinho, who plays the double bass in bands he has set up with friends in Itaboraí.

Until last year he was working for the QGIT consortium on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ). He was a machine operator assistant on the embankment where the Natural Gas Processing Unit (UPGN), part of the complex, was built.

But he lost his job in early 2015, when lay-offs intensified as a result of the crisis faced by Petrobras, the state oil company that owns COMPERJ.

The initial projected cost of the megaproject was 6.5 billion dollars. But with cost overruns it has risen to twice that amount, even though the project was reduced drastically to a single refinery and the UPGN.

The most expensive part, the petrochemical plant, which would have fuelled industrialisation in this city 45 km from Rio de Janeiro, was cancelled because Petobras did not manage to find partners.

The plunge in oil prices and the corruption scandal shaking the company since March 2014, implicating dozens of politicians and businesspersons for billions of dollars in kickbacks, smothered the plan to build in Itaboraí the biggest petrochemical complex in Latin America.

The losses are huge. “Of 14 plants or buildings where I worked on the construction, only four or five will be used,” said Rogerio Henrique Lourenço, 26, a building technician who was employed by the COMPERJ works for five years.

Besides the white elephants - the shiny modern buildings still empty within the 45 square kilometres of the shrunken megaproject – equipment was purchased and infrastructure was built, which require costly maintenance while the future remains uncertain.

To that is added the expense of the compensation and mitigation of the social and environmental impacts, which has included sanitation, clean-up of rivers, and reforestation – obligations that have not shrunk in accordance with the downsizing of the project.

The municipalities under the influence of COMPERJ, especially Itaboraí, are losing the prospect of development promised in 2006, when then president Luiz Inácio Lula da Silva (2003-2010) announced the project.

At the time he said it would consist of two refineries and two petrochemical units, besides installations for services and training of the necessary technical personnel.

The Getulio Vargas Foundation, a leading economic think tank, predicted that the petrochemical complex would foment the emergence of a plastics industry hub. According to its projections, between 362 companies – a conservative estimate – and 724 companies – a more optimistic forecast – would set up shop in the area.

That fast-forward industrialisation was expected to generate between 117,000 and 168,000 jobs in the southeastern state of Rio de Janeiro – just over one-third of which were to be concentrated in COMPERJ’s direct area of influence.

Itaboraí, as the city where COMPERJ is located, was to reap the greatest benefits, leaving behind its status as one of the poorest municipalities in the state – a commuter town whose residents work in neighbouring cities.

Jackson Coutinho, 21, managed to buy a car after working 18 months in a construction company helping to build the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil. Now unemployed, the dream of this worker from the city of Itaboraí is to join a military band as a musician, and study accounting. Credit: Mario Osava/IPS

Jackson Coutinho, 21, managed to buy a car after working 18 months in a construction company helping to build the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil. Now unemployed, the dream of this worker from the city of Itaboraí is to join a military band as a musician, and study accounting. Credit: Mario Osava/IPS

“The castle came crumbling down,” said Lourenço, who was laid off in March 2014, when construction of the petrochemical complex began to run out of steam.

The father of three young children now gets by with casual work, mainly on small-scale construction sites. When he talked to IPS he was handing out pamphlets on the main street of Itaboraí.

His dream is to pass a civil service exam and become a public employee, with job stability.
“In COMPERJ I had well-paid jobs, but they were temporary,” he said. His five years there were divided between short-term contracts in a number of different companies.

Francisco Assunção, 22, had a similar experience. He worked for nearly two years in three of the dozens of companies participating in the construction of COMPERJ.

Now he is trying to make a living with his motorcycle taxi, “but people prefer to walk, because they don’t have money,” he said. So he also finds casual or part-time work in the construction industry and restaurants.

“I earned more in the COMPERJ jobs,” he said. Although he was paid just 300 dollars a month, he got an additional 40 percent for food and medical assistance, he explained.

Coutinho stands out because he spent 18 months in the same job, which made it possible for him to be promoted and to earn enough to buy a car. “It was a dream, but it’s over,” he said.

Although he is focused on his musical career, he has a “Plan B”: to study accounting, although he doesn’t like math. “I have friends who are accountants,” he said.

But he is confident that “COMPERJ will resume its original plan (to build a petrochemical complex), because too much money was invested there, and they went beyond the point of no return.” An estimated 80 percent of the construction is complete.

Rogerio Henrique Lourenço, 26, worked for five years on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil, for several different companies. Now he supports his three young children and their mother in the city of Itaborai, where the shrunken and stalled megaproject is located, with casual work. Credit: Mario Osava/IPS

Rogerio Henrique Lourenço, 26, worked for five years on the construction of the Rio de Janeiro Petrochemical Complex (COMPERJ) in Brazil, for several different companies. Now he supports his three young children and their mother in the city of Itaborai, where the shrunken and stalled megaproject is located, with casual work. Credit: Mario Osava/IPS

For these young men, the well-paying, steady work they enjoyed for several years merely drove home the lack of opportunities in Itaboraí, a 343-year-old city of 230,000 people that has remained faithful to its origins as a town that emerged alongside a highway, which is now its long central avenue.

The scant local productive activity, virtually limited to ceramics and orange groves, offers neither jobs nor intellectual stimulus for young people.

“This is a city that does not cultivate a cultural identity,” Franciellen Fonseca, who is studying to become a social worker and is taking part in the Incid research project, told IPS. “There are no recreational opportunities, plazas or places where locals can gather.”

The study by the Brazilian Institute of Social and Economic Analyses (IBASE) monitors compliance with citizen rights in the 14 municipalities in COMPERJ’s area of influence, based on a system of indicators that the non-governmental organisation developed.

Its most recent study, on “the invisible citizenship rights of COMPERJ workers”, stressed the difficulty of obtaining information about the situation faced by labourers working on the project.

Refusing to provide information on the workers’ conditions is “a serious rights violation, because it makes it impossible to closely monitor the effects and impacts of these megaprojects on people’s lives,” says an Incid research project report.

The number of workers on the COMPERJ construction sites has never been revealed. There was talk of 30,000 at the height of construction, in 2012-2013, and figures have varied widely since then.

The young men who were laid off and talked to IPS say local workers were a minority on the construction sites – running counter to the promise to put a priority on hiring local labour. One of the numerous strikes that brought work temporarily to a halt demanded precisely that more local workers be hired, Coutinho pointed out.

The companies argued that there was not enough skilled local labour. But when people with the necessary training appeared, the companies set impossibly high standards for prior work experience, or simply did not hire them, said Lourenço.

The “invisibility” surrounding workers at COMPERJ was broken by the frequent strikes and rioting, which the old union was unable to handle.

Its successor, the Itaboraí union of assembly and maintenance workers, emerged in June 2014 to confront a different reality: the growing wave of lay-offs.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: The West Vote for a Better Yesterday Thu, 29 Oct 2015 15:19:16 +0000 Roberto Savio

Roberto Savio is founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News.

By Roberto Savio
ROME, Oct 29 2015 (IPS)

The recent elections in Switzerland and Poland are good indicators of what will happen elsewhere in Europe, with this irresistible growing wave of refugees. But let us first make some crucial considerations.

Roberto Savio

Roberto Savio

The first is that the present system of international relations and national governance is not functioning any longer. We are in a period of transition, but nobody knows to where. The left is without a manifesto, and the right is just riding the status quo. There is no long term political thinking.

Second, we are in a “new economy,” based on the supremacy of finance over man’s production. Unelected officials, like governors of central banks and bankers, have increasingly more power than before. This “new economy” considers precarious jobs as natural, social inequality as a legitimate reality, the market as the sole basis for societal development and the state as inefficient and a brake to the private sector.

The third,is that political institutions have lost their gloss. No political party has any longer a real youth movement. They are perceived more and more as self referent, considering citizens just as an electorate, and they are seen as more part of the system in power than spokespersons for their citizens.

The cost of politics (and corruption) is growing year by year. The coming elections in the US will cost over 4 billion dollars, and until now just 145 donors have paid for more than 50 per cent of the of the electoral campaign. According to the London School of Economics, the cost of electoral campaigns in Europe has increased by 47 per cent in the last decade. In other words, many consider that we live now in a democracy that is turning into a plutocracy. And Hungary is openly advocating for a autocratic democracy, like Singapore and China, and getting away with it.

The fourth is that multilateralism is in crisis. The US has stopped ratifying any international treaties, from the Right of the Children to the Law of the Sea. The United Nations has been marginalized. The regional organizations, like the African Union, ASEAN or the Organization of American States, are notoriously toothless. And the European Union is going from an existential crisis on the euro (Greece), into a more serious one, the refugees. The United Kingdom is leading a charge for devolution of powers from Brussels that will create a precedent that others will invoke, Hungary and Poland first.

If those considerations are considered valid, then it is not difficult to understand that the European electorates are voting on the basis of political nostalgia and lack of security. In front of an uncertain future, the dream to go back to a better past is strong. Both the Swiss and Polish elections rewarded the party which wanted to defend the national identity against foreigners, especially Muslim, and the national religious traditions against the European values of sexual liberty, gays marriage, free abortion and decaying lifestyles.

The polish case is emblematic. Poland has been one of the greatest recipient of EU aid. East Europe did join the EU to get funds and support, but without any intention to give anything in exchange, as the refusal to accept any immigrant has made clear…

Both the Swiss and Polish elections rewarded the party which wanted to defend the national identity against foreigners, especially Muslim, and defend religion against the European values of sexual liberty, gays marriage, free abortion and decaying lifestyles.

It is worth remembering that until the financial crisis of 2007, xenophobic and rightwing parties were marginal political entities in almost all of Europe. In a short time, they have become important players all over Europe, even in countries known for their civic sense and tolerance, like Netherlands and the Nordic countries.

What bring votes to a xenophobic, right wing and anti-Europe party is the dream to go back to a secure and orderly past. Voters do not want to vote for an uncertain future: they find it more reassuring to vote for a time in which politics where national, there was not a faceless bureaucracy in Brussels dictating how to pack tomatoes, and a supranational currency, the euro, manoeuvred by unelected powerful bankers in Frankfurt, with a hegemonic Germany dictating other countries. It is also worth remembering that a large segment of European citizens has yet to recover the quality of life it had before 2007. and that young people pay a disproportionate cost for a crisis originated by the finance.

The dream of returning to the past is also the reason for the creation in US of the radical wing of the Republican Party, known as the Tea Party, and the victory of Justin Trudeau in Canada. And while the West has a golden recent age on which to dream, in the Global South nationalism, a twin of political nostalgia, is on the rise.

But for the West, there is a problem. There are now 60 million refugees, and in this figure there are not those who escape sex persecutions, like gays in Africa, or woman from Boko Haram in Nigeria. Migrants is a term much more representative of the reality than refugees, which are for Europe those who escape from clearly recognized conflicts. Demography is clear. Africa is going to become one billion people by 2030, and Europe would lose at least 15 million people by then.

The Europe we know – homogenous, white, Christian and tolerant – is going to disappear. But it will not be without lot of suffering. The US has become a multicultural and multiethnic country in over a century ago. According to the records of the most important entry points, Ellis Island in New York, 9 million Irish, Germans, Austrians and Scandinavians entered the country in the steamboat times, with more than 8 million Poles, Bulgarians, Rumanians, Hungarians, Russians and Baltics, and more than 5 million Italians and Greeks. In a few decades, a total of 22.5 million Europeans became Americans. Europe is not ready even to do a tenth of this.


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Opinion: TPP is Bad for One’s Health Thu, 22 Oct 2015 20:14:05 +0000 N Chandra Mohan

Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
Oct 22 2015 (IPS)

Reflecting President Barack Obama’s pivot to Asia, the US, Japan and 10 other Pacific Rim nations have inked a Trans-Pacific Partnership (TPP) agreement. This is the largest mega free trade agreement (FTA) in two decades and represents 40 per cent of the global economy.

N Chandra Mohan

N Chandra Mohan

This pact puts tremendous pressure on the European Union to conclude its Transatlantic Trade and Investment Partnership with the US. China, too, will seek to hasten the Regional Comprehensive Economic Partnership. With the Wold Trade Organization (WTO) unable to conclude the Doha Round, India’s policy makers feel that it is in the country’s interest to be part of at least one of these mega FTAs that reflect the new global architecture for trade.

What are India’s gains if it joins the TPP? According to economic theory, the trade creation after joining this grouping will benefit India as its exports go up manifold. Cheaper imports, in turn, lower inflation. There will also be much greater Indian participation in US and Japanese supply chains in the Indo-Pacific region. Larger export markets would bring economies of scale to textile and other manufacturing firms. But there will be an adverse impact on the demand for its products if it does not join. Vietnam thus will gain at India’s expense in garment exports as it enjoys duty free access to the US while India faces duties of 14-30 per cent.

But TPP is less about trade and more to do with stricter intellectual property rights (IPRs), labour, environment standards and investor-state dispute settlement. Its IPR regime is Big Pharma-driven with provisions that adversely affect the availability of affordable medicines in the developing world. In fact, it would be disastrous for public health in India. The proviso to grant patents to “new uses of a known product” is fraught with grave implications as it may lead to ever-greening of patents. Similarly, the special treatment extended to pharmaceutical patents, placing them in a preferred category compared to other technologies, by patent term adjustment for regulatory delays, also will lead to a longer term for patents, argued TC James, consultant with the think-tank RIS at a recent panel discussion on TPP.

This trade pact thus will bring in new handicaps for India’s pharmaceutical industry, which are mostly generics, from getting marketing approvals. A case in point is the data exclusivity provisions for test data of biologics – which are grown from live cells – for five to eight years. These constitute a major barrier for the entry of cheaper generic versions, or biosimilars, in which India has a proven world-class capability. US law protects data collected during the development of biologics for 12 years. Pressure from Australia and others ensured that this was brought down to five years but this could go up to eight years.

In the fine-print of Article QQ.E.20, Big Pharma ensured that market exclusivity for biologics is provided either through at least eight years of data protection, or at least five years of data protection with other measures to “deliver a comparable outcome in the market,” As the latter option is problematical, market exclusivity will inevitably extend further by another three years. This means a longer period when monopoly pricing can be exercised by Big Pharma that will raise the price of drugs and take them out of reach for many people in India and even in the 12-menber grouping, for that matter.

India will thus seriously compromise its public health objectives if it chooses to join TPP. It has a well-established legal framework for IPRs and its courts have been active in enforcing this regime, exemplified by the denial of a patent for an anti-cancer drug to a foreign drug major in 2013 as it did not meet the criteria of inventiveness in India’s Patent Act. Such judicial activism has also been manifested in the award of a compulsory licence for the local manufacture of an anti-cancer drug due to the unaffordable prices charged by the global pharma giant that held the patent.

Not surprisingly, Big Pharma has for long been up in arms against India’s IPRs and has sought to pressurize the country to dilute some of the rigours of its legislation for drug patents. The United States Trade Representative has listed India under the Priority Watch list for the enforcement of its patent legislation, especially for drugs even though it is Agreement on Trade Related Aspects of Intellectual Property Right-compliant. What better opportunity to make amends under the guise of joining TPP. Compulsory licensing thus is a no-no. So is Section 3(d) of India’s Patent Act, which raises the bar for what is inventive to be granted a patent. These flexibilities provided by WTO’s TRIPS agreement are bound to clash with TPP that has low inventiveness thresholds to be granted patent protection.

India must not buckle under such pressures to weaken its IPR legislation. According to its national policy on IPRs, the right to health is an integral part of the right to life enshrined in the Constitution of India. India is committed to providing its citizens access to affordable medicines, quality healthcare and innovative products and services. The Patents Act as amended in 2005 protects innovation in pharmaceuticals and provides for measures to safeguard public health. India should continue to use the flexibilities available under TRIPS agreement and not compromise on the patent linkage and patent term extensions sought by TPP.

Nonetheless, India shouldn’t desist from efforts to engage with Big Pharma if it entails win-win outcomes that ensure affordable drugs to its people. The US drug major Gilead Sciences Inc introduced tiered pricing, whereby it charges lower prices in India compared to prices in the US. Gilead and nine Indian companies entered into a partnership based on effective IPR protection and licensing to produce an affordable version of a drug for Hepatitis C. India thus has access to patented products at affordable prices while ensuring a decent return for the innovating company. Can’t other US drug majors be persuaded to follow Gilead’s example? India does not need to join the 12-member grouping for such outcomes that further its public health objectives.


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Opinion: From European Union to Just a Common Market Tue, 20 Oct 2015 12:15:17 +0000 Roberto Savio

Roberto Savio, founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News.

By Roberto Savio
ROME, Oct 20 2015 (IPS)

The success in the recent Swiss elections of the UDC-SVP, a xenophobic, anti European Union, right wing party, opens a number of reflections.

Roberto Savio

Roberto Savio

Seventy years ago Europe came out from a terrible war, exhausted and destroyed. That produced a generation of statesman, who went about creating a European integration, in order to avoid the repetition of the internal conflicts that had created the two world wars. Today a war between France and Germany is unthinkable, and Europe is an island of peace for the first time in its history.

This is the mantra we hear all the time. What is forgotten is that in fact a good part of Europe did not want integration. In 1960, the United Kingdom led the creation of an alternative institution, dedicated only to commercial exchange: the European Free Trade Association (EFTA), formed by the United Kingdom, Austria, Denmark, Norway, Portugal, Sweden, Switzerland, then later Finland and Iceland. It was only in 1972 that, bowing to the success of European integration, the UK and Denmark asked to join the EU. Later, Portugal and Austria left EFTA to join the European Union.

The UK was never interested in the European project and always felt committed to “a special relation” with United States. Union would mean also solidarity and integration, as the various EU treaties kept declaring. The UK was only interested in the market side of the process.

Since 1972, the gloss of European integration has lost much of its shine. Younger generations have no memory of the last war. The EU is perceived far from its citizens, run by unelected officials who make decisions without a participatory process, and unable to respond to challenges. Where is the external policy of the EU? When does it take decisions that are not an echo of Washington?

Since the financial crisis of 1999, xenophobic, nationalistic and right wing parties have sprouted all over Europe. In Hungary, one of them is in power and openly claims that democracy is not the most efficient system. The Greek crisis has made clear that there is a north-south divide, while Germany and the others do not consider solidarity a criterion for financial issues. And the refugee crisis is now the last division in European integration. The UK has openly declared that it will take only a token number of 10,000 refugees, while a new west-east divide has become evident, with the strong opposition of Eastern Europe to take any refugee. The idea of solidarity is again out of the equation.

Germany moved because of its demographic reality. It had 800,000 vacant jobs, and it needs at least 500,000 immigrants per year to remain competitive and keep its pension system alive. But that mentality is even more clear with the East European countries, which experience increasing demographic decline. At the end of communism in 1989, Bulgaria had a population of 9 million. Now it is at 7.2 million. It is estimated that it will lose an additional 7 per cent by 2030, and 28.5 per cent by 2050. Romania will lose 22 per cent by 2050, followed by Ukraine (20%), Moldova (20%), Bosnia and Herzegovina (19.5%), Latvia (19%), Lithuania (17.5%), Serbia (17%), Croatia (16%), and Hungary (16%). Yet, all Eastern Europe countries have followed the British rebellion, and take a strong stance on refusing to accept refugees.

Now the idea of European integration is reaching a crucial challenge: the United Kingdom will hold a referendum by the end of 2017 to decide if remain in the European Union or not. The prime minister David Cameron, has invented this referendum, in order to renegotiate with EU the terms of British participation, get enough concessions to appease the Euro-skeptics and thus win the referendum in favor of Europe.

Only 10 years ago, such a maneuver would have gone nowhere. But now things are different, and there is a general tendency among European countries to take back as much as possible space given to the EU. Germany has already indicated that it is open to debate, and it wants to avoid a Brexit as much as possible. Cameron has not yet indicated the detail of his requests to remain in the EU. But it is widely believed that they will be about unhitching from European political integration, requesting exceptionality for the British financial sector, demanding a voice in decisions in the Eurozone (of which the UK is not a member), eliminating social benefits for European immigrants and giving to the British parliament a strong say over European decisions. Cameron has already indicated that he will withdraw from the European Court of Justice.

Once Great Britain obtains these concessions or even part of them, other countries, beginning with Hungary, will follow. And this will be the end of the process of European integration. We will take the route of EFTA, not the one envisioned by the founding fathers: Konrad Adenauer, Robert Schumann, Paul-Henri Spaak and Alcide De Gasperi.

Meanwhile, Europe will have to accept that it is not going to be the homogenous and white society that the right wing and xenophobic parties dream of reestablishing. The lack of global governability has created a staggering figure of 60 million refugees. Of those, 15 million live in refugee camps. One of them, Dadaab, in Kenya, has now half a million people, more than the population of several members of the United Nations. It is estimated that climate change will create by 2030 another 10 million refugees. Solidarity or not, Europe demography will require the arrival of some million. What will be the Europe of 2030?


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OPINION: Time to Reform the Global Casino Tue, 20 Oct 2015 10:12:18 +0000 Hazel Henderson

Hazel Henderson, president of Ethical Market Media (U.S. and Brazil) is a futurist, science policy advisor and author of Mapping he Global Transition to the Solar Age and other books.

By Hazel Henderson
ST. AUGUSTINE, Florida, Oct 20 2015 (IPS)

The year 2015 highlights the global shift from traditional money-based, gross domestic product (GDP)-measured economic growth to the new models of sustainable, inclusive human development embodied in the United Nations Sustainable Development Goals (SDGs) ratified by its 193 member nations.

Hazel Henderson Credit:

Hazel Henderson

This historic shift still involves ideological and political struggles between incumbent industries of the earlier Industrial Revolution and the disruptive forces and technologies of our succeeding Information Age. The battles continue between the fossilized economic and financial sectors and those rising in the knowledge-richer technologies and cleaner, greener companies based on efficiency, renewable energy and “shareconomies.”

This multi-generational shift also involves deeper processes of changing world views, social organisations and evolving cultures in our global human family of some 7.5 billion people.

These historic changes in 2015, now visible in the SDG 17’s intertwined goals, go far beyond the earlier Millennium Development Goals (MDGs). They embrace the major problems and opportunities for continuing the successful evolution of human societies on planet Earth. The SDGs close the obsolete textbooks on money-based, GDP-measured economic growth. Today, the social and environmental costs of this earlier GDP model are evident to all in pollution, ecological and social disruption, widespread effects of climate change, global warming and rising sea levels – all measured daily by 120 Earth-observing satellites.

All this physical evidence of humans stressing ecological limits and planetary boundaries also led to the focus on finance as driver of these failed models of GDP-growth and short-term profits. The “free market” models of Britain’s prime minister Margaret Thatcher and US president Ronald Reagan in the 1980s drove “financialisation” and globalization which privatized and deregulated economic activities – divorcing them from their social context and consequences.

Finance became a global casino, the servant of fossilized industrialization and its overemphasis on investing in coal, oil and gas. This is highlighted in the research of the British NGO Carbon Tracker: trillions of “assets” in fossil fuel companies balance sheets became potential liabilities because they could not be burned without further damage to the climate. Client Earth, a public interest law firm, announced it is monitoring 250 corporations and their directors for possible legal action pursuant to the Companies Act of 2006.

Many science policy analysts, including this writer, and millions of citizens have been pointing out the failures of economics and its GDP-growth fetish which still drives financial markets. Yet, it took decades before today’s physical evidence, growing crises and millions of ethical investors produced the global transitions now recognized in the UN’s SDGs. This fossilized global finance is addressed in the two-year, ground-breaking United Nations Environment Programme (UNEP) Inquiry: Design of a Sustainable Financial System, whose report The Financial System We Need was released October 8, 2015.

This two-year Inquiry was steered by a global advisory board of central bankers, stock exchange and pension fund executives, regulators led by UNEP administrator Achim Steiner, and was co-directed by Nick Robins and Simon Zadek. It explores how to reshape and align crisis-prone global financial markets with the new SDGs – beyond short term speculative high speed trading toward serving needs of the real world economies. The UN Inquiry report contains many innovative studies including Greening China’s Financial System; Exploring Financial Policy and Regulatory Barriers to Private Climate Finance in South-East Asia; Scaling Green Bond Markets for Sustainable Development; Financial Reform, Institutional Investors and Sustainable Development; Fiduciary Duty in the 21st Century; Values BasedBanking; Insurance 2030 – Harnessing Insurance for Sustainable Development; and reports on these issues from India, Brazil, Indonesia, Bangladesh, Africa and Colombia.

Many innovative critiques are also referenced, including Ethical Markets’ Reforming Electronic Markets and Trading; Britain’s New Economics Foundation’s Financial System Impact of Disruptive Innovation, on the electronic shareconomy, crowdfunding, peer-to-peer lending – all bypassing conventional finance. Canada contributed research from CIGI (Center for International Governance Innovation) on environmental risk disclosure, its new FALSTAFF model and Central Banks Can and Should Do Their Part in Funding Sustainability, which boldly calls for central banks to use their quantitative easing (i.e., money printing) to buy new green bonds to grow the next economy for real people rather than bailing out past mistakes of big banks.

The Inquiry’s 4th progress report: The Coming Financial Climate reviewed all the findings on how governments, regulators, standard-setters and market actors are starting to incorporate sustainability factors into the rules that govern the financial system. Although there is much still to be done to de-risk and transform conventional finance, this Inquiry has broken down major barriers and brought together many of the progressive forces taming speculative markets and reforming practices that led to the 2008 crises and resulting human misery. The battle lines are drawn. Ending tax breaks and subsidies to fossil fuels and nuclear power will accelerate the new cost advantages of the more efficient renewable sectors worldwide.


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Trans-Pacific partnership raise the barriers for the access to affordable medicines Thu, 15 Oct 2015 14:09:32 +0000 carlos-m-correa ]]>

Carlos Correa, is the special adviser on trade and intellectual property issues of the South Centre.

By Carlos M. Correa
GENEVA, Oct 15 2015 (IPS)

The pharmaceutical industry from the US and Europe scored a major victory with the adoption, in 1994, of a binding agreement on intellectual property (Agreement on Trade Related Aspects of Intellectual Property Rights – TRIPS) in the context of the nascent World Trade Organization (WTO).

While some transitional periods were allowed, the TRIPS Agreement did not leave any space for a special and differential treatment based on the countries’ levels of development. In particular, it imposed on all World Trade Organisation members (WTO) the obligation to grant patents in all fields of technology.

The lack of patent protection promotes price competition in the pharmaceutical market and, in some cases, clears the way for the development of generic pharmaceutical industries. The most noticeable case is that of India, which developed a strong pharmaceutical industry and is known today as “the pharmacy of the developing world.”

The Trans-Pacific Partnership (TPP) is an ambitious trade agreement between the U.S. with 11 other countries (Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam).

Notably, there are major differences in the level of development of these countries (for example, Vietnam’s gross domestic product per capita (GDP) is approximately 43 times less than the US GDP per capita). Despite this, Washington seeks the application of the same standards of protection to all parties in the partnership.

In fact, tariffs are already low among the TPP negotiating countries. There are very little gains to be obtained from the TPP in this regard.

What these agreements tend to be really about are issues such as intellectual property rights. And the most important strategic reason of this initiative for the US is likely to be to counter China’s growing influence in the Asia-Pacific region, and to make the region less hospitable for the Chinese “state capitalism.”

The enhanced protection of pharmaceutical products was a key concern for the US in trade negotiations that led to the adoption of the TRIPS agreement. Despite the significant enhancement of the international standards of intellectual property protection that that agreement entailed, the pharmaceutical industry from the US and the European Union remained unsatisfied. They aimed at even higher standards of protection.

However, it soon became evident that it would not be possible to obtain such higher standards within the relevant multilateral organizations, WTO and World Intellectual Property Organisation (WIPO), where developing countries resisted further increases in intellectual property protections.

In this scenario, developed countries opted to seek the enhanced protection demanded by the pharmaceutical industry and other constituencies through bilateral or plurilateral trade agreements, where the bargaining position of individual countries is weaker and the promises of market access, or other real or expected trade advantages, make agreements of intellectual property more viable.

Thus, while under the TRIPS Agreement patents must last for 20 years from the date of application, the free trade agreements (FTAs) promoted by the US oblige the partner signatory countries to extend the patent term to compensate for “unreasonable” delays beyond a certain period in the procedures for the marketing approval of a medicine as well as in the examination and grant of patent applications.

FTAs also oblige, among other things, to grant patents based on “utility” rather than industrial applicability and, importantly, to secure market exclusivity on the basis of the protection of test data required for the marketing approval of pharmaceuticals, generally for five years from the date of such approval in the country where protection is sought. FTAs also require partners to establish a “linkage” between the marketing approval of medicines and patents, thereby granting pharmaceutical companies with rights that, under some FTAs, are also stronger than those available under the US law.

For instance, a study found that the patent term extension would generate in Colombia an increase in pharmaceutical expenditures of US$ 329 million and a reduction in pharmaceutical consumption of 7 per cent by 2025.

With respect to the potential impact of the TPP, in particular, a study by Australian and US researchers estimated that, in Vietnam, the government would only be able to provide anti-retroviral therapy to 30 per cent of people in living with HIV (down from its current rate of 68 per cent) since the cost per person per year of treatment would increase to US$ 501 under the US proposal from its current level of $127.22.

The negative impact of TRIPS-plus standards on access to medicines has been found even in developed countries that are not net exporters of intellectual property rights, such as in Canada and Australia.

The costs incurred by the smaller partners in FTAs are disproportionately high in relation to the benefits that accrue to pharmaceutical companies.


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If the World Trade Organisation did not Exist, it Would Have to be Invented Wed, 14 Oct 2015 16:50:45 +0000 Roberto Azevedo

Roberto Azevêdo is the director general of World Trade Organisation (WTO)

By Roberto Azevêdo
GENEVA, Oct 14 2015 (IPS)

The World Trade Organisation (WTO) is a relative newcomer on the international stage. This year we are marking our 20th anniversary.

Roberto Azevêdo. Credit: World Trade Organization (WTO)

Roberto Azevêdo. Credit: World Trade Organization (WTO)

One hundred twenty-eight governments came together to create this organisation to govern world trade in 1995. In their Ministerial declaration they predicted that it would usher in “a new era of global economic cooperation”.

So has that prediction or that ambition­ proved accurate?

Over these two decades, the organisation has certainly faced major challenges.

Our negotiating arm, especially the Doha Development Round, has made slow progress. A growing number of trade conflicts is putting real pressure on our dispute settlement system.

With the expansion of regional trade agreements, some of them among major trading blocs­, many have questioned whether they could actually replace the WTO. And, of course, the WTO has been the focus of some discontent ­ particularly in the form of anti-globalisation protests which came to a head at our Seattle ministerial meeting in 1999.

These challenges should not be underestimated. But actually, in some cases, rather than being a consequence of the WTO’s shortcomings, I think they are ­ for the most part ­ a result of its achievements.

And despite these challenges, I would argue that the open, transparent and rules-based trading system, as embodied in the WTO, has become an essential and unassailable pillar of global governance.

To appreciate this, I think it is important to look at the origins of the system.

In 1947, a group of 23 nations signed the General Agreement on Tariffs and Trade (GATT).

The GATT was not a fully-fledged organisation; its membership was limited and so was the scope of its mandate. And so the WTO was created in 1995.

And, as I see it, by founding the WTO and agreeing on the legal texts, our members provided the equivalent of a “constitution” for global trade.

That “constitution” enshrines the basic, perennial principles of trade. Non-discrimination, for example, is embodied in an important premise: most-favoured nation treatment, which prohibits a member from discriminating between trade partners by offering more favourable treatment to one member over another.

It is no coincidence that as the rule of law in trade has spread, average tariffs have fallen dramatically. In fact, they have been cut in half. Average applied tariffs were 15 percent in 1995. Today they stand at less than 8 percent. And trade volumes have more than doubled.

Many argue that the difficulties in advancing the Doha Round of world trade negotiations,­ the latest in a long line of trade “rounds,” ­ show that the organisation has lost its ability to negotiate.

And while these difficulties are very real, the reality is that members are negotiating all the time ­ and, actually, they have delivered a great deal.

The clearest proof that the multilateral system can deliver new negotiated outcomes is the Bali Package.

Negotiated in 2013, the Bali Package contains a set of decisions that include steps on agriculture, measures for least developed countries (LDCs), and the first multilateral agreement since the WTO was created:­ the Trade Facilitation Agreement.

The Trade Facilitation Agreement will simplify, standardise and speed up global customs procedures, which can lead to an average cut in trade costs by around 14 percent an impact potentially greater than the elimination of all remaining global tariffs.

And while the economic gains of Bali are indeed significant, it has had a broader systemic impact.

Right now, we are working hard to deliver meaningful outcomes in our next Ministerial Conference in Nairobi this December.

These conferences, which happen at least every two years, are the highest decision-making body of the WTO.

However, gaps in some key negotiating areas are still very big. The big issues of the Doha Round, such as agricultural subsidies and market access, have proved to be extremely contentious. The situation may change, but there are few signs of this at present.

But, despite differences on major issues, I think there is potential for a meaningful agreement in Nairobi.

And crucially, there is a broad understanding that those deliverables must include significant steps on development and LDC issues.

So, where does the WTO stand after 20 years?

The WTO was seen as a key pillar of a new kind of global economic order ­ open, inclusive, cooperative ­ that was taking shape at the end of the Cold War.

And through much hard work, I think this vision has been made into reality:
Global trade barriers are historically low, and international trade has grown significantly. Trade is underpinned by solid rules, and most importantly ­ rules which are respected. Participation in the trading system has become nearly universal, and support is provided for those members most in need. More members are making use of the dispute settlement system and ­ with each new case ­ a more relevant body of trade law develops. And more members are using WTO councils, committees and working groups to coordinate policies, head-off disputes, using the “soft power” of the system to complement the “hard power” provided by the dispute settlement mechanism.

If the WTO did not exist, it would have to be invented.

In the end, the WTO represents the willingness of its members to cooperate. It represents the recognition that their national interests are increasingly intertwined with their collective interests.


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Opinion: India’s Compact with Africa Tue, 13 Oct 2015 12:53:22 +0000 N Chandra Mohan

Chandra Mohan is an economics and business commentator.

By N Chandra Mohan
NEW DELHI, Oct 13 2015 (IPS)

The third India-Africa Forum Summit to be held in New Delhi later this month – in which 54 African countries will participaate – is expected to result in a deeper engagement between India and Africa. This summit takes place at a time when both need each other more than ever before. Both remain bright spots in a bleak and blighted growth landscape. Out of 189 countries, only 63 are expected to grow by 4 per cent and more this year, 36 of which are in Africa. But many countries there are adversely impacted by China’s diminishing appetite for commodities and shrinking trade. India is currently one of the fastest growing economies in the world.

N Chandra Mohan

N Chandra Mohan

India wants to create a new architecture for its closer ties with Africa. What could be its important elements? There is no doubt that economic relations in terms of bilateral trade and investment are expected to improve manifold. Foreign Office mandarins bristle at the suggestion that this summit represents an effort at catching up with the much bigger Africa summits that China organized since 2006. They probably also demur at the suggestion that India has, in a “too little, too late” fashion, discovered Africa and is making amends through the promise of capacity-building, more aid and duty free access to its market.

Energy security is an important area that has seen Beijing and New Delhi scramble for sources of oil supply in Africa to fuel their rapidly growing economies. But this is an area where India has lost out heavily to Chinese oil giants.Given this track record, there is a warrant for going beyond a “China catch-up” The perception that India’s interests in Africa are identical — notably, to only secure acccess to its vast raw materials and resources — needs to be dispelleed. India has one major advantage over China in this region, notably, the dynamism of its fast-globalising private sector, represented by the likes of Tata Motors, Godrej and Bharti Group.

This is the trump card that India must play to forge a new partnership with the continent. Its investments must propel African trade into cutting-edge global networks that alter the international division of labour, as argued by Harry Broadman in his book Africa’s Silk Road: China and India’s New Economic Frontier. Indo-African trade has grown exponentially to US$93 billion in 2013. India has signed bilateral trade agreements with more than 20 African countries. India’s private investments in the continent have also surged over a period of time in diverse sectors like telecommunications, information technology, energy and automobiles.

Another major advantage is the Indian Diaspora, especially in south and east Africa. For instance, India’s linkages with South Africa go back in time – the 1.15 million strong people of India origin arrived between 1860 and 1911 as indentured labour to work as field hands and mill hands in sugar and other plantations and stayed on. In east Africa, the Diaspora’s contribution has been significant in India’s trade as they own distribution channels, manufacturing facilities and even mines. Unfortunately, this potential has not been adequately tapped. India’s growing partnership with Africa must harness the strengths of the Diaspora.

India Inc has committed US$10 billion to infrastructure and other projects since 2008. For instance, the Bharti Group has undertaken 11 green-field investments projects in Nigeria and Uganda in 2014, adding to its existing investments in 13 other African countries like Burkina Faso, Chad, Democratic Republic of Congo, Ghana, Kenya, Madagascar, Malawi, The Republic of Congo, Seychelles, Sierra Leone, Tanzania, Zambia and Uganda. The Tatas have invested in Algeria. India’s green-field investments in Africa amounted to US$1.1 billion as against US$6 billion of China in 2014, according to UNCTAD’s World Investment Report for 2015.

The other important element is building on the longstanding history of friendship and cooperation in development. Indo-African relations quintessentially define the modern concept of development compact that is based on shared responsibility and helping one another meet their developmental goals. This compact is more South-South than North-South as it entails mutual gain, non-interference, collective growth opportunities and indeed an absence of loan conditionalities. All of this strengthens the partnership in capacity-building, education, agriculture, food security, climate change, energy security and so on in a concerted manner.

Since the second summit in 2011, India has given 25,000 scholarships to African countries. A number of capacity-building institutions are in various stages of implementation. Three vocational centres have been set up in Ethiopia, Burundi and Rwanda. “India never says that we are setting up this institute, in this African country; here is the money, here is the institute, run it. This is what distinguishes us from the others,” stated the Secretary (West) in the Ministry of External Affairs at a consultation organized by the think-tank RIS ahead of the summit, adding that African countries felt “a vested interest” in such institutions and a sense of ownership.

India offered US$7.4 billion in the form of lines of credit (LoC) or soft loans since the summits began in 2008 of which $7 billion has been approved. There are 140 projects currently happening over 41 countries with such concessional aid. Even earlier, India provided a major LoC for Ethiopia in 2006 which in a way changed the dynamics of cooperation. The (US$640 million LoC for the development of its sugar industry across the value chain was a landmark development. In the case of Mozambique, financing a solar panel production unit represented a departure from the way India previously supported projects in the realm of advanced technologies.

The architecture of India’s engagement thus reflects its desire to provide comprehensive support for Africa’s development. India Inc is the spearhead for closer ties in trade and investment with the fast-growing economies of the continent. It is also a source for reliable and quality medicines and vaccines at affordable rates for large parts of Africa, especially in the battle against AIDS. The cooperation in the field of healthcare has contributed significantly towards Africa’s efforts to achieve MDGs. Post-2015, this partnership will also extend to achieving SDGs.


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TPP is “Worst Trade Agreement” for Medicine Access, Says Doctors Without Borders Wed, 07 Oct 2015 19:28:09 +0000 Tharanga Yakupitiyage By Tharanga Yakupitiyage

“The TPP [Trans-Pacific Partnership] will…go down in history as the worst trade agreement for access to medicines in developing countries,” said Doctors without Borders/Médecins Sans Frontières (MSF) in a statement following the signing of the TPP trade deal.

The controversial agreement is the largest trade deal in a generation, bringing together 12 countries around the world including the United States to govern 40 percent of the world’s economy.

Negotiations on the TPP deal, initiated in 2008, finally came to a conclusion on Oct. 5 in the southern US city of Atlanta. It includes a range of economic policies including lowered tariffs as well as standards for labor law, environmental regulation, and international investments.

“This partnership levels the playing field for our farmers, ranchers, and manufacturers by eliminating more than 18,000 taxes that various countries put on our products,” said US President Barack Obama in a statement following the end of negotiations. He also noted that the deal has the “strongest” commitments on labor and the environment of any trade agreement in history.

Though the deal has yet to be formally adopted by the signatories’ legislative bodies, it has already received criticism from numerous civil society members, including MSF, whose main concern arises from the deal’s provisions on data protection for biologic drugs.

Biologic drugs include any therapy from a biological source including vaccines, anti-toxins and monoclonal antibodies for diseases including cancer and HIV/AIDS.

According to the Brookings Institution, a US-based think tank, biologics are larger and structurally more complex than other drugs, making them more difficult and costly to develop. On average, biologics cost 22 times more than nonbiologics.

Due to these high costs, companies utilize data from the original drug creator to develop “biosimilars,” cheaper, generic versions of biologics. MSF has stated that this competition is the “best way to reduce drug prices and improve access to treatment.”

For instance, MSF treats almost 300,000 people with HIV/AIDS in 21 countries with generic drugs. These drugs have reduced the organization’s cost of treatment from US$10,000 per patient per year to US$140 per patient per year.

However, in the US, biologics creators have 12 years of data exclusivity. During this period, the US Food and Drug Administration (FDA) cannot approve a biosimilar that utilizes original biologic data.

Data protection rules vary in other countries, while Peru, Chile and Mexico do not have any biologics data rules at all.

As part of the TPP negotiations, the U.S. sought to include the 12-year protection rule. Trade ministers went back and forth on the rule, finally settling on a mandatory minimum of five to eight years of data protection.

As a result, biosimilars will not be able to enter the market in countries that previously had no restrictions. According to MSF, this will lead to high, sustained drug prices by pharmaceutical companies, preventing individuals and health providers from acquiring affordable and essential medicines.

MSF predicts that at least half a billion people will be unable to access medicines once the TPP takes effect.

“The big losers in the TPP are patients and treatment providers in developing countries,” MSF said in its statement.

The organization urged governments and its legislatures to consider the consequences.

“The negative impact of the TPP on public health will be enormous, be felt for years to come, and will not be limited to the current 12 TPP countries, as it is a dangerous blueprint for future agreements,” MSF warned.


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Opinion: International Tax Cooperation Crucial for Development Wed, 07 Oct 2015 16:25:40 +0000 Jomo Kwame Sundaram Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Oct 7 2015 (IPS)

It has become clear that the South, including the least developed countries, has little reason to expect any real progress to the almost half century old commitment to transfer 0.7 percent of developed countries’ income to developing countries. But to add insult to injury, developing countries have, once again, been denied full participation in inter-governmental discussions to enhance overall as well as national tax capacities.

The ability to pursue development policies depends crucially on available fiscal space, which relies mostly on domestic revenues, especially taxes. However, tax revenues in most low- and lower middle-income developing countries are low. The average tax-GDP ratios in low-income and lower-middle income countries are around 15 and 19 per cent respectively, compared to the OECD average of around 34 per cent.

Although non-tax revenues may add significantly to total revenues in some countries, these ratios are typically low even in countries with considerable non-petroleum mineral resource extraction activity. Therefore, low- and lower-middle-income countries should take steps to increase their revenues after considering various options for doing so.
This is necessary because the main approach in recent decades has been to increase tax rates only if unavoidable. It was presumed that lower rates would ensure better compliance with tax laws, and thus raise revenue.

The prevailing tax wisdom also favoured broadening the tax base, even when taxation capacities are modest. Thus, indirect taxation has tended to increase while direct taxation of corporations and individuals has tended to decline. The latter was supposed to be good for investment and growth although the empirical support for this presumption is dubious.

In the vast majority of countries in sub-Saharan Africa and Latin America, the tax to GDP ratio has actually stagnated or declined, as international trade taxes accounted for the largest share of tax revenue. As tariffs and export duties declined with trade liberalization, the share of trade taxes has fallen.

Unfortunately, other taxes have not grown to compensate for the lower trade taxes. There is an urgent need to reverse this trend, with greater commitment to revenue generation in order to improve social protection, create employment and otherwise contribute to sustained economic recovery.

For many developing countries, total tax revenues were mainly from three sources: domestic taxes on goods and services (general sales tax, excises), foreign trade taxes (mostly import duties) and direct taxes (mostly from corporations, rather than individuals). Wealth and property taxes as well as social security contributions continue to make modest contributions.

For rich countries, however, income taxes (mostly from individuals) make the largest contribution (around 34 per cent), with consumption taxes at the around the same level, with social insurance contributions accounting for 26 per cent of total tax revenue and trade taxes quite insignificant.

With their different economic circumstances, it does not make sense for developing countries to simply emulate developed economies in trying to generate revenue. Even among developing countries, no one size fits all.

And certainly not for all time, as tax systems must evolve with changing economic circumstances. A key question is: which taxes are most likely to meet the requirements of effective collection, buoyancy and stability?

Globalization and Tax Evasion

Revenue losses due to globalization need to be addressed. There are three main reasons for revenue losses:

First, capital movements increase opportunities for tax evasion because of the limited capacity that any tax authority has to check the overseas incomes of its residents; evasion is easier as some governments and financial institutions systematically facilitate the concealment of relevant tax information from home tax authorities.

Where dividends, interest, royalties and management fees are not taxed in the country in which they are paid, they more easily escape notice in the countries where the beneficiaries live. There have been large non-resident aliens’ bank deposits in some countries like the US that impose no taxes on interest from such deposits.

Second, avoidance (not evasion) may increase, given international differences in tax rules and rates, because of the choice of tax regime that international-tax-treatment of enterprise income commonly offers. This is more likely for taxation of profits from corporations’ international operations. Transfer pricing for goods, services and resources – moving among branches or subsidiaries of a company – provides opportunities for shifting income to minimize tax liability.

Third, international competition for inward foreign direct investment may lead governments to reduce tax rates and increase concessions for foreign investors. Income tax rates have fallen sharply since the 1980s. The tax rates that governments can impose are thus constrained by international competition. They are reluctant to raise rates or to tax dividend and interest income for fear of capital flight. Yet, it has long been known that direct-tax concessions have little or no effect in diverting international investment, let alone in attracting such flows. Hence, such tax concessions constitute an unnecessary loss of revenue.

Beggar-thy-neighbour policies have led to revenue losses for many developing countries in a race-to-the-bottom also involving labour and environmental standards, which in turn erodes the prospects for balanced, inclusive and sustainable development.

Finance ministries and tax authorities in developing countries need to cooperate among themselves and with their developed economies counterparts in the Organisation for Economic Co-operation and Development (OECD) to learn from one another and to close existing loopholes in their mutual interest. With the huge and growing size of public debts and the real and imagined fiscal constraints to sustained global economic recovery, inclusive international tax cooperation is more urgent than ever.

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United Arab Emirates and Cuba Forge Closer Ties Tue, 06 Oct 2015 19:10:19 +0000 Patricia Grogg The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Oct 6 2015 (IPS)

Cuba and the United Arab Emirates agreed to strengthen diplomatic ties and bilateral cooperation during an official visit to this Caribbean island nation by the UAE minister of foreign affairs, Sheikh Abdullah bin Zayed Al Nahyan.

During his 24-hour stay, Al Nahyan met on Monday Oct. 5 with Cuban authorities, signed two agreements, and inaugurated his country’s embassy in Havana, which he said was a clear sign of the consolidation of the ties established by the two countries in March 2002.

“I am sure that the next few years will witness the prosperity of our ties,” he added during his official meeting with his Cuban counterpart, Bruno Rodríguez, with whom he signed an agreement on air services “between and beyond our territories” which will facilitate the expansion of opportunities for international air transport.

In the meeting, Rodríguez reaffirmed his government’s support for Arab peoples in their struggle to maintain their independence and territorial integrity.

According to official sources, the two foreign ministers concurred that the opening of the UAE embassy is an important step forward in bilateral ties and will permit closer follow-up of questions of mutual interest.

Al Nahyan also met with the first vice president of the councils of state and ministers, Miguel Díaz Canel. The two officials confirmed the good state of bilateral ties and the possibilities for cooperation on the economic, trade and financial fronts, Cuba’s prime-time TV newscast reported.

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

Cuba’s minister of foreign trade and investment, Rodrigo Malmierca, signed a credit agreement with the Abu Dhabi Fund for Development, to finance a solar energy farm that will generate 10 MW of electricity.

Al Nahyan first visited Havana on Oct. 1-2, 2009 in response to an official invitation from minister Rodríguez. On that occasion they signed two agreements, one on economic, trade and technical cooperation, and another between the two foreign ministries.

“We have great confidence in Cuba’s leaders and in our capacity to carry out these kinds of projects,” Al Nahyan told the local media on that occasion.

United Arab Emirates, a federation made up of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain – established diplomatic relations with Cuba in March 2002, in an accord signed in Cairo.

The decision to open an embassy in the Cuban capital was reached in a June 2014 cabinet meeting presided over by Sheikh Mohammed bin Rashid Al Maktoum, the UAE vice president and prime minister, and the ruler of Dubai.

In late February 2015, Al Maktoum received the letters of credentials for the new ambassador of Cuba in the UAE, Enrique Enríquez, during a ceremony in the Al Mushrif Palace in the Emirati capital.

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

Later, UAE Assistant Foreign Minister for Political Affairs Ahmed al Jarman and Enríquez discussed the state of bilateral relations and agreed to take immediate concrete steps to expand and strengthen ties in different areas.

Enríquez also met with Cubans living in Abu Dhabi with a view to bolstering relations between them and their home country. They agreed on periodic future gatherings.

In May 2014, the UAE and Cuba signed an open skies agreement to allow the airlines of both countries to operate in each other’s territories, as well as opening the door to new plans for flights between the two countries, the UAE General Civil Aviation Authority (GCAA) reported.

The accord formed part of a strategy to boost trade with other countries, said Saif Mohammed al Suwaidi, director general of the GCAA, who headed a delegation of officials and representatives of national airlines during a two-day visit to Cuba.

The UAE signed similar agreements with other Latin American countries, including Argentina, Brazil, Chile, Colombia and Mexico, as part of its effort at closer relations with this region, which is of growing interest to the Gulf country.

Talks have also been announced between the UAE and Russia to build a giant airport in Cuba, which would serve as an international airport hub for Latin America, the Abu Dhabi-based National newspaper reported in February.

The proposal is being discussed by the Russian government and the Abu Dhabi state investment fund Mubadala, mandated to diversify the emirate’s economy.

In 2013 and 2014, UAE was named the world’s largest official development aid donor in a report released by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD). In 2013, the Gulf nation provided five billion dollars in ODA to other countries.

Last year, according to OECD data, the only Gulf country to have a Ministry of International Cooperation and Development spent 1.34 percent of their gross domestic product in development cooperation.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Brazil’s Expanded Climate Targets Frustrate Environmentalists Fri, 02 Oct 2015 21:05:26 +0000 Mario Osava Grasslands replaced the Amazon rainforest in Brasil Novo, a municipality in the Xingú River basin, where the giant Belo Monte hydroelectric dam is being built. Low-productivity stock-raising, with just one or two animals per hectare, is the big factor in deforestation and soil degradation in the region, and the government’s goal is to recover just one-fourth of the area degraded by this activity. Credit: Mario Osava/IPS

Grasslands replaced the Amazon rainforest in Brasil Novo, a municipality in the Xingú River basin, where the giant Belo Monte hydroelectric dam is being built. Low-productivity stock-raising, with just one or two animals per hectare, is the big factor in deforestation and soil degradation in the region, and the government’s goal is to recover just one-fourth of the area degraded by this activity. Credit: Mario Osava/IPS

By Mario Osava
RIO DE JANEIRO, Oct 2 2015 (IPS)

Brazil’s greenhouse gas emissions reduction programme, hailed as bold, has nevertheless left environmentalists frustrated at its lack of ambition in key aspects.

“The decision to present absolute reduction targets is praiseworthy, but they could be better and more ambitious, to the benefit of the country itself and of the global climate change talks,” said André Ferretti, general coordinator of the Climate Observatory, a Brazilian network of 37 environmental groups.

On Sep. 27, President Dilma Rousseff announced at the Sep. 25-27 U.N. Sustainable Development Summit in New York that Brazil’s goal is to cut greenhouse gas (GHG) emissions by 37 percent by 2025 and 43 percent by 2030, with a base year of 2005.“The weakest point in Brazil’s commitment is with respect to the forest question. It is demeaning to promise to end illegal deforestation by 2030, admitting that illegal practices will be tolerated for a decade and a half.” -- André Ferretti

This is Brazil’s Intended Nationally Determined Contribution (INDC) to keeping the global temperature rise below two degrees Celsius this century, the ceiling set by experts to ward off a climate catastrophe.

Each country had until Oct. 1 to submit its INDC, to be incorporated into the new universal binding treaty to be approved at the 21st yearly session of the Conference of the Parties to the 1992 United Nations Framework Convention on Climate Change (UNFCCC), to be held Nov. 30 to Dec. 11 in Paris.

In order for Brazil to meet these goals, at least 45 percent of its total energy mix is to be made up of renewable sources, including hydropower, by 2030. The global average is just 13 percent, the Brazilian president pointed out.

Alternative sources like wind, solar, biomass and ethanol will account for 23 percent of the country’s electricity output, up from nine percent today.

In addition, the country will attempt to eliminate illegal deforestation in the Amazon rainforest and pledged to offset emissions from regulated deforestation.

Reforesting 12 million hectares and recovering 15 million hectares of degraded grasslands are other goals announced by Rousseff, who noted that Brazil is one of the first countries of the developing South to assume absolute reduction targets for cutting GHG emissions, with goals even higher than those set by many industrialised countries.

Other countries offer reductions with respect to projected future emissions, based on current rates of production, consumption and economic growth. At the COP15, held in 2009 in Copenhagen, Brazil promised to reduce its GHG emissions by 36 to 39 percent below its projected emissions for 2020.

President Dilma Rousseff announced Brazil’s national greenhouse gas emissions reduction contribution during the Sep. 25-27 U.N. Sustainable Development Summit in New York. Credit: UN/Mark Garten

President Dilma Rousseff announced Brazil’s national greenhouse gas emissions reduction contribution during the Sep. 25-27 U.N. Sustainable Development Summit in New York. Credit: UN/Mark Garten

But the country’s INDC goals “are still lower than what the country could achieve, and add very little to what has already been done,” Ferreti told IPS.

In 2012, GHG emissions had already been cut 41 percent with respect to 2005, basically due to a lower rate of deforestation in the Amazon, although they rose later because of greater use of fossil fuels.

Currently Brazil, Latin America’s biggest GHG emitter, releases nearly 1.48 billion tons a year of emissions into the atmosphere.

The target for net emissions for 2030 does not differ much from the 1.2 billion tons of carbon dioxide released in 2012, according to the Ministry of Science and Technology.

“The weakest point in Brazil’s commitment is with respect to the forest question,” said Ferretti, who is also manager of conservation strategies in the Boticario Group Foundation for Nature Protection. “It is demeaning to promise to end illegal deforestation by 2030, admitting that illegal practices will be tolerated for a decade and a half.”

“In legal terms, it is contradictory to set such a lengthy timeframe to combat an illegal activity,” former lawmaker Liszt Vieira, who directed Rio de Janeiro’s botanical garden for 10 years, told IPS.

Furthermore, the targets only refer to the Amazon, leaving out other ecosystems, such as the Cerrado, the savannah that covers 203.6 million hectares, or 24 percent of the national territory, and is suffering heavy and growing deforestation, said Ferretti.

“All of this reflects the Brazilian government’s weak commitment on this issue,” said Paulo Barreto, a senior researcher at the Amazon Institute of People and the Environment. “Brazil could assume a zero deforestation goal for 2030, which would be feasible because this country has learned a lot about the issue, has the necessary technology, and has land that has already been deforested, for the expansion of agriculture.

“Besides, it would be in the best interests of the country, which depends heavily on rainfall for agriculture and energy,” he said in an interview with IPS. “Its vulnerability to drought has been revealed by the current water and energy crisis, especially in the state of São Paulo, after scarce rainfall for the last two years.”

“That’s why a good climate accord in Paris would be good for Brazil,” to prevent extreme events like drought, he said.

An ambitious goal, like zero deforestation nationwide, would give Brazil a certain leadership role in the climate conference, to encourage contributions from other countries and the reaching of agreements that would make it possible to limit climate change to less disastrous levels, said both Barreto and Vieira.

Furthermore, the role that forests play in regulating rainfall, especially the Amazon jungle in South America, is understood better today.

Brazil could also present more ambitious goals with respect to energy from alternative sources, expanding investment in wind and solar energy, said Vieira. In energy, the country is going against the current, he said, increasing generation of thermal power with fossil fuels and putting a priority on producing oil from the pre-salt deposits discovered beneath a two-kilometre-thick salt layer under rock, sand and deep water in the Atlantic.

Vieira believes Brazil has lost the leadership role it had in environment and the climate for nearly two decades, since it hosted the 1992 U.N. Conference on Environment and Development, or Earth Summit, in Rio de Janeiro. In his view, it is the big players in the issue – China, the United States and Europe – that will decide the future of the global climate.

But despite the limitations of the government’s national climate programme, the environmentalists consulted by IPS admitted that Rousseff’s announcement was a happy surprise.

“We expected something worse from a development-oriented government that has treated environmentalism as an obstacle to development and economic growth,” said Vieira, who formed part of the current administration until 2013, as president of the botanical garden, a position of trust in the Environment Ministry.

“The presentation of the targets was both a relief and a frustration,” said Ferretti. “It was bad because it could have been better, both in the forest question and in energy, with more attention to biomass and solar energy.”

“And it was good because, besides some good measures, such as the recovery of degraded land, goals were set for 2025 and 2030, indicating that they would be revised every five years and could be expanded, opening a door to negotiation with and emulation by other countries,” he added.

It was also positive, he said, because Brazil abandoned its stance of inflexibly defending “common but differentiated responsibilities” exempting developing countries from meeting the same kinds of targets, as they are not equally responsible for the problem of global warming.

That separation between the two blocs boosted the “Third World” leadership by some countries like Brazil, but hindered negotiations, Ferretti argued.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: UN Committee adopts principles for sovereign debt restructuring Thu, 17 Sep 2015 14:46:09 +0000 Timossi Montes

Adriano José Timossi is Senior Programme Officer of the Global Governance for Development Programme (GGDP) of the South Centre and and Manuel F. Montes is senior adviser of the South Centre, Geneva.

By Adriano José Timossi and Manuel F. Montes
GENEVA, Sep 17 2015 (IPS)

columnsBoth-2_redAs a growing number of countries face the possibility of debt crises, the United Nations General Assembly has approved a set of nine basic principles for sovereign debt restructuring processes in an effort to provide for debt restructuring that is fair and economically sustainable.

The principles were forwarded to the General Assembly after two years of deliberations by the Ad Hoc Committee on Sovereign Debt Restructuring Processes, which agreed to them at the third working session of the on 27-28 July held at the UN headquarters in New York. They had originally been put forward by the Group of 77 (the coalition of developing nations) and China, which had also been responsible for initiating the establishment of the committee in 2014.

Six countries voted against the resolution, including the United States, claiming that the UN was not the forum to discuss debt restructuring and that such a mechanism would create uncertainty in financial markets. Most developed countries boycotted the Ad Hoc Committee’s working session in July, as did the International Monetary Fund (IMF).

The right of a state to design its own macroeconomic policy, including restructuring of its sovereign debt, without being frustrated or impeded by abusive measures, is one of the agreed-upon principles. Additionally, they declare that sovereign immunity from jurisdiction and execution regarding sovereign debt restructurings is a right of states before foreign domestic courts and exceptions should be restrictively interpreted.

Another principle is sustainability, which implies that sovereign debt restructuring workouts lead to a stable debt situation in the debtor state, preserving creditors’ rights while promoting economic growth and sustainable development, minimizing economic and social costs, warranting the stability of the international financial system and respecting human rights.

Other principles include good faith by both the sovereign debtor and all its creditors; transparency to enhance the accountability of the actors concerned; impartiality among all institutions and actors involved in sovereign debt restructuring workouts; equitable treatment for creditors; legitimacy, entailing respect for the requirements of inclusiveness and the rule of law; and majority restructuring, which implies that sovereign debt restructuring agreements that are approved by a majority of creditors are not to be impeded by other states or a non-representative minority of creditors.

The process of developing these principles included numerous informal working sessions, at which participants discussed the proposals by the Group of 77 and China, along with several principles based on the outcome of the UNCTAD Working Group on a Debt Workout Mechanism, comprising experts, legal scholars, investors, policymakers and civil society representatives.

During one of those sessions, Nobel laureate economist Joseph Stiglitz gave a keynote speech in which he pointed to Greece and Argentina as recent examples of countries that have suffered because of inadequate frameworks for debt restructuring. In the absence of an adequate framework for debt restructuring, he said, economies often go into deep recession, as happened in both countries. He also noted that there has been little progress in implementing the framework for dealing with sovereign debt that was established by the Commission of Experts on Reforms of the International Monetary and Financial System, which studied the 2007-2008 global economic and financial crises and which Stiglitz himself chaired.

In his address, Stiglitz also welcomed the Ad Hoc Committee’s work, noting that the UN, and not the IMF, is the right place for discussing these issues related to sovereign debt restructuring. Noting that the IMF is an institution of creditors, he said that to put it in charge of debt restructuring would be akin to asking Citibank to design the bankruptcy law in the United States. “We know how they would design the law, it would have indentured servitude,” he said. “We need a fair bankruptcy law, an efficient bankruptcy law and the bankruptcy laws that come out of creditors are neither fair nor efficient. The only place where one can have creditors and debtors at the table is the UN.”

Stiglitz identified five reasons why the issue has once again reached the top of the policy agenda. First, many countries are facing problems of excessive indebtedness. Sovereign debt is no longer a problem of the past, it is a current event in Greece and Puerto Rico, and there are potential crises brewing in many countries around the world.

Secondly, court rulings, particularly in the US and UK, have highlighted the incoherence of the current system and have made orderly debt restructuring, at least in some constituencies, more difficult, if not impossible. Capitalism within countries could not work without a framework for debt restructuring, and this is why every country has a bankruptcy law to facilitate the restructuring of debt. However, Stiglitz noted, there is no comparable international framework or international law, but rather an incoherent system where one jurisdiction makes one ruling and another jurisdiction makes a different ruling and there is no place where these can be reconciled.

The third reason is that there has been a movement of debt from banks to capital markets and this has increased significantly the difficulties of debt renegotiations because there are many more creditors with often conflicting interests at the table. Fourthly, and not as well recognized as it should be, is the development of CDS (credit default swaps), which are financial instruments for shifting risk, which can bring to the negotiating table parties who have no economic interest in a settlement. Worse still, they may have economic interest in not having a settlement.

And the fifth reason is the growth of vulture funds whose business model involves holding out against settlement and noncooperation (with the debtor country) in order to obtain payments greater than those participating in the debt restructuring exercise. This business model is making debt restructuring under existing institutional arrangements much more difficult if not impossible.

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

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Opinion: Brazil’s Crisis is a Blessing and a Curse Thu, 17 Sep 2015 08:08:51 +0000 Tarso Genro Tarso Genro

Tarso Genro

By Tarso Genro
PORTO ALEGRE, Sep 17 2015 (IPS)

The Lula development model that lifted 35 million people out of poverty and raised living standards for another 20 million people during the governments of President Luiz Inácio Lula da Silva (2003-2011) has run its course.

This has come at a time when the global financial system is in crisis and is seeking economic recovery and profits by manipulating the interest rates paid by indebted countries, leaving their governments without much leeway to find alternative ways of meeting their commitments.

The current fiscal crisis in Brazil has emerged from these two historical situations.

The Lula model, underpinned by high commodity prices, drove social inclusion and increased the purchasing power of wage earners. It also promoted enormous investment in social housing and public education, embarked on a policy of diversified international relations, and made large investments in infrastructure.

It was a period of intense social dialogue among a wide spectrum of participants that went from bankers to landless peasants.

The model became exhausted, not because it failed, but because in fulfilling its goals it created new social demands.

The Lula governments reformed the class structure in Brazil, and now a large proportion of the population aspires to continue its upward mobility and improvement in their quality of life. This will be possible only through a further reduction of the country’s tremendous social inequalities, because the only way to grow the economy without increasing debt is to expand demand in the great mass domestic market in this country of 204 million people, a large proportion of whom are under-consuming according to the standards of advanced capitalism.

Brazil also possesses unexplored sources of wealth, the most obvious of which is its huge offshore oil reserves.

Some have blamed the present political crisis on corruption. Actually, it would be true to say that the crisis has been aggravated as a result of corruption cases initiated in the state apparatus decades ago. These were never before investigated effectively and independently, and they finally came to light during the governments of Lula and President Dilma Rousseff. Corruption emerged from criminal power systems embedded in the state during governments prior to those of the Workers’ Party (PT – Partido dos Trabalhadores). These were used by part of the PT for its own benefit and to maintain its power.

But it is important to remember that the discovery of these corrupt systems was possible because of the strengthening of organs for control and investigation, which occurred primarily under the Lula governments. Although the PT shared, along with all the other parties, in the corruption of the state and the political system, it is also true that corruption was never fought as hard as it was during the PT governments.

The crisis may therefore be seen as “blessed” because, after Brazil recovers from it, there will be a new anti-corruption consciousness in the country among political and business elites. Ultimately, if the PT wishes to survive as the proponent of a democratic and egalitarian utopia, it will have to undertake a profound organizational, programmatic, ethical and political reform.

The political crisis in Brazil cannot be fully understood without taking into account two vital factors in our history.

First, the period since the 1988 constitution is the longest democratic era in the country’s history. Although it arose from a pact with the military regime, it set the country on a course toward social democracy, which at the time was in reverse internationally because of pressure from neoliberal reforms.

Second, Brazilian society continues to have yawning social and economic inequalities, the consequences of the policies of an elite characterized by a colonial and slave-owning culture and opposed to any type of income redistribution through the state, which it views as an interloper trying to appropriate its private wealth.

These two factors gave rise to the current crisis as factions have struggled for power and to define the development model and reform of the political system that will take shape in the next government period.

At the center of the process is the following critical question: Will the model of state and society that is being restructured within the framework of the global crisis come closer to the European social model (adapted to Brazilian conditions)? Or will it generate a society where the population is divided into one-third extremely poor, one-third relatively poor and only one-third fully included – with all the ingredients for upheavals such as states of emergency and periods of authoritarianism.

What will be contested in Brazil in the coming decades, therefore, is not the implementation of a socialist or “post-capitalist” system, for which there is no existing paradigm, but whether there will be a national democratic project with greater or less social cohesion, with greater or less inequality and poverty.

The possibility of social democracy began to be constructed during the Lula governments and continued during the first Rousseff government (2011-2015). However in her second term, which began in January 2015, Rousseff was forced by internal political circumstances (the system of party alliances) and the international situation (the global economic crisis) to abandon that direction and to adopt monetary policies demanded by the liberal and neoliberal opposition.

She did this without consulting her own party base or the social and parliamentary forces that support her with increasing dissatisfaction. This is the impasse that characterizes Brazilian politics today and is motivating part of the opposition to attempt to remove the president by “lawful means,” as happened to former Paraguayan President Fernando Lugo, impeached and ousted in 2012 by parliament.

But the crisis is “cursed” on two accounts. On the one hand, never has so much hatred been unleashed against the segment of society represented by the PT and other left wing parties, opening wounds that will be difficult to heal.

For any incoming government calling itself left wing but acting in centrist and social democratic ways, unless it can rapidly respond to real demands it will be violently destabilized by disappointed mass movements, by the mass media and by conservative or falsely social democratic parties.

On the other hand, the ferocious campaign against the PT governments has itself created economic instability that has benefited the rent-extracting sector, increased the wealth of the rich and impoverished the rest of society. According to reliable sources, “large fortunes have grown again in the first half of 2015″, implying that the social deficit has increased as state functions have been reduced.

It is still too soon to predict the future of the PT and the Rousseff government. But it is certain that the losers in the political demonization and fascist radicalization promoted by dominant media outlets against the PT and the left are Brazilian democracy and the working population, who may experience a serious reversal of their social gains and their political participation.

There will be regrettable excesses during this period of judging the old systems of illegal financing of parties and of corruption, driven by contests for the upper hand between state institutions, and by the political manipulations instigated by the major media outlets against Lula and the PT.

Translated by Valerie Dee

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

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Is Good Governance Good For Development? Mon, 14 Sep 2015 15:43:23 +0000 Jomo Kwame Sundaram Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

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

Many well-meaning people who would like better governance have been misled into insisting on so-called ‘good governance’ reforms, with the expectation that this would lead to development.

There is no clear or systematic evidence that good governance – as an approach — is necessary for development. However, the evidence favours the converse: governance improves with development.

No one is advocating bad governance, or corruption, or however one wants to define whatever good governance is meant to address. Nor is anyone saying that governance does not matter.

Clearly, no one is opposed to good governance in the sense of governance that is good. On the contrary, everyone wants to improve governance in many aspects of human affairs.

When the policy prescriptions of the conventional wisdom of the last three decades did not result in sustained development, good governance reforms became the great hope. After all, the statistical correlation between good governance indicators and economic performance has long fuelled hope that good governance would bring development.

Thus, good governance became a convenient way to explain away the failure of the development economics orthodoxy of the last two decades of the 20th century — when Latin America lost more than a decade, and Sub-Saharan Africa a quarter century due to enforcement of the so-called ‘Washington Consensus’!

Market liberalization was supposed to be the necessary complement of freedom and democracy — following the late Friedrich Hayek and Milton Friedman, both Nobel laureates in economics with considerable name recognition.

Thus, good governance was touted as the great miracle cure for development failure and corruption, usually simplistically attributed to big government. After all, who favours corruption, red-tape or ineptitude?

These were easy targets, and when conventional analysis could not explain development failures and corruption, bureaucracy, bad governance and governance failure could conveniently be blamed.

But unfortunately, all good things in life do not necessarily go together. And while most people want democracy, or want to see an end to corruption, development does not necessarily follow. And that is the problem.

Unfortunately, unrealistic expectations have been created by presuming that good governance reforms are necessary for development. When good governance reforms are imposed as aid conditionalities, recipient developing country governments often end up mimicking donor expectations.

And when you have well over a hundred good governance indicators, reforms become so wide-ranging, impossible to achieve, beyond the means of most developing countries and, worst of all, a major distraction from needed development efforts.

To make things worse, many ostensible good governance solutions favour particular vested interests, with grossly unfair consequences. Also, many good governance reforms have had unexpected, if not perverse outcomes, sometimes worsening governance problems, e.g. when decentralization and devolution have led to powerful local political patrons — which some call ‘cacique’ democracy.

So, let us improve governance by all means. But let us not overload the governance reform agenda unnecessarily. As Harvard Professor Merilee Grindle has put it, we need ‘good enough’ governance — meaning we must prioritize, and strategically.

There is no systematic evidence that the much touted good governance reforms are necessary for development. We cannot presume that the advocates of good governance have been always right about how best to improve governance.

Take the claims about the ostensible necessity to strengthen property rights.

In reality, the tragedy of the commons is not inevitable, and strengthened property rights are not the only solution. The late, much maligned Nobel laureate Elinor Ostrom showed that human societies have long coped with ecological, resource and other constraints with a variety of arrangements other than by strengthening property rights.

As governance improves with development, let us prioritize development-enhancing governance reforms, or developmental governance. A pragmatic approach to improving governance cannot be dogmatic, pre-conceived, and one-size-fits-all, where one has the solution even before one knows the problem.

Identify the major constraints, analyse, and then address them, perhaps sequentially. Draw from relevant experiences, lessons learned. Do not presume there are best practices regardless of context. We need to be humble, not presumptuous, and that is never easy for those of us deemed experts.

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

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

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Kitty Stapp

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Opinion: From Inequality to Inclusion Tue, 08 Sep 2015 16:57:54 +0000 Jomo Kwame Sundaram Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Sep 8 2015 (IPS)

Recent years have seen a remarkable resurgence of interest in economic inequality, thanks primarily to growing recognition of some of its economic, social, cultural and political consequences in the wake of Western economic stagnation.

The unexpectedly enthusiastic reception for last year’s publication of Thomas Piketty’s “Capital in the Twenty-First Century” underscores this sea change.New thinking on social protection recognises that most of the poor and vulnerable in developing countries are outside the formal economy, with almost four-fifths of the poor living in the countryside.

Piketty has correctly renewed attention to the connections between the functional and household/individual distributions of income as well as to wealth inequality. Clearly, the distribution of wealth (capital, real property) is the major determinant of the functional distribution of income.

And by textbook economics’ definition, profit maximisation involves capturing economic rents of some kind – from finance, monopolistic intellectual property rights (IPRs), ‘competitive advantage’, producer surplus, etc., presumably thanks to successful rent-seeking, by influencing legislation, regulation, public policy, public opinion and consumer preferences.

As is understandable and the norm, Piketty’s focus is on inequality at the national level, rather than at the global level. But Branko Milanovic and others have shown that about two-thirds of overall world interpersonal or inter-household inequality is accounted for by inter-country inequality, with the remaining third due to what may be termed class and other intra-national inequalities.

International inequality

There are many competing explanations for international inequalities. Historical differences in capital accumulation, including public investments, and productivity are commonly invoked to explain different economic capacities, capabilities and incomes.

But frequently unsustainable foreign investments also lead to significant net outflows, greatly diminishing the net benefits from additional economic capacities. Financial flows to the settler colonies from the late 19th century were exceptional in this regard. Generally, a small share of foreign direct investment actually enhances economic capacities, instead mainly contributing to acquisitions and mergers.

Financial globalisation in recent decades, especially capital market flows, have not ensured sustained net flows from capital-rich to capital-poor economies, but has instead worsened financial volatility and instability, increasing the frequency of crises with traumatic effects for the real economy, and growth sustainability.

Contrary to the conventional wisdom that international trade lifts all boats, it has generally favoured the richer countries at the expense of their poorer counterparts. For well over a century, except during some notable periods and some rare minerals more recently, the prices of primary commodities have declined against manufactures.

This has been especially true of tropical agriculture compared to temperate products, as productivity gains have accrued to consumers more than to producers. In recent decades, cut-throat competition has meant a similar fate for developing country manufactured exports compared to the large marketing margins of manufactures from developed economies.

Social protection

As the deadline for the Millennium Development Goals approaches, the call to address inequality as a crucial challenge for development has emerged as an issue to be addressed in the post-2015 development framework.

Inequality gradually came back into development debates after the United Nations, the World Bank and the IMF focused flagship publications on this issue a decade ago, with the publication of the UN 2005 Report on the World Social Situation entitled The Inequality Predicament, the World Development Report 2006, and the 2007 World Economic Outlook on Globalization and Inequality.

The ongoing effects of the global financial and economic crisis since 2008 have reinforced recognition that inequality has been slowing not only human development, but also economic recovery. But this has not led to any fundamental change in economic policy thinking or a major commitment to redress inequality at the global or even national level, except perhaps by improving taxation.

Instead, it has led to a consensus to establish a global social protection floor, recognising not only that poverty and hunger in the world will not be eliminated by more of the same economic policies, especially with the currently dim prospects for sustained economic and employment recovery and growth.

Historically, the welfare state emerged in developed countries to address deprivations in the formal economy – retirees, retrenched workers, military veterans and mothers among others. Social protection and other fiscal interventions do not fundamentally challenge wealth or income distribution, and current thinking is mindful of the potentially unsustainable burden of a welfare state.

New thinking on social protection recognises that most of the poor and vulnerable in developing countries are outside the formal economy, with almost four-fifths of the poor living in the countryside. The new interventions thus seek to accelerate the transition from protection to production, for greater resilience and self-reliance.

Edited by Kitty Stapp

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