Inter Press Service » Globalisation http://www.ipsnews.net News and Views from the Global South Sat, 30 Apr 2016 22:04:27 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.10 “Together, Civil Society Has Power”http://www.ipsnews.net/2016/04/together-civil-society-has-power/?utm_source=rss&utm_medium=rss&utm_campaign=together-civil-society-has-power http://www.ipsnews.net/2016/04/together-civil-society-has-power/#comments Fri, 29 Apr 2016 22:53:55 +0000 Constanza Vieira http://www.ipsnews.net/?p=144908 Participants in the biannual International Civil Society Week 2016, held in Bogotá, waiting for the start of one of the activities in the event that drew some 900 activists from more than 100 countries. Credit: CIVICUS

Participants in the biannual International Civil Society Week 2016, held in Bogotá, waiting for the start of one of the activities in the event that drew some 900 activists from more than 100 countries. Credit: CIVICUS

By Constanza Vieira
BOGOTA, Apr 29 2016 (IPS)

When Tamara Adrián, a Venezuelan transgender opposition legislator, spoke at a panel on inclusion during the last session of the International Civil Society Week held in Bogotá, 12 Latin American women stood up and stormed out of the room.

Adrián was talking about corruption in Venezuela, governed by “Chavista” (for the late Hugo Chávez) President Nicolás Maduro, and the blockade against reforms sought by the opposition, which now holds a majority of seats in the legislature.

The speaker who preceded her, from the global watchdog Transparency International, referred to corruption among left-wing governments in South America.

Outside the auditorium in the Plaza de Artesanos, a square surrounded by parks on the west side of Bogotá, the women, who represented social movements, argued that, by stressing corruption on the left, the right forgot about cases like that of Fernando Collor (1990-1992), a right-wing Brazilian president impeached for corruption.“Together, civil society has power…If we work together and connect with what others are doing in other countries, what we do will also make more sense.” -- Raaida Manaa

“Why don’t they mention those who have staged coups in Latin America and who have been corrupt?” asked veteran Salvadoran activist Marta Benavides.

Benavides told IPS she was not against everyone expressing their opinions, “but they should at least show respect. We don’t all agree with what they’re saying: that Latin America is corrupt. It’s a global phenomenon, and here we have to tell the truth.”

That truth, according to her, is that “Latin America is going through a very difficult situation, with different kinds of coups d’etat.”

She clarified that her statement wasn’t meant to defend President Dilma Rousseff, who is facing impeachment for allegedly manipulating the budget, or the governing left-wing Workers’ Party.

“I want people to talk about the real corruption,” she said. “In Brazil those who staged the 1964 coup (which ushered in a dictatorship until 1985) want to return to power to continue destroying everything; but this will affect everyone, and not just Brazil, its people and its resources.”

In Benavides’ view, all of the panelists “were telling lies” and no divergent views were expressed.

But when the women indignantly left the room, they missed the talk given on the same panel by Emilio Álvarez-Icaza, executive secretary of the Inter-American Commission on Human Rights (IACHR), who complained that all of the governments in the Americas – right-wing, left-wing, north and south – financially strangled the IACHR and the Inter-American Court of Human Rights.

Emilio Álvarez-Icaza, executive secretary of the Inter-American Commission on Human Rights (IACHR), the last one on the right, speaking at an International Civil Society Week panel on the situation of activism in Latin America. Credit: Constanza Vieira/IPS

Emilio Álvarez-Icaza, executive secretary of the Inter-American Commission on Human Rights (IACHR), the last one on the right, speaking at an International Civil Society Week panel on the situation of activism in Latin America. Credit: Constanza Vieira/IPS

He warned that “An economic crisis is about to break out in the Inter-American human rights system,” which consists of the IACHR and the Court, two autonomous Organisation of American States (OAS) bodies.

“In the regular financing of the OAS, the IACHR is a six percent priority, and the Inter-American Court, three percent,” said Álvarez-Icaza.

“They say budgets are a clear reflection of priorities. We are a nine percent priority,” he said, referring to these two legal bodies that hold states to account and protect human rights activists and community organisers by means of precautionary measures.

He described as “unacceptable and shameful” that the system “has been maintained with donations from Europe or other actors.”

There were multiple voices in this disparate assembly gathered in the Colombian capital since Sunday Apr. 24. The meeting organised by the global civil society alliance CIVICUS, which carried the hashtag ICSW2016 on the social networks, drew some 900 delegates from more than 100 countries.

The ICSW2016 ended Friday Apr. 29 with the election of a new CIVICUS board of directors.

Tutu Alicante, a human rights lawyer from Equatorial Guinea, is considered an “enemy of the state” and lives in exile in the United States. He told IPS that “we are very isolated from the rest of Africa. We need Latin America’s help to present our cases at a global level.”

Equatorial Guinea’s President Teodoro Obiang has been in power for 37 years. On Sunday Apr. 24 he was reelected for another seven years with over 93 percent of the vote, in elections boycotted by the opposition. His son is vice president and has been groomed to replace him.

“Because of the U.S. and British interests in our oil and gas, we believe that will happen,” Alicante stated.

He said the most interesting aspect of the ICSW2016 was the people he met, representatives of “global civil society working to build a world that is more equitable and fair.”

He added, however, that “indigenous and afro communities were missing.”

“We’re in Colombia, where there is an important afro community that is not here at the assembly,” Alicante said. “But there is a sense that we are growing and a spirit of including more people.”

He was saying this just when one of the most important women in Colombia’s indigenous movement, Leonor Zalabata, came up. A leader of the Arhuaco people of the Sierra Nevada de Santa Marta mountains, she has led protests demanding culturally appropriate education and healthcare, and indigenous autonomy, while organising women in her community.

She was a keynote speaker at the closing ceremony Thursday evening.

A woman with an Arab name and appearance, Raaida Manaa, approached by IPS, turned out to be a Colombian journalist of Lebanese descent who lives in Barranquilla, the main city in this country’s Caribbean region.

She works with the Washington-based International Association for Volunteer Effort.

“The most important” aspect of the ICSW2016 is that it is being held just at this moment in Colombia, whose government is involved in peace talks with the FARC guerrillas. This, she said, underlines the need to set out on the path to peace “in a responsible manner, with a strategy and plan to do things right.”

The title she would use for an article on the ICSW2016 is: “Together, civil society has power.” And the lead would be: “If we work together and connect with what others are doing in other countries, what we do will also make more sense.”

In Colombia there is a large Arab community. Around 1994, the biggest Palestinian population outside the Middle East was living in Colombia, although many fled when the civil war here intensified.

“The peaceful struggle should be the only one,” 2015 Nobel Peace Prize-winner Ali Zeddini of the Tunisian Human Rights League, who took part in the ICSW2016, said Friday morning.

But, he added, “you can’t have a lasting peace if the Palestinian problem is not solved.” Since global pressure managed to put an end to South Africa’s apartheid, the next big task is Palestine, he said.

Zeddini expressed strong support for the Nobel peace prize nomination of Marwan Barghouti, a Palestinian leader serving five consecutive life sentences in an Israeli prison. He was arrested in 2002, during the second Intifada.

 Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Why we need to stand united against governments cracking down on dissenthttp://www.ipsnews.net/2016/04/why-we-need-to-stand-united-against-governments-cracking-down-on-dissent/?utm_source=rss&utm_medium=rss&utm_campaign=why-we-need-to-stand-united-against-governments-cracking-down-on-dissent http://www.ipsnews.net/2016/04/why-we-need-to-stand-united-against-governments-cracking-down-on-dissent/#comments Thu, 28 Apr 2016 14:33:35 +0000 Dhananjayan Sriskandarajah http://www.ipsnews.net/?p=144877 Police use tear gas and water canons in Istanbul to disperse demonstrators protesting the new Internet bill in February 2014. Credit: Emrah Gurel/IPS.

Police use tear gas and water canons in Istanbul to disperse demonstrators protesting the new Internet bill in February 2014. Credit: Emrah Gurel/IPS.

By Dhananjayan Sriskandarajah
JOHANNESBURG, Apr 28 2016 (IPS)

Last month, after receiving threats for opposing a hydroelectric project, Berta Caceres, a Honduran indigenous and environmental rights campaigner, was murdered. A former winner of the Goldman Environmental Prize for her opposition to one of Central America’s biggest hydropower projects, Berta was shot dead in her own home.

In the same month, South African anti-mining activist, Sikhosiphi Bazooka Radebe, leader of a fiercely fought campaign to protect a pristine stretch of the Pondoland Wild Coast, was also shot dead.

Across the world, civic activists are being detained, tortured and killed. The space for citizens to organise and mobilise is being shut down; dissenting voices are being shut up. In 2015, at least 156 human rights activists were murdered. 156 that we know of.

The scale of the threat cannot be underestimated. The most recent analysis by my CIVICUS colleagues shows that, in 2015, significant violations of civic space were recorded in over 100 countries, up from 96 in 2014. People living in these countries account for roughly 86% of the world’s population. This means that 6 out of 7 people live in states where their basic rights to freedom of association, peaceful assembly and expression are being curtailed or denied. No single region stands out; truly, this is a worldwide trend, a global clampdown.

Hostility towards civil society is becoming normalised as threats emanate from an increasing range of state and non-state actors: corrupt politicians and officials, unaccountable security forces, unscrupulous businesses and religious fundamentalists.

Hostility towards civil society is becoming normalised as threats emanate from an increasing range of state and non-state actors: corrupt politicians and officials, unaccountable security forces, unscrupulous businesses and religious fundamentalists. But perhaps more worrying is the demonisation of civil society in mainstream political discourse. A recent bill in Israel, touted by its supporters as the ‘Transparency Bill’, places rigorous new disclosure demands on any Israeli non-profit organisation that receives more than 50% of its funding from “Foreign Political Entities’, in other words from foreign governments, the EU or UN. Following an escalating global trend, the bill seeks to cast Israeli CSOs as disloyal ‘foreign agents’, demanding that their public communications state the source of their funding and calling for their employees to wear distinctive tags.

In the UK recent government efforts to restrict the lobbying activities of civil society organisations prompted over 140 charities to express their concern. A proposed new grant agreement clause seeks to prevent UK charities from using their funds to enter into any dialogue with parliament, government or a political party. In India, Prime Minister Modi has cautioned his judiciary against being influenced by what he called, ‘five star activists’. Insinuating that the civil society sector is elitist and out of touch with realities on the ground, the comments lent renewed impetus to the country’s ongoing crackdown on critical civil rights activists and NGOs.

The recent proliferation of counter-terrorism measures has also served to further stigmatise and stifle the sector. By suggesting that non-profit organisations are particularly vulnerable to abuse or exploitation by terrorist groups, governments have justified new laws and regulatory restrictions on their legitimate activities and the political space they inhabit. Freedom of speech is being silenced, funding sources cut off; the effect has been debilitating.

State surveillance of online activities is also on the rise as authorities note the power of the internet and social media as a tool for citizen mobilization. Governments have woken up to the power of civil society. The deepest fear of repressive regimes is no longer necessarily the rise of new political opposition parties; it is 100,000 of their citizens taking to the streets in the pursuit of change. And so a concerted push-back has begun, an effort to tame civil society, to smother its ability to catalyse social transformation.

We need to push back on these incursions on civic space, urgently and across the world. We need to be challenging our governments over rights violations, about the murder of activists, about their progress in fighting poverty, climate change and inequality.

There is much cause for hope. Last year, a coalition of Tunisian civil society organisations won the Nobel Peace Prize for their work in bringing a country back from the brink of civil war and laying the foundations of a pluralistic democracy. The latest innovations in protest and movement building, in technologies that can liberate and mobilise citizens, in citizen-generated data that can empower campaigners and increase transparency around the monitoring of our global goals: all of these signal a new era of dynamic civic activism. Over the last few days more than 500 leading activists and thinkers gathered at International Civil Society Week 2016 in Bogota, Colombia to plot civil society’s global fight-back. It is fitting that this meeting took place against a backdrop of the peace negotiations that Colombian civil society has played such a key role in making possible.

Our gathering has the potential to be a defining moment for the future of democratic struggles. There will be more setbacks, low points and sacrifices to come but the demands for change won’t go away. Nor will civil society’s ability to affect it. A new, radically different vision for the future of civic action is being formulated. And those of us who believe in a healthy, independent civil society have more responsibility than ever before to keep on making our case. Knowing the threats she faced, Berta Caceres said, ‘We must undertake the struggle in all parts of the world, wherever we may be, because we have no spare or replacement planet. We have only this one and we have to take action’. She was right.

Dhananjayan Sriskandarajah is the Secretary General of CIVICUS, the global civil society alliance.

The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of IPS.

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The Hypocrisy of the West and Fiscal Paradisehttp://www.ipsnews.net/2016/04/the-hypocrisy-of-the-west-and-fiscal-paradise/?utm_source=rss&utm_medium=rss&utm_campaign=the-hypocrisy-of-the-west-and-fiscal-paradise http://www.ipsnews.net/2016/04/the-hypocrisy-of-the-west-and-fiscal-paradise/#comments Wed, 27 Apr 2016 15:17:35 +0000 Roberto Savio http://www.ipsnews.net/?p=144853 Roberto Savio, is founder and president emeritus of the Inter Press Service (IPS) news agency and publisher of Other News]]>

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

By Roberto Savio
ROME, Apr 27 2016 (IPS)

The publication of the Panama Papers has now been digested, like any scandal, after just a few days. We are now getting so accustomed to scandals, that it is confusing, and the general public reaction often is: all are corrupt and politics is all about corruption.

Roberto Savio

Roberto Savio

This, of course, plays out well for the right wing, xenophobic parties, numbers of which are ever increasing in every election, from Donald Trump in the United States, to Nigel Farage in Great Britain who promptly asked for the resignation of British prime minister David Cameron, who is among the users of the legal office of Mossack and Fonseca in Panama, which has helped more than 14.000 clients to create 214,488 companies in 21 fiscal paradises.

In some cases, like Iceland, that brought the prime minister to his knees, is a concrete response to the public indignation. By and large the general reaction was similar to the model of Cameron’s style: deny any wrongdoing, and just wait for the fury to go die down.

The Panama Papers had of course a very prominent space in the media, where the issue was alive for several days (but never more than five). The media put very little effort into looking beyond the Panama Papers and to find out the real situation of the fiscal paradise. Had they done so, a very uncomfortable truth would have emerged: the same countries who speak publicly against such paradise, do very little to eliminate them.

For instance, according to the Panama papers, it emerges that more than half of the ghost companies created by Mossack-Fonseca were registered in the British Virgin Islands. It works there like in Panama: a company pays a fee to register and an annual fee after that (always less than 500 US dollars), and by law the company will have to pay taxes only on the activities realized in the country. It suffices to not have any commercial activity in Panama or in any other fiscal paradise to be completely out of the grip of local tax authorities.

It is clear that the Virgin Islands are a British territory, like the Bahamas, Bermuda, Turk and Caicos, and therefore London could oblige these territories to comply with the international laws on transparency and accountability. The Panama Papers are just, “one firm in one place” says the economist Gabriel Zucman, author of “The Hidden Wealth of Nations: The Scourge of Tax Havens.” So, it cannot be representative of what is happening in the whole world”. The total amount of registered firms avoiding taxation is not really known. In fact, Zucman estimates that the tax heavens are now sheltering a staggering 7.6 trillion dollars, or 8% of the world’s financial wealth. And he draws attention to the fact that the United Sates is a major fiscal paradise, just after Switzerland and Hong Kong, according to the Financial Secrecy Index published by the Tax Justice Network, based in Washington.

And here comes a very good example of double standards. After it became evident that Swiss banks were hiding American capital (for which the US Treasury hit them with a heavy fine), in 2010 the US passed the Foreign Account Tax Compliance Act, which requires all financial firms in the world to surrender details about Americans with offshore accounts. But the US has refused to be part of any agreement for exchanging financial information with other countries.

Edward Kleinbar and Heather A. Lowe, of Global Financial Integrity, say that American Banks are awash with money coming from foreign investors. Kleibard, who was chief of staff of the Congress’s Joint Committee on taxation, declares: “ the United Sates demands that the rest of the world tell it when an American holds an account at a foreign institution, but the US does not return the favour by providing similar information on foreign investors, in US banks to their home jurisdiction”.

But in fact, the secrecy of American banks go beyond that. In fact, several states in the US use their constitutional privileges to shelter their banks also from the central government. Heather A. Lowe, the legal counsel and director of government affairs for Global Financial Integrity, Washington, warned that the problem was in any American state, not just in the more notorious one. ”You can create anonymous companies anywhere in the US: The reason people know about Delaware, Nevada and Wyoming is because those states market themselves internationally”.

For instance, Delaware secretary of State has stressed in his annual reports that this marketing efforts have “helped the state to reach thousands of legal professionals in dozens of countries across the globe, to tell the Delaware story”. And Nevada boasted a similar advertisement on the state’s website: Why incorporate in Nevada? Minimal reporting and disclosing requirement. Stockholders are not public records”.

While the legitimacy of taxes as a concept may be up to personal interpretation, what matters in Hillary Clinton’s use of the so-called Delaware loophole, in particular, is her constant harping on the need for corporations and elite individuals to pay their fair share. In other words, Clinton’s employment of North Orange Street amounts to a telling, Do As I Say, Not As I Do. And, as the Guardian notes, both of “the leading candidates for president – Hillary Clinton and Donald Trump – have companies registered at 1209 North Orange, and have refused to explain why.”

John Cassara, a former special agent for the US Treasury Department, reported in the New York Times on April 8where many of the declarations are coming from, about the frustration that fiscal agents have when they try to investigate “who or what is behind that company: you basically strike out. It does not matter if is the FBI, at the federal level, state or local. Even the Department of Justice can’t get the information. There is nothing you can do.” He had to abandon an investigation in Nevada when they found a corporation that had received more than 3700 suspicious wire transfers, totalling over 381 million dollars.

Clearly, one cannot set up rules for global governance, when important rich countries have double standards and cannot even put their own house in order. But the lack of global governance becomes even more evident, when we find out that the debate about global tax negotiations is exclusive to the 34 members of the Organization for Economic Cooperation and Development (OECD), and all the other countries of the world are left out. The Group of 77 and China, which has 134 members, has repeatedly asked that the UN must play a greater role in global tax cooperation but to no avail.

And it is a fact that in the list of account holders in Panama there is a large presence of personalities from Arab Countries, China, Nigeria, Brazil and so on. But there is a cultural problem, for which there is no solution. The fiscal authorities of the OECD countries think that on delicate matters, it is better to exclude the developing countries, because it would create a mechanism of negotiations where they could find themselves in the minority. That of course, would be to recognize that global governance can only be effective with a democratic system of consultation and decision. That is not at all the prevailing mood in an increasingly fractured world. Therefore, it would be normal to expect many more scandals, with spotlight for a few days on the names that could emerge, followed by a total relapse, until the next scandal explodes.

How long this can last without damaging the foundations of democracy, it is difficult to predict. And some defenders of the present system are already maintaining that scandals are proof that democracy is alive. But if the citizen’s growing lack of trust in the political and economic elites continues, it is difficult to see how scandals will help nurture democracy.

(End)

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Choose Humanity: Make the Impossible Choice Possible!http://www.ipsnews.net/2016/04/choose-humanity-make-the-impossible-choice-possible/?utm_source=rss&utm_medium=rss&utm_campaign=choose-humanity-make-the-impossible-choice-possible http://www.ipsnews.net/2016/04/choose-humanity-make-the-impossible-choice-possible/#comments Wed, 27 Apr 2016 15:03:47 +0000 Herve Verhoosel http://www.ipsnews.net/?p=144850 Herve Verhoosel is the Spokesperson of the World Humanitarian Summit (WHS), to be hosted in Istanbul on May 23-24. He was previously leading the Roll Back Malaria office at the UN in New York and was also Head of External Relations, Advocacy and Communication. In this Op-Ed Verhoosel introduces this major event, the first ever of its kind, which will bring together governments, humanitarian organizations, people affected by humanitarian crises and new partners including the private sector to propose solutions.]]>

Herve Verhoosel is the Spokesperson of the World Humanitarian Summit (WHS), to be hosted in Istanbul on May 23-24. He was previously leading the Roll Back Malaria office at the UN in New York and was also Head of External Relations, Advocacy and Communication. In this Op-Ed Verhoosel introduces this major event, the first ever of its kind, which will bring together governments, humanitarian organizations, people affected by humanitarian crises and new partners including the private sector to propose solutions.

By Herve Verhoosel
UN, New York, Apr 27 2016 (IPS)

We have arrived at the point of no return. At this very moment the world is witnessing the highest level of humanitarian needs since World War Two. We are experiencing a human catastrophe on a titanic scale: 125 million in dire need of assistance, over 60 million people forcibly displaced, and 218 million people affected by disasters each year for the past two decades.

Herve Verhoosel

Herve Verhoosel

More than $20 billion is needed to aid the 37 countries currently affected by disasters and conflicts. Unless immediate action is taken, 62 percent of the global population– nearly two-thirds of all of us- could be living in what is classified as fragile situations by 2030. Time and time again we heard that our world is at a tipping point. Today these words are truer than ever before.

The situation has hit home. We are slowly understanding that none of us is immune to the ripple effects of armed conflicts and natural disasters. We’re coming face to face with refugees from war-torn nations and witnessing first-hand the consequences of global warming in our own backyards. We see it, we live it, and we can no longer deny it.

These are desperate times. With so much at stake, we have only one choice to make: humanity. Now is the time to stand together and reverse the rising trend of humanitarian needs. Now is the time to create clear, actionable goals for change to be implemented within the next three years that are grounded in our common humanity, the one value that unites us all.

This is why the United Nations Secretary-General is calling on world leaders to reinforce our collective responsibility to guard humanity by attending the first-ever World Humanitarian Summit.

From May 23rd to the 24th, our leaders are being asked to come together in Istanbul, Turkey, to agree on a core set of actions that will chart a course for real change. This foundation for change was not born overnight. It was a direct result of three years of consultations with more than 23,000 people in 153 countries.

On the basis of the consultation process, the United Nations Secretary-General launched his report for the World Humanitarian Summit titled “One Humanity, Shared responsibility. As a roadmap to guide the Summit, the report outlines a clear vision for global leadership to take swift and collective action toward strengthening the coordination of humanitarian and crisis relief.

Aptly referred to as an “Agenda for Humanity,” the report lays out ground-breaking changes to the humanitarian system that, once put into action, will promptly help to alleviate suffering, reduce risk and lessen vulnerability on a global scale.

The Agenda is also linked to the Sustainable Development Goals, which specifically maps out a timeline for the future and health of our world. Imagine the end of poverty, inequality and civil war by 2030. Is it possible? Undoubtedly so. Most importantly, the Secretary-General has called for measurable progress within the next three years following the Summit.

As such, the Summit is not an endpoint, but a kick-off towards making a real difference in the lives of millions of women, men and children. It’s an unprecedented opportunity for global leaders to mobilize the political will to address some of the most pressing challenges of our time. So, how to take action?

The Agenda specifies five core responsibilities that the international community must shoulder if we expect to end our shared humanitarian crises. These core responsibilities offer a framework for unified and concentrated action to Summit attendees, leadership and the public at large. Once implemented, change will inevitably follow.

1. Prevent and End Conflict: Political leaders (including the UN Security Council) must resolve to not only manage crises, but also to prevent them. They must analyse conflict risks and utilize all political and economic means necessary to prevent conflict and find solutions, working with their communities – youth, women and faith-based groups – to find the ones that work.

The Summit presents a unique opportunity to gain political momentum and commitment from leaders to promote and invest in conflict prevention and mediation in order to reduce the impacts of conflicts, which generate 80 percent of humanitarian needs.

2. Respect Rules of War: Most states have signed and implemented international humanitarian and human rights laws, but, sadly, few are respected or monitored. Unless violators are held accountable each time they break these laws, civilians will continue to make up the vast majority of those killed in conflict – roughly 90 percent. Hospitals, schools and homes will continue to be obliterated and aid workers will continue to be barred access from injured parties.

The Summit allows a forum for which leadership can promote the protection of civilians and respect for basic human rights.

3. Leave No One Behind: Imagine being forcibly displaced from your home, being stateless or targeted because of your race, religion or nationality. Now, imagine that development programs are put in place for the world’s poorest; world leaders are working to diminish displacement; women and girls are empowered and protected; and all children – whether in conflict zones or not – are able to attend school. Imagine a world that refuses to leave you behind. This world could become our reality.

At the Summit, the Secretary-General will call on world leaders to commit to reducing internal displacement by 50 percent before 2030.

4. Working Differently to End Need: While sudden natural disasters often take us by surprise, many crises we respond to are predictable. It is time to commit to a better way of working hand-in-hand with local systems and development partners to meet the basic needs of at-risk communities and help them prepare for and become less vulnerable to disaster and catastrophe. Both better data collection on crisis risk and the call to act early are needed and required to reduce risk and vulnerability on a global scale.

The Summit will provide the necessary platform for commitment to new ways of working together toward a common goal – humanity.

5. Invest in Humanity:
If we really want to act on our responsibility toward vulnerable people, we need to invest in them politically and financially, by supporting collective goals rather than individual projects. This means increasing funding not only to responses, but also to crisis preparedness, peacebuilding and mediation efforts.

It also means being more creative about how we fund national non-governmental organizations – using loans, grants, bonds and insurance systems in addition to working with investment banks, credit card companies and Islamic social finance mechanisms.

It requires donors to be more flexible in the way they finance crises (i.e., longer-term funding) and aid agencies to be as efficient and transparent as possible about how they are spending money.

Our world is at a tipping point. The World Humanitarian Summit and its Agenda for Humanity are more necessary today than ever before. We, as global citizens, must urge our leaders to come together at the Summit and commit to the necessary action to reduce human suffering. Humanity must be the ultimate choice.

Join us at http://www.ImpossibleChoices.org and find more information on the Summit at https://www.worldhumanitariansummit.org.
@WHSummit
@herveverhoosel
#ShareHumanity

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Organised Civil Society Increasingly Hemmed In by Global Eliteshttp://www.ipsnews.net/2016/04/organised-civil-society-increasingly-hemmed-in-by-global-elites-say-activists/?utm_source=rss&utm_medium=rss&utm_campaign=organised-civil-society-increasingly-hemmed-in-by-global-elites-say-activists http://www.ipsnews.net/2016/04/organised-civil-society-increasingly-hemmed-in-by-global-elites-say-activists/#comments Tue, 26 Apr 2016 22:55:43 +0000 Constanza Vieira http://www.ipsnews.net/?p=144845 Tunisian 2015 Peace Prize-winner Ali Zeddini (left), next to Sri Lankan activist Danny Sriskandarajah, secretary general of Civicus, and two other participants in the International Civil Society Week, hosted by Bogotá from Apr. 25-28, with the participation of 900 activists from more than 100 countries. Credit: Constanza Vieira/IPS

Tunisian 2015 Peace Prize-winner Ali Zeddini (left), next to Sri Lankan activist Danny Sriskandarajah, secretary general of Civicus, and two other participants in the International Civil Society Week, hosted by Bogotá from Apr. 25-28, with the participation of 900 activists from more than 100 countries. Credit: Constanza Vieira/IPS

By Constanza Vieira
BOGOTA, Apr 26 2016 (IPS)

Collusion, according to the dictionary, means “secret or illegal cooperation or conspiracy, especially in order to cheat or deceive others.” That is what the world’s political and economic elites engage in, according to Danny Sriskandarajah, secretary general of the international civil society alliance CIVICUS.

The reason for this is that they are afraid of dissent, the activist from Sri Lanka said Monday, Apr. 25, the first day of the International Civil Society Week 2016 which has drawn 900 civil society delegates from all continents to the Colombian capital.

This is the first time the biannual CIVICUS event is being held in Latin America.

In Sriskandarajah’s view, this is the reason that protests by young people in every region of the world are cracked down on by the police, often brutally.

He also said this is why civil society organisations are facing a global crisis, with governments that seek to impose their policies.

To do so, more governments are making overseas funding of civil society organisations illegal, while at the same time stepping up state surveillance of their online activities, due to fear of the power of civil society and the social networks to mobilise citizens to protest.

To this is added intimidation and repression which, in many cases, are curbing people’s ability to fight for a broad range of human rights.

Fundamental freedoms are under attack, said organisers and delegates.

CIVICUS tracks threats to basic freedoms of speech, expression and association in over 100 countries. In 2015, it counted 156 murders of human rights defenders worldwide.

Last year, half of the rights violations documented by CIVICUS happened in Latin America, where human rights defenders were the main targets. The most dangerous country was Colombia.

During more than three years of peace talks between the Colombian government and the FARC guerrillas, over 500 community organisers and activists have been murdered in Colombia, especially small farmers and rural leaders seeking to reclaim land belonging to their families and communities, as well as human rights activists supporting their struggle.

The global crackdown on activism has continued in 2016. Two high-profile cases were the murders of Honduran human rights activist Berta Cáceres and South African community leader Sikhosiphi Bazooka Rhadebe.

Sriskandarajah said “We need to find new ways to defend activists and hold governments to account for these violations as well as the progress they must make in the fight against poverty, inequality and climate change.”

These and other central ideas form part of the Apr. 25-28 international week in Bogotá, whose hashtag is #ICSW2016. The week will culminate in the CIVICUS World Assembly on Friday Apr. 29.

The organisers were expecting 500 delegates at ICSW2016, but 900, from nearly 100 different countries, showed up. They were received by the host organisation, the Colombian Confederation of NGOs, created in 1989 as an umbrella group for non-governmental organisations fighting for economic, social and cultural rights.

Participants have been inspired by the presence of 2015 Nobel Peace Prize-winner Ali Zeddini of the Tunisian Human Rights League, one of the four organisations that joined forces to guide Tunisia’s spontaneous 2010-2011 Jasmine Revolution during the power vacuum left by dictator Zine El Abidine Ben Ali (1987-January 2011) after he fled the North African country.

The Tunisian movement was finally successful in bringing about a transition to democracy, with a new constitution that establishes, in articles that cannot even be rewritten by another constituent assembly, that Tunisia is a civil state based on the people’s will, not the will of God. It also guarantees freedom of belief, conscience and religious practice.

The ICSW2016 will review mechanisms that hold governments accountable for murders of activists and other human rights violations. The delegates will also assess the progress made in the fight against poverty, inequality and adaptation to climate change.

Other participants are José Ugaz of Peru, the chair of Transparency International, and South African activist Kumi Naidoo, former head of Greenpeace and current director of the Africa Civil Society Centre.

The participating organisations include the Community of Democracies, Global Philanthropy Project, Article 19, the International Centre for Non-Profit Law, Amnesty International, the International Land Coalition, Abong – the Brazilian Association of NGOS, Transparency International and ACT Alliance.

One of this week’s workshops will address recent trends in the use of technology to empower and mobilise citizens.

One example is DataShift, a social data platform and Civicus initiative “that builds the capacity and confidence of civil society organisations to produce and use citizen‑generated data.”

A Youth Assembly was held Sunday Apr. 24 ahead of the ICSW2016. The delegates discussed solutions to youth poverty and inequality, as well as adaptation to climate change.

IPS spoke to Jhoanna Cifuentes, a Colombian with a degree in biology who is an activist with Red+Vos, a young people’s network. She is taking part in the ICSW2016 in representation of the Colombian Youth Climate Movement (MCJC).

The MCJC was created in 2014 to participate in the annual climate conferences. That year’s edition was held in Peru.

“We realised there was no space for young Colombians to come together and make their voices heard,” Cifuentes said. “We didn’t know each other, we all worked with different focuses. Our 10 groups organised and joined forces.”

The experience showed her that these civil society meetings are a chance to meet and network with people involved in similar activism. Because, she said, “Our work can’t just be limited to the local level, we have to have a wider influence.”

The Youth Assembly put out a statement on priority issues for young people, such as inclusion, gender and the environment. “But in order for these questions not to remain just on paper, it is the duty of each one of us to develop these initiatives and concerns in the organisations we work with,” Cifuentes said.

“I think a meeting like this one serves that purpose: to share information and make contacts in order to form networks, to work together in the future,” she added.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: World Economy in Serious Difficulty: Call for Bold Measureshttp://www.ipsnews.net/2016/04/opinion-world-economy-in-serious-difficulty-call-for-bold-measures-2/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-world-economy-in-serious-difficulty-call-for-bold-measures-2 http://www.ipsnews.net/2016/04/opinion-world-economy-in-serious-difficulty-call-for-bold-measures-2/#comments Tue, 26 Apr 2016 15:09:19 +0000 Yilmaz Akyuz http://www.ipsnews.net/?p=144832 Yilmaz Akyuz is the chief economist of the South Centre, based in Geneva. A longer version of this article was originally published in the Real News network (http://therealnews.com/t2/)]]>

Yilmaz Akyuz is the chief economist of the South Centre, based in Geneva. A longer version of this article was originally published in the Real News network (http://therealnews.com/t2/)

By Yilmaz Akyuz
GENEVA, Apr 26 2016 (IPS)

The US was the cause of the crisis but has come out better than anyone else in the advanced world and better than many developing countries. During the crisis there was a widespread perception that this was the end of US hegemony. It was end of the dollar as the major reserve currency.

Yilmaz Akyuz

Yilmaz Akyuz

When we look back now, we see that the US is strengthened a lot more as a result of this crisis. Not only vis-à-vis other developed countries –“ Europe, European Union or Japan – but developing countries including China, in economic terms. The status of the dollar as a reserve currency today is unchallenged because of the crisis in Europe.

The US economy is also fragile. Usually economic expansions are often followed by contractions. This is part of the capitalist system working in boom bust cycles. The US has had 24 quarters of expansion since the beginning of the crisis. And a lot of people think simply on this observation that after such expansion US recovery or growth is supposed to come to an end on historical evidence.

But apart from that? It is very difficult to get out of the policies that US introduced in response to the crisis. It does not know how to get out of the policy of easy money. It is very hesitant in raising interest rates. But on the other hand if there is a slowdown in the US and a contraction and renewed instability they do not have any ammunition to respond to it, because they used all their ammunition to respond to the last crisis and they are still using the same except in bond purchases

We have not had a serious debt crisis in an emerging economy in the past 10 – 12 years. However, the risks are very serious now. The world is caught in a debt trap today. Why? Because the resolution of the European and American crisis – which was a debt crisis – required cutting debt. But what we have seen is that the policies implemented to resolve that crisis have given rise to the accumulation of additional debt.

In the US, the ratio of public plus private debt to gross domestic product (GDP) increased from 200% to 280%. In Japan it increased to 500%; in the Eurozone and China it doubled. And in developing countries today it is close to 200% of GDP.

The current situation has an uncanny similarity to the 1970s and 1980s. Developing countries had a boom in commodity markets in the 70s which was accompanied by massive international lending by banks recycling petrodollars [oil surpluses]. And this twin-boom in commodities and capital flows to developing countries in the 70s ended up with a bust when the US raised interest rates in 1979 and 1980. And what we had was a debt crisis in Latin America. And the situation now is somewhat similar. We had a twin boom in commodity prices and capital flows and now we have come to the end of this boom even without the US changing its monetary policy in a big way. And the question is will the outcome be the same as in the 1970s?

We are highly vulnerable to the reversal of commodity prices and capital flows. The vulnerability to commodity prices nevertheless varies among developing countries because different types of commodities fell at different rates. Some developing countries benefit from commodity price declines but no developing country would benefit from tightening of the external financial situation. Now we cannot count on reserves. Traditionally we look at the reserve adequacy in terms of their volume relative to short-term external debt, but now there is a strong presence of foreigners in domestic bond, equity and deposit markets and their exit can cause significant turmoil.

Monetary policy now faces a major dilemma. In order to stimulate demand and growth we have to cut interest rates. A cut in interest rates can trigger capital outflows. So there is a dilemma between growth and stability. If we face a liquidity crisis we no longer have enough reserves to meet our imports and stay current on our debt payments and keep the capital account open – what do we do? Business as usual? Borrow from the IMF? Keep the capital account open? Continue allowing capital to run out, using reserves and the borrowing from the IMF and practicing austerity?

Now I think there is a strong misgiving vis-à-vis the IMF among the developing countries. And I am sure they will do their best to avoid going to the IMF in the event of a serious liquidity crisis. I am not referring to a solvency crisis, default – I am talking about simple liquidity crisis when you do not have enough foreign exchange to meet your current account needs and debt payments. Then what do you do?

Of course, the unorthodox response is to use reserves to support one’s economy, imports, not to support capital outflows. Are we prepared to impose controls over capital outflows? Are we prepared to impose temporary debt standstills? Or, are we prepared to impose austerity on creditors and investors rather than austerity on the people? These are the critical issues.

In conclusion, even if we avoid a fully-fledged financial crisis, the prospects are for sluggish, erratic growth and heightened instability in the global economy. Why? Because of financial excesses we have had in the past 8-9 years. And one cannot easily restructure balance sheets; that is the problem. We need to have a better policy mix than we have been using.

A few suggestions. First, stop relying on easy money which is not good except for speculation in advanced economies, abandon fiscal orthodoxy, invest in infrastructure and create jobs and create demand. Secondly, we need better control over international capital flows not only by recipient countries but also by source countries. Because they are most destabilizing. They are at the heart of the current difficulties that we face. Third, we need a mechanism for adequate provision of international liquidity and finally we need effective and equitable debt resolution mechanisms.

Now these issues should be studied and debated extensively, particularly at the current juncture. But unfortunately Bretton Woods institutions are not the best place to do that; neither to consider the fragilities, nor to resolve the problems. The IMF has missed one of the most serious crises in the world since the second world war, the subprime crisis. The IMF at the Secretariat level is not very efficient in providing early warnings to countries about the global economic situation. And this is not just a technical expertise issue; it is also a political issue. Because such an early warning – an effective projection of the difficulties in the world requires a critical examination of the policies of countries which exert significant impact on the world economy. It would require criticizing US and European economic policy. The IMF Secretariat cannot do that. In 20018 and 2009 when we were writing that the rise of the South was a myth, the IMF was promoting that the South was becoming a locomotive for the world economy. And they changed their mind only in 2013.

Secondly the IMF is not very bold in innovation. They are not bold in the reform of the international financial architecture. Why? Because the IMF is part of that architecture and that requires to reform that very same institution…So I believe that these matters should be discussed and debated among developing countries and in other fora such as the United Nations Conference on Trade and Development (UNCTAD), which has a much better record in anticipating these difficulties and providing proposals, which eventually became part of the mainstream.

(End)

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Opinion: Unnoticed, We Are Close to Destruction of Our Planethttp://www.ipsnews.net/2016/04/opinion-unnoticed-we-are-close-to-destruction-of-our-planet/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-unnoticed-we-are-close-to-destruction-of-our-planet http://www.ipsnews.net/2016/04/opinion-unnoticed-we-are-close-to-destruction-of-our-planet/#comments Thu, 21 Apr 2016 07:45:25 +0000 Roberto Savio http://www.ipsnews.net/?p=144747 By Roberto Savio
ROME, Apr 21 2016 (IPS)

On the 17th of April, Italians were called to vote in a national referendum, on the extension of licenses to extract petrol and gas from the seas. The government, the media and those in the economic circles, all took a position against the referendum, claiming that 2000 jobs were at a stake. The proponents of the referendum (among them five regions), lost. Italy is following a consistent trend, after the Summit on Climate Change (Paris December 2015), in which all countries (Italy included) took a solemn engagement to reduce emissions.

Roberto Savio

Roberto Savio

Two weeks after the Summit, the British Prime Minister took the initiative to extend the licenses to extract coal, explaining that 10.000 jobs were at stake. Then it was India’s turn, to declare that licenses for coal powered stations would be increased, as the development of the country comes before protection of the environment.

On this, the Polish government declared that it had no intentions to reduce the use of Polish coal, in the short term. Then Hungary made a similar statement about its use of fossil energy.

Meanwhile, no significant initiative for emission’s control has been announced after Paris. And all the Republican candidates have announced that, once installed in the White House, they will declare null and void the agreements reached in Paris, where Obama played a crucial role. In fact, several Republican initiatives are seeking Supreme Court cancellation of measures taken by the administration to limit pollutions. And with different accents, all the xenophobe and right wing parties which are emerging everywhere in Europe, have indicated that they do not consider the Paris agreement as a priority in their agenda.

The main criticism of the scientific community, on the Paris agreements, was that while the accepted goal was to limit the increase of the global temperature to 2 degrees, compared with that of the beginning of the industrial revolution (while accepting that 1.5 degrees would have been an adequate target), in reality the sum total of all individual targets freely established by the countries, was coming to at least 3.5 degrees.

The idea was that with further negotiations, the target of 2 degrees would finally emerge, also thanks to new technologies. Now, an equally crucial flaw is emerging. No control of implementation of the agreement will take place before 2030. Until then, each country is responsible for implementing its target, and also for checking the implementation of its commitment.

It would have been interesting to see a similar philosophy, adopted on tax levels. Every citizen could decide how much tax he or she pledges to pay, and be responsible until 2030 to check that this engagement or commitment is met. Then only in 2030, mechanisms of verification would fall in place. And those mechanisms would bear no enforcements or penalties. They would only indicate public shaming of those who did not keep their engagements.

Of course, the fact that industrialized countries, like Italy and United Kingdom, far from reducing sources of pollution, is not a good example for developing countries, who are now coming into industrialization, and have to limit their emissions because since early 19th century industrialized countries have been polluting the world.

In fact, subsidies to the fossil industries, according to the World Bank, run now at 88 billion dollars per year. According to a report from the Overseas Development Institute G20 countries spend more than twice of what the top 20 private companies are spending on finding new reserves of oil, gas and coal, and do so with public money. Meanwhile, the Fund for helping underdeveloped countries to adopt new technologies, established at 100 billion in Paris, has yet to be completed. Of course a check up is due by 2030.

Well, every week we receive alarming data on how the climate is deteriorating much faster than we thought. I am not talking about the uninterrupted news on natural catastrophes. I am talking about the alarming cries by the scientific community from all over the world.

The National Centre for Climate Restoration from Australia has published a sort of summary about all those calls, in an alarming report by Prof. Kevin Andersen of the UK Tyndall Centre for Climate Change in which it says:

…According to new data released by the US National Oceanic and Atmosphere Administration, measurements taken at the Marina Loa Observatory in Hawaii show that carbon dioxide (CO2) concentration jumped by 3.08 parts per million (ppm) during 2015, the largest year-to- year increase in 56 years of research. 2015 was the fourth consecutive year that CO2 grew more than 2ppm.Scientist say that they are shocked and stunned by the “unprecedented NASA temperature figures for February 2016, which are 1.65”C higher than the beginning of the nineteen century and around 1.9”C warmer than the pre-industrial level…..

This means, according to Prof. Michael Mann “we have no carbon budget left for the 1.5 degrees target and the opportunity for holding the 2 degrees is rapidly fading unless the world starts cutting emissions rapidly and right now. The current el Niño conditions have contributed to the record figures, but compared to previous big El Niños, we are experimenting blowout temperatures.” For a glimpse into what lies in our future, we have only to look at Venezuela, where now public offices work three days per week to cut water and power usage.

Stefan Rahmstorf of the Potsdam Institute of Climate Change Research says “In 2012, the US National Academy of Science analyzed in detail how a major drought in Syria – from 2007 to 2010 – was a crucial factor in the civll war that began in 2011. More than a million people left their farms to go to crowded and unprepared cities, where they were inspired by the Arab Spring to rise against a dictatorial regime which was not providing any help.

Journalist Baher Kamal, who is the Inter Press Service IPS Advisor for Africa and Middle, East did publish a two part series on the impact of Climate Change on the Middle East and North of Africa region, which makes clear the region, could become largely uninhabitable by the year 2040. Just to give an example, the Nile could lose up to 80% of its flow. Bahrain, Kuwait, Lebanon, Palestine, Oman, Qatar, Saudi Arabia and the Emirates are all at very high risk. But so are also Algeria, Iraq, Jordan Libya, Morocco, Syria, Tunisia and Yemen.

Dr. Moslem Shathout, deputy chairman of the Arab Union for Astronomy and Space, considers that Arab North African countries are the most affected, by large, by the climate change impact.

In other words, we have to expect a mass of displaced people, on the shores of the Mediterranean, and therefore of Europe. The category of climate refugees does not exist in any legislation.

While it is a fact that Europe’s population was 24% at the beginning of the nineteen-century, it will be 4% at the end of the present one. Europe will lose 40 million people that will need to be replaced by immigrants, to keep productivity and pensions running.

The arrival of 1.3 million people, two thirds young and educated, has created a massive political crisis, and the unravelling of Europe.

The climate refugees will be of all ages, and many from the agricultural sector, the most conservative and uneducated in the Arab world.

Do Italian Prime Minister Matteo Renzi and British Prime Minister David Cameron – who for electoral reasons play the chord of a few lost jobs from the fossil industry – have any idea on how to face this imminent future?

Probably not, but they do not care. This problem will not be during their tenure. So climate change is not in the political agenda as a very top priority. And media follows events, not processes, so no cries of alarm; yet, from one to the next, a continuation of disasters lead to catastrophes…

When, everybody will realize as the saying goes, God pardons, man does sometimes, but nature never.

(End)

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Latin America to Redouble Its Climate Efforts in New Yorkhttp://www.ipsnews.net/2016/04/latin-america-to-redouble-its-climate-efforts-at-new-york-ceremony/?utm_source=rss&utm_medium=rss&utm_campaign=latin-america-to-redouble-its-climate-efforts-at-new-york-ceremony http://www.ipsnews.net/2016/04/latin-america-to-redouble-its-climate-efforts-at-new-york-ceremony/#comments Wed, 20 Apr 2016 23:48:16 +0000 Diego Arguedas Ortiz http://www.ipsnews.net/?p=144741 Deforestation, as seen in this part of Rio Branco, the northern Brazilian state of Acre, is one of the main sources of greenhouse gas emissions in Latin America. Credit: Kate Evans/Center for International Forestry Research

Deforestation, as seen in this part of Rio Branco, the northern Brazilian state of Acre, is one of the main sources of greenhouse gas emissions in Latin America. Credit: Kate Evans/Center for International Forestry Research

By Diego Arguedas Ortiz
SAN JOSE, Apr 20 2016 (IPS)

The countries of Latin America will flock to sign the Paris Agreement, in what will be a simple act of protocol with huge political implications: it is the spark that will ignite actions to curb global warming.

More than 160 countries have confirmed their attendance at the ceremony scheduled for Friday, Apr. 22 in New York by United Nations Secretary-General Ban Ki-moon. And eight have announced that they will present the ratification of the agreement during the event, having already completed the internal procedures to approve it.

The countries of Latin America, with the exception of Nicaragua and Ecuador, promised to participate in the collective signing of the historic binding agreement reached by 195 countries on Dec. 12 in the French capital.

Experts consulted by IPS stressed the political symbolism of the ceremony, and said they hoped Latin America would press for rapid implementation of the climate deal. “In New York, the region will underscore the importance of acting with the greatest possible speed, in view of the impacts that we are feeling in each one of our countries.” -- Andrés Pirazzoli

“In New York, the region will underscore the importance of acting with the greatest possible speed, in view of the impacts that we are feeling in each one of our countries,” said Chilean lawyer Andrés Pirazzoli, a former climate change delegate of Chile and an expert in international negotiations.

The countries of Latin America and the Caribbean, many of which are especially vulnerable to the effects of climate change, are calling for the adoption of global measures to curb global warming.

According to a 2014 World Bank report, “In Latin America and the Caribbean temperature and precipitation changes, heat extremes, and the melting of glaciers will have adverse effects on agricultural productivity, hydrological regimes, and biodiversity.”

Pirazzoli said this recognition of the threat posed by climate change in the region would be a bone of contention for the participating countries.

At the Paris Summit or COP 21 – the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) – the Chilean expert led the technical team of the Independent Association of Latin America and the Caribbean (AILAC), made up of Chile, Colombia, Costa Rica, Guatemala, Honduras, Panama, Paraguay and Peru.

Pirazzoli said that “if there is one issue that has brought Latin America together, beyond internal ideological questions, it was the issue of vulnerability.”

“That will be a mantra for the region in the negotiations that will follow the signing of the agreement,” which will get underway again in Bonn in May, he added.

Friday’s ceremony is just the first piece in a puzzle that involves the 197 parties to the UNFCCC, in which each one will have to activate its mechanism to achieve ratification of the international agreement.

On Dec. 12, 2015, at the end of COP 21, United Nations Secretary-General Ban Ki-moon (centre) and other dignitaries celebrated the historic Paris Agreement on climate change, to be signed this week in New York. Credit: United Nations

On Dec. 12, 2015, at the end of COP 21, United Nations Secretary-General Ban Ki-moon (centre) and other dignitaries celebrated the historic Paris Agreement on climate change, to be signed this week in New York. Credit: United Nations

In order for the treaty to enter into effect, it must be signed by at least 55 parties accounting for a combined total of at least 55 percent of global greenhouse gas emissions, and this is to happen by 2020, according to what was agreed on at COP 21.

The countries agreed to limit global warming to 2 degrees Celsius by the end of this century relative to pre-industrial levels to prevent “catastrophic and irreversible impacts”.

The agreement set guidelines for the reduction of greenhouse gas emissions, for addressing the negative impacts of global warming, and for financing, to be led by the countries of the industrialised North.

In the region, the process will vary from country to country, but “according to tradition in Latin America, normally these accords have to go through two houses of Congress, which makes the process more complex,” said Pirazzoli.

He pointed out that Mexico and Panama committed to ratifying the agreement this year.

The United Nations reported that the eight countries that will attend the agreement signing ceremony with their ratification instrument in hand are Barbados, Belize and St. Lucia – in this region – along with Fiji, the Maldives, Nauru, Samoa and Tuvalu.

“A story of power of vulnerable countries is beginning to emerge, and instead of coming as victims, they will use this ceremony to show that they want to be in the leadership,” said Costa Rican economist Mónica Araya, another former national climate change negotiator.

Araya heads the non-governmental organisation Nivela and is an adviser to the Climate Vulnerable Forum, a self-defined “leadership group” within the UNFCCC negotiations, which assumes strong, progressive positions.

The economist said the confirmation of their participation in the New York ceremony by almost all of the countries in Latin America was one more sign that the region is waking up.

She concurred with Pirazzoli that Latin America’s leaders are finding points in common that enable them to overcome ideological barriers, at least in this field.

“We have seen new efforts, such as the summit of environment ministers in Cartagena, which set a precedent by creating a climate change action platform for the entire region,” said Araya, referring to the 20th Meeting of the Forum of Ministers of the Environment of Latin America and the Caribbean, held in late March in that Colombian city.

But she said that in order for international efforts to be effective, change must start at home. “Public opinion and the business community should be helped to understand that our parliaments will play a key role” in ratifying the agreement, she added.

Enrique Maurtua, climate change director with the Argentine NGO Environment and Natural Resources Foundation, and a veteran of the climate talks, agreed.

“The signing of the accord is only the second step, after reaching the agreement,” he said. “Without this, we can’t go on to the third, which is ratification – the most important step in order for the accord to go into effect.”

Maurtua said these global processes need to take root at a global level, by improving their Intended Nationally Determined Contributions (INDCs), which nearly the entire region submitted last year, with the exception of Panama, which did so on Apr. 14, and Nicaragua, which said it would not do so.

Although they account for only a small proportion of global greenhouse gas emissions, the region’s countries pledged to reduce them in their INDCs – a numerous group with ambitious goals, including the two biggest economies in the region: Brazil and Mexico.

They also listed climate change adaptation actions, in several cases going beyond the minimum required.

Maurtua was upbeat with regard to the implementation of the Paris Agreement by 2020 and the 2016 negotiating process, which will begin in Bonn in May and will continue until COP 22 is held in Morocco.

“Latin America could very well be an example of the implementation of good practices for achieving sustainable development,” he said.

The absence of Ecuador and Nicaragua is in line with previous positions taken, where they have showed a reluctance to participate in multilateral processes.

After COP 21, Nicaragua said the Paris Agreement did not go far enough.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: Breaking the Grip of Rimbunan Hijau over Papua New Guineahttp://www.ipsnews.net/2016/04/opinion-breaking-the-grip-of-rimbunan-hijau-over-papua-new-guinea/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-breaking-the-grip-of-rimbunan-hijau-over-papua-new-guinea http://www.ipsnews.net/2016/04/opinion-breaking-the-grip-of-rimbunan-hijau-over-papua-new-guinea/#comments Wed, 20 Apr 2016 16:35:26 +0000 Frederic Mousseau http://www.ipsnews.net/?p=144732 Frederic Mousseau, Policy Director of the Oakland Institute. ]]>

Frederic Mousseau, Policy Director of the Oakland Institute.

By Frederic Mousseau
OAKLAND, Apr 20 2016 (IPS)

James Sze Yuan Lau and Ivan Su Chiu Lu must be extremely busy men. Together, they are listed as directors of some 30 companies involved in various activities and services related to logging or agribusiness in Papua New Guinea (PNG). The former is the managing director of Rimbunan Hijau (RH) PNG and son-in-law of RH’s founder Tiong Hiew King; the latter is executive director of RH PNG Ltd.. All but two of these 30 companies have the same registered address at 479 Kennedy Road, in the national capital, Port Moresby–the headquarter of the RH group in the country.

Frederic Mousseau

Frederic Mousseau

Their ability to magically fit into a relatively small office space on Kennedy Road is not the only puzzling fact about the subsidiaries of the Malaysian group, Rimbunan Hijau. Out of the 30 above mentioned companies, 16 subsidiaries that are directly involved in logging or agribusiness have one other thing in common. According to their financial records , they don’t make a profit. Most of them have been working at a loss for over a decade. During the 12 years for which financial records were available to the Oakland Institute’s researchers, all together, the subsidiaries declared an average loss of about US$ 9 million every year.

How the group – the largest logging operator in PNG – manages to operate at a loss for so many years, and yet still remains in business? If it were unprofitable to log and export timber from PNG, why would these companies continue their operations? These are some of the critical questions raised in a report released in February 2016, The Great Timber Heist: The Logging Industry in Papua New Guinea, by the Oakland Institute. The report exposed massive tax evasion and financial misreporting by foreign logging companies, allegedly resulting in non-payment of hundreds of millions of dollars in taxes.

Recovering tax revenue would be certainly welcomed by PNG given the acute budget crisis the country has been facing in recent months. Yet, it is unclear whether the government of PNG will decide to take action following these revelations. After all, despite the promises made by the Prime Minister, still no action has been taken two and a half years after the damning report on recent land leases, produced by the Commission of Inquiry (CoI), which identified all sorts of malpractices and irregularities and concluded that most leases were illegal.

A first step for any government would be to start monitoring the declared sale prices of exported timber. PNG prices are much lower than those of other exporters of tropical timber (nearly 50% cheaper in 2014), which suggests that logging companies undervalue their exports and therefore their profits. But the recent statements by the Forest Minister in denial of the findings of the report, and given the well-documented deficiencies of the PNG Forest Authority, there is little hope of decisive action by this agency.

Another level of action is the enforcement of tax compliance by the Internal Revenue Commission (IRC), the government agency in charge of tax collection. However, although many RH companies are conveniently located at the same address, it may prove difficult for tax auditors to ascertain the extent of their wrongdoings. The Group has been built as a complex and opaque financial structure: almost all RH holding companies–the parent companies of those operating in PNG–are located in tax havens, primarily the British Virgin Islands, known for facilitating illicit financial flows.

Moreover, the use of multiple subsidiaries in logging operations makes auditing even more complex to conduct. For instance, in one single project in West Pomio, Gilford Ltd.’s records indicate financial transactions with 16 other RH subsidiary companies. This interrelation facilitates transfer pricing as companies of the same group can charge each other an artificially high price for goods, equipment, and services, thereby increasing the sister company’s operational expenses, and artificially reducing their profits. This interrelation would require investigators to not just focus on individual logging companies but to extend their audits to the larger RH Group. But who would they go after?

RH is controlled by Tiong Hiew King, one of Malaysia’s richest men. Although logging is the core business of the group – ‘Rimbunan Hijau’ ironically means ‘forever green’ in Malay, his empire covers a multitude of sectors, and all continents from fisheries in New Zealand, timber in Siberia, to Chinese speaking newspapers in California. RH’s grip over PNG goes far beyond the forests, as it is present across all sectors of the economy. The company’s most recent investment in the capital Port Moresby is a project known as Vision City, which contains the largest shopping mall in the Pacific Islands region and is expected to be expanded to include an office tower block, service apartments, a hotel and convention centre. It also owns the National, the largest of the two daily newspapers in PNG, an airline, Tropicair, as well as shipping and logistics companies.

Whereas the group appears as PNG’s superpower, citizens are left powerless. As documented in 2013 Oakland Institute’s report and film, logging in PNG hides a multilayered tragedy of daylight robbery, whereby local communities are being deprived of their resources and their rights, with the complicity of their own government. RH has often been accused in the past of connections within the political elite in the country and of involvement in corruption and violence in relation to its logging operations. In a number of occasions, local police forces have been used to intimidate and arrest local landowners opposed to logging and land grabbing by RH subsidiaries.

A single corporate group, RH, thus materializes the betrayal of the unique constitutional protections that PNG citizens are supposed to enjoy. The 1975 Constitution guaranteed people’s land rights and upheld national sovereignty, self-reliance, and the preservation of natural resources as key principles for the country. It called on the State “to control major enterprises engaged in the exploitation of natural resources.” Ironically, today a major enterprise has turned the statement around and appears to be controlling the state and the country’s natural resources. Will Papua New Guineans eventually decide to put the things back in place?

(End)

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Developing countries left out of global tax decisionshttp://www.ipsnews.net/2016/04/developing-countries-left-out-of-global-tax-decisions/?utm_source=rss&utm_medium=rss&utm_campaign=developing-countries-left-out-of-global-tax-decisions http://www.ipsnews.net/2016/04/developing-countries-left-out-of-global-tax-decisions/#comments Tue, 19 Apr 2016 06:02:44 +0000 Lyndal Rowlands http://www.ipsnews.net/?p=144698 Global tax rules mean companies pay taxes where their headquarters are located not in the countries where they operate. Credit: Thembi Mutch/IPS

Global tax rules mean companies pay taxes where their headquarters are located not in the countries where they operate. Credit: Thembi Mutch/IPS

By Lyndal Rowlands
Apr 19 2016 (IPS)

Over one hundred developing countries continue to be left out of global tax cooperation negotiations despite leaks such as the Panama papers showing the high cost of tax avoidance.

“Rich countries (get) together in a closed room and decide on what they call global tax rules,” Tove Maria Ryding a civil society representative on the Financing for Development (FfD) Group told journalists here Monday.

The current process which is coordinated by the 34 member Organisation for Economic Cooperation and Development (OECD) is “extremely undemocratic,” said Ryding, who is also tax justice coordinator at the European Network on Debt and Development (Eurodad).

The Group of 77 and China, which represents 134 UN member states has “repeatedly called” for the UN to have a greater role in global tax cooperation. It argues that this would “(strengthen) international cooperation in tax matters,” and “allow all member States, including developing countries, to have an equal say on issues related to tax matters.”

However this proposal was rejected at the UN’s important 2015 summit on Financing for Development leaving the OECD with continued control over global tax matters.

Ryding says that the rules which continue to be written by the OECD disadvantage developing countries. For example, she said, when a company operates in more than one country, the OECD rules decide that the taxes should mainly be paid in the country where the company has its headquarters. This advantages OECD countries, she said, where headquarters are normally located, and disadvantages developing countries where companies perform substantial parts of their operations.

Ryding said that developing countries were being asked to follow these rules despite not being given a chance to participate in making them.

After the UN Financing for Development summit in 2015 she said that the OECD “adopted almost 2000 pages of new decisions on what they call global tax rules.”

Developing countries are often left out of these meetings, or when they are asked to participate they are charged an expensive bill, said Ryding. By comparison all UN members already had representation at the United Nations, she said, so participating in these talks within the UN would be less costly.

She said that World Bank President Jim Yong Kim suggestion, reportedly made last week, that a UN tax body would be funded by aid money was incorrect.

Ryding spoke during a press conference at the beginning of a three-day follow-up to last year’s Financing for Development conference.

Other development financing issues being discussed during the follow-up include developing country debt and changes to aid money given by developed countries.

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Maquilas Help Drive Industrialisation in Paraguayhttp://www.ipsnews.net/2016/04/maquilas-help-drive-industrialisation-in-paraguay/?utm_source=rss&utm_medium=rss&utm_campaign=maquilas-help-drive-industrialisation-in-paraguay http://www.ipsnews.net/2016/04/maquilas-help-drive-industrialisation-in-paraguay/#comments Sat, 16 Apr 2016 01:59:21 +0000 Mario Osava http://www.ipsnews.net/?p=144645 Texcin, the garment plant built by Brazilian company Riachuelo near the airport in Asunción, under Paraguay’s maquila law, which offers tax exemptions and other incentives for export-oriented production. In the foreground a garment worker in training (“entrenamiento”). Credit: Mario Osava/IPS

Texcin, the garment plant built by Brazilian company Riachuelo near the airport in Asunción, under Paraguay’s maquila law, which offers tax exemptions and other incentives for export-oriented production. In the foreground a garment worker in training (“entrenamiento”). Credit: Mario Osava/IPS

By Mario Osava
ASUNCION, Apr 16 2016 (IPS)

“There were cases of people who stopped coming to work after receiving their first wages and then came back a few days later to ask if there was more work,” because they were used to casual work in the informal economy, said Ivonne Ginard.

Ginard, a human resources manager in the textile firm Texcin, was in charge of hiring the plant’s 353 employees and helping them make the transition from informal labour to working in a factory with set schedules, uniforms, safety measures and medical certificates to justify absences.

Texcin, a garment factory near the Asunción airport, is emblematic of the incipient industrialisation process in Paraguay, which is still an agriculture-based economy, where soy and beef are the main exports and informal employment is predominant in the cities.

The plant is a joint venture between members of the Paraguayan business community and Riachuelo, one of the biggest clothing brands in Brazil, where it has 285 stores and two industrial plants. Riachuelo decided to take advantage of the incentives provided by the law on maquila export plants, in effect in Paraguay since 2000, to produce clothing in this neighbouring South American country instead of importing from Asia.

The aim is to increase the number of workers twofold by the end of 2016 and to continue to expand, since the company has the space to build a new plant.

“Paraguay offers abundant, young, easily trained workers, cheap energy, and tax incentives for maquilas and duty-free zones, which make it possible to import raw materials tariff-free,” said Andrés Guynn, one of the Paraguayan partners, who heads Texcin.

“Our production is competitive with costs similar to those of Asia, with a big advantage in terms of time: it takes 90 days for products to be shipped from China to Brazil, while ours get to (the Brazilian city of) São Paulo in 72 hours, by truck,” he said.

“Under the maquila regime, 108 companies set up shop in Paraguay, 62 of them in the last two years, and 80 percent of them come from Brazil,” the director of the maquila sector in the Ministry of Industry and Trade, Ernesto Paredes, told IPS.

Maquila or maquiladora plants are built by foreign corporations, generally in free trade zones. They import materials and equipment duty-free for assembly or manufacturing for re-export, and enjoy other tax breaks and incentives, as well as more flexible labour conditions.

Texcin human resources manager Ivonne Ginard (right), next to the woman who trains the garment workers, Rosa Prieto. “Texcin changed my life,” said Prieto, who was a self-employed seamstress in the informal sector of the economy for 15 years, before she was hired by the company in January 2015. Credit: Mario Osava/IPS

Texcin human resources manager Ivonne Ginard (right), next to the woman who trains the garment workers, Rosa Prieto. “Texcin changed my life,” said Prieto, who was a self-employed seamstress in the informal sector of the economy for 15 years, before she was hired by the company in January 2015. Credit: Mario Osava/IPS

“The maquiladora industry is dynamic, but it does not accept trade union freedom, it does not allow unions to be organised in its factories, which violates constitutional rights,” the president of the Confederation of the Working Class (CCT) labour federation, Julio López, told IPS.

Auto parts factories are predominant in the industry, in terms of both revenue and jobs generated by maquiladoras in Paraguay, Paredes said. He said the sector uses the “just-in-time” delivery system developed by Japan’s auto industry, which is an inventory strategy employed to boost efficiency and reduce waste by receiving goods only as they are needed in the production process, which cuts inventory costs.

The Japanese company Yasaki and Germany’s Leoni have recently set up plants in Paraguay, employing thousands of people, nearly all of them women, in the production of electrical car cables.

And Paraguay now has its first car assembly plant. A national company, Reimplex, began to assemble J2 cars for Chinese auto maker JAC Motors on the outskirts of Asunción on Mar. 28.

Clothing factories also employ large numbers of women.

In addition, the plastics industry is expanding fast in the eastern department of Alto Paraná, on the border with Brazil, Paredes said.

Cheap local labour, which he said is “low-cost not so much because of the wages paid, but due to the low social charges” and low taxes, are especially attractive for Brazilian companies. To that is added the cost of electricity, which is 63 percent cheaper than in Brazil, according to the head of the maquila sector.

One limitation is transport and energy infrastructure. “Roads, ports, highways, real estate – all of this is lacking, although Paraguay has been investing heavily in airports, hotels, and office buildings,” he said.

One solution would be to widen the two-lane highway between Asunción and Ciudad del Este, the country’s two main economic hubs. However, the plan is not to expand the existing road, but “to build a second highway exclusively for trucks and trade,” as well as a second bridge to Brazil, said Paredes.

Texcin’s textile warehouse seen behind a sign announcing the expansion of the plant which was built by Brazilian company Riachuelo with partners in Paraguay on the outskirts of Asunción. Credit: Mario Osava/IPS

Texcin’s textile warehouse seen behind a sign announcing the expansion of the plant which was built by Brazilian company Riachuelo with partners in Paraguay on the outskirts of Asunción. Credit: Mario Osava/IPS

Investment is also needed in another route for the transportation of heavy loads, the Paraguay-Paraná waterway, used to export soy.

“Better signalisation would double its capacity and speed up river traffic,” Gustavo Rojas, a researcher at the Center for Economic Analysis and Dissemination in Paraguay (CADEP), told IPS.

This land-locked country of 6.8 million people has the world’s third-largest river barge fleet, as well as shipyards that build them, which favours an increase in river traffic, Paredes said.

Electricity is, potentially, Paraguay’s biggest comparative advantage, since the country owns half of the energy from two huge hydropower dams: Itaipú, shared with Brazil, and Yacyretá, on the border with Argentina, with the capacity to produce 14,000 and 3,200 MW, respectively.

But it only began to use part of that energy when a power line from Itaipú to Villa Hayes, near Asunción, was completed in October 2013. The power line was financed by a Brazilian fund aimed at narrowing the development gap between countries in the Southern Common Market (Mercosur) trade bloc, made up of Argentina, Brazil, Paraguay, Uruguay and Venezuela.

Without an adequate distribution network, however, the new energy supply did not eliminate problems like the February blackout that left 300,000 homes without power in Greater Asunción.

Achieving a more secure energy supply “is a question of time,” said Guynn, who tried to place his company near the new power line.

The problem is that the national power utility, ANDE, does not have investment capacity, and “distribution is not secure and steady,” said Fernando Masi, founding director of CADEP, which carries out research on public policies and provides graduate studies in economy.

But the broad availability of energy is a new element drawing industries to Paraguay, since the other advantages, such as low labour costs and tax incentives, already existed before.

Cheap energy also tempted the British-Australian multinational metals and mining corporation Rio Tinto, which studied the possibility of producing aluminum in Paraguay, even if it had to ship in the raw material, bauxite, from far away, because electric power is the main cost of the aluminum industry.

But a major public campaign, which collected more than 100,000 signatures, managed to block the project, “which would consume more energy than all of the national industries combined,” while requiring subsidies and employing a relatively small number of people, Mercedes Canese, an engineer who was deputy minister of industry during the government of Fernando Lugo (2008-2012), told IPS.

However, another engineer, Francisco Scorza, who studied the case, said the Rio Tinto project became unviable because “China began to produce very cheap aluminum, at 1,200 dollars a ton, 40 percent less expensive than here, and Paraguay can’t afford to subsidise energy.”

CADEP’s Masi said attracting small and medium-sized industries is better for development and employment, but the maquila sector has limits. The auto parts industry, for example, is limited to producing wiring, “because there is no bilateral agreement with Brazil on the car industry,” he said.

Brazil demands that Paraguay stop imports of used automobiles, “a very high cost for Paraguay to pay,” as it has a large fleet of used Japanese vehicles known as the “Vía Chile” cars because they come into Paraguay through that neighbouring country.

The maquila industry only exported 284 million dollars worth of goods in 2015 – very little in comparison to Paraguay’s overall industrial exports of 3.0 to 3.5 billion dollars, said Masi.

Industrialisation in Paraguay “has taken off, but not at the fast pace that was expected,” he said, adding that improving energy and logistics infrastructure could help.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Opinion: Robust Global Economic Recovery Needs Coordinated Policy Responsehttp://www.ipsnews.net/2016/04/opinion-robust-global-economic-recovery-needs-coordinated-policy-response/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-robust-global-economic-recovery-needs-coordinated-policy-response http://www.ipsnews.net/2016/04/opinion-robust-global-economic-recovery-needs-coordinated-policy-response/#comments Thu, 14 Apr 2016 15:45:32 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=144619 Anis Chowdhury held various senior positions in the United Nations Secretariat in New York and Bangkok. Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development.]]>

Anis Chowdhury held various senior positions in the United Nations Secretariat in New York and Bangkok. Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development.

By Anis Chowdhury and Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Apr 14 2016 (IPS)

In the wake of releasing the IMF’s latest assessment of the global economy, Chief Economist Maurice Obstfeld noted in his blog, “Global growth continues, but at an increasingly disappointing pace that leaves the world economy more exposed to negative risks. Growth has been too slow for too long.”

The IMF anticipates 3.2% global economic growth this year, down from 3.4% predicted in January, 3.6% last October and 3.8% last April. Nonetheless, this continuously downward revised forecast is still higher than the United Nations global growth forecast of 2.9% and 3.2% in 2016 and 2017 respectively early this year.

‘Solution’ is the problem
The United Nations has been warning against early fiscal consolidation and austerity since 2009 before G20 leaders retreated, in mid-2010, from their earlier commitment, at their April 2009 London Summit, to coordinate their responses involving large fiscal stimulus packages to prevent the global financial crisis from becoming a depression. In effect, Gordon Brown, the host, considerably strengthened the IMF, ostensibly to better support affected countries, to ensure a coordinated and balanced global recovery.

But the first ‘green shoots of recovery’ provided the pretext for a policy U-turn once powerful financial interests had been saved. Rapid ‘fiscal consolidation’ through budgetary austerity measures, it was claimed, would restore investor confidence, thus ensuring higher investment and growth. Even though much cited research justifying ‘fiscal austerity’ was discredited as flawed, and the IMF admitted that such advice was based on erroneous ‘back of the envelope’ estimates, leaders in Europe have stuck to their contractionary fiscal policy stance.

The entire burden of economic recovery has been put on monetary policy and structural reforms, which are clearly not working. Structural reform measures are understandably slow. Low and now negative interest rate policies, euphemistically termed quantitative easing, have kept economies barely afloat, while causing financial instability and exchange rate volatility in emerging economies, one reason cited by the IMF for its downward growth forecast revision.

While reforms aspire to offer win-win solutions, most involve winners and losers. Political resistance tends to be greater in a stagnating economy, especially one characterized by rising inequality due to stagnant or falling real wages. Cutting social services when unemployment is high not only depresses aggregate demand, but also exacerbates inequality and social unrest.

Thus, instead of raising productivity, boosting growth and expanding employment, attempts at structural reforms often result in deteriorating productivity, slow growth, stagnating employment and declining aggregate demand. After six years of fiscal consolidation, debt levels, including in the euro zone, are still rising with no signs of labour market improvements.

Europe holding us all back
The unemployment rate in the euro area has only declined marginally from the 2013 peak of 12%. It is still unacceptably high and remains well above pre-crisis levels. Eurostat estimates that 21.7 million men and women in the EU-28, of whom 16.67 million were in the euro area (EA-19), were unemployed in February 2016 while the seasonally-adjusted unemployment rate in the euro area was 10.3%.

The youth unemployment rate — which had declined sharply between 2005 and 2007 in the EU-28, reached its low of 15.2% in the first quarter of 2008, and peaked 23.8 % in the first quarter 2013 — stood at 21.4% at the end of 2015. In February 2016, 4.4 million youth were unemployed in the EU-28, of whom 3.0 million were in the euro area.

Despite drastic fiscal consolidation and severe cuts in public services, the debt-GDP ratio increased, not only in Greece, but also in other countries such as Italy, Portugal, Belgium, Spain, France and the UK. Continued low growth is making the current debt-reduction strategy and fiscal consolidation self-defeating. Government debt in the Euro zone reached nearly 92% of GDP at the end of 2014, the highest level since the single currency was introduced in 1999, compared to 66% in 2007. The new debt to GDP ratio is more than 50% higher than the maximum allowed level of 60% set by the Stability and Growth Pact rules designed to make sure EU members “pursue sound public finances and coordinate their fiscal policies”.

With domestic demand declining, growth is supposed to come from export demand, but obviously, all countries cannot simultaneously find external markets for their output – as implied by so much contemporary trade rhetoric. Hence, addressing high unemployment and public debt has to involve reinvigorating domestic demand. This would entail both immediate policy actions to expand domestic demand as well as medium-term policies to address structural issues and longer-term challenges such as climate change.

Governments should expand public services including active labour market programs, subsidized childcare, universal healthcare and education. Such public provisioning enhances ‘social wages’, taking pressure off wage demands as businesses strive to recover. These measures help ensure social and political stability at modest fiscal cost.

New Deal again?
Over eight decades ago, President Franklin Delano Roosevelt introduced the New Deal for a strong and sustained economic recovery. It not only ushered in a new era of economic growth and prosperity, especially in some poorer US regions, but also addressed widespread environmental, economic and social distress. The current crisis needs such a response. But after decades of globalization and environmental deterioration, a feasible and viable response must necessarily involve international cooperation and commitment to sustainable development.

Such a Global New Deal (GND) would be in line with the United Nations Agenda 2030 for sustainable development goals that all countries adopted last September. It would have employment elements in line with the Global Jobs Pact, but also support private investments and welfare provisioning for the Global Social Protection Floor. It should therefore be central to international recovery efforts complemented by national stimulus packages aimed at reviving and greening national economies.

The GND will inevitably increase public debt in the near term, but the fiscal costs of public borrowing should be modest when long-term interest rates are at a historic low. In the longer-term, it will engender sustained economic growth, employment recovery and fiscal consolidation, as the New Deal did.

Many countries had huge public debts when WW II ended. Despite calls then for drastic expenditure cuts, governments spent a great deal on economic reconstruction and social welfare. Had they caved in to the fiscal hawks of their time, post-war European recovery would have been delayed and the Cold War could have been lost. As governments continued with massive expenditure to rebuild their countries, economies grew all over the world, and debt diminished quickly with rapid economic growth and fast growing tax revenues during the post-war Golden Age.

(End)

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OPINION: Learning from History for Progresshttp://www.ipsnews.net/2016/04/opinion-learning-for-history-for-progress/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-learning-for-history-for-progress http://www.ipsnews.net/2016/04/opinion-learning-for-history-for-progress/#comments Thu, 07 Apr 2016 12:37:08 +0000 Jomo Kwame Sundaram http://www.ipsnews.net/?p=144516 Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007]]>

Jomo Kwame Sundaram was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought in 2007

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Apr 7 2016 (IPS)

The Chinese character for crisis combines the characters for ‘danger’ and ‘opportunity’. Our ability to improve the human condition depends critically on our ability to recognize and address dangers, but also to seize opportunities made possible by recognizing that crises offer rare opportunities to pursue extraordinary options not normally available.

Jomo Kwame Sundaram. Credit: FAO

Jomo Kwame Sundaram. Credit: FAO

New Post-War Consensus

World War Two was a case in point. The Bretton Woods Conference in July 1944 committed to create the conditions for enduring peace through post-war reconstruction and post-colonial development through sustained growth, full employment and reducing inequality.

Thus, Bretton Woods created the International Bank for Reconstruction and Development (IBRD) Development and the International Monetary Fund (IMF). The IBRD, better known as the World Bank, was created to support long-term investment and development. The IMF would help countries, not only to overcome balance of payments difficulties, but also “to direct economic and financial policies toward the objective of fostering orderly economic growth with reasonable price stability”. Similar concerns were behind the International Labour Congress two months earlier. On 10th May 1944, the Congress had adopted the historic Philadelphia Declaration which emphasized that “lasting peace can be established only if it is based on social justice”.

For decades after the war, labour’s share of output and gross income increased as other inequalities declined. This Golden Age also saw greater investment in health, education and public services, including social protection. The underlying post-WW2 consensus endured for over a quarter century before breaking down in the 1970s.

Marshall Plan

As the Cold War began, US Secretary of State General George Marshall announced a re-industrialization plan for war-torn Europe. Politically, the Marshall Plan was intended to create a cordon sanitaire to contain the spread of communism. Generous infusion of US aid and support for national developmental policies ensured the rebirth of modern Europe. For many Europeans, this is still seen as America’s finest hour.

In the decades that followed, the Marshall Plan developed into what is probably the most successful economic development assistance programme in history. Similar economic development policies and assistance were introduced in Japan, Taiwan and South Korea, especially following the establishment of the People’s Republic of China and the outbreak of the Korean War.

This experience offers valuable lessons today. Europe and Northeast Asia rebuilt quickly, industrialized and achieved sustained and rapid growth through policies including economic interventions such as high duties, quotas and other non-tariff barriers. Free trade was only pursued as international competitiveness was achieved.

George Marshall knew that shared economic development is the only way to lasting peace, as John Maynard Keynes had warned in his criticisms of the impact of the Treaty of Versailles on Germany after the First World War. Marshall also emphasized that aid should be truly developmental, not piecemeal or palliative. National economic capacities and capabilities had to be nurtured to ensure sustainable development.

Counter-Revolution

Each era, no matter how successful, sows the seeds of its own end. The celebration of markets and private property were the major new economic norms invoked from the 1980s to undermine the post-war consensus. Nobel laureate Simon Kuznets’ hypothesis – suggesting the inevitability of inequality rising with growth before its eventual decline – was invoked to justify related inequality.

The higher propensity to save of rentiers and profiteers, compared to wage earners, became the pretext for the tolerance, if not deliberate promotion of inequality in favour of the former, ostensibly to accelerate investment and growth. Conversely, progressive redistributive measures were deemed bad for growth, as they allegedly not only lowered savings and investment rates, but also deterred investors.

From the early 1980s, the so-called “Washington Consensus” – the policy consensus on developing countries uniting the American government and the Bretton Woods institutions located in the US capital city – emerged to rationalize the counter-revolutions against development economics, Keynesian economics and progressive state interventions.

Macroeconomic policies became narrowly focused on balancing the annual budget and attaining low inflation – instead of the previous emphasis on sustained growth and full employment with reasonable price stability. A relentless push for deregulation, privatization and economic globalization followed. Such measures were supposed to boost growth, which would trickle down, thus reducing poverty – hence, we were not to worry about inequality.

But the ‘neo-liberal’ measures largely failed to deliver sustained growth. Instead, financial and banking crises have become more frequent, with more devastating consequences, exacerbated by greater tolerance for inequality and destitution, which have undermined effective demand, in turn forming a vicious cycle, impeding sustained economic recovery and growth.

Global New Deal

The new global priorities from the end of the Second World War remain very relevant today. Empirical evidence has disproved the previous conventional wisdom that progressive redistribution retards growth. Instead, inequality and social exclusion have been shown to be detrimental to development.

After the last three and a half decades of regression, we have to recommit ourselves to the more inclusive and egalitarian ethos of the Philadelphia Declaration, Bretton Woods and the Marshall Plan with a global New Deal for our times.

(End)

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OPINION: Indian Economy: Fading Promise or Gearing for Growthhttp://www.ipsnews.net/2016/04/opinion-indian-economy-fading-promise-or-gearing-for-growth/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-indian-economy-fading-promise-or-gearing-for-growth http://www.ipsnews.net/2016/04/opinion-indian-economy-fading-promise-or-gearing-for-growth/#comments Wed, 06 Apr 2016 14:32:21 +0000 Shyam Saran http://www.ipsnews.net/?p=144492 Shyam Saran is a former Foreign Secretary of India. He is currently Chair of Research and Information Systems for Developing Countries (RIS) a prestigious think tank and a Senior Fellow at the Centre for Policy Research in New Delhi.]]>

Shyam Saran is a former Foreign Secretary of India. He is currently Chair of Research and Information Systems for Developing Countries (RIS) a prestigious think tank and a Senior Fellow at the Centre for Policy Research in New Delhi.

By Shyam Saran
NEW DELHI, Apr 6 2016 (IPS)

It was in 2001 that the Chief Economist of Goldman Sachs, Jim O’Neill, coined the acronym, BRICs, to denote the special category of large emerging economies, which he predicted were destined to transform the structure of the global economy, through sustained growth in the twenty first century. According to him, the BRICs, namely, Brazil, Russia, India and China, which at the turn of the century accounted for 25% of global Gross domestic product (GDP), could double their share to 50%.

Shyam Saran

Shyam Saran

Since then, these emerging economies have traversed differential trajectories. China is the second largest economy in the world after the U.S. but it is now experiencing an inevitable slow-down. Both Brazil and Russia are in deep economic crisis, with their commodity-based economies hard hit by the continuing stagnation in global GDP and trade. It is only India which has maintained a stable 7-7.5% of GDP growth over the past decade and a half and is today, the fastest growing large emerging economy. What are the prospects of India sustaining an accelerated rate of GDP growth over the next several decades?

Will it be able to narrow the as yet expanding gap with China, which is a 11 trillion dollars economy to India’s 2 trillion dollars GDP?India enjoys sound economic fundamentals. It has a large and still growing young population, which with proper education and skills, could constitute a “demographic dividend” precisely when most advanced economies, as well as China, are confronting challenge of an ageing population. The country has followed a policy of fiscal prudence and conservative monetary policies which create a stable environment for investments and innovation.

The latest budget has pegged the fiscal deficit to 3.5% of the GDP. It has introduced several important reforms such as allowing foreign direct investment (FDI) into agro-processing and marketing which has the potential of transforming Indian agriculture. A bankruptcy law is in the offing and legislation has been passed on linking all subsidies and benefits to the ‘Aadhar’ , or the unique identification number which has by now enrolled over 900 million Indians (out of a total population of 1.2 billion). This will allow direct benefit transfer, through bank accounts, to those entitled to subsidies, such as on LPG, kerosene and essential food items. This is expected to reduce leakages and corruption significantly. However, the Government has so far been unable to pass legislation instituting the General Sales Tax (GST) which is indispensable to creating a true national market and reducing barriers to inter-State commerce and movement of goods.

India today has a pro-reform and pro-business government, led by Prime Minister Narendra Modi. A most important change from the past has been the public embrace by the political leadership of economic reforms, including unrolling a welcome mat for foreign investment, a commitment to improving the ease of doing business and providing incentives for the burgeoning start-up domain. The Prime Minister has been unequivocal in courting foreign direct investment, this being a major priority in his foreign visits. In this sense, India is no longer engaged in “reforms through stealth”. Reforms have entered the political mainstream and this provides assurance and predictability on the sustainability of the reform process.

Despite this congenial political environment for economic reforms, there has been mixed record of progress on the ground. This is, to some extent, the result of a much less favourable international economic environment since the global financial crisis erupted in 2007- 2008. The advanced economies of the U.S., Europe and Japan, are struggling to restore health to their severely impaired economies. The Chinese economy, which had emerged as the engine of global economic growth in the past 3 decades, is now slowing down more precipitously than expected.

Global trade, which was growing at double the rate of global GDP (6% against the GDP growth of 3% per annum) since 1990, is now expanding at a slower rate than global GDP (2.5% per annum). Since the 2007 – 2008 crisis, protectionist trends in major economies are on the rise, further shrinking market access for goods and services from emerging economies like India. Thus, the investment and export driven strategies which were successful in transforming East Asian economies, including China, are not as effective as before. India will need to find other drivers of growth, including within its domestic economy, to sustain accelerated growth. In this context, innovation becomes important. The surge in start-ups in India is an encouraging development. In having to deal with a more competitive and slower-growing global market-place, India will need to leverage is strengths. One key asset it has is the very size of its market and its significant growth prospects. For example, it has a mobile market of 900 million and the prospects for similar growth in its smart-phone market are immense. Its e-commerce sector is expanding at a rapid rate. It is in these new lines of business that opportunities for leap-frogging exist. However, the Modi government has not so far been able to formulate an overall economic strategy which takes into account the altered global economic environment and the implications for India’s economic prospects. Exports have been declining 15 months in a row and domestic investment is at a standstill. The banking sector, in particular, public sector banks, are heavily exposed to non-performing assets and foreign investors are confused by bureaucratic decisions which contradict the Prime Minister’s positive messaging. There appears to be a lack of capacity and leadership at the ministerial and senior bureaucratic level, leading to contradictory policies and lack of implementation. More recently the development narrative which won the elections for Modi has been in danger of being overwhelmed by the politics of polarization and communal and sectarian divide which appear to be driven by short term electoral calculations. This also acts as an inhibiting factor on foreign investment .

While India may have the best prospects today among emerging economies, it is likely to achieve only sub-optimal results unless some of these structural problems are resolved.

(End)

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The Arab Spring: Five Years Onhttp://www.ipsnews.net/2016/04/the-arab-spring-five-years-on/?utm_source=rss&utm_medium=rss&utm_campaign=the-arab-spring-five-years-on http://www.ipsnews.net/2016/04/the-arab-spring-five-years-on/#comments Fri, 01 Apr 2016 13:20:04 +0000 Ugo Tramballi http://www.ipsnews.net/?p=144443 is senior correspondent andcolumnist for the Italian daily Sole 24 Ore.]]> An Egyptian man riding a scooter and wearing a traditional fez known locally as a “tarboush” in Tahrir square Cairo, October 20, 2015.

An Egyptian man riding a scooter and wearing a traditional fez known locally as a “tarboush” in Tahrir square Cairo, October 20, 2015.

By Ugo Tramballi
Apr 1 2016 (Longitude - Italy)

Five years ago the Arab world blew up, and the flames are still raging. What at first had been euphoria quickly turned to chaos. What cannot be denied, though, is that the uprisings were the spark of an epochal change.

There is no law or decree in Egypt – by now back to a sense of normality – which does not claim to be taken in the name of the January 25 Revolution. This event has created around it a rhetoric in apparent contrast with the real importance of what it would celebrate. But were the events of Tahrir Square really a revolution, or just a student uprising? Whichever way the experts define it, along with the upheavals in the whole region, it is still a question as to whether it was a catastrophe or a historic step for the Arab world.

Five years after the Jasmine Revolution in Tunisia, which began in December 2010, and the Revolt of Tahrir Square, which erupted shortly afterwards in Cairo on January 25, 2011, the memory of these events has blurred. Shortly after Egypt, rebellions took hold in Syria, Libya, Bahrain, Saudi Arabia and Yemen. In some countries they turned into civil war, in others they were quickly repressed. The only thing that that everyone seems to agree on is that the Arab Springs – as they were called, imagining them to be something like the Prague Spring of 1968 against the Soviet yoke – have been a failure. The only country spared was Tunisia, but only because it is small, with an educated population, religiously and ethnically homogeneous, and not so geographically strategic as to possesses natural resources that could entice others in the region and the world.

Five years after Tahrir, Egypt’s President General Abdel Fattah el-Sisi, formerly a general, has essentially imposed a restoration after a period of unrest and a shortlived government of the Muslim Brotherhood, democratically elected but inept. The Sisi regime is more illiberal than that of Hosni Mubarak, which the crowd had overthrown five years ago: the laws are more repressive, most opponents are in prison, and freedom of the press has disappeared. Any criticism is punished as if it were an act of terrorism against the state. But Sisi has the consent of the majority of Egyptians in search of order and stability. His seizure of power in the summer of 2013, against the Muslim Brotherhood, was a brutal coup d’état in every sense. But it was supported by millions of Egyptians who demanded the military release Egypt from chaos.

Elsewhere other “springs” have been a complete disaster. They toppled dictatorial regimes – or, as in Syrian, weakened it – but they did not create democratic forms of government. On the contrary, they have paved the way to anarchy combined with tribal, sectarian and Islamic extremism. Many are convinced that without the great upheaval of 2011, there would be no Islamic State today. It would seem that the dictators of before were better; they managed to control systems and ommunities unprepared for democracy. In short, the riots have shown that the Arab Middle East is not ready, and perhaps never will be, to accept social and political systems that were better than what it had. In some ways, this is a modern form of that old lens full of stereotypes, through which we have always observed the Levant: Orientalism.

Yet the facts would seem to support this view. Today there is no Arab country that is better off than it was in 2010. The only one, Tunisia, is a victim of recurring Islamic terrorism that was not as aggressive before the revolution. But all this is true only if you look at the short-term history, following the daily news of a nascent political process full of fits and starts.

The French Revolution broke out in 1789: there was the Terror followed by the Thermidor, Napoleon, and the Restoration. European states, enemies and friends of France, took advantage of the uncertainty as today Saudi Arabia, Iran, Turkey and Qatar are exploiting the instability in Syria, Iraq and Libya, as well as the weakness of Egypt. Then there was 1848: the year of European revolutions, which broke out spontaneously and without a common design, resembling the Arab world in 2011. Then came Napoleon III, and only the birth of the Third Republic in 1870 put an end to the process begun by the Revolution 81 years ago.

Nowadays television and the internet have accelerated the dissemination of information and increased the volatility ofpolitical developments. But before establishing the futility, or worse, the danger of the Arab Spring, we must look to a time frame outside that of journalism. Dictators who were swept away by the uprisings of 2011 were not the alternative to the Arab Springs, but rather their cause. They prevented the modernization and gradual opening of their civil societies; they refused reforms, transforming economic growth into a gift that the leader bestowed on his subjects; they prevented the consolidation of a healthy relationship between state and religion. Because of them, it was inevitable that sooner or later these countries would explode. It was just a matter of time – whether in 2011, or 2015, or later – before those regimes failed under the crust of apparent social order. If today Tunisia is the only democratic model that has come out of the revolts, then this is mainly because its leader from 1957 to 1987, Habib Bourguiba, was the only Arab dictator to have really modernized his country, creating a school system and giving women a role in society.

Yet through protests or with weapons, through a painful political evolution or a tragic bloodbath that still continues, the revolutions of 2011 represent a turning point that the Arab world can no longer avoid. If the French Revolution is the universally recognized barometer for the transition from one historical epoch to another, the Arabs will count their modernity (or post-modernity, if you will) from the Springs.

This story was originally published by Longitude, Italy

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OPINION: Ignore Standard Good Governance Prescriptions To Accelerate Developmenthttp://www.ipsnews.net/2016/03/opinion-ignore-standard-good-governance-prescriptions-to-accelerate-development-2/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-ignore-standard-good-governance-prescriptions-to-accelerate-development-2 http://www.ipsnews.net/2016/03/opinion-ignore-standard-good-governance-prescriptions-to-accelerate-development-2/#comments Thu, 31 Mar 2016 12:09:13 +0000 Anis Chowdhury and Jomo Kwame Sundaram http://www.ipsnews.net/?p=144423 Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development. Anis Chowdhury held various senior positions in the United Nations Secretariat in New York and Bangkok.]]>

Jomo Kwame Sundaram was UN Assistant Secretary General for Economic Development. Anis Chowdhury held various senior positions in the United Nations Secretariat in New York and Bangkok.

By Anis Chowdhury and Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Mar 31 2016 (IPS)

Many well-meaning people believe that “good governance” is key to inclusive development. But research claiming that “good governance” is essential for rapid growth suffers from serious methodological or conceptual limitations. Existing definitions are extremely broad, suffer from functionalist tautology, or mainly refer to corruption.

Defining Good Governance

Invoking a functionalist definition (such as ‘good governance’ is “good-for-economic-development”), one cannot define a country’s ‘quality of government’ without measuring its effects. As The Economist (June 4, 2005) noted, defining ‘good governance’ as “good-for-economic-development” may generate tautological explanations and meaningless policy implications: “What is required for growth? Good governance. And what counts as good governance? Whatever promotes growth. And what is required for growth?”

Attempts to define Quality of Governance (QoG) as multi-faceted also suffer from tautology: “What is required for the quality of life enjoyed by citizens? Quality of governance. What is quality of governance? That which promotes the quality of life. . . .”.

If good governance or “QoG is everything, then maybe it is nothing”. Those who have defined ‘good governance’ as what can be shown to be “good for economic development” illustrate this problem. Many important non-economic attributes of good governance, such as trust and subjective measures of well-being, are left out by such definitions.

Thus, ‘good governance’ cannot be defined precisely, and hence, cannot be meaningfully or usefully monitored. Of course, the dire conditions typically associated with failed states probably preclude most economic or social progress, and cause declining living standards. Even recent World Bank research has been sceptical about the World Bank’s own frequently cited World Governance Indicators (WGIs), observing “there is little if any evidence on the concept validity of the six WGI indexes”.

The WGIs do not take into account country-specific challenges and environments, which could be different, not only between developing and developed countries, but also among developing countries. They also suffer from the typical biases of perceptions-based subjective measures. There is also no historical evidence that limited government is better for development — a premise of the WGIs. The view that the existence of government failures implies that minimalist government is best for development has no factual basis.

Growth

Many countries that have performed well in terms of growth, structural transformation and equity, have fallen short on the most widely used “good governance” indicators. Also, not all good governance reforms are similarly feasible or beneficial, let alone necessary or desirable in all circumstances.

For example, the United States and the Republic of Korea did not improve governance significantly until they had become quite affluent. Contrary to the often exaggerated claims about how much ‘institutions matter’, greater transparency, accountability and participation are often a consequence, rather than a direct cause of faster development.

Instead, all the ostensible evidence actually links good governance indicators to income levels. Observing the absence of any strong evidence relating standard good governance criteria to growth, Dani Rodrik notes that “the incontrovertible long-run association between good governance and high incomes provides very little guidance for appropriate strategies to induce high growth”.

Poor countries suffer a multitude of constraints, and effective growth acceleration interventions must address the most binding growth bottlenecks. Thus, as a rule, broad good governance reforms are neither necessary nor sufficient for growth.

Corruption

The popular governance focus on corruption presumes that government policy discretion and interventions necessarily lead to corruption and abuse even though there is no factual basis for this presumption. Small governments are not synonymous with the absence of corruption while countries with very low levels of corruption have relatively large governments, as in Scandinavia and the Netherlands.

Also, defining good governance simply in terms of the absence of corruption is not very useful. While corruption is antithetical to good governance, good governance implies much more than merely the absence of corruption, clientelism, nepotism, cronyism, patronage, discrimination, and regulatory or policy capture.

If good governance indicators suffer from measurement problems, and if the causality from good governance to economic growth cannot be ascertained, is there any causal link between economic growth and corruption? This is relevant, as in practice, the good governance agenda often focuses mostly on anti-corruption measures.

Conceivably, corruption adversely affects development in many different ways, especially if it diverts resources that would otherwise be invested productively. However, the evidence does not show anti-corruption measures accelerating economic growth. Rather, while all corruption is damaging in some way, and is hence undesirable, some types of corruption are much more damaging than others.

Claiming to fight corruption in developing countries generally — by implementing a laundry list of desired governance reforms — seems laudable, impressive and deserving of support, but such efforts typically ignore more feasible and targeted policies that can improve economic performance.

Necessary?

The World Bank’s 1997 World Development Report advised developing countries to pay attention to 45 aspects of good governance. By 2002, the list had grown to 116 items. Countries wanting to improve their governance must undertake a great deal more as good governance advocates continue to extend their indicators lists. And the longer they wait, the more they will need to do!

Unfortunately, the long and lengthening agenda often means that a multitude of governance reforms need to be undertaken urgently, typically with little thought to their sequencing, interdependence, or relative contributions to reforming governments to be more efficient, effective and responsive, let alone to accelerate development and alleviate poverty.

Among the multitude of governance reforms deemed necessary, there is typically little guidance about what is considered essential and what is not, what should come first and what should follow, what can be achieved in the short term and what can only be achieved over the longer term, what is feasible and what is not.

The presumption that good governance accelerates growth, and hence, that comprehensive institutional reform is a pre-requisite for development continues to lose support. Large-scale institutional transformation of the type envisioned by the good governance agenda has never been a prerequisite for accelerating economic growth or poverty reduction.

(End)

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Need for an Urgent Revision to Bond Contracts and a Debt Workout Mechanismhttp://www.ipsnews.net/2016/03/need-for-an-urgent-revision-to-bond-contracts-and-a-debt-workout-mechanism-2/?utm_source=rss&utm_medium=rss&utm_campaign=need-for-an-urgent-revision-to-bond-contracts-and-a-debt-workout-mechanism-2 http://www.ipsnews.net/2016/03/need-for-an-urgent-revision-to-bond-contracts-and-a-debt-workout-mechanism-2/#comments Sun, 27 Mar 2016 08:22:06 +0000 Yuefen Li http://www.ipsnews.net/?p=144382 http://www.southcentre.int/category/publications/southviews/]]>

Yuefen Li is Special Advisor on Economics and Development Finance of the South Centre For more information see http://www.southcentre.int/category/publications/southviews/

By Yuefen Li
GENEVA, Mar 27 2016 (IPS)

Argentina signed an agreement in principle on 29 February 2016 with four “super holdout” hedge funds including NML Capital Ltd, Aurelius Capital, Davidson Kempner and Bracebridge Capital. Buenos Aires would pay them a total of about 4.65 billion dollars, amounting to 75 percent of the principal and interest of all their claims of Argentina’s bonds that were defaulted on during the 2001 debt crisis. This deal would allow the return of Argentina to the international capital market after more than 15 years of exclusion.

Yuefen Li

Yuefen Li

The payment is to be made in cash before 14 April 2016, provided that Argentina’s Congress approves the repeal of Argentina’s domestic laws, namely the Lock Law and the Sovereign Payment Law, which prohibit the country from proposing terms to the holdouts that are better than those Argentina offered to its creditors in earlier restructurings.

The reason to call the four hedge funds as “super holdouts” is because they are the largest, the most combative and the most tenacious holdout creditors. Argentina floated exchange bonds in 2005 and then again in 2010 after it defaulted during the 2001 debt crisis on its bonds that were valued at nearly 100 billion dollars. Ninety-three percent of the holders of Argentine restructured sovereign bonds accepted the exchange proposals at a considerable “haircut” (i.e. discount rate) of about 65%.ed bonds). The remaining 7% of the bond holders turned down the offers.

In 2003, NML Capital Ltd first sued Argentina for repayment of 100% of the face value of the bonds they hold. As a result of the suit, U.S. District Judge Thomas Griesa issued his pari passu ruling which prohibited Argentina from servicing its bonds before paying the holdouts. This led Argentina to default on its debt again in 2014.

To end the stalemate, the newly elected President of Argentina, Mauricio Macri, made resolving the holdout dispute a priority and in February 2016 offered to pay 6.5 billion dollars to the group of six hedge fund holdouts. Two of the funds accepted the offer but not NML and three other funds which asked for better terms.

Yet the tactics and the business model the “super holdouts” used to get a windfall out the legal battle as well the legal precedence this case left behind may have potential negative systemic impact on future sovereign debt workout. How to mitigate the negative impact and make future debt workout timely and orderly?

Current efforts have concentrated on making it more difficult for holdouts to rush to the court room through strengthening current contract clauses. However, the financial incentives to be “super holdouts” are immense.
However, NML and other holdout hedge funds have done everything within the law. Purchase of sovereign bonds on the secondary market at discount rates may be legal, but one can say that the business model of specializing in purchasing hugely undervalued bonds for the purpose of resorting to litigation and other means to force the distressed governments to pay the full face value is not ethical because it is at the expense of the ordinary tax payers and the well being of a sovereign state. Additional, Judge Griesa’s pari passu injunction is a strong leverage for the holdouts against the bond issuer. This injunction may still be held as a precedence and be resorted to in the future-a bet for bond issuer to lose the case.

Three approaches may be of value to consider for the purpose of reducing the recurrences of the NML-style “super holdouts”.

One approach is to reduce incentives for holdouts. It is common business practice for goods and services bought at huge discount in retail stores or via internet to have clear stipulations that they are either not refundable or cannot be changed or returned. People take it for granted that it is a lawful and correct business practice. To buy things at Christmas sales and go back to the stores and request for refund of the full original price of the products would be considered as unethical. Why then is it so unlawful to reject the request of the “super holdout” to get paid 100% when the bonds were bought at a fraction of their face value? Because sovereign bond contracts never mention bonds bought at very deep discount at the secondary market would be treated differently at times of debt restructuring, the issuing State then gets bound to respect the bond contract and pay it at face value.

In the absence of a multilateral legal framework on sovereign debt restructuring mechanism, reducing incentives may be done through revising the contractual terms for the bonds. In the case when the bonds were bought at a steep discount, there could be a contractual clause to limit the margin of returns to minimize the likelihood of litigating for 100% repayment. Consideration could be given to add a clause to bond contracts to the effect that “in case of a debt restructuring, the bondholders would be paid back no higher than X% of the purchase price of the bond.” The percentage could be a range and take into consideration the past holdout cases together with haircut levels of historical debt restructuring incidences. The range or specific percentage should allow sufficient profit margin and avoid the possibility of moral hazard of strategic default. In this way, secondary market operations would not be disrupted and hopefully the incentives for super holdout could be diminished.

Other ways of reducing incentives for super holdout should be examined. For instance, the statutory penalty interest rates of some of the bonds Elliott Management holds are exorbitantly high.

According to the Wall Street Journal, these bonds would bring 10-15 times of return to Elliott Management. These kinds of arrangements give insane incentives to holdout bond holders.

Another way out is to explore whether it is really beneficial for the stability of the international financial market not to regulate hedge funds specialized in debt holdout. At a time of increased social responsibilities for the institutions of the real economy, more regulations in the banking sector and more specific codes of conduct for various business sectors, should there also be some regulations and codes of conduct with respect to these hedge funds?

Finally, there have been repeated international efforts to establish an international debt workout regime or legal framework to cope with systemic issues relating to the “too late and too little” phenomenon for debt restructurings as well as the holdout problem. The IMF tried in 2003. The United Nations General Assembly set up an Ad Hoc Committee mandated to create a multilateral legal framework for sovereign debt restructurings in September 2014.

As one outcome, in 2015 the Committee formulated the ‘Basic Principles on Sovereign Debt Restructuring’ based on years of research and consensus building in UNCTAD. However, political resistance from the developed countries has made it difficult for the United Nations to push the work to a more inclusive and substantive phase. The Argentina case has proved once again the need of a debt workout mechanism.

(End)

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Argentina, the United States’ New South American Allyhttp://www.ipsnews.net/2016/03/argentina-the-united-states-new-south-american-ally/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-the-united-states-new-south-american-ally http://www.ipsnews.net/2016/03/argentina-the-united-states-new-south-american-ally/#comments Fri, 25 Mar 2016 16:30:36 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=144359 U.S. President Barack Obama (C) and his Argentine counterpart Mauricio Macri (R), next to a monument in Remembrance Park in Buenos Aires with the names of many of the 30,000 victims of forced disappearance under the 1976-1983 military regime. Mar. 24 marked the 40th anniversary of the start of the dictatorship. In his last official speech in the country, Obama criticised Washington’s support for this and other de facto regimes in the region. Credit: Casa Rosada

U.S. President Barack Obama (C) and his Argentine counterpart Mauricio Macri (R), next to a monument in Remembrance Park in Buenos Aires with the names of many of the 30,000 victims of forced disappearance under the 1976-1983 military regime. Mar. 24 marked the 40th anniversary of the start of the dictatorship. In his last official speech in the country, Obama criticised Washington’s support for this and other de facto regimes in the region. Credit: Casa Rosada

By Fabiana Frayssinet
Mar 25 2016

After a decade of bilateral tension, the presidents of Argentina, Mauricio Macri, and the United States, Barack Obama, resumed the friendship between the two countries, which could lead to a free trade treaty and a “universal” alliance.

“The United States stands ready to work with Argentina through this historic transition in any way that we can,” said Obama, in the first official visit by a U.S. president to this South American country since 1995, on Wednesday, Mar. 23 and Thursday, Mar. 24, after his historic three-day visit to Cuba.

Former president George W. Bush (2001-2009) visited in 2005, but to participate in the Summit of the Americas in Mar del Plata, where the United States’ dream of a Free Trade Area of the Americas (FTAA) was buried.

“We see (Obama’s visit) as a gesture of affection, friendship, at a time when Argentina is embarking towards a new horizon and new changes,” Macri said Wednesday in a joint press conference in the Casa Rosada, the presidential palace.

“Please feel at home,” said the centre-right Argentine president, in office since December, setting the tone for the new relations between Buenos Aires and Washington, which he said would be “mature, intelligent, and constructive.”

During the visit, several agreements on security, cooperation in the fight against the drug trade, and investment were signed, in a show of the new era.

By contrast, relations with Néstor Kirchner (2003-2007) and his wife and successor Cristina Fernández (2007-2015) of the Front for Victory – the left-leaning faction of the Peronist (Justicialist) party – were marked by clashes. In an interview ahead of his visit, Obama said Fernández’s “government policies were always anti-American.”

The tension between the countries peaked during the Summit of the Americas in Mar del Plata.

“We have to remember that on that occasion, Argentina actually said ‘no’ to the FTAA,” political scientist Juan Manuel Karg, of the University of Buenos Aires, told IPS.

But now Latin America’s third-largest economy and the United States have not only launched a new era of friendship but are seeking to knock down barriers to negotiate, for example, a bilateral free trade deal, as Obama indicated.

“One of the main things made clear was the United States’ interest in Argentina, and in Latin America as a whole, in the search for free trade agreements,” said Karg.

Argentina is a member of the Southern Common Market (Mercosur) trade bloc, along with Brazil, Paraguay, Uruguay and Venezuela.

Macri clarified that in order to reach an eventual bilateral agreement, it would be necessary to “strengthen Mercosur” before considering “a broader accord.”

“Despite its limitations and the slow pace of the progress it has made, Mercosur is still the most powerful economic bloc in South America, which rejected the FTAA not many years ago, in a context of the search for autonomy and integration among equals,” former foreign minister Jorge Taiana (2005-2010), now a lawmaker and the president of the Mercosur parliament, Parlasur, told IPS.
“The change of government in Argentina and the difficult political and economic situation in Venezuela and Brazil undoubtedly point to a change and a renewed presence of the United States, which wants to have a larger influence in regional decisions again,” he said.

In Karg’s view, “there is a possibility that Argentina will sign a free trade agreement with the United States in the medium term.”

But he said it could be a broader agreement, if there are changes of government in Brazil and Venezuela, or “a flexibilisation in Mercosur, with the aim of making Argentina a fulcrum between that block and the Pacific Alliance (made up of Chile, Colombia, Peru and Mexico),” which also have agreements with the United States.

In 2015, Argentina had a 4.7 billion dollar deficit in trade with the United States, with imports totalling more than 7.6 billion dollars and exports nearly 3.4 billion.

But now Obama, who was accompanied by a large business delegation, promised to expand investment, given Argentina’s new openness.

“A country that reduces tariffs, opens up to imports, strikes down export taxes, and frees up the market becomes more attractive to foreign investors,” the director of the Southern Cone edition of the Le Monde Diplomatique newspaper, José Natanson, commented to IPS. “I think foreign direct investment will increase.”

“I believe that what we see in this case is obviously a change in the Argentine government’s foreign policy, one of the areas where the difference is the most marked, with respect to ‘Kirchnerism’,” he said.

Under Kirchner and Fernández, a priority was given to relations with partners like China and Russia.

Macri, on the other hand, promised to “insert Argentina in the world.”

Since Macri took office, Argentina has also been visited by the prime minister of Italy, Matteo Renzi, and French President François Hollande.

“With Obama’s visit, Macri has reasserted his interest in privileged ties with the United States, which harks back to the 1990s, when the government of Carlos Menem had a privileged relationship with that country,” Taiana said.

The former foreign minister said the new government’s renegotiation with the “vulture funds” also helped smooth things over.

“Argentina put up resistance to this before, but now Macri decided to pay back the vulture funds. This removes the biggest discrepancy between Argentina and the United States,” he said.

Obama praised Macri’s “constructive approach,” which he said would “stabilise Argentina’s financial relationship internationally” and “heighten Argentina’s influence on the world stage in settings like the G20 (group of advanced and emerging economies).”

But for Obama, who called for Argentina and the United States to become “universal allies,” the alliance could also stretch to the promotion of “civil liberties, independent judiciaries, government transparency and accountability” and even the fight against terrorism.

Referring to the recent attacks in Brussels, “Obama was very emphatic” when he said he would call on U.S. allies “to take measures against the Islamic State,” said Karg.

“By becoming a privileged partner of the United States at this new moment in history, Argentina also has to assume what it means to be an ally at a ‘universal’ level, and especially during a moment of geopolitical turmoil,” he said.

Human rights forced itself onto the agenda

The second and last day of Obama’s visit was Mar. 24, the 40th anniversary of the coup that ushered in Argentina’s 1976-1983 military dictatorship, which left 30,000 people “disappeared.”

In the face of protests by human rights groups because Obama’s visit coincided with the anniversary of this dark page in Argentine history, the president decided to spend the afternoon in the tourist city of Bariloche in the country’s southern Patagonian region.

But before flying there, he reiterated his pledge to declassify new intelligence and military archives that can shed light on U.S. support for the Argentine de facto regime.

And the last activity on his official agenda was a visit to Remembrance Park, to pay homage to the victims of Argentina’s “dirty war”.

At the memorial, surrounded by photos and names of the victims of forced disappearance, he criticised the role played by his country in supporting dictatorships in Argentina and other countries in the region, which he described as “those dark days.”

“Democracies have to have the courage to acknowledge when we don’t live up to the ideals that we stand for. And we’ve been slow to speak out for human rights and that was the case here,” Obama said.

“We cannot forget the past,” he said, before stating “when we find the courage to confront it, and we find the courage to change that past, that’s when we build a better future.”

Taiana said “I think this is Obama’s way of trying to show a change in U.S. policy with respect to the repression and its past commitment to the dictatorship.”

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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Soy Fuels Industrialisation in Paraguayhttp://www.ipsnews.net/2016/03/soy-fuels-industrialisation-in-paraguay/?utm_source=rss&utm_medium=rss&utm_campaign=soy-fuels-industrialisation-in-paraguay http://www.ipsnews.net/2016/03/soy-fuels-industrialisation-in-paraguay/#comments Wed, 23 Mar 2016 21:45:30 +0000 Mario Osava http://www.ipsnews.net/?p=144324 http://www.ipsnews.net/2016/03/soy-fuels-industrialisation-in-paraguay/feed/ 1 Panama’s Expanded Canal Faces a Challenging Scenariohttp://www.ipsnews.net/2016/03/panamas-expanded-canal-faces-a-challenging-scenario/?utm_source=rss&utm_medium=rss&utm_campaign=panamas-expanded-canal-faces-a-challenging-scenario http://www.ipsnews.net/2016/03/panamas-expanded-canal-faces-a-challenging-scenario/#comments Fri, 04 Mar 2016 16:44:21 +0000 Iralis Fragiel http://www.ipsnews.net/?p=144076 Two ships go through the Miraflores locks on the Pacific side of the Panama Canal, which raise or lower vessels 16.5 metres and take 40 minutes to pass through. Credit: Iralís Fragiel/IPS

Two ships go through the Miraflores locks on the Pacific side of the Panama Canal, which raise or lower vessels 16.5 metres and take 40 minutes to pass through. Credit: Iralís Fragiel/IPS

By Iralís Fragiel
PANAMA CITY, Mar 4 2016 (IPS)

When the new locks of the expanded Panama Canal begin operations, they will do so amidst numerous challenges, because of the storm clouds hanging over the global economy, especially China. But local authorities and experts are not worried about the possible impact on the expanded canal.

The slowdown in the Chinese economy, the second largest client of the Panama Canal, transporting 48.42 million tons in 2015, is one of the factors causing concern regarding this motor of the Panamanian economy, which last grew six percent, the highest rate in Latin America.

But the start of operations of the expanded canal, due in May or June, does not worry Luis Ferreira, spokesman for the Panama Canal Authority (ACP), an autonomous government agency.“When there were economic problems in the past, we would lose basically two to three percent of the cargo; the same thing might happen this time, but we don’t expect a substantial decrease, unless there is an all-out recession in China.” – Luis Ferreira

“When there were economic problems in the past, we would lose basically two to three percent of the cargo; the same thing might happen this time, but we don’t expect a substantial decrease, unless there is an all-out recession in China,” he said in an interview with IPS.

In 2015, China’s GDP grew 6.9 percent, compared to 7.3 percent in 2014, confirming the slowdown after years of double-digit growth.

The expansion of the 80-km canal, which turned 100 years old in 2014 and which handles approximately five percent of global trade, involved an investment of 5.25 billion dollars. Work began on Sep. 3, 2007.

With this megaproject, carried out by Grupo Unidos por el Canal (GUPC), the consortium led by Spanish construction firm Sacyr, Panama hopes to increase daily ship traffic from 35- 40 to 48-51.

The canal will also be able to accommodate larger vessels. Currently, it can only handle ships with a cargo capacity of up to 5,000 tons, but once the expansion is complete New Panamax vessels with a capacity of up to 13,000 tons will be able to go through the canal.

For Panama’s productive sectors, the expansion of the canal holds out the promise of economic growth.

The ACP’s team of experts in foreign trade told IPS that the weakening of the global economy in 2015 did not affect the canal, and that no impact is expected this year either.

“The volumes of raw materials heading for China for industrial use, such as coal and iron ore, are not significant (for the canal), since there are closer sources in Australia and Brazil, which do not use the waterway,” the ACP experts stated in their collective response to IPS.

Meanwhile, the volumes of grains, especially soy, grew at a strong pace in the last few years, due to the rising demand for food in China.

The experts also said the expansion “will open up new opportunities for trade flows of non-traditional products, such as liquefied natural gas, and will offer economies of scale that will make the Panama Canal route more attractive for segments such as container vessels and dry bulk cargo ships.”

The new locks in Cocolí, on the Pacific Ocean, have 16 rolling gates. Each chamber is 427 metres long by 55 metres wide and 18.3 metres deep. The expanded Panama Canal will be able to handle New Panamax vessels with a capacity of up to 13,000 tons, up from the current 5,000 ton limit. Credit: Iralís Fragiel/IPS

The new locks in Cocolí, on the Pacific Ocean, have 16 rolling gates. Each chamber is 427 metres long by 55 metres wide and 18.3 metres deep. The expanded Panama Canal will be able to handle New Panamax vessels with a capacity of up to 13,000 tons, up from the current 5,000 ton limit. Credit: Iralís Fragiel/IPS

Cargo tonnage by origin and destination has remained steady over the last three years, according to the ACP. The United States remains the largest client of the canal, with a total cargo of 160.78 million tons in 2015.

The cargo traded between the two leading clients reflects this stability. From China to the United States, 10.37 million tons were shipped through the canal in 2013, 10.96 million in 2014 and 10.91 million in 2015. And from the United States to China, 24.95 million tons were shipped in 2013, 30.77 million in 2014 and 30.20 million in 2015.

Given the economic outlook in China and changes in the energy sources used, the ACP is also getting ready for traffic of liquefied natural gas carriers.

“An incursion into new areas of business that reinforce the transportation and logistics industries is being evaluated, such as the case of the Corozal port and the creation of a logistics park that would complement the operations of the expanded canal,” the ACP experts said.

Canal revenue totaled 2.6 billion dollars in 2015, up from 2.5 billion in 2014, and equivalent to 5.61 percent of the country’s GDP.

Jordi Prat at the Interamerican Development Bank (IDB) told IPS that Panama has “a positive economic outlook but not without risks.” And in the case of the canal, the United States, which it depends on most, “is growing at a relatively strong pace,” although the vulnerability could increase if the situation in China continues to go downhill.

Prat, the IDB’s principal regional economist for Central America, said the challenge faced by this country is keeping the growth rate between six and eight percent a year, and preventing a decline in maritime trade flows, fuelled by other sources of growth.

Prat pointed out that between 2000 and 2014, the sectors that grew the most in Panama were construction (37 percent), transportation and logistics (22 percent), finance (15 percent) and public services (12 percent).

Besides the economic variables, inclusion is key to development in this Central American nation of four million people, he said.

Panama managed to reduce the poverty level from 38.3 to 25.8 percent, between 2006 and 2014, said Prat. However, inequality is reflected by the fact that 86.9 percent of the population in autonomously governed indigenous “comarcas” or counties is poor.

The IDB economist said Panama should move towards “inclusive growth, by fomenting human capital, education, and access to health and basic services, in order to boost productivity, which has not increased significantly in recent times.”

Analyst Rodrigo Noriega concurs with Prat that Panama has to seriously focus on education, training and scientific research, to bolster development.

“That is where we are limping, in education, and in corruption – these are issues that in the long term definitely hurt the Panamanian economy,” said Noriega.

He said the economy may see growth slow down in 2016 and 2017, due to external factors and the impact of the drought caused by the El El Niño-Southern Oscillation (ENSO), a cyclical climate phenomenon that affects weather patterns around the world.

“These external factors could be reducing Panama’s GDP by 2.0 to 2.5 percent a year. What I’m saying is GDP could be growing between 7.5 and 8.0 percent, instead of the current 5.0 to 5.5 percent,” he said.

But he stressed that a project such as the expansion of the canal is not something that is undertaken with a short-term view, but to address the needs of the country over the next 30 to 50 years.

“There will be two slow years, but that is actually a good thing for us because right now we have a water shortage problem. It’s best if the ship traffic isn’t so heavy, because we need to recover in terms of water supply and take baby steps to learn to handle the larger vessels,” said Noriega.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

 

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