Inter Press Service » South-South http://www.ipsnews.net Turning the World Downside Up Thu, 23 Oct 2014 00:50:16 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.2 Outgunned by Rich Polluters, Africa to Bring United Front to Climate Talkshttp://www.ipsnews.net/2014/09/outgunned-by-rich-polluters-africa-to-bring-united-front-to-climate-talks/?utm_source=rss&utm_medium=rss&utm_campaign=outgunned-by-rich-polluters-africa-to-bring-united-front-to-climate-talks http://www.ipsnews.net/2014/09/outgunned-by-rich-polluters-africa-to-bring-united-front-to-climate-talks/#comments Mon, 29 Sep 2014 17:43:34 +0000 Monde Kingsley Nfor http://www.ipsnews.net/?p=136933 Mercy Hlordz (l), Akos Matsiador (centre) and Mary Azametsi (r) are all victims of climate change. Credit: Jamila Akweley Okertchiri/IPS

Mercy Hlordz (l), Akos Matsiador (centre) and Mary Azametsi (r) are all victims of climate change. Credit: Jamila Akweley Okertchiri/IPS

By Monde Kingsley Nfor
YAOUNDE, Sep 29 2014 (IPS)

As climate change interest groups raise their voices across Africa to call for action at the COP20 climate meeting in December and the crucial COP21 in Paris in 2015, many worry that the continent may never have fair representation at the talks.

The African Group noted during a May meeting in Ethiopia that while negotiations remain difficult, they still hope to break some barriers through close collaboration and partnerships with different African groups involved in negotiations."Most of our problems are financial. For example, in negotiations Cameroon is seated next to Canada, which comes with a delegation of close to a hundred people, while two of us represent Cameroon." -- lead negotiator Tomothé Kagombet

Within the Central African Forest Commission (COMIFAC) group, a preparatory meeting is planned for next month with experts and delegates from the 10 member countries, according to Martin Tadoum, deputy secretary general of COMIFAC, “but the group can only end up sending one or two representatives to COP meetings.”

Meanwhile, the Pan-African Parliamentarians’ Network on Climate Change (PAPNCC) is hoping to educate lawmakers and African citizens on the problem to better take decisions about how to manage it.

“The African parliamentarians have a great role to influence government decisions on climate change and defend the calls of various groups on the continent,” Honorable Awudu Mbaya, Cameroonian Parliamentarian and president of PAPNCC, told IPS.

PAPNCC operates in 38 African countries, with its headquarters in Cameroon. Besides working with governments and decision-makers, it is also networking with youth groups and civil society groups in Africa to advance climate goals.

Innovative partnership models involving government, civil society groups, think tanks and academia could also enforce governments’ positions and build the capacity of negotiators.

The United Nations Economic Commission for Africa (UNECA) has noted that bargaining by all parties is increasingly taking place outside the formal negotiating space, and Africa must thus be prepared to engage on these various platforms in order to remain in the loop.

Civil society organisations (CSOs) in Africa are designing various campaign strategies for COP 20 and COP 21. The Pan African Climate Justice Alliance (PACJA), a diverse coalition of more than 500 CSOs and networks, is using national platforms and focal persons to plan a PACJA week of activities in November.

“PACJA Week of Action is an Africa-wide annual initiative aimed at stimulating actions and reinforcing efforts to exercise the power of collective action ahead of COPs. The weeks will involve several activities like staging pickets, rallies, marches, and other forms of action in schools, communities, workplaces, and public spaces,” Robert Muthami Kithuku, a programme support officer at PACJA headquarters in Kenya, told IPS.

Others, like the African Youth Initiative on Climate Change (AYICC) and the African Youth Alliance, are coming up with similar strategies to provide a platform for coordinated youth engagement and participation in climate discussions and the post-2015 development agenda at the national, regional and international levels.

“We plan to send letters to negotiators, circulating statements, using the social media, using both electronic and print media and also holding public forums. Slogans to enhance the campaign are also being adopted,” Kithuku said.

Africa’s vulnerability to climate change seems to have ushered in a new wave of south-south collaboration in the continent. The PAPNCC Cameroon chapter has teamed up with PACJA to advocate for greater commitments on climate change through tree-planting events in four Cameroonian communities. It is also holding discussions with regional parliamentarians on how climate change can better be incorporated in local legislation.

In June, mayors of the Central African sub-region gathered in Cameroon to plan their first participation in major climate negotiations at COP21 in Paris. Under the banner The International Association of Francophone Mayors of Central Africa on Towns and Climate Change (AIMF), the mayors are seeking ways to adapt their cities to the effects of climate change and to win development opportunities through mitigating carbon dioxide emissions.

During a workshop of African Group of Negotiators in May 2014, it was recognised that climate change negotiations offer opportunities for Africa to strengthen its adaptive capacity and to move towards low-carbon economic development. Despite a lack of financial resources, Africa has a comparative advantage in terms of natural resources like forests, hydro and solar power potential.

At the May meeting, Ethiopia’s minister of Environment and Forests, Belete Tafere, urged the lead negotiators in attendance to be ambitious and focused in order to press the top emitters to make binding commitments to reduce emissions. He also advised the negotiators to prioritise mitigation as a strategy to demonstrate the continent’s contribution to a global solution.

But negotiations are still difficult. Africa has fewer resources to send delegates to COPs, coupled with a relatively low level of expertise to understand technical issues in the negotiations.

“Africa is just a representative in negotiations and has very little capacity to influence decisions,” Tomothé Kagombet, one of Cameroon’s lead negotiators, told IPS.

“Most of our problems are financial. For example, in negotiations Cameroon is seated next to Canada, which comes with a delegation of close to a hundred people, while two of us represent Cameroon, and this is the case with all other African countries.”

He said that while developed countries swap delegates and experts in and out of the talks, the Africans are also obliged remain at the negotiating table for long periods without taking a break.

“At the country levels, there are no preparatory meetings that can help in capacity building and in enforcing countries’ positions,” he said.

As a strategy to improve the capacity of delegates, COMIFAC recruits consultants during negotiations to brief representatives from the 10 member countries on various technical issues in various forums.

“To reduce the problem of numbers, the new strategy is that each country is designated to represent the group in one aspect under negotiation. For example, Chad could follow discussions on adaptation, Cameroon on mitigation, DRC on finance,” COMIFAC’s Tadoum told IPS.

With a complex international climate framework that has evolved over many years, with new mitigation concepts and intricacies in REDD (reducing emissions from deforestation), the Clean Development Mechanism (CDM), and more than 60 different international funds, the challenges for African experts to grasp these technicalities are enormous, Samuel Nguiffo of the Center for Environment and Development told IPS (CED). CED is a subregional NGO based in Cameroon.

“There is no country budget set aside for climate change that can help in capacity building and send more delegates to COPs. The UNFCCC sponsors one or two representatives from developing countries but the whole of Africa might not measure up with the delegates from one developed nation,” said Cameroon’s negotiator, Tomothé Kagombet.

The lead African negotiators are now crafting partnerships with with young African lawyers in the negotiations process and compiling a historical narrative of Africa’s participation and decisions relevant to the continent as made by the Conference of Parties (COP) to the UNFCCC process, from Kyoto in 1997 to Paris in 2015.

Edited by Kitty Stapp

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Brazil to Monitor Improvement of Water Quality in Latin Americahttp://www.ipsnews.net/2014/08/brazil-to-monitor-improvement-of-water-quality-in-latin-america/?utm_source=rss&utm_medium=rss&utm_campaign=brazil-to-monitor-improvement-of-water-quality-in-latin-america http://www.ipsnews.net/2014/08/brazil-to-monitor-improvement-of-water-quality-in-latin-america/#comments Wed, 27 Aug 2014 21:25:32 +0000 Fabiola Ortiz http://www.ipsnews.net/?p=136376 A technician from the State Environmental Institute of Rio de Janeiro monitors water quality in the Rodrigo de Freitas Lagoon in this Brazilian city. Credit: Agência Brasil/EBC

A technician from the State Environmental Institute of Rio de Janeiro monitors water quality in the Rodrigo de Freitas Lagoon in this Brazilian city. Credit: Agência Brasil/EBC

By Fabiola Ortiz
RIO DE JANEIRO, Aug 27 2014 (IPS)

Problems in access to quality drinking water, supply shortages and inadequate sanitation are challenges facing development and the fight against poverty in Latin America. A new regional centre based in Brazil will monitor water to improve its management.

One example of water management problems in the region is the biggest city in Latin America and the fourth biggest in the world: the southern Brazilian megalopolis of São Paulo, which is experiencing its worst water crisis in history due to a prolonged drought that has left it without its usual water supplies – a phenomenon that experts link to climate change.

To prevent such problems, the United Nations Environment Programme (UNEP) and Brazil’s national water agency (ANA) signed a memorandum of understanding, making the institution the hub for water quality monitoring in Latin America and the Caribbean.“Access to good quality water is one of the key issues for eliminating poverty and is also one of the main problems faced by developing countries. This has serious consequences for the health of the population and the environment.“ -- Marcelo Pires

ANA will also promote regional cooperation to strengthen monitoring and oversight.

“Brazil will be a hub for the region and will act as a coordinator for training programmes carried out together with other countries,” Marcelo Pires, an expert on water resources in the strategic management of ANA, told Tierramérica.

“Monitoring, sample collection methods and data analysis are very useful for decision-makers” when it comes to water management, he said.

The regional hub will also play a strong role in the establishment of national centres in each country.

“We don’t yet have a precise assessment of the situation, but we know there are advanced monitoring centres in Argentina, Chile and Colombia,” Pires said.

ANA will also be the nexus with UNEP to disseminate information on the quality of water resources, according to the parameters set by the U.N. Global Environment Monitoring System (GEMS) Water Programme.

That programme has created a global network of more than 4,000 research stations with data collected in some 100 countries.

Since 2010, Brazil’s water agency has been implementing a national water quality programme in the country’s 26 states and federal district, inspired by GEMS.

Pires said access to clean water, as well as the provision of sanitation to the entire population, is a basic condition for the country’s development.

The northern Brazilian city of Santarém, on the banks of the Tapajós river, a tributary of the Amazon river, dumps a large part of its waste in the area around the port. The lack of sanitation means the river is highly polluted. Credit: Fabíola Ortiz/IPS

The northern Brazilian city of Santarém, on the banks of the Tapajós river, a tributary of the Amazon river, dumps a large part of its waste in the area around the port. The lack of sanitation means the river is highly polluted. Credit: Fabíola Ortiz/IPS

“Access to good quality water is one of the key issues for eliminating poverty and is also one of the main problems faced by developing countries. This has serious consequences for the health of the population and the environment,” the expert said.

UNEP Executive Director Achim Steiner said the inefficient management of water resources and international cooperation among countries of the developing South were “fundamental steps” for the sustainable use of water.

“Guaranteeing infrastructure for water and sanitation is a basic condition for economic development. This challenge is made even more complex as a result of the impacts of climate change. All of this reinforces the need to adapt to the global reality,” Steiner said, announcing the agreement with ANA.

The memorandum of understanding between the two institutions was made known this month, although it was signed in July during a visit by Steiner to Brazil. It will initially be in effect until late 2018, when it could be extended.

A study carried out by ANA found that over 3,000 towns and cities are in danger of experiencing water shortages in Brazil starting next year. That is equivalent to 55 percent of the country’s municipalities.

Water shortages are a frequent aspect of life in Latin America, as is unequal distribution of water. In addition, the quality of both water and sanitation is precarious.

“Our outlook is not very different from that of our neighbours,” Pires said.

To illustrate, he noted that only 46 percent of the sewage from Brazilian households is collected, and of that portion only one-third is treated, according to the latest survey on basic sanitation.

“Brazil has a sanitation deficit. People coexist on a day-to-day level with polluted rivers. That is reflected in public health and even in the treatment of water to supply households,” Pires said.

Climate change, another variable

Climate change-related impacts also make greater integration in terms of water management necessary among the countries of Latin America, because it means episodes of drought are more frequent and more pronounced, which results in lower water levels in reservoirs.

In Latin America, 94 percent of the population has access to clean water – the highest proportion in the developing South – according to a May report by the World Health Organisation (WHO). But 20 percent of Latin Americans lack basic sanitation services.

There is also a high level of inequality in access to clean water and sanitation, between rural and urban areas.

The World Bank, for its part, notes that climate change generates a context of uncertainty and risks for water management, because it will increase water variability and lead to more intense floods and droughts.

The consequence will be situations like the one in greater São Paulo, where one-third of the population of 21 million now face water shortages, while incentives are provided to people who manage to cut water consumption by 20 percent.

Different São Paulo neighbourhoods have been rationing water supplies to residents since February.

Alceu Bittencourt, president of the Brazilian Association of Sanitary and Environmental Engineering in São Paulo, told Tierramérica that this is the worst water crisis in the history of the city and is evidence of climate variability.

He added that most cities and towns in Latin America have not put in place a response to these changes in the climate.

“It will take two or three years to get back to normal. This exceptional situation indicates that climate change is changing the rainfall patterns,” he commented, referring to the worst drought in southern Brazil in 50 years.

Since Jul. 12, the water that has reached the taps of at least nine million residents of São Paulo comes from the “dead volume” of the Cantareira system of dams, built in the 1970s, which collects the water from three rivers. The dead volume is a reserve located below the level of the sluices, and is only used in emergencies.

According to official projections, the reserve will be exhausted in October if the drought does not end, which would further aggravate the crisis that is already affecting every category of water consumer, Bittencourt explained.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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

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OPINION: International Relations, the U.N. and Inter Press Servicehttp://www.ipsnews.net/2014/08/opinion-international-relations-the-u-n-and-inter-press-service/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-international-relations-the-u-n-and-inter-press-service http://www.ipsnews.net/2014/08/opinion-international-relations-the-u-n-and-inter-press-service/#comments Fri, 22 Aug 2014 14:37:48 +0000 Roberto Savio http://www.ipsnews.net/?p=136282 This is the first in a series of special articles to commemorate the 50th anniversary of IPS, which was set up in 1964, the same year as the Group of 77 (G77) and UNCTAD.]]> IPS's then Director-General Roberto Savio honours the director-general of the International Labour Organisation, Juan Somavía of Chile, Oct. 29, 1999. Credit: UN Photo/Susan Markisz

IPS's then Director-General Roberto Savio honours the director-general of the International Labour Organisation, Juan Somavía of Chile, Oct. 29, 1999. Credit: UN Photo/Susan Markisz

By Roberto Savio
ROME, Aug 22 2014 (IPS)

In 1979, I had a debate at the United Nations with the late Stan Swinton, then the very powerful and brilliant director of Associated Press (AP). At one point, I furnished the following figures (which had been slow to change), as an example of Western bias in the media:

In 1964, four transnational news agencies – AP, United Press International (UPI), Agence France Presse (AFP) and Reuters – handled 92 percent of world information flow. The other agencies from industrialised countries, including the Soviet news agency TASS, handled a further 7 percent. That left the rest of the world with a mere 1 percent.In a world where we need to create new alliances, the commitment of IPS is to continue its work for better information, at the service of peace and cooperation.

Why, I asked, was the entire world obliged to receive information from the likes of AP in which the United States was always the main actor? Swinton’s reply was brief and to the point: “Roberto, the U.S. media account for 99 percent of our revenues. Do you think they are more interested in our secretary of state, or in an African minister?”

This structural reality is what lay behind the creation of Inter Press Service (IPS) in 1964, the same year in which the Group of 77 (G77) coalition of developing countries saw the light. I found it unacceptable that information was not really democratic and that – for whatever reason, political or economic – it was leaving out two-thirds of humankind.

We set up an international, non-profit cooperative of journalists, in which – by statute – every working journalist had one share and in which those like me from the North could not account for more than 20 percent of the membership.

As importantly, we stipulated that nobody from the North could report from the South. We set ourselves the challenge of providing journalists from developing countries with the opportunity to refute Northern claims that professional quality was inferior in the South.

Two other significant factors differentiated IPS from the transnational news agencies.

First, IPS was created to cover international affairs, unlike AP, UPI, AFP and Reuters, where international coverage was in addition to the main task of covering national events.

Second, IPS was dedicated to the long-term process and not just to events. By doing this, we would be giving a voice to those who were absent in the traditional flow of information – not only the countries  of the South, but also neglected actors such as women, indigenous peoples and the grassroots, as well as issues such as human rights, environment, multiculturalism,  international social justice and the search for global governance…

Of course, all this was not easily understood or accepted.

We decided to support the creation of national news agencies and radio and TV stations in the countries of the South because we saw these as steps towards the pluralism of information. In fact, we helped to set up 22 of these national news agencies.

That created distrust on both sides of the fence. Many ministers of information in the South looked on us with suspicion because, while we were engaging in a useful and legitimate battle, we refused to accept any form of state control. In the North, the traditional and private media looked on us as a “spokesperson” for the Third World.

In 1973, the Press Agencies Pool of the Non-Aligned Movement agreed to use IPS, which was growing everywhere, as its international carrier. At the same time, in the United Nations, the call was ringing for the establishment of a New International Economic Order (NIEO) and was approved by the General Assembly with the full support of the Security Council.

It looked like global governance was on its way, based on the ideas of international economic justice, participation and development as the cornerstone values for the world economic order.

In 1981 all this came to an end. Ronald Reagan in the United States and Margaret Thatcher in the United Kingdom decided to destroy multilateralism and, with it, the very concept of social justice.

One of the first actions taken was to ask all countries working with IPS to cut any relation with us, and dismantle their national systems of information. Within a few years, the large majority of national news agencies, and radio and TV stations disappeared.  From now on, information was to be a market, not a policy.

The United States and the United Kingdom (along with Singapore) withdrew from the U.N. Scientific, Cultural and Educational Organisation (UNESCO) over moves to establish a New International Information Order (NIIO) as a corollary to NIEO, and the policy of establishing national systems of information disappeared. The world changed direction, and the United Nations has never recovered from that change.

IPS was not funded by countries, it was an independent organisation, and even if we lost all our clients from the world of national systems of information, we had many private media as clients. So we survived, but we decided to look for new alliances, with those who were continuing the quest for world governance based on participation and justice, with people interested in global issues, like human rights, the environment and so on.

It is worth noting that the United Nations was moving along a parallel path. In the 1990s, Boutros Boutros-Ghali, the sixth U.N. secretary-general, launched a series of world conferences on global issues, with the U.N. Conference on Environment and Development (UNCED) – also widely known as the ‘Earth Summit’ – the first in Rio de Janeiro in 1992.

For the first time, not only we of IPS – a non-governmental organisation (NGO) recognised by the U.N. Economic and Social Council (ECOSOC) – but any NGO interested in and concerned with environmental issues could attend.

Actually, we really had two conferences, albeit separated by 36 kilometres: one, the inter-governmental conference with 15,000 participants, and the other the NGO Forum, the civil society conference with over 20,000 participants. And it was clear that the civil society forum was pushing for the success of the Earth Summit much more than many delegates!

To create a communication space for the two different gatherings, IPS conceived and produced a daily newspaper – TerraViva – to be distributed widely in order to create a sense of communality. We continued to do so at the other U.N.-organised global conferences in the 1990s (on Human Rights in Vienna in 1993, on Population in Cairo in 1994, on Women in Beijing in 1995, and the Social Summit in Copenhagen, also in 1995).

We then decided to maintain it as a daily publication, to be distributed throughout the United Nation system: this is the TerraViva that reaches you daily, and is the link between IPS and members of the U.N. family.

Against this backdrop, it is sad to note that the world suddenly took a turn for the worse with the end of the Cold War at the end of the 1980s, when an endless number of unresolved fault lines that had been frozen during the period of East-West hostility came to light.

This year, for example, the number of persons displaced by conflict has reached the same figures as at the end of the Second World War.

Social injustice, not only at national but also at the international level, is growing at an unprecedented speed. The 50 richest men (no women) in the world accrued their wealth in 2013 by the equivalent of the national budgets of Brazil and Canada.

According to Oxfam, at the present pace, by the year 2030 the United Kingdom will have the same level of social inequality as during the reign of Queen Victoria, a period in which an unknown philosopher by the name of Karl Marx was working in the library of the British Museum on his studies of the exploitation of children in the new industrial revolution.

Fifty years after the creation of IPS, I believe more than ever that the world is unsustainable without some kind of global governance. History has shown us that this cannot come from military superiority … and events are now becoming history fast.

During my life I have seen a country of 600 million people in 1956, trying to make iron from scraps in schools, factories and hospitals, turn into a country of 1.2 billion today and well on the road towards becoming the world’s most industrialised country.

The world had 3.5 billion people in 1964, and now has over 7.0 billion, and will be over 9.0 billion in 20 years’ time.

In 1954, sub-Saharan Africa had 275 million inhabitants and now has around 800 million, soon to become one billion in the next decade, well more than the combined population of the United States and Europe.

To repeat what Reagan and Thatcher did in 1981 is therefore impossible – and, anyhow, the real problem for everybody is that there is no progress on any central issue, from the environment to nuclear disarmament.

Finance has taken a life of its own, different from that of economic production and beyond the reach of governments. The two engines of globalisation, finance and trade, are not part of U.N. discourse. Development means to ‘be more’, while globalisation has come to mean to ‘have more’ – two very different paradigms.

In just 50 years, the world of information has changed also beyond imagination. The internet has given voice to social media and the traditional media are in decline. We have gone, for the first time in history, from a world of information to a world of communication. International relations now go well beyond the inter-governmental relations, and the ‘net’ has created new demands for accountability and transparency, the bases for democracy.

And, unlike 50 years ago, there is a growing divide between citizens and public institutions. The issue of corruption, which 50 years ago was a hushed-up affair, is now one of the issues that begs for a renewal of politics. And all this, like it or not, is basically an issue of values.

IPS was created on a platform of values, to make information more democratic and participatory, and to give the voice to those who did not have one. Over the last 50 years, through their work and support, hundreds and hundreds of people have shared the hope of contributing to a better world. A wide-ranging tapestry of their commitment is offered in The Journalists Who Turned the World Upside Down, a book written by over 100 personalities and practising journalists.

It is evident that those values continue to be very current today, and that information continues to be an irreplaceable tool for creating awareness and democracy, even if it is becoming more and more a commodity, event-oriented and market-oriented.

But, in my view, there is no doubt that all the data show us clearly that we must find some global governance, based on participation, social justice and international law, or else we will enter a new period of dramatic confrontation and social unrest.

In a world where we need to create new alliances, the commitment of IPS is to continue its work for better information, at the service of peace and cooperation … and to support those who share the same dream.

Roberto Savio is founder of IPS and President Emeritus.

Edited by: Kitty Stapp

 

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Cuba Sees Its Future in Mariel Port, Hand in Hand with Brazilhttp://www.ipsnews.net/2014/08/cuba-sees-its-future-in-mariel-port-hand-in-hand-with-brazil/?utm_source=rss&utm_medium=rss&utm_campaign=cuba-sees-its-future-in-mariel-port-hand-in-hand-with-brazil http://www.ipsnews.net/2014/08/cuba-sees-its-future-in-mariel-port-hand-in-hand-with-brazil/#comments Fri, 22 Aug 2014 13:16:51 +0000 Patricia Grogg http://www.ipsnews.net/?p=136278 The container terminal administrative building in the port of the Mariel special economic development zone in Cuba. Credit: Jorge Luis Baños/IPS

The container terminal administrative building in the port of the Mariel special economic development zone in Cuba. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Aug 22 2014 (IPS)

The Mariel special economic development zone, the biggest construction project undertaken in decades in Cuba, emerged thanks to financial support from Brazil, which was based on political goodwill, a strategy of integration, and business vision.

“Cuba would not have been able to undertake this project from a technical or economic point of view,” economist Esteban Morales told IPS. He added that the geographic setting makes the development zone strategic in terms of trade, industry and services in Latin America and the Caribbean.

Brazil financed the construction of the container terminal and the remodeling of the port of Mariel, which is equipped with state-of-the-art technology to handle cargo from Post-Panamax container ships that will begin to arrive when the expansion of the Panama Canal is completed in December 2015.

Post-Panamax refers to vessels that do not fit in the current Panama Canal, such as the supertankers and the largest modern container and passenger ships.

The port, 45 km west of Havana, is located along the route of the main maritime transport flows in the Western hemisphere, and experts say it will be the largest industrial port in the Caribbean in terms of both size and volume of activity.

Construction of the terminal, in the heart of the 465 sq km special economic development zone, has included highways connecting the Mariel port with the rest of the country, a railway network, and communication infrastructure, and the port will offer a variety of services.

In the special zone, currently under construction, there will be productive, trade, agricultural, port, logistical, training, recreational, tourist, real estate, and technological development and innovation activities, in installations that include merchandise distribution centres and industrial parks.

The special zone is divided into eight sectors, to be developed in stages. The first involves telecommunications and a modern technology park where pharmaceutical and biotechnology firms will operate – two sectors which will be given priority in Mariel, along with renewable energies, agriculture and food, among others.

The Cuban government is currently studying the approval of 23 projects from Europe, Asia and the Americas for Mariel, in the chemical, construction materials, logistics and equipment rental industries.

The terminal was inaugurated on Jan. 27, and during its first six months of operation it received 57 ships and some 15,000 containers – small numbers compared to the terminal’s warehouse capacity of 822,000 containers. Post-Panamax vessels can carry up to 12,600 containers, three times more than Panamax ships.

Another economist, Pedro Monreal, estimates that the cost per container will be cut in half.

The lower costs, he said, will improve the competitiveness of Brazil’s manufactured goods, to cite one example. Mariel, where a free trade zone will also operate, could become a platform for production and export by the companies, even for supplying Brazil’s domestic market.

Heavy machinery prepares the terrain for a railway that will form part of the new infrastructure linked to the special development zone in the port of Mariel – the biggest project undertaken in Cuba in decades: Credit: Jorge Luis Baños/IPS

Heavy machinery prepares the terrain for a railway that will form part of the new infrastructure linked to the special development zone in the port of Mariel – the biggest project undertaken in Cuba in decades: Credit: Jorge Luis Baños/IPS

Although Decree Law 313, which created the special economic development zone, was passed in September 2013, the remodeling of Mariel began three years ago, led by a joint venture formed in February 2010 by the Compañía de Obras e Infraestructura, a subsidiary of the private Brazilian construction firm Odebrecht, and Quality Cuba SA.

The container terminal is run by Global Ports Management Limited of Singapore, one of the world’s biggest container terminal operators, which has been working with the Cuban firm Almacenes Universales S.A, which is the owner and user of the terminal, and responsible for oversight of its efficient use.

The relationship between Cuba and Brazil is a longstanding one. Former Brazilian president Luiz Inácio Lula da Silva (2003-2010) did not hide his sympathies for the Cuban revolution, and has visited this country a number of times, first as a trade unionist and political party leader, and then as a president and former president.

Two packages of agreements signed in 2008 and 2010 between Lula and Cuban President Raúl Castro marked their interest in strengthening bilateral ties, an effort continued by current Brazilian President Dilma Rousseff.

When she attended the inauguration of the terminal, Rousseff said the project would take 802 million dollars in the first stage, plus 290 million for the second stage. The first of Brazil’s loans was initially to go towards construction of the road, but the local government decided to start with the port.

The credit was granted by Brazil’s National Bank of Economic and Social Development (BNDES). Havana provided 15 percent of the investment needed for the work.

“Cuba is a priority for our government, and Brazil is important to Havana,” the director general of the Brazilian Agency for the Promotion of Exports and Investments (APEX-Brazil), Hipólito Rocha, told IPS.

APEX-Brazil was created by Lula and Castro to promote joint business ventures with Cuba, the rest of the Caribbean and Central America.

Odebrecht is the most important company involved in Mariel, but diplomatic sources told IPS that a total of around 400 Brazilian companies are taking part in the project. “Between our countries there is affinity, political will, an interest in integration, but business matters are also important,” Rocha said.

He added that Cuba strictly lives up to its financial commitments with Brazil, and said bilateral relations “are solid, sustainable and bring benefits to our country as well.”

Analyst Arturo López-Levy said Brazil’s involvement in the Mariel project was decisive not only because of the investment. The political scientist, who lives in the United States, says the Brazilian government is sending a message to Washington and the European Union and other emerging powers that it backs the transformations underway in Cuba.

The presidents of China, Xi Jinping, and Russia, Vladimir Putin, also sent out signals when they visited Cuba in July, indicating their interest in expanding cooperation with Havana.

The two presidents stopped over in Cuba when they travelled to the sixth summit of the BRICS group (Brazil, Russia, India, China and South Africa), held Jul. 14-16 in Brazil.

The strengthening of ties promises greater access to the Chinese and Russian markets, attraction of investment in areas of common interest like the pharmaceutical and energy industries, and cooperation for the modernisation of strategic areas in defence, ports and telecommunications, López-Levy told IPS.

With respect to the possible interest of U.S. businesses in getting a foothold in the special economic development zone, and to an increase in pressure for the lifting of the five-decade U.S. embargo, the analyst said “the Cuban market awakens very limited interest in the United States.”

However, he said it was “clear” that U.S. investors are becoming more interested, especially Cuban-Americans.

“In order for this motivation to turn into political pressure against the embargo, the Cuban economy has to give out clear signs of recovery and of the government’s willingness, in key areas, to adopt a mixed economy with transparent guarantees for investors and export capacity,” he said.

Rocha has a somewhat different opinion.

“The embargo is going to collapse under its own weight,” he said. “Business will knock it down.”

It was seen as symbolic that the first ship that docked in the Mariel port after it began to operate brought food for Cuba from the United States – cash-only imports, which were authorised by the U.S. Congress in 2000.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: Toward an Inclusive TPP Trade Pacthttp://www.ipsnews.net/2014/08/opinion-toward-an-inclusive-tpp-trade-pact/?utm_source=rss&utm_medium=rss&utm_campaign=opinion-toward-an-inclusive-tpp-trade-pact http://www.ipsnews.net/2014/08/opinion-toward-an-inclusive-tpp-trade-pact/#comments Wed, 06 Aug 2014 16:55:34 +0000 Dr. Harsha Vardhana Singh http://www.ipsnews.net/?p=135965 By Dr. Harsha Vardhana Singh
NEW YORK, Aug 6 2014 (IPS)

The Trans-Pacific Partnership (TPP) negotiations have been hitting headlines recently, but not for all the right reasons.

The media provides an incomplete picture of its implications, focusing mainly on its process and pre-occupations of the main parties to the negotiations. These negotiations, including the most recent meetings that took place in Ottawa, Canada, in July 2014, have been criticised by Canadian and international media for being veiled in secrecy.It is important that these negotiations do not create systems which are exclusionary, fragmenting and adversely affecting overall economic opportunities.

There have been, however, leaks and statements which show the broad contours of the ongoing talks covering the large number of subject areas which aim to develop a “21st century” trade and investment regime.

There is little attention, if any, to the adverse market conditions that the TPP will generate, for countries not part of these negotiations; countries which are significantly contributing to the prosperity of those who are negotiating TPP.

The TPP is a proposed regional free trade agreement (FTA) being negotiated by 12 countries in the Asia-Pacific region, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam (contrast this with 160 members of World Trade Organisation).

The TPP nations together account for about one-third of world trade and foreign direct investment. Thus, there is a larger interconnected world outside the coverage of TPP which is economically crucial for all concerned. It is important that these negotiations do not create systems which are exclusionary, fragmenting and adversely affecting overall economic opportunities.

Today’s trade negotiations focus significantly on issues commonly referred to as non-tariff barriers. These include standards which specify requirements for products to be sold in specific markets.

These standards could have a larger general impact, such as environment or social standards, or have product-specific effects such as specifications for cars, electric gadgets, textiles and clothing, fruits, etc. The focus of TPP negotiations suggests that there is a strong possibility for markets and economic opportunities to get fragmented.

That would create major difficulties for all. This can be prevented through specific steps to create inclusive systems, which are essential in our increasingly inter-dependent world.

In the next five to seven years, the rapid growth of middle class in regions outside the TPP and global links between trade and sustainable development could create significant potential conflicts without inclusive systems.

Photo by Jamie Levine

Photo by Jamie Levine

Just recently, I was in Beijing, China for a workshop that discussed the Implications of TPP for China and India in detail. At the event, co-organised by the International Institute for Sustainable Development (IISD), the International Centre for Trade and Sustainable Development (ICTSD) and the China Society for WTO Studies (CWTO), I made two strong recommendations for India, China and even other developing nations: (i) that these countries should upgrade their capacities for policies and meeting evolving standards, so that their access to major markets could continue without significant problems, and (ii) that non-TPP countries should combine forces to push for the development of more inclusive trade systems, and suggest ways of doing so.

However, the main action to develop inclusive systems within TPP has to be from those negotiating the agreement, so as to maintain substantive and effective linkages with the rest of the world.

While some additional countries may join the TPP, whenever concluded, others which may find it more difficult to do so would nonetheless be important parts of a trading system providing opportunities for sustained prosperity for all economies. Restraining their effective participation would mean restraining the positive potential of the system as a whole.

Various countries are in different stages of preparedness with respect to higher standards likely to arise from TPP. In late 2013, South Korea announced its interest in joining in TPP. There is a strong debate in China on whether or not to join TPP.

In Brazil, parts of the private sector seem open to joining this new mega-FTA, while the government appears to be reticent about it. In India, the policy makers have begun a process of upgrading domestic capacities, but it is very unlikely that India would be able to join an agreement such as TPP, for several years.

All African economies are outside the process of any of the mega-FTAs such as TPP. Their state of preparation is in general much less than the larger economies of other continents. In some instances, there is a view that TPP may not be concluded, so why worry about it!

However, progress in TPP negotiations is continuing, though at less than the desired pace of participants. It is expected to pick up in the months ahead.

Recognising the advent of the contours of a new trade regime in large parts of the global markets, China is already moving ahead with policy reform to better equip itself for a world of new trade and investment regulations.

This will help consolidate its existing position as an important hub of global value chains and its desire to move forward in the value chain to produce higher value items with state-of-art technologies. Interestingly, this preparation for a post-TPP world enmeshes well with its next stage of domestic reform.

However, even a relatively advanced developing nation such as China would find it difficult to have market access post-TPP unless the agreement incorporates an inclusive system. This task would be much more difficult for lesser developed nations. The content of standards under TPP is likely to be high, and lead to considerable cost escalation for exports of several developing nations.

In TPP, these would likely reflect standards prevailing in the U.S.; simultaneously with TPP we have the Trans-Atlantic Trade and investment Partnership (TTIP) negotiations between EU and the US which have an important focus on standards. The results of TPP cannot be too different from that of TTIP in this regard.

Studies have shown that impediments to market access by standards are recognised by even exporters from the U.S. and the EU to each other’s market. Similarly, in a recent discussion of Korean emission standards for automobiles, U.S. Ford Motor Company argued that Korea’s standards and related system would raise cost by 7,000 dollars for each Ford Explorer vehicle.

Given that trade and investment play an important role in their growth performance, losing access to TPP and TTIP countries, which together account for about half of world trade, would be highly damaging for India, China or other non-member countries.

Ultimately, the most suitable action that the emerging developing economies (China, India, Brazil and others) can take at this point, would be to pool their collective energies together to press for conditions which ensure that the emerging international trade system works better for all countries, including those not part of the large free trade agreements such as TPP and TTIP.

Such synergies would be useful even for up-gradation of domestic capacities, working together with co-ordinated and cooperative programmes.

Common efforts are crucial for developing inclusive systems because each of these countries on its own will make little impact for changing the evolving regulatory regimes. A more formalised collective response would empower them to press the negotiating nations to develop more inclusive, rather than exclusionary, systems.

Dr. Singh has been with IISD as a senior fellow since October 1, 2013 and provides advice and support to the Institute’s work in China, and on multilateral trading systems.Before joining IISD, Singh served as deputy director-general at the World Trade Organisation from October 2005 to September 2013.

Edited by: Kitty Stapp

 

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India Stands Firm on Protecting Food Security of South at WTOhttp://www.ipsnews.net/2014/08/india-stands-firm-on-protecting-food-security-of-south-at-wto/?utm_source=rss&utm_medium=rss&utm_campaign=india-stands-firm-on-protecting-food-security-of-south-at-wto http://www.ipsnews.net/2014/08/india-stands-firm-on-protecting-food-security-of-south-at-wto/#comments Fri, 01 Aug 2014 18:32:00 +0000 Ravi Kanth Devarakonda http://www.ipsnews.net/?p=135879 By Ravi Kanth Devarakonda
GENEVA, Aug 1 2014 (IPS)

The failure of the two major players in global trade negotiations to bridge their differences has put paid to the adoption of the protocol of amendment for implementation of the contested Trade Facilitation Agreement (TFA) for the time being. 

India and the United States failed Thursday at the World Trade Organization (WTO) to reach agreement on construction of a legally binding decision on a “permanent peace clause” that would further strengthen what was decided for public distribution programmes for food security in developing countries at the ninth ministerial meeting in Bali, Indonesia, last year.New Delhi made its choice clear to Azevedo: either members [of the WTO] agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

The Bali decision on food security was one of the nine non-binding best endeavour outcomes agreed by trade ministers on agriculture and development.

For industrialised and leading economic tigers in the developing world, the TFA – which would harmonise customs procedures in the developing world on a par with the industrialised countries – is a major mechanism for market access into the developing and poorest countries.

WTO Director-General Roberto Azevedo, who had put all his energies over the last seven months into ensuring the timely adoption of the TFA protocol by July 31 as set out in the Bali ministerial declaration, was clearly upset with the failure to adopt the protocol.

“The fact we do not have a conclusion means that we are entering a new phase in our work – a phase which strikes me as being full of uncertainties,” Azevedo told the delegates at the concluding session of the General Council, which is the highest WTO decision-taking body between ministerial meetings.

The Bail ministerial declaration was adopted at the WTO’s ninth ministerial meeting in December last year. It resulted in a binding multilateral agreement on trade facilitation along with non-binding outcomes on nine other decisions raised by developing and poorest countries, including an interim solution on public distribution programmes for food security.

The developing and poorest countries remained unhappy with the Bali package even though their trade ministers endorsed the deal. The countries of the South resented what they saw as the “foster parent treatment” accorded to their concerns in agriculture and development.

While work on clearing the way for the speedy implementation of the TFA has preceded at brisk pace at the WTO over the last seven months, other issues were somewhat neglected. Several African and South American countries, as well as India, remained unhappy with the lack of progress in issues concerning agriculture and development, particularly in public distribution programmes for food security.

Last week, India fired the first salvo at the WTO by declaring that unless there are “credible” outcomes in the development dossier of the Bali package, including a permanent solution for food security, it would not join the consensus to adopt the TFA. Bolivia, Venezuela and Cuba shared India’s concerns.

Despite concerted political lobbying by leading U.S. administration officials and envoys from Western countries in New Delhi to change its stand, the Indian government informed the WTO director-general Wednesday that it wanted a substantive outcome on food security, without which it would oppose the TFA protocol.

Without bringing India and the United States into a face-to-face dialogue at the WTO, Azevedo held talks with the representatives from the world’s two largest democracies in a one-on-one format.

According to sources familiar with the WTO’s closed-door consultations, Azevedo informed India that its demand for a substantive outcome on food security would not be acceptable to members because they would not approve “re-writing” the Bali ministerial declaration.

New Delhi made its choice clear to Azevedo: either members agree to a permanent solution for food security or postpone adoption of the TFA protocol until there are credible outcomes on all issues, by the end of the year.

“India’s position remains the same,” New Delhi trade minister Nirmala Sitharaman told reporters after a meeting with the U.S. Commerce Secretary Penny Pritzker Thursday.

Given the importance of TFA for U.S. business interests, Washington yielded some ground by agreeing to a compromise, but the two sides were stuck on legal aspects, particularly on how this should be adopted at the General Council.

The result Thursday was that the differences between the two led to an adjournment of the General Council without the TFA protocol.

“We have not been able to find a solution that would allow us to bridge that gap,” the WTO director-general told members.  “We tried everything we could … but it has not proved possible,” Azevedo said.

“We are absolutely sad and disappointed that a very small handful of countries were unwilling to keep their commitments from the December conference in Bali and we agree with the director-general that the failure has put this institution on very uncertain ground,” U.S. deputy trade representative Ambassador Michael Punke told reporters.

Brazil’s trade envoy Marcos Galvao suggested that it would be possible to reinvigorate the talks despite the failure Thursday. “When we come back in September, we can come forward with the Bali package and the whole work programme,” Galvao told IPS.

In New Delhi, U.S. Secretary of State John Kerry said “our feeling is obviously that the agreement that was reached in Bali is an agreement that importantly can provide for food security for India.”

“We do not dismiss the concerns India has about large numbers of poor people who require some sort of food assurance and subsistence level, but we believe there’s a way to provide for that that keeps faith with the WTO Bali agreement,” Kerry maintained.

Credible and permanent rules for food security are vital for developing countries to continue with their public distribution programmes to address livelihood security.

“The programme enables governments in the developing countries to put more money in the hands of the poor farmers by buying their crops at stable and higher price, and use those government purchases to feed the hungry – many of those same farm families – with free or subsidised food distributions,” said Timothy A. Wise, an academic with the Global Development and Environment Institute at the U.S. Tufts University.

Several developing and poorest countries – Zambia, Ghana, Malawi, Senegal, Kenya, Nigeria, Egypt, Morocco, Tunisia, Botswana, Sri Lanka, Bangladesh, Nepal, Jordan, India, and Saudi Arabia – are currently implementing food security programmes for different food articles.

The Bali package involves nine issues in addition to the TFA and they need to be addressed “on an equal footing,” Nelson Ndirangu, Kenya’s senior trade official told IPS. “I’m sympathetic to India’s stand and I agree that all issues, including a permanent solution for food security, must be addressed along with the TFA,” said Ndirangu.

(Edited by Phil Harris)

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Nicaragua Pins Hopes for Progress on Grand Canalhttp://www.ipsnews.net/2014/08/nicaragua-pins-hopes-for-progress-on-grand-canal/?utm_source=rss&utm_medium=rss&utm_campaign=nicaragua-pins-hopes-for-progress-on-grand-canal http://www.ipsnews.net/2014/08/nicaragua-pins-hopes-for-progress-on-grand-canal/#comments Fri, 01 Aug 2014 16:25:10 +0000 Jose Adan Silva http://www.ipsnews.net/?p=135875 Three farmers study the route for the interoceanic canal on a map of Nicaragua, which the Chinese firm HKND Group presented in the southern city of Rivas during a meeting with people who will be affected by the mega-project. Credit: José Adán Silva/IPS

Three farmers study the route for the interoceanic canal on a map of Nicaragua, which the Chinese firm HKND Group presented in the southern city of Rivas during a meeting with people who will be affected by the mega-project. Credit: José Adán Silva/IPS

By José Adán Silva
MANAGUA, Aug 1 2014 (IPS)

Víctor Sánchez doesn’t want gold or the comfortable future income he was promised.

He just wants to live the life he has always lived on his farm along the Banks of the Las Lajas river – but the river is slated to become part of the route followed by the Nicaragua Interoceanic Grand Canal.

Sánchez, a 59-year-old small-scale farmer from the southwestern department or state of Rivas, told IPS that he isn’t familiar with the details of the mega-project that the government touts as the ticket for this country to lose its dubious status as the second-poorest in the Western Hemisphere, after Haiti.

He is worried that he will be removed from the land where he has always lived with his extended family, and that he won’t receive compensation for his property.

That’s what he told representatives of the HKND Group at a Jul. 15 meeting in the International University of Agriculture and Livestock in Rivas. HKND is the Hong Kong-based Chinese company that was granted the concession to build the canal.

The Chinese technicians, with the support of interpreters and Nicaraguan officials, provided details of the ambitious project to a local audience in the city of Rivas, the departmental capital, 110 km south of Managua.

The canal will connect the Pacific and Atlantic oceans by means of a 278 km waterway, which includes a 105 km stretch across Lake Cocibolca.

The numbers involved are impressive: the canal will cost 50 billion dollars to build and will be up to 520 metres wide, with a monimum depth of 27.6 metres and a maximum of 30 metres. An estimated 5,100 vessels a year will make the 30-hour crossing through the canal.

Pang Kwok Wai, assistant director of HKND’s department of construction management, explained that the work is set to begin in December in the municipality of Brito, in Rivas, on the Pacific coast.

The department will be split in half by the canal and part of the local population will be relocated.

The project will create a city of 140,000 people on the Pacific side of the country. A 29 sq km duty-free zone will also be established in Rivas, along with four tourist complexes, an international airport with warehouse capacity for thousands of tons of cargo, a deepwater port, giant bridges and other “sub-projects” in the terminology used by HKND.

In June 2013, the government of leftwing President Daniel Ortega granted the concession for HKND Group to build and run the canal for 50 years, extendable by another 50 years.

The government argues that the canal will definitively transform the economy of this Central American nation, where 42.5 percent of the population of 6.1 million lives in poverty and 70 percent of jobs are in the informal economy.

Telémaco Talavera, the president of the National Council of Universities and a member of the Special Commission for the Grand Canal, told IPS that to carry out the work, large industrial companies will be created that will require local labour power: 50,000 direct jobs during the construction phase and 200,000 permanent jobs after 2019, when the canal is to be completed.

HKND also announces the construction of new cement, steel, dynamite, asphalt, fuel and energy plants.

The Nicaraguan government estimates that as a result of the construction work, GDP growth will accelerate from the current four-five percent to 10.8 percent in 2014 and 15 percent in 2015.

The government projects that GDP will climb from 11.2 billion dollars to 24.7 billion dollars in 2018.

HKND Group, led by the mysterious Chinese businessman Wang Jing, has given the world the impression that the project is a sure thing, from its news releases.

But doubts about the company, and especially about the fund created to finance the canal, are far from being cleared up.

The company says it hired the China Railway Construction Corporation to carry out the technical feasibility studies, the U.S. McKinsey & Company for the information analysis and the UK-based Environmental Resources Management consultancy for the social and environmental impact assessments.

HKND technical experts have repeated in public and private meetings in Nicaragua and China that the company invited businesspeople from China, Russia, the UK, the United States, Germany, Belgium and Australia to support the project.

Hopes for the future…and doubts

The canal has raised hopes among thousands of Nicaraguans for a more prosperous future, according to two national surveys.

One of the pollsters, MyR Consultores, found in a July poll that 31.3 percent of respondents thought the canal would bring benefits to a smaller or greater extent.

Another survey, by the Americas Barometer of the Latin American Public Opinion Project at Vanderbilt University in the U.S., presented in Managua this month as well, found that 72.8 percent of those interviewed stressed the generation of jobs by the canal as a potential benefit.

But 43.4 percent of respondents were worried about the environmental effects that the project could have.

That fear is shared by dozens of environmentalists and non-governmental organisations, like the Nicaraguan Foundation for Sustainable Development, which under the leadership of biologist Jaime Incer, environmental adviser to the president of Nicaragua, is opposed to the construction work with the argument that it will irreversibly affect Lake Cocibolca.

The lake is the biggest in Latin America: 8,624 sq km of freshwater. According to the organisation’s estimates, the construction of the canal would affect 400,000 hectares of jungle and wetlands.

Incer told IPS that Nicaragua gave HKND authority over the lake and surrounding areas, which include more than 16 watersheds and 15 protected areas representing 25 percent of the country’s rainforest.

HKND Group has not yet completed its environmental impact studies. Nevertheless, it has already decided on the route to be followed by the canal, as well as the construction of a 400 sq km artificial lake and 41 giant deposits along the route to store the earth that is removed.

Another aspect criticised by opponents is the lack of transparency surrounding the project’s financing. Detractors have not received any response to their questions about who is financing the project and how they operate.

The company and its executives in Nicaragua, as well as the Nicaraguans in charge of the project, have avoided revealing the identity of their sources of financing.

“The fund is guaranteed, but it is confidential; these matters are business secrets, especially because of the companies that trade on the stock market,” said HKND’s Pang.

Talavera, with the Special Commission for the Grand Canal, told IPS that the important thing at this time is to explain to the population the reach of the mega-project and to guarantee that it brings benefits for the country. “The details about the financing will be provided when the time is right, if the financing partners decide on that,” he said.

The country’s refusal to reveal information about the partners and the origin of the funds has given rise to speculation. For example, opposition lawmaker Eliseo Núñez has insinuated that the Chinese government is behind the project – a suspicion that Wang Jing has consistently denied.

Edited by: Estrella Gutiérrez / Translated by: Stephanie Wildes

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Oil Alliance Between China and Costa Rica Comes to Life Againhttp://www.ipsnews.net/2014/07/oil-alliance-between-china-and-costa-rica-comes-to-life-again/?utm_source=rss&utm_medium=rss&utm_campaign=oil-alliance-between-china-and-costa-rica-comes-to-life-again http://www.ipsnews.net/2014/07/oil-alliance-between-china-and-costa-rica-comes-to-life-again/#comments Wed, 30 Jul 2014 02:22:47 +0000 Diego Arguedas Ortiz http://www.ipsnews.net/?p=135822 The presidents of China, Xi Jinping, and Costa Rica, Luis Guillermo Solís, both at their microphones during a Jul. 17 meeting in Brasilia. Credit: Presidencia de Costa Rica

The presidents of China, Xi Jinping, and Costa Rica, Luis Guillermo Solís, both at their microphones during a Jul. 17 meeting in Brasilia. Credit: Presidencia de Costa Rica

By Diego Arguedas Ortiz
SAN JOSE, Jul 30 2014 (IPS)

China’s plan to become Costa Rica’s main energy ally through the joint reconstruction of an oil refinery has been revived after the presidents of the two countries agreed to review the conditions of the project during a meeting in the Brazilian capital.

The two countries initially signed a framework accord in 2008, including Chinese participation in oil projects, especially the upgrade and expansion of the Moín refinery on Costa Rica’s Caribbean coast, with an investment of 1.5 billion dollars.

But criticism from public institutions, political leaders and social organisations brought the initiative to a halt.

The Costa Rican president’s office stated in a communiqué that Beijing had accepted its request to renegotiate the project, with the aim of “resolving inconsistencies in the contract,” in which each country has invested 50 million dollars so far.

Costa Rican Foreign Minister Manuel González said in a Jul. 22 press conference that “we have no deadline” for that review, which all of the involved institutions will take part in.

President Luis Guillermo Solís participated in the news briefing, although he did not specifically refer to the refinery.

Under the microscope

A year ago, the comptroller general’s office ordered Soresco, the joint venture, not to use the 1.8 million dollar feasibility study due to a conflict of interest, because it was conducted by a subsidiary of the Chinese partner CNPCI.

The study saddled Recope with costs from Soresco, such as land, fuel tanks, environmental damages and the expansion of the oil pier.

The comptroller general’s office ruled that the 16.28 profit margin established could be too high. A second consultancy, the U.S.-based Honeywell, also questioned that figure.

While the agreement creating Soresco stated that each partner would pay its own workers involved in the project, Recope paid half of the wages of the Chinese employees, as well as bonuses and incentives. Recope is seeking to be repaid 12 million dollars.

Solís held a bilateral working meeting with Chinese leader Xi Jinping on Jul 17 in Brasilia, during a summit of presidents of the Community of Latin American and Caribbean States (CELAC) with Xi, after the sixth summit of the BRICS (Brazil, Russia, India, China and South Africa) grouping.

The upgrade of the Moín refinery, which belongs to the state oil refinery Refinadora Costarricense de Petróleo (Recope), would increase its processing capacity from 18,000 to 60,000 barrels a day of crude. The company controls Costa Rica’s oil imports, and since 2011 it has had to purchase only refined products, because the plant was shut down.

The joint refinery project, or “Chinese refinery” as it is referred to locally, was criticised by politicians and a large part of organised civil society from the start.

“We have always defended the construction of a refinery, whether it was with China, Russia or France,” said Patrick Johnson, a leader of the oil workers’ union, the Sindicato de Trabajadores Petroleros Químicos y Afines.”We want the confusion to be cleared up…and if the project is beneficial, then it should go ahead because the country needs a refinery,” he told IPS.

In June 2013, the office of the comptroller general brought the initiative to a halt arguing that there were serious problems with a key feasibility study. Since then, the project has been on hold.

The renegotiations should overcome the first real hurdle that China has run into in Costa Rica. In 2007, this country became the first in Central America to establish diplomatic relations with China, in a part of the world that continues to have ties with Taiwan – incompatible with relations with China.

“Having an embassy here makes it easier to deal with matters with Central America,” Patricia Rodríguez, an expert on China who was an official in Costa Rica’s embassy in Beijing from 2008 to 2010, told IPS.

China is now Costa Rica’s second-biggest trading partner after the United States. This country’s sales to the Asian giant climbed from 91 million dollars in 2000 to 1.5 billion in 2011, when a free trade treaty signed in 2010 went into effect.

In strategic terms, the joint refinery between Recope and the state-run China National Petroleum Corporation International (CNPCI) is China’s star project in the country, and the joint venture Sociedad Reconstructora Chino Costarricense (Soresco) was set up in 2009 to carry it out.

The investment is to amount to 1.5 billion dollars, of which Soresco would receive 900 million in loans from the China Development Bank. The rest will come from the partners. The construction and remodeling of the plant will absorb 1.2 billion dollars of that total.

The work was to begin early this year and was to last 42 months. The comptroller general’s office’s decision to put it on hold was due, among other things, to the fact that the feasibility study was carried out by a subsidiary of CNPCI, which it said subverted the evaluation.

The resolution had the effect of “completely paralysing the refinery upgrade process by leaving it without the technical studies necessary for it to continue,” explained Recope in a lawsuit brought against the comptroller general’s office in response to the measure.

Despite the ruling by the comptroller general’s office, the administration of conservative President Laura Chinchilla (2010-May 2014) continued to defend the refinery modernisation project. But the centre-left Solís promised during the election campaign to renegotiate the agreement, because he considered several aspects of the contract negative for the country.

The request to renegotiate the contract had the support of political sectors and in particular of lawmaker Ottón Solís, an economist and university professor who was one of the first to speak out against certain facets of the agreement.

“We have enormous bargaining power here because China is desperate to open up negotiations with Costa Rica and this country has prestige,” Deputy Solís, of the governing Citizen Action Party, told IPS.

“If we insinuate that it’s impossible to negotiate with China because they take advantage of you with unfair contracts, the whole world will be put on the alert and other countries won’t want to negotiate with them,” and that gives Costa Rica bargaining power, he said.

One of the promises made was that the upgrade of the refinery will bring down fuel costs for consumers, who currently pay 41 percent extra in taxes and profit margins for service stations and Recope’s operating costs.

Petrol currently costs 1.48 dollars a litre in Costa Rica, which makes it the most expensive gasoline in Central America. Official figures from 2012 indicate that oil consumption in the country stood at 53,000 barrels per day.

“Fuel is a fundamental element for price stability because there are public services that depend on its price, like public transportation and electricity, and the same is true in the case of the productive apparatus,” the president of Costa Rica’s consumers association, Erick Ulate, told IPS.

During the meeting with President Solís, Xi also agreed to expand the timeframe for carrying out studies for the project of widening the road connecting San José with the Caribbean port of Limón, where 90 percent of the country’s exports are shipped out. The expansion of the road will be financed with a 395 million dollar loan from Beijing.

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As Winds of Change Blow, South America Builds Its House with BRICShttp://www.ipsnews.net/2014/07/as-winds-of-change-blow-south-america-builds-its-house-with-brics/?utm_source=rss&utm_medium=rss&utm_campaign=as-winds-of-change-blow-south-america-builds-its-house-with-brics http://www.ipsnews.net/2014/07/as-winds-of-change-blow-south-america-builds-its-house-with-brics/#comments Fri, 18 Jul 2014 14:36:36 +0000 Diana Cariboni http://www.ipsnews.net/?p=135624 Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

By Diana Cariboni
MONTEVIDEO, Jul 18 2014 (IPS)

While this week’s BRICS summit might have been off the radar of Western powers, the leaders of its five member countries launched a financial system to rival Bretton Woods institutions and held an unprecedented meeting with the governments of South America.

The New Development Bank (NDB) and the Contingent Reserve Arrangement signal the will of BRICS countries (Brazil, Russia, India, China and South Africa) to reconcile global governance instruments with a world where the United States no longer wields the influence that it once did.“The U.S. government clearly doesn't like this, although it will not say much publicly.” -- Mark Weisbrot

More striking for Washington could be the fact that the 6th BRICS summit, held in Brazil, set the stage to display how delighted the heads of state and government of South America – long-regarded as the United States’ “backyard”— were to meet Russia’s president Vladimir Putin.

At odds with Washington and just expelled from the Group of Eight (G8) following Russia’s intervention in the Ukrainian crisis, Putin was warmly received in the region, where he also visited Cuba and Argentina.

In Buenos Aires, Putin and the president of Argentina, Cristina Fernández, signed agreements on energy, judicial cooperation, communications and nuclear development.

Argentina, troubled by an impending default, is hoping Russian energy giant Gazprom will expand investments in the rich and almost unexploited shale oil and gas fields of Vaca Muerta.

Although Argentina ranks fourth among the Russia’s main trade partners in the region, Putin stressed the country is “a key strategic partner” not only in Latin America, but also within the G20 and the United Nations.

Buenos Aires and Moscow have recently reached greater understanding on a number of international issues, like the conflicts in Syria and Crimea, Argentina sovereignty claim over the Malvinas/Falkland islands and its strategy against the bond holdouts.

Meanwhile, the relationship between Washington and Buenos Aires remains cool, as it has been with Brasilia since last year’s revelations of massive surveillance carried out by the National Security Agency against Brazil.

Some leftist governments –namely Bolivia, Venezuela and Ecuador— frequently accuse Washington of pursuing an imperialist agenda in the region.

But it was the president of Uruguay, José Mujica –whose government has warm and close ties with the Barack Obama administration— who better explained the shifting balance experienced by Latin America in its relationships with the rest of the world.

Transparency clause

In an interview before the summit, Ambassador Flávio Damico, head of the department of inter-regional mechanisms of the Brazilian foreign ministry, said a clause on transparency in the New Development Bank’s articles of agreement “will constitute the base for the policies to be followed in this area.”

Article 15, on transparency and accountability, states that “the Bank shall ensure that its proceedings are transparent and shall elaborate in its own Rules of Procedure specific provisions regarding access to its documents.”

There are no further references to this subject neither to social or environmental safeguards in the document.

After a dinner in Buenos Aires and a meeting in Brasilia with Putin, Mujica said the current presence of Russia and China in South America opens “new roads” and shows “that this region is important somehow, so the rest of the world perhaps begins to value us a little more.”

Furthermore, he reflected, “pitting one bloc against another… is not good for the world’s future. It is better to share [ties and relationships, in order to] keep alternatives available.”

Almost at the same time, Washington announced it was ready to transfer six Guantanamo Bay detainees to Uruguay, one of the subjects Obama and Mujica agreed on when the Uruguayan visited the U.S. president in May.

Mujica has invited companies from United States, China and now Russia to take part in an international tender to build a deepwater port on the Atlantic ocean which, Uruguay expects, could be a logistic hub for the region.

But beyond Russia, which has relevant commercial agreements with Venezuela, the real centre of gravity in the region is China, the first trade partner of Brazil, Chile and Perú, and the second one of a growing number of Latin American countries.

China’s president Xi Jiping travels on Friday to Argentina, and then to Venezuela and Cuba.

“The U.S. government clearly doesn’t like this, although it will not say much publicly,” said Mark Weisbrot, co-director of the Center for Economic and Policy Research.

“With a handful of rich allies, they have controlled the most important economic decision-making institutions for 70 years, including the IMF [International Monetary Fund], the World Bank, and more recently the G8 and the G20, and they wrote the rules for the WTO [World Trade Organisation],” Weisbrot told IPS.

The BRICS bank “is the first alternative where the rest of the world can have a voice.  Washington does not like competition,” he added.

However, the United States’ foreign priorities are elsewhere: Eastern Europe, Asia and the Middle East.

And with the exception of the migration crisis on its southern border and evergreen concerns about security and defence, Washington seems to have little in common with its Latin American neighbours.

“I wish they were really indifferent. But the truth is, they would like to get rid of all of the left governments in Latin America, and will take advantage of opportunities where they arise,” said Weisbrot.

Nevertheless, new actors and interests are operating in the region.

The Mercosur bloc (Argentina, Brazil, Paraguay and Uruguay) and the European Union are currently negotiating a trade agreement.

Colombia, Chile, México and Perú have joined forces in the Pacific Alliance, while the last three also joined negotiations to establish the Trans-Pacific Partnership.

In this scenario, the BRICS and their new financial institutions pose further questions about the ability of Latin America to overcome its traditional role of commodities supplier and to achieve real development.

“I don’t think that the BRICS alliance is going to get in the way of that,” said Weisbrot.

According to María José Romero, policy and advocacy manager with the European Network on Debt and Development (Eurodad), the need to “moderate extractive industries” could lead to “changes in the relationship with countries like China, which looks at this region largely as a grain basket.”

Romero, who attended civil society meetings held on the sidelines of the BRICS summit, is the author of “A private affair”, which analyses the growing influence of private interests in the development financial institutions and raises key warnings for the new BRICS banking system.

BRICS nations should be able “to promote a sustainable and inclusive development,” she told IPS, “one which takes into account the impacts and benefits for all within their societies and within the countries where they operate.”

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India’s Cut-Rose Sector Pushes Past Barriershttp://www.ipsnews.net/2014/07/indias-cut-rose-sector-pushes-past-barriers/?utm_source=rss&utm_medium=rss&utm_campaign=indias-cut-rose-sector-pushes-past-barriers http://www.ipsnews.net/2014/07/indias-cut-rose-sector-pushes-past-barriers/#comments Fri, 18 Jul 2014 12:33:35 +0000 Keya Acharya http://www.ipsnews.net/?p=135621 Rose growers in Bangalore, India, rely on sustainable rainwater harvesting techniques. Credit: Keya Acharya/IPS

Rose growers in Bangalore, India, rely on sustainable rainwater harvesting techniques. Credit: Keya Acharya/IPS

By Keya Acharya
Jul 18 2014 (IPS)

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Public Stockholding Programmes for Food Security Face Uphill Strugglehttp://www.ipsnews.net/2014/07/public-stockholding-programmes-for-food-security-face-uphill-struggle/?utm_source=rss&utm_medium=rss&utm_campaign=public-stockholding-programmes-for-food-security-face-uphill-struggle http://www.ipsnews.net/2014/07/public-stockholding-programmes-for-food-security-face-uphill-struggle/#comments Thu, 17 Jul 2014 22:12:26 +0000 Ravi Kanth Devarakonda http://www.ipsnews.net/?p=135617 By Ravi Kanth Devarakonda
GENEVA, Jul 17 2014 (IPS)

Framing rules at the World Trade Organization for maintaining public stockholding programmes for food security in developing countries is not an easy task, and for Ambassador Jayant Dasgupta, former Indian trade envoy to the WTO, “this is even more so when countries refuse to acknowledge the real problem and hide behind legal texts and interpretations in a slanted way to suit their interests.”

“The major problem is that the WTO’s Agreement on Agriculture (AOA) was negotiated in early 1990s and there are many issues which were not taken into account then,” says Ambassador Dasgupta, who played a prominent role in articulating the developing countries’ position on food security in the run-up to the WTO’s ninth ministerial meeting in Bali, Indonesia, last year.

“If the WTO has to carry on as an institution catering for international trade and its member states, especially the developing and least-developed countries, the rules have to be modified to ensure food security and livelihood security for hundreds of millions of poor farmers,” Ambassador Dasgupta told IPS Thursday.

Ironically, the rich countries – which continue to provide tens of billions of dollars for subsidies to their farmers – are insisting on inflexible disciplines for public stockholding programmes in the developing world.“Credible disciplines for food security are vital for the survival of poor farmers in the developing countries who cannot be left to the vagaries of market forces and extortion by middlemen” – Ambassador Jayant Dasgupta, former Indian trade envoy to the WTO

The United States, a major subsidiser of farm programmes in the world and charged for distorting global cotton trade by the WTO’s Appellate Body, has called for a thorough review of farm policies of  developing countries seeking a permanent solution for public stockholding programmes to address food security.

“Food security is an enormously complex topic affected by a number of policies, including trade distorting domestic support, export subsidies, export restrictions, and high tariffs,” says a United States proposal circulated at the WTO on July 14.

“These policies [in the developing countries],” continues the proposal, “can impede the food security of food insecure peoples throughout the world.” The United States insists that food security policies must be consistent with the rules framed in the Uruguay Round of trade negotiations that came into effect in 1995.

“Public stockholding is only one tool used to address food security, and disciplines regarding its application are already addressed in the Agreement on Agriculture,” the United States maintains.

The agriculture agreement of the trade body was largely based on the understandings reached between the two largest subsidisers – the European Union and the United States – which culminated in what is called the Blair House Agreement in 1992. The major subsidisers were provided a “peace clause” for ten years (1995-2005) from facing any challenges to their farm subsidy programmes at the WTO.

The AOA also includes complex rules regarding how its members, especially industrialised countries, must reduce their most-distorting farm subsidies.

In the face of increased legal challenges at the WTO and also demands raised for steep cuts in subsidies during the current Doha trade negotiations, several industrialised countries shifted their subsidies from what are called most trade-distorting “amber box” measures to “green box” payments which are exempted from disputes. Jacques Berthelot, a French civil society activist, says that the United States has placed some of its illegal subsidies into the green box.

When it comes to disciplines on food security, however, the United States says it is important to ensure that “[food security] programmes do not distort trade or adversely affect the food security of other members.”  The United States has suggested several “elements” for a Work Programme on food security, including the issue of public stockholding programmes, for arriving at a permanent solution. Washington wants a thorough review of how countries have implemented food security in developing countries.

The U.S. proposal, says a South American farm trade official, is aimed at “frustrating” the developing countries from arriving at a simple and effective solution that would enable them to continue their public stockholding programmes without many hurdles. “The United States is interested in preserving the Uruguay Round rules but not address the issues raised by the developing countries in the Doha Round of trade negotiations that seek to address concerns raised by developing countries,” the official adds.

The G-33 group – with over 45 developing and least-developed countries – has brought the food security issue to the centre-stage at the WTO. Over the last two years, the G-33, led by Indonesia with China, India, Pakistan, the Philippines, Kenya, Nigeria, Zimbabwe, Bolivia, Cuba and Peru among others, has called for updating the external reference price based on 1986-88 prices to ensure that they can continue with their public stockholding programmes under what is called de minimis support for developing countries.

Following the G-33’s insistence on a solution for public stockholding programmes for food security, which became a make-or-break issue at the WTO’s Bali ministerial meeting, trade ministers had agreed on a decision “with the aim of making recommendations for a permanent solution.” The ministers directed their negotiators to arrive at a solution in four years.

Over the last six months, there has been little progress in addressing the core issues in the Bali package raised by developing countries, including food security. “We are deeply concerned that the Ministerial Decision on Public Stockholding for Food Security Purposes is getting side-lined,“ India told members at the WTO on July 2.

“In this and other areas, instead of engaging in meaningful discussion, certain members have been attempting to divert attention to the policies and programmes of selected developing country members,” says New Delhi, emphasising that “the issues raised are in no way relevant to the core mandate that we have been provided in the Bali Decisions.”

At a time when the industrialised countries want rapid implementation of the complex agreement on trade facilitation, their continued stonewalling tactics on the issues raised by developing countries has created serious doubts whether food security issue will be addressed in a meaningful manner at all.

“Credible disciplines for food security are vital for the survival of poor farmers in the developing countries who cannot be left to the vagaries of market forces and extortion by middlemen,” says Ambassador Dasgupta. “The delay in addressing food security will pose problems for millions of people below poverty who are dependent on public distribution programmes.”

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International Reform Activists Dissatisfied by BRICS Bankhttp://www.ipsnews.net/2014/07/international-reform-activists-dissatisfied-by-brics-bank/?utm_source=rss&utm_medium=rss&utm_campaign=international-reform-activists-dissatisfied-by-brics-bank http://www.ipsnews.net/2014/07/international-reform-activists-dissatisfied-by-brics-bank/#comments Thu, 17 Jul 2014 21:39:24 +0000 Mario Osava http://www.ipsnews.net/?p=135613 Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 17 2014 (IPS)

The creation of BRICS’ (Brazil, Russia, India, China and South Africa) own financial institutions was “a disappointment” for activists from the five countries, meeting in this northeastern Brazilian city after the group’s leaders concluded their sixth annual summit here.

The New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA), launched Tuesday Jul. 15 at the summit in the northeastern Brazilian city of Fortaleza, represent progress “from United States unilateralism to multilateralism,” said Graciela Rodriguez, of the Brazilian Network for the Integration of Peoples (REBRIP).

But “the opportunity for real reform was lost,” she complained to IPS at the International Seminar on the BRICS Bank, held in this city Wednesday and Thursday Jul. 16-17 as a forum for civil society organisations in parallel to the sixth summit.

The format announced for the NDB “does not meet our needs,” she said.

The NDB will promote “a new kind of development" only if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals. -- Carlos Cosendey, international relations secretary at the Brazilian foreign ministry
The bank’s goal is to finance infrastructure and sustainable development in the BRICS and other countries of the developing South, with an initial capital investment of 50 billion dollars, to be expanded through the acquisition of additional resources.

“We want an international system that serves the majority, not just the seven most powerful countries (the Group of Seven),” that does not depend on the dollar and that has an international arbitration tribunal for financial controversies, said Oscar Ugarteche, an economics researcher at the National Autonomous University of Mexico.

“It is unacceptable that a district court judge in New York should put a country at risk,” he told IPS, referring to the June ruling of the U.S. justice system in favour of holdouts (“vulture funds”) in their dispute with Argentina, which could force another suspension of payments.

“We need international financial law,” similar to existing trade law, and an end to the dominance of the dollar in exchange transactions, which enables serious injustice against nations and persons, like embargoes on payments and income in the United States, he said.

“Existing international institutions do not work,” and the proof of this is that they have still not overcome the effects of the 2008 financial crisis, said the Mexican researcher.

Major powers like the United States and Japan have unsustainable debt and fiscal deficits, yet are not harassed by the International Monetary Fund (IMF), in contrast to the treatment meted out to less powerful nations, particularly in the developing South.

During the seminar, organised by REBRIP and Germany’s Heinrich Böll Foundation, oft-repeated demands were for civil society participation, transparency, environmental standards and consultation with the populations affected by projects financed by the NDB.

These demands have not yet been included in the NDB but may be discussed during its operational design over the next few years, while the group’s parliaments ratify its approval, said Carlos Cosendey, international relations secretary at the Brazilian foreign ministry, in a dialogue with activists.

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Participants at one of several panels at the International Seminar on the BRICS Bank, held Jul. 16-17 in Fortaleza, Brazil. Credit: Mario Osava/IPS

Cosendey said that a disadvantage of the multilateral bank was the need for its regulations not to be confused with infringement of national sovereignty of member states. The political, cultural, legal and ethnic differences between the five countries could pose a major obstacle to the adoption of common criteria, he said.

The NDB can be constructive “if it integrates human rights” into its principles and presents solutions for the social impacts of the projects it finances, said Nondumiso Nsibande, of ActionAid South Africa, an NGO.

“We need roads, other infrastructure and jobs, as well as education, health and housing,” but big projects tend to harm poor communities in the places where they are carried out, she told IPS. It is still not known what levels of transparency and social concern the bank will have, she said.

In the view of Chankrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, the NDB will alleviate India’s great needs for infrastructure, energy, long distance transport and ports. However, he does not expect it to make large investments in one key service for Indians: sanitation.

Having an Indian as the bank’s first president, as the five leaders have decided, will help attract more investments, but he said people’s access to water must remain a priority.

Cosenday said the NDB will promote “a new kind of development.”

But Chalapurath told IPS that this will only happen if its loans are made conditional on the adoption of low-polluting technologies and are guided by the Millennium Development Goals and their successors, the Sustainable Development Goals, as well as human rights and other best practices.

Adopting democratic processes within the bank will facilitate dialogue with social movements, parliaments and society in general, he said.

Incorporating environmental issues and gender parity is also essential, said Ugarteche and Rodriguez, who regards this as necessary in order to make progress towards “environmental justice.”

Not only roads and ports need to be built; even more important is the “social infrastructure” that includes sanitation, water, health and education, said Rodriguez, the coordinator of the REBRIP working group on International Economic Architecture.

Mobilising resistance to large projects that affect local populations in the places they are constructed will be part of the response to the probable priority placed by the NDB on financing physical infrastructure projects, she announced.

The social organisations gathered in Fortaleza, with representatives from Brazil, India, China, South Africa and other countries that are not members of the group, are preparing to coordinate actions to influence the way the bank and its policies are designed, and to monitor its operations and the actions of the BRICS group itself.

Brazilian economist Ademar Mineiro, also of REBRIP, said there was potential for national societies to influence the format and policies of the NDB, and time for them to organise and mobilise. “It is an unprecedented opportunity,” he told IPS.

Russia did not originally support the BRICS bank, preferring private funding. But Mineiro said its position changed after the United States and the European Union involved multilateral financial institutions like the World Bank in sanctions against Moscow for its annexation of Crimea, a part of Ukraine.

BRICS evolved “from the economic to the political,” with its members demanding more power in the international system. The alliance is one of the pillars of the Chinese strategy to conquer greater influence, including in the West, said Cui Shoujun, a professor at the School of International Studies of Renmin University in China.

“The BRICS need China more than the other way round,” he told IPS, adding that the Chinese economy is 20 times larger than South Africa’s and four times larger than those of India and Russia.

As well as seeking natural resources from other countries, among the reasons why China has joined and supports BRICS is strengthening the legitimacy in power of the Communist Party through internal stability and prosperity, the academic said.

(END)

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BRICS Forges Ahead With Two New Power Drivers – India and Chinahttp://www.ipsnews.net/2014/07/brics-forges-ahead-with-two-new-power-drivers-india-and-china/?utm_source=rss&utm_medium=rss&utm_campaign=brics-forges-ahead-with-two-new-power-drivers-india-and-china http://www.ipsnews.net/2014/07/brics-forges-ahead-with-two-new-power-drivers-india-and-china/#comments Thu, 17 Jul 2014 18:07:51 +0000 Shastri Ramachandaran http://www.ipsnews.net/?p=135604 By Shastri Ramachandaran
NEW DELHI, Jul 17 2014 (IPS)

The Sixth BRICS Summit which ended Wednesday in Fortaleza, Brazil, attracted more attention than any other such gathering in the alliance’s short history, and not just from its own members – Brazil, Russia, India, China and South Africa.

Two external groups defined by divergent interests closely watched proceedings: on the one hand, emerging economies and developing countries, and on the other, a group comprising the United States, Japan and other Western countries thriving on the Washington Consensus and the Bretton Woods twins (the World Bank and the International Monetary Fund).

The first group wanted BRICS to succeed in taking its first big steps towards a more democratic global order where international institutions can be reshaped to become more equitable and representative of the world’s majority. The second group has routinely inspired obituaries of BRICS and gambled on the hope that India-China rivalry would stall the BRICS alliance from turning words into deeds.The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

In the event, the outcome of the three-day BRICS Summit must be a disappointment to the latter group. First, the obituaries were belied as being premature, if not unwarranted. Second, as its more sophisticated opponents have been “advising”, BRICS did not stick to an economic agenda; instead, there emerged a ringing political declaration that would resonate in the world’s trouble spots from Gaza and Syria to Iraq and Afghanistan.

Third, and importantly, far from so-called Indian-China rivalry stalling decisions on the New Development Bank (NDB) and the emergency fund, the Contingency Reserve Arrangement (CRA), the Asian giants grasped the nettle to add a strategic dimension to BRICS.

With a shift in the global economic balance of power towards Asia, the failure of the Washington Consensus and the Bretton Woods twins in spite of conditionalities, structural adjustment programmes and “reforms”, financial meltdown and the collapse of leading banks and financial institutions in the West, there had been an urgent need for new thinking and new instruments for the building of a new order.

Despite the felt need and multilateral meetings that involved developing countries, including China and India which bucked the financial downturn, there had been no sign of alternatives being formed.

It is against this backdrop – of the compelling case for firm and feasible steps towards a new global architecture of financial institutions – that BRICS, after much deliberation, succeeded in agreeing on a bank and an emergency fund.

From India’s viewpoint, this summit of BRICS – which represents one-quarter of the world’s land mass across four continents and 40 percent of the world population with a combined GDP of 24 trillion dollars – was an unqualified success. The success is sweeter for the National Democratic Alliance (NDA) government led by the Bharatiya Janata Party (BJP) because the BRICS summit was new Prime Minister Narendra Modi’s first multilateral engagement.

For a debutant, Modi acquitted himself creditably by steering clear of pitfalls in the multilateral forum as well as in bilateral exchanges – particularly in his talks with Chinese President Xi Jiping, with Russian President Vladimir Putin and with Brazilian President Dilma Rousseff – and by delivering a strong political statement calling for reform of the U.N. Security Council and the IMF.

In fact, the intensification and scaling up of India-China relations by their respective powerful leaders is an important outcome of the meeting in Brazil, even though the dialogue between the Asian giants was on the summit’s side-lines. Nevertheless, Modi and Xi spoke in almost in one voice on global politics and conflict, and on the case for reform of international institutions.

The new leaders of India and China, with the power of their recently-acquired mandates, sent out an unmistakable signal that they have more interests in common that unite them than differences that separate them.

Against this backdrop, Indian Prime Minister Modi’s outing was significant for other reasons, not least because of the rapport he was able to strike up, in his first meeting, with Chinese President Xi. The stature, power, force and credibility of BRICS depend on its internal cohesion and harmony and this, in turn, revolves almost wholly on the state of relations between India and China. If India and China join hands, speak in one voice and march together, then BRICS has a greater chance of its agenda succeeding in the international system.

As it happened, Modi and Xi hit it off, much to the consternation of both the United States and Japan. They spoke of shared interests and common concerns, their resolve to press ahead with the agenda of BRICS and the two went so far as to agree on the need for an early resolution of their boundary issue. They invited each other for a state visit, and Xi went one better by inviting Modi to the Asia-Pacific Economic Cooperation meeting in China in November and asking India to deepen its involvement in the Shanghai Cooperation Organisation (SCO).

Modi’s “fruitful” 80-minute meeting with Xi highlights that the two are inclined to seize the opportunities for mutually beneficial partnerships towards larger economic, political and strategic objectives. This meeting has set the tone for Xi’s visit to India in September.

Although strengthening India-China relationship, opening up new tracks and widening and deepening engagement had been one of former Indian Prime Minister Manmohan Singh’s biggest achievements in 10 years of government (2004-2014), after a certain point there was no new trigger or momentum to the ties. Now Xi and Modi are investing effort to infuse new vitality into the relationship which will have an impact in the region and beyond.

As is the wont when it comes to foreign affairs and national security, Modi’s new government has not deviated from the path charted out by the previous government. BRICS as a foreign policy priority represents both continuity and consistency. Even so, the BJP deserves full marks because it did not treat BRICS and the Brazil summit as something it had to go through with for the sake of form or as a chore handed down by the previous government of Manmohan Singh.

Before leaving for Brazil, Modi stressed the “high importance” he attached to BRICS and left no one in doubt that global politics would be high on its agenda.

He pointed attention to the political dimension of the BRICS Summit as a highly political event taking place “at a time of political turmoil, conflict and humanitarian crises in several parts of the world.”

“I look at the BRICS Summit as an opportunity to discuss with my BRICS partners how we can contribute to international efforts to address regional crises, address security threats and restore a climate of peace and stability in the world,” Modi had said on eve of the summit.

Having struck the right notes that would endear him to the Chinese leadership, Modi hailed Russia as “India’s greatest friend” after he met President Vladimir Putin on the side-lines of the summit.

India belongs to BRICS, and if BRICS is the way to move forward in the world, then BRICS can look to India, along with China, for leading the way, regardless of political change at home. That would appear to be the point made by Modi in his first multilateral appearance.

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BRICS Build New Architecture for Financial Democracyhttp://www.ipsnews.net/2014/07/brics-build-new-architecture-for-financial-democracy/?utm_source=rss&utm_medium=rss&utm_campaign=brics-build-new-architecture-for-financial-democracy http://www.ipsnews.net/2014/07/brics-build-new-architecture-for-financial-democracy/#comments Wed, 16 Jul 2014 20:41:04 +0000 Mario Osava http://www.ipsnews.net/?p=135601 The five BRICS leaders pose for the cameras at the sixth annual summit in the Brazilian city of Fortaleza. Credit: Agência Brasil/EBC

The five BRICS leaders pose for the cameras at the sixth annual summit in the Brazilian city of Fortaleza. Credit: Agência Brasil/EBC

By Mario Osava
FORTALEZA, Brazil, Jul 16 2014 (IPS)

The BRICS alliance (Brazil, Russia, India, China and South Africa) launched the New Development Bank (NDB) and Contingency Reserve Arrangement (CRA) during its sixth summit, institutionalising a new financial architecture for the emerging powers.

Two other agreements, one for Cooperation among Export Credit and Guarantees Agencies and another on Cooperation for Innovation among national development banks, complete the structure established Tuesday Jul. 15 by the five heads of state in the northeastern Brazilian city of Fortaleza.

The BRICS Summit concludes Wednesday with a meeting between the five leaders and the presidents of the Union of South American Nations (UNASUR) held in Brasilia, as well as several bilateral meetings.

The NDB and CRA are not being created “against anyone,” but as a “response to our needs,” said the summit host, Brazilian President Dilma Rousseff, at a press conference after the meeting with Vladimir Putin (Russia), Narendra Modi (India), Xi Jinping (China) and Jacob Zuma (South Africa).

BRICS leaders reject interpretations that the mechanisms have been created in opposition to or as alternatives to the World Bank and the International Monetary Fund (IMF), part of the Bretton Woods global financial system established in the 1940s.

Social inclusion - a voice from India

A key promoter of the New Development Bank and the country that will appoint the first NDB president, India was also the voice of social concerns at the Sixth BRICS Summit.

Prime Minister Narendra Modi said in Fortaleza that fighting poverty should be the main focus of the group, especially through construction of the Sustainable Development Goals which will shape the development agenda after 2015.

Food security is another issue that Modi identified as a priority, as did members of the Indian business community who participted in the BRICS Business Forum on Monday Jul. 14. It is a highly sensitive topic in India, where hundreds of millions of people live in poverty, most of them subsistence farmers in rural areas.

BRICS should not be a centralised, hierarchical institution, but should focus attention on local areas and people, and involve youth, Modi said in his speech at the Summit. He suggested the creation of a Young Scientists’ Forum and a BRICS university, using the internet for intensive contact between students in the five countries.

The uniqueness of BRICS, he said, is that “for the first time” it brings together a group of nations on the basis of “future potential,” rather than existing characteristics. This “forward looking” idea creates fresh perspectives and institutional changes for a more stable world, overcoming present economic conflicts and turbulence, Modi said.

The theme of the BRICS Summit is “Inclusive growth: sustainable solutions.”

Chinese President Xi Jinping said his country, which is the major trading partner of 128 nations, seeks “win-win” cooperation to promote better world economic governance.

Africa is in urgent need of “inclusive and dynamic growth,” said Jacob Zuma, the president of South Africa, while Russian President Vladimir Putin proposed the formation of a BRICS Energy Association, with a fuel reserve bank to ensure the energy security of its member states.

The NDB will complement existing multilateral and regional financial institutions, whose lack of resources constrain financing of infrastructure projects in developing countries, according to the summit’s final declaration, signed by the participating heads of state.

The CRA, a mechanism through which the five countries make available a total of 100 billion dollars from their reserves, is a currency pool that provides financial security for its members, without departing from the IMF, summit speakers said.

If one of the BRICS countries wishes to borrow more than 30 percent of the sum it is entitled to, in order to overcome threats to its balance of payments, it will have to face questions from the IMF about conditions of payment, said the Brazilian finance minister, Guido Mántega.

Brazil, Russia and India can withdraw up to the value of their contributions of 18 billion dollars each. South Africa may take out twice the five billion dollars it will contribute to the mechanism, and China up to half its 41 billion dollar commitment.

The new institutions “consolidate” the BRICS alliance, Mántega said. Before they become operational, they must be ratified by the countries’ parliaments, he said.

The bank and the reserve fund are so constituted as to prevent aspirations of dominance, Rousseff said. The countries will have equal shares in the NDB, of 10 billion dollars each, and equal voting rights. The capital may later be doubled.

Bank presidents and its governing councils will be appointed on a rotating basis.

China will contribute 41 percent of CRA funds but decisions will be taken by a broader majority, reaching consensus for the negotiation of larger loans, Mántega said.

But the NBD headquarters will be located in the Chinese city of Shanghai, and it will be difficult to avoid the economic and monetary weight of the Asian power from translating into greater decision-making power for Beijing.

The NDB’s composition avoids inequalities at the outset, but equal participation is only a formality as “in practice the future trend will be towards greater Chinese influence,” according to Carlos Langoni, former president of the Brazilian Central Bank.

To be effective, the bank will have to increase its initial capital of 50 billion dollars, recruiting new financing resources, and in this as well as in crises the “dominant role” of the country offering most capital and guarantees is an influential factor, added Langoni, who is the present director of the World Economics Centre at the Getulio Vargas Foundation.

China is interested in diversifying its investments, in multilateral and regional institutions as well as bilaterally. In recent years it has become the largest investor in Latin America.

It already participates in several regional financial mechanisms, such as the Chiang Mai Initiative, similar to the CRA and involving countries of the Association of Southeast Asian Nations, and it is seeking to establish the Asian Infrastructure Investment Bank, as an alternative to the Asian Development Bank in which Japan has decisive influence.

Langoni believes that the BRICS, with the CRA resting on “mega-economies” with their enormous currency reserves, will in the long term be able to “grow faster and have more weight than the IMF, which is already facing difficulties raising funds because of its rules.”

However, the IMF will remain the most powerful multilateral financial body over the next decade, he said.

The rise of the BRICS reflects a multipolar world, as the alliance includes military powers like Russia and China, nuclear powers like both these countries and India, and “moderators” without military ambitions like Brazil and South Africa.

Progress in strengthening and institutionalising the group at its Fortaleza summit could help reduce border tensions existing between China and India, or between Russia and the West, Langoni said.

In his view, what cements the group is its “frustration over the action of multilateral bodies, particularly the IMF,” in the face of the financial crises. These institutions are very complex and made up of a large number of countries.

The BRICS countries can operate with greater ease with their own financial instruments, which can also supply their urgent needs for investment in infrastructure, especially in Brazil and India, he argued.

The BRICS “found their identity” by working with the Group of Twenty (G20) industrial and emerging countries to defend the stimulation of growth, rather than recession-inducing austerity, after the 2008 global financial crisis, Mántega pointed out. Later they came to demand reform of the IMF, which spearheaded response to the crisis.

Some reforms to grant emerging countries greater participation in IMF decision-making were approved by the G20, but then stalled because they were rejected in the U.S. Congress.

The IMF is regarded as extremely undemocratic, because the United States has power of veto and some countries of the industrial North have a majority of votes, in contradiction with the present correlation of economic forces and the weight of emerging powers.

The absence of reforms “negatively impacts on the IMF’s legitimacy, credibility and effectiveness.” The reforms must lead to the “modernisation of its governance structure so as to better reflect the increasing weight of emerging markets and developing countries (EMDCs),” says the Fortaleza Declaration, signed by the five BRICS leaders.

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Russia Hoping Cuba Can Help Spur Trade with Latin Americahttp://www.ipsnews.net/2014/07/russia-hoping-cuba-can-help-spur-trade-with-latin-america/?utm_source=rss&utm_medium=rss&utm_campaign=russia-hoping-cuba-can-help-spur-trade-with-latin-america http://www.ipsnews.net/2014/07/russia-hoping-cuba-can-help-spur-trade-with-latin-america/#comments Wed, 16 Jul 2014 16:20:51 +0000 Peter J. Marzalik http://www.ipsnews.net/?p=135596 By Peter J. Marzalik
MOSCOW, Jul 16 2014 (EurasiaNet)

Amid deteriorating relations with the West, Russian President Vladimir Putin is looking to diversify a Russian economy that is tightly linked to European markets. Fittingly, an old Soviet-era satellite state seems eager to lend a helping hand.

Emilio Lozada, Cuba’s ambassador to Russia, led a trade delegation in June to Kazan, the capital of Tatarstan, a resource-rich republic located 500 miles east of Moscow on the Volga River. Garcia met with Tatarstan’s chief executive, Rustam Minnikhanov, to discuss Cuba’s efforts to emulate the “Tatarstan model,” which has seen the autonomous republic emerge as one of Russia’s most prosperous regions during the post-Soviet era.The diversification push stands to make Russia less vulnerable to economic pressure, especially sanctions exerted by the United States and European Union in response to the ongoing crisis in Ukraine.

Lozada explained that Cuban officials, in studying Tatarstan’s economic experiences over the past few decades, seek to “find many useful things for ourselves,” the Tatar-Inform news agency reported.

Cuba by no means represents an alternative to Europe, but the Kremlin is still very interested in encouraging Cuban trade. In late May, prior to the Cuban delegation’s trip to Tatarstan, two major Russian energy companies, Rosneft and Zarubezhnetf, signed joint exploration agreements with the Cuban energy concern, Cupet.

Underscored by its recent gas deal with China, Russia is intent on reorienting trade away from Europe. Toward this end, the Kremlin hopes an expansion of commerce with Cuba could act like a wedge, opening broader ties with Latin American states.

The diversification push stands to make Russia less vulnerable to economic pressure, especially sanctions exerted by the United States and European Union in response to the ongoing crisis in Ukraine. Annual trade turnover between Russia and Latin America stood at 16.2 billion dollars in 2012, according to International Monetary Fund data.

The Kremlin’s revived interest in Latin America was also evident in Foreign Minister Sergei Lavrov’s recent tour of the region. Lavrov sought to bolster relations with old allies, such as Cuba and Nicaragua, as well as woo traditionally anti-Communist states, especially Chile and Peru.

During their Kazan meeting, Lozada and Minnikhanov discussed ways Tatar businesses in the oil, pharmaceutical, and tourism sectors could help bolster economic development in Cuba.

“I think that this is a very useful undertaking. These contacts were started [back in the Soviet era], and now they need to be restored, to work actively with Cuba; through it they can access all of Latin America,” Shamil Ageev, the chairman of Tatarstan’s Chamber of Commerce, asserted.

While many Russian regions are struggling, Tatarstan has comparatively thrived over the past two decades. The republic produces 32 million tons of oil per year and possesses reserves estimated at more than one billion tonnes. In addition, Tatarstan hosts the Kamaz truck factory, the Kazan helicopter plant, and Tupolev aviation production facilities.

Cuba’s ties to Tatarstan date back to the early 1990s, a time known among Cubans as the special period, when the island’s economy imploded due to the Soviet Union’s collapse and cut-off of aid from Moscow.

“We will never forget that late in the 90s, when our country experienced serious difficulties, Tatarstan opened an economic representation in Cuba,” Ambassador Lozada said in Kazan.

“Cooperation between Russia and Cuba are getting stronger and diverse ties between Tatarstan and Cuba develop within its framework. We are your friends and Tatarstan is open for you,” Mintimer Shaimiev, the former long-time Tatar president who now serves as a senior advisor to the autonomous republic’s government, was quoted as telling the visiting Cuban delegation.

Editor’s note:  Peter J. Marzalik is an independent analyst of Islamic affairs in the Russian Federation. This story originally appeared on EurasiaNet.org.

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Big Business Opportunities Seduce BRICS Entrepreneurshttp://www.ipsnews.net/2014/07/big-business-opportunities-seduce-brics-entrepreneurs/?utm_source=rss&utm_medium=rss&utm_campaign=big-business-opportunities-seduce-brics-entrepreneurs http://www.ipsnews.net/2014/07/big-business-opportunities-seduce-brics-entrepreneurs/#comments Tue, 15 Jul 2014 20:49:23 +0000 Mario Osava http://www.ipsnews.net/?p=135585 Brazilian officials at an information meeting prior to the Sixth BRICS Summit. Credit: Agência Brasil/EBC

Brazilian officials at an information meeting prior to the Sixth BRICS Summit. Credit: Agência Brasil/EBC

By Mario Osava
FORTALEZA, Brazil, Jul 15 2014 (IPS)

The growing vitality of the group of countries made up of Brazil, Russia, India, China and South Africa (BRICS), which is beginning to formalise its institutions even as it tries to bridge very disparate realities, seems to be partly cemented by increasing links between its companies.

The complementary nature of their economies was highlighted at the BRICS Business Forum on Monday Jul. 14, one of the meetings prior to the sixth annual summit of the five leaders, inaugurated Tuesday Jul. 15 in the northeastern city of Fortaleza and closing on Wednesday in Brasilia.Trade between the five countries has multiplied 10-fold between 2002 and 2012, reaching 276 billion dollars.

More than 700 members of the business community participated in the entrepreneurial debates, designed to promote 3.9 billion dollars worth of contracts in the sectors of agriculture, infrastructure, logistics, information technology, health and energy.

The Business Forum of the BRICS group of emerging powers began its work five years ago.

There is “an immense complementarity” among BRICS members, which can be appropriately used to greatly benefit all its countries, said Marcos Jank, head of corporate affairs at BRF, a Brazilian transnational and leading meats exporter.

“China has an enormous market and Brazil has vast reserves of natural resources,” with a lot of productive land to supply large populations, he said.

This is one way of looking at what many criticise as unbalanced trade, in which Brazil exports virtually exclusively commodities, especially soya and iron ore, and imports mainly manufactured goods from China.

But integration of production chains and higher added value in exports can happen even in the agriculture and livestock business, Jank said. Instead of importing soya to feed its meat production, China could import the meat from Brazil, he said.

A major hurdle to the growth of trade and productive integration between the BRICS countries are barriers of all kinds, tariff and non-tariff, technical, subsidies and other protectionist measures that affect trade, particularly in agricultural products, Jank complained.

India has prohibitive tariffs of up to 100 percent on Brazilian chicken, while South Africa “is closed” and Russia is a “volatile” market, opening and closing in rapid succession for Brazilian meats, he said.

Nevertheless, trade between the five countries has multiplied 10-fold between 2002 and 2012, reaching 276 billion dollars, according to the World Trade Organisation. The share of the BRICS group in global trade has doubled from eight to 16 percent between 2001 and 2011.

Two new instruments that will be formally created at the Summit contradict views that the group had little chance of integration because of its political and historical differences, disparate levels of development and even commercial strategies.

These are the New Development Bank (NDB) and the Contingency Reserve Arrangement (CRA), a common fund to combat financial crises.

The progress seen in only a few years, since the BRIC acronym was coined in an analysis of emerging economies by an economist at a U.S. bank, contrasts with the stagnation of other coalitions, like the IBSA Dialogue Forum involving India, Brazil and South Africa, which interrupted its summit meetings in 2011.

“What unites the emerging BRICS countries is power,” according to Narinder Wadhwa, executive director of SKI Capital Services, in India.

Jointly, the BRICS have 46 percent of the world’s population and 26 percent of its land mass. The BRICS countries’ combined gross domestic product, based on purchaing power parity (PPP), is greater than that of the U.S. or the European Union, “so it is natural that they should demand greater participation in decision-making bodies,” he told IPS.

This seems to have fuelled the group’s high rate of progress since its first summit was held in 2009.

Another factor accelerating integration is the potential for exchange of trade and investments in these large countries with a combined population of nearly three billion people, where numbers of middle class consumers have grown rapidly in recent decades.

For this reason, Wadhwa says he is “optimistic” about the future of what many people are already calling a “bloc,” although no treaties have been signed that would justify the term and its governments are reluctant to be considered as such.

But realising this potential calls for pragmatism, said Sergy Katyrin, president of the BRICS Business Council in Russia, and Rubens de La Rosa, of Brazil’s BRICS Business Council and executive director of Marco Polo, a Brazilian transnational company that produces large vehicles, especially buses.

Africa is a new frontier for global trade and investment, with consumption growing rapidly in the middle population sectors, the president of the African Business Council, Patrice Motsepe, told IPS.

Motsepe, a mining magnate regarded as the first black South African billionaire, chaired a report on the business potential of the five countries that underscored Africa’s high potential.

According to the African Development Bank, trade between the continent and BRICS reached 340 billion dollars in 2012 and is expected to rise to 500 billion dollars in 2015. Sixty percent of this trade is with China.

Each national chapter of the Business Council is made up of 25 business people, who have set up five working groups to study potential joint business enterprises in infrastructure, financial services, manufacturing, energy and capacity development.

Much still remains to be done to increase economic integration between the BRICS countries, which were formerly practically unknown to each other, these business leaders said.

De la Rosa said that among the proposals to be made to heads of government in Fortaleza was promoting trade in national currencies, because this would “reduce the cost of transactions” and could favour trade and investments.

Facilitating visas for business trips, harmonising technical standards, intensifying communication between companies in the different countries and overcoming barriers, including red tape, will be some of the other recommendations made by Robson Andrade, the president of the Brazilian National Confederation of Industry (CNI) which organised the Business Forum in Brazil.

The main concern of Brazilian industrialists is the trade deficit of Brazil with its partners, which amounted to 101 billion dollars in 2013, equivalent to 21 percent of Brazilian trade.

More than 70 percent of Brazilian exports to China, India, Russia and South Africa are soya, iron ore and oil, while in the opposite direction 95 percent of what Brazil imports from these countries are manufactured goods, according to CNI.

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New BRICS Monetary Fund May Reproduce Inequalitieshttp://www.ipsnews.net/2014/07/new-brics-monetary-fund-may-reproduce-inequalities/?utm_source=rss&utm_medium=rss&utm_campaign=new-brics-monetary-fund-may-reproduce-inequalities http://www.ipsnews.net/2014/07/new-brics-monetary-fund-may-reproduce-inequalities/#comments Sat, 12 Jul 2014 00:11:13 +0000 Mario Osava http://www.ipsnews.net/?p=135511 Mega-projects like the Itaipú hydropower station shared by Brazil and Paraguay could in future be financed by the new fund and new bank to be launched by BRICS leaders in the Brazilian city of Fortaleza. Credit: Mario Osava/IPS

Mega-projects like the Itaipú hydropower station shared by Brazil and Paraguay could in future be financed by the new fund and new bank to be launched by BRICS leaders in the Brazilian city of Fortaleza. Credit: Mario Osava/IPS

By Mario Osava
FORTALEZA, Brazil, Jul 12 2014 (IPS)

The first common institutions to be set up by Brazil, Russia, India, China and South Africa – the BRICS – are financial, and have arisen as a result of reforms to an international system that continues to largely ignore the growing influence of emerging countries.

But the Contingency Reserve Arrangement (CRA), the BRICS countries’ monetary fund, will also be unbalanced in the composition of its resources, leading to the possible reproduction of these inequalities. The cement that binds the BRICS together is their aspiration to wield more power in international economic bodies.

The CRA and a development bank will be formally established at the Sixth BRICS Summit, to be held in Brazil on Tuesday Jul. 15 in the northeastern city of Fortaleza and on Wednesday Jul. 16 in Brasilia. On Monday, preparatory meetings will take place between ministers, members of the business community and the group’s central banks.

The reserve fund will have 100 billion dollars to come to the rescue of any of its members suffering an exchange crisis. China would contribute 41 percent of the total, South Africa – the smallest partner – five percent, and the other countries 18 percent each.

These percentages reflect the size of each country’s economy. However, participation in the New Development Bank (NDB), the other instrument that will be established at the summit, will be on the basis of equal shares: 10 billion dollars each and equal voting rights for each member.

This is the big difference between the NDB and the World Bank, of which it is a reflection. “The NDB is democratic,” Christopher Wood, a researcher for the South African Institute of International Affairs in Johannesburg, told IPS.

This aspect of the NDB is also very different from the CRA, where China, as the largest country, “will probably have a disproportionate influence,” but it is hoped that the design of the institution will prevent it from being overly one-sided, Wood said.

Negotiations have been under way to create the development bank and the monetary mechanism since 2012, and now only a legal review is required before they are signed by the five BRICS leaders in Fortaleza, announced José Alfredo Graça Lima, the undersecretary- general for political affairs at the Brazilian foreign ministry.

BRIC, an acronym coined in 2001 by U.S. economist Jim O’Neill for the four emerging powers that are changing the shape of the world, began to hold meetings of heads of state and government in 2009, forming “a coalition” that was joined by South Africa in 2011.

“It is not a bloc” that adopts common policies for trade and other sectors, Brazilian diplomats said in response to critical observations about the discrepancies between the countries in different economic or political international forums.

The huge countries, or “whale-economies,” are getting to know each other and have expanded their dialogue. They have “a positive role in democratising international relations,” Graça Lima said.

Cooperation between the five countries is already ongoing in more than 30 areas, and their societies are also interacting through business and academic forums and other means, said Flavio Damico, the head of the Brazilian foreign ministry’s department of inter-regional mechanisms.

But the cement that binds the BRICS together is their aspiration to wield more power in international economic bodies. “The structure of power and privileges” of the global financial and political system “has remained set in stone” since 1945, and will have to change “to adjust to present reality,” he said.

The blocking of a proposed reform of the International Monetary Fund (IMF) in the U.S. Congress spurred the BRICS countries to make headway with their own solutions. The CRA will probably “not substantially change the world economic order in the short term, but it certainly could erode the centrality of the IMF in the long run,” said Wood.

The CRA is being formed in the context of persistent after-effects of the 2008 financial crisis and the “systemic imbalances in the global economy, perpetuated by the monetary policies of advanced economies, such as the United States and the European Union,” Vivan Sharan, an expert on BRICS with the Observer Research Foundation in India, told IPS.

With the “monetary safety net,” BRICS will be signalling “lesser levels of dependence on Bretton Woods institutions such as the IMF, which urgently requires structural and governance reform,” he said. But the group is not aiming at “a recalibration of the global economic order,” he said.

Brazilian economist Fernando Cardim, professor emeritus of economics at the Federal University of Rio de Janeiro, doubts the CRA will be successful. Its resources will be too few, as its entire funds would not even be able to protect Brazil alone from mass capital flight, he argued.

Moreover, it will not necessarily prevent potential intra-BRICS strife, as China will have decisive powers “similar to or even greater than those of the United States over the IMF,” and is likely to wield power with less subtlety, he said.

But the BRICS institutions are not seeking to substitute for or confront the IMF or the World Bank. The CRA’s goal is to “complement” them, as “an additional line of defence” for the five countries, which are not facing balance of payment difficulties, according to Graça Lima.

The IMF’s resources total 937 billion dollars, more than nine times the value of CRA funds, and it will continue to play a key role for the CRA itself and other monetary mechanisms created to combat financial crises, Wood said.

In the Chiang Mai Initiative, a similar mechanism adopted by the Association of Southeast Asian Nations after the region’s 1997-1998 crisis, and which is backed by China, South Korea and Japan, countries must first request IMF assistance if they wish to draw a large loan from the funding pool, said Wood.

The NDB, already known as the BRICS Development Bank, is less controversial, although it has drawn criticism from social and environmental activists. The plan is for it to begin financing infrastructure and sustainable development projects in two years’ time, after obtaining parliamentary approval from member countries.

Its starting capital of 50 billion dollars is limited in comparison with the needs of BRICS members and other developing countries that could benefit from loans and even join the bank. It is less than the amount loaned annually by Brazil’s National Bank for Economic and Social Development (BNDES).

The Indian government, for instance, estimates that one trillion dollars are needed for financing domestic infrastructure projects over the next five years, around half of which is to come from the private sector.

However, new sources of funding are important because Indian infrastructure projects are facing serious liquidity challenges, as they are over-dependent on banking sector finance due to “the non-existence of a robust corporate bond market,” said Sharan in New Delhi.

“South Africa has a lot to gain,” as the NDB will focus on large infrastructure projects, a common problem amongst all the BRICS, and can offer long-term financing which is often difficult to obtain, particularly from the private sector, Wood said.It will also support project preparation, like surveying work, which often needs to be done before financing for the project can be accessed.

The NDB is authorised to double its funds, but its key importance is that co-financing projects acts as a catalyst, by reducing the risk and cost burden for other lenders and so attracting resources from private investors and national and multilateral development banks around the world, according to Wood and the Brazilian diplomats.

With additional reporting from Ranjit Devraj in New Delhi and Brendon Bosworth in Johannesburg.

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Violence Casts Shadow Over ‘Himalayan Viagra’ Harvest in Nepalhttp://www.ipsnews.net/2014/06/violence-casts-shadow-over-himalayan-viagra-harvest-in-nepal/?utm_source=rss&utm_medium=rss&utm_campaign=violence-casts-shadow-over-himalayan-viagra-harvest-in-nepal http://www.ipsnews.net/2014/06/violence-casts-shadow-over-himalayan-viagra-harvest-in-nepal/#comments Fri, 27 Jun 2014 11:39:44 +0000 Naresh Newar http://www.ipsnews.net/?p=135217 Hundreds of thousands of harvesters flock to high-altitude pastures in Nepal to gather a fungus known as ‘Himalayan Viagra’. Credit: Uttam Babu Shrestha

Hundreds of thousands of harvesters flock to high-altitude pastures in Nepal to gather a fungus known as ‘Himalayan Viagra’. Credit: Uttam Babu Shrestha

By Naresh Newar
KATHMANDU, Jun 27 2014 (IPS)

Intense competition during harvest season for a fungus dubbed ‘Himalayan Viagra’ – coveted for its legendary aphrodisiac qualities – has sparked violence in Nepal’s remote western mountains, causing concern among security officials here about the safety of more than 100,000 harvesters.

“The violence has already begun even at the initial stage of the harvest, and we can expect more,” Nepal Police Divisional Inspector General Kesh Bahadur Shahi, head of the Midwestern Development Region headquarters in Surkhet District, 600 km west of the capital Kathmandu, told IPS.

Earlier this month a harvester named Phurwa Tshering (30) was killed in a violent tussle in the Dolpa District, northeast of Surkhet, where tens of thousands of harvesters gather each year.

A second harvester, Thundup Lama, died some days later in a Kathmandu hospital from injuries sustained in the scuffle, amid allegations of police misconduct.

Known among the scientific community as ophiocordyceps sinensis – though harvesters refer to it simply as ‘caterpillar fungus’, and Tibetan traders use the name ‘yartsa gunbu’ (meaning, literally, ‘winter worm, summer grass’) – the fungus germinates underground inside living larvae, mummifies them during the winter, and then emerges through the head of the dead caterpillar, pushing up through the soil in the form of a stalk-like mushroom.

For over 2,000 years people across the Asiatic region have sought this fungus for its healing properties, including its fabled ability to treat diseases of the kidney and lungs, as well as cure erectile dysfunction.

A harvester holds up a single piece of ‘Yartsa Gunbu’, otherwise known as ‘winter worm, summer grass.’ Credit: Uttam Babu Shrestha

A harvester holds up a single piece of ‘Yartsa Gunbu’, otherwise known as ‘winter worm, summer grass.’ Credit: Uttam Babu Shrestha

Since 2001, when the Nepali government legalised harvesting of the fungus, the mountains have become the site of a veritable battle royal.

Lured by the promise of high profits harvesters flock to the Himalayas every June to participate in the two-month hunt for the prized fungus, setting up camp on the northern alpine grasslands of Nepal, Bhutan, India and the Tibetan Plateau, at altitudes of between 3,000 and 5,000 metres above sea-level.

Though each stalk measures no more than four centimeters in length, a single gram of yartsa gunbu can sell for up to 80 dollars (mostly in China), making the dangerous, high-altitude hunt more than worth it for thousands of impoverished farmers.

But because the substance is so rare and so valuable, the collection period often turns deadly. So far, no one has been held accountable for the deaths, and Nepal’s police force has denied allegations of wrongdoing.

Unsatisfied with officials’ assurances, the National Human Rights Commission (NHRC) recently deployed an investigation team to the Dolpa district, which borders Tibet.

“Our team has headed for field investigations to the site where the incident occurred and we will also speak to the Nepal police to uncover the truth,” Bed Prasad Adhikari, secretary of the NHRC, told IPS.

“We need to wait until the investigation is concluded, and only then will NHRC reveal the truth to the public,” he added.

In 2011 a local court sentenced six men to life in prison for the murder of seven of their harvest rivals.

While Nepali security officials scramble to patrol some of the world’s roughest terrain, ecology experts warn of over-harvesting and the need for sustainable practices that could support local economies and end the cycle of violence.

Stepping up security

“There is an urgent need for sustainable harvesting practices and an equitable benefit-sharing mechanism with the local people." -- Yam Bahadur Thapa, director general of the Department of Plant Resources (DoPR) at Nepal’s ministry of forests and soil conservation
The police are expecting more violence as the season enters its third week, and have already dispatched 160 personnel attached to the Armed Police Force (APF) – a paramilitary set up during Nepal’s decade-long civil war – to patrol harvesting sites, including the northern Mugu and Dolpa districts.

“We have asked for more personnel from the Nepal police to support our security operation,” Shahi said.

Speaking to IPS in Kathmandu, Police Spokesperson and Senior Superintendent of Police Ganesh KC told IPS this is the first time armed personnel have been deployed to oversee the harvest, and they are facing challenges due to the huge radius of the harvesting zone, and the extremely difficult terrain.

The Dolpa District alone – home to 24 pastures rich in the caterpillar fungus – spans nearly 8,000 square km.

To make matters worse, commercial traders and so-called ‘cartels’ have now joined the fray.

“There is a mafia of traders from Kathmandu and other adjoining Nepali districts near the Chinese border who are involved in the scheme, and they come with huge stacks of cash and will not return empty-handed,” Shahi said. “Some traders even bring helicopters to buy as much as they can.”

From policing to long-term policies

Various studies suggest that China’s booming economy, which has fueled demand for the ‘winter worm, summer grass’, has created a global market for the fungus that touches 11 billion dollars a year.

Nepal currently meets two percent of the global demand for the precious fungus, making it the world’s second largest supplier.

But as demand outpaces supply, and a valuable natural resource is plundered away annually, tensions over access rights have been mounting.

“There is loss of social integrity among local people; there are cases of robbery and deaths as a result [of this harvest],” Yam Bahadur Thapa, director general of the Department of Plant Resources (DoPR) at Nepal’s ministry of forests and soil conservation, told IPS.

“There is an urgent need for sustainable harvesting practices and an equitable benefit-sharing mechanism with the local people,” he noted, adding that the presence of outsiders often exacerbates tensions.

Thapa said the number of harvesters has doubled since 2001, while the number of units collected per person has declined drastically, from 260 pieces of fungus per person in 2006 to less than 125 now.

In addition, he asserted, “The price difference between the local and international market is huge, leading to an inequitable share of income among the primary collectors.”

For instance, a kilogram of fungus sold for 25,000 dollars by a middleman in Nepal could sell for up to 70,000 dollars once it is shipped abroad, he said.

A DoPR draft policy for caterpillar fungus harvest management submitted in April to the prime minister’s cabinet is still awaiting approval. The policy proposes regulating trade to increase government revenue, investing in scientific research, strengthening local institutions and raising awareness among the locals.

“There is no single inch of habitat left untouched…at the end of the harvesting season,” Uttam Babu Shrestha, a research fellow at the Institute of Agriculture and the Environment at the University of Southern Queensland in Australia, told IPS.

His research during the 2011 harvest season in Nepal showed that, “Virtually all harvesters (95.1 percent) believe the availability of the caterpillar fungus in the pastures to be declining, and 67 percent consider current harvesting practices to be unsustainable.”

Shrestha found per capita harvesting to be higher in Nepal than in other countries, which adds to the tension. “Nepal’s harvesters and traders are doing business in a fearful environment,” he said, echoing the concerns of law enforcement officials.

Better central regulation would not only enhance sustainability and security, but would also increase government revenue, experts say.

The official royalty rate of around 10,000 Nepali rupees (about 100 dollars) per kilogram was set when Nepal legalised the harvest in 2001.

Since then, “The market price… has increased up to 2,300 percent and yet the royalty rate is the same,” Shrestha said, describing the stagnant rate as a “missed opportunity.”

The International Centre for Integrated Mountain Development (ICIMOD) estimates that the government of Nepal currently earns about 5.1 million rupees from the trade.

Experts say that by paying local harvesters a higher price, the government could witness a substantial increase in revenue flows.

Until the government agrees upon a comprehensive plan, the high-altitude pastures will continue to see fear, violence and destruction in pursuit of the mysterious fungus.

(END)

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IMF Issues “Revolutionary” Warning on Corporate Tax Avoidancehttp://www.ipsnews.net/2014/06/imf-issues-revolutionary-warning-on-corporate-tax-avoidance/?utm_source=rss&utm_medium=rss&utm_campaign=imf-issues-revolutionary-warning-on-corporate-tax-avoidance http://www.ipsnews.net/2014/06/imf-issues-revolutionary-warning-on-corporate-tax-avoidance/#comments Thu, 26 Jun 2014 21:31:47 +0000 Carey L. Biron http://www.ipsnews.net/?p=135215 By Carey L. Biron
WASHINGTON, Jun 26 2014 (IPS)

The staff at the International Monetary Fund (IMF) has issued an unusually stark warning over the lack of harmonised global tax policies, pointing out that these gaps are allowing for widespread tax gaming by corporations with particularly negative impacts for developing countries.

Anti-poverty advocates are lauding a new staff paper from the fund released Wednesday. Its findings not only coincide with civil society calls for major taxation reforms at the national and international levels, but also repeatedly push back against longstanding tax-related dogma, including that offered by the Washington-based IMF itself.“As tax dodging knows no border, it makes sense to move to the international level to create such a worldwide entity.” -- Catherine Olier of Oxfam

“This is, frankly, a revolutionary paper,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“It looks very carefully at many aspects of tax planning, and each time says that this has very negative impact on developing countries … Ultimately, it says that traditional tax theory is essentially uninformed by empirical knowledge.”

The paper is the result of a new focus on tax-dodging among the Group of 20 (G20) industrialised countries, which directed the fund to undertake related research. The findings are particularly notable in their sustained focus on the impacts on developing countries.

“Our technical assistance work in developing countries frequently encounters large revenue losses through gaps and weaknesses in the international tax regime,” Michael Keen, deputy director of the IMF’s Fiscal Affairs Department, said in a statement.

“The sums involved for them can be large, not just relative to corporate tax but relative to all tax revenue: 10-15 percent in some cases. The paper reports new evidence that these effects are in fact systematically more important for developing countries.”

Corporate tax rates in all countries have plummeted in recent decades, the paper notes.

Low-income countries have seen these rates degrade from near 50 percent in 1980 to under 30 percent last year. Others have seen similar plunges, with high-income countries seeing corporate taxation fall from around 40 percent three decades ago to little more than 20 percent today.

Such trends have been tracked for years. Yet in the aftermath of the global financial crisis, rich and middle-income countries have begun actively discussing how to maximise their tax revenues, with a focus on ending corporate accounting gimmickry.

Rich companies and individuals could be stashing away as much as 20 trillion dollars overseas in order to escape national taxation, according to some estimates.

“Developed countries today need more income and are mad because not everyone is paying their taxes,” Griesgraber says.

“And that anger is also translating into public pressure. People who pay their taxes even during a difficult recession are even madder than the governments.”

“Meaningless” designations

According to the IMF data, developing countries should perhaps be the most incensed by the impacts of today’s global taxation hodgepodge. The paper offers new findings on the ramifications of what the fund terms “spillover effects” – the ways in which one country’s tax rules impact on another country, which can also be thought of in terms of tax competition between countries.

This phenomenon has been significantly exacerbated as multinational companies have increasingly learned how to legally “move” their operations – largely on paper – for tax benefit. Such companies appear to be based in countries with low taxes, despite doing most of their work in another country that, in turn, is unable to place levies on the company’s full earnings.

“Current international tax arrangements rest on concepts of companies’ ‘residence’ and the ‘source’ of their income, both of which globalization has made increasingly fragile (some would say meaningless),” the paper states.

“At its core, a key issue in assessing any international tax arrangement is how it divides the rights to tax between source and residence countries … The allocation of rights is especially important for low-income countries, however, as flows are for them commonly very asymmetric – they are essentially ‘source’ countries.”

The fund staff found that the impact of these spillover effects on corporate tax bases are “significant and sizable” but are “especially pronounced for low-income countries”. Compared to rich countries, the paper notes, “the base spillovers from others’ tax rates are two to three times larger” in developing countries, and “statistically more significant”.

Particularly problematic has been the extractives industry, though the fund also calls out telecommunications companies. The paper recounts IMF experiences in multiple countries where corporate tax trickery has eaten up much of a project’s revenue, such as a “gold mining sector in which USD 100 billion has been invested over the last decade, but which is almost entirely debt financed”.

The fund ultimately goes so far as to suggest that countries should be extremely careful about signing any bilateral tax treaty, urging developing country governments instead to signal openness to investment by other means. Through such agreements, countries can sign away their right to levy full tax rates and give an upper hand to foreign corporations.

“The IMF analysis raises some very worrying concerns about the impact of tax rules and practices in rich countries on the ability of poor countries to raise their own revenues,” Diarmid O’Sullivan, a tax justice policy advisor with ActionAid, a watchdog group, said Wednesday.

“We see a clear message to … major capital-exporting countries to review their tax rules and make sure they are not harming the ability of poor countries to raise the revenues they need for their development.”

Comprehensive approach

One key step being pushed by governments and civil society today to cut down on corporate tax avoidance entails the automatic exchange of tax information between governments. Doing so, proponents say, would quickly clear up the discrepancies that can be exploited by tax-dodgers.

In February, the Organisation for Economic Co-operation and Development (OECD), comprised of 34 rich countries, unveiled just such a proposal. Still, anti-poverty campaigners have warned that developing economies were not included in discussions around the OECD plan – though a roadmap is due by September on facilitating poor countries’ participation in such exchanges, an OECD official told IPS.

Some are now hoping that this new flurry of work could be leading towards the formalisation of a stricter international framework on tax policy, in line with the globalised environment of today’s multinational corporations. Indeed, the IMF’s new paper notes that “the case for an inclusive and less piecemeal approach to international tax cooperation grows.”

Indeed, a decade and a half ago an IMF official proposed the establishment of a World Tax Authority, an idea that campaigners are now hoping to revive.

“As tax dodging knows no border, it makes sense to move to the international level to create such a worldwide entity,” Catherine Olier, a policy advisor with Oxfam International, an advocacy and humanitarian group, told IPS.

“Modalities about its functionalities and mandate would remain to be determined, but it could have a role in setting minimum standards to avoid harmful tax competition between countries – and, if ambitious, an international dispute mechanisms to fight countries that deliberately put in place tax policies with too much negative spillover effect on others.”

The IMF and OECD reports will both go before the G20 at a summit in November.

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Argentina Once More on the Map, Invited by BRICShttp://www.ipsnews.net/2014/06/argentina-once-more-on-the-map-invited-by-brics/?utm_source=rss&utm_medium=rss&utm_campaign=argentina-once-more-on-the-map-invited-by-brics http://www.ipsnews.net/2014/06/argentina-once-more-on-the-map-invited-by-brics/#comments Wed, 18 Jun 2014 18:55:43 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=135068 “Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

“Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

By Fabiana Frayssinet
BUENOS AIRES, Jun 18 2014 (IPS)

As Argentina starts to mend fences with the international financial markets, the emerging powers that make up the BRICS bloc invited it to their next summit. This could be a step towards this country’s reinsertion in the global map, after its ostracism from the credit markets since the late 2001 debt default.

For now, there is no letter “A” in the BRICS acronym, which stands for Brazil, Russia, India, China and South Africa. But in Buenos Aires speculation is rife about whether it should be called BRICSA, ABRICS or BRICAS, if Argentina is admitted.

The invitation for President Cristina Fernández to participate in the group’s sixth summit, scheduled for Jul. 15 in the northeast Brazilian city of Fortaleza, is seen as another sign that Latin America’s third-largest economy may be incorporated, after India, Brazil and South Africa indicated their interest.

“This is very significant for Argentina,” Fernanda Vallejos, an economist at the University of Buenos Aires (UBA), told IPS.

“It not only points to the recognition by the rest of the members of Argentina’s importance and potential, but also opens a door for our country to gain greater political and economic clout on the international stage.”

Vallejos stressed the key role played by BRICS over the last decade in the growth of the global economy at a time of financial crisis in the industrialised North.

The term BRICS was coined for the world’s major emerging markets in 2001 by economist Jim O’Neill of investment bank Goldman Sachs. Together, these countries represent around one-quarter of global GDP, 43 percent of the planet’s population, and 20 percent of global investment.

In addition, as Argentina’s foreign ministry stressed, the five countries account for 45 percent of the world’s labour force, hold over three trillion dollars in combined foreign reserves, and produce two billion tonnes a year of agricultural products.

Vallejos said that in a world where blocs are playing a bigger and bigger role, BRICS has a growing voice in international forums, where the members are “demanding participation in accordance with the weight of their economies.”

“The proposal set forth by India – with which bilateral trade expanded 30 percent in 2013 – and backed by Brazil and South Africa also puts paid to the opposition’s tired complaint about our country supposedly being isolated from the world,” said Vallejos, who is also a researcher at the Energy, Technology and Infrastructure Observatory for Development (OETEC).

The formal invitation to Fernández was issued by Russia, which also thus confirmed its support.

“I think this shows that Argentina is fully inserted in international relations, not ‘isolated from the world’,” Nicolás Tereschuk, a political scientist at UBA, told IPS. “It simply doesn’t toe the line with the policies of the central countries at just any cost or in any circumstances, as it used to do at other times in its history.”

Argentina’s invitation from BRICS came almost simultaneously with the May 28 announcement of an agreement reached by the Fernández administration and the Paris Club, which this country owed 9.7 billion dollars since the default 13 years ago.

Some political sectors here see the public debt contracted by the 1976-1983 military dictatorship as illegitimate. But the centre-left Fernández administration hopes the agreement with the Paris Club will facilitate the renewed flow of international credit and investment.

Economist Diego Coatz said the agreement and other measures adopted by the government such as “improving” its economic data, whose reliability was questioned by the International Monetary Fund (IMF), point to a “shift” by the authorities aimed at “reintegration in the world in financial terms…and at positioning the country better on the international front.”

Coatz, with the research centre of the Argentine Industrial Union – the country’s leading industrial employer federation – said that if Argentina is admitted to the BRICS bloc, “it will once more be seen as an emerging developing country with great potential.”

In addition, incorporation in the bloc would open a new window for external financing, when Argentina is in need of foreign exchange and investment, he said.

At the Fortaleza summit a formal decision could be reached on creating a regional development bank as an alternative to international financial institutions like the IMF, World Bank or Interamerican Development Bank.

The new bank would have a 50 billion dollar fund for financing infrastructure in the bloc’s member countries. It would also establish a joint foreign exchange reserves pool of 100 billion dollars, “which would serve as insurance against the volatility of the markets,” Vallejos said.

“Argentina could access financing at very beneficial rates compared to the heavy interest rates of other international institutions” in order to finance infrastructure for development, she underscored.

“The strengthening of international trade by the possible admission to BRICS means important possibilities for Argentina to make significant progress towards a more developed industrial sector, with insertion in global production chains, the development of strategic sectors and the industrialisation of the countryside,” Vallejos said.

The interest would appear to be mutual.

“The invitation came after the turmoil in emerging markets early this year, after which the ‘establishment’ international financial press talked about a ‘decline’ of BRICS,” Tereschuk said.

In addition, “growth in China is slowing down, India is at a decisive moment, with the dilemma of faster growth or stagnation, and the Brazilian economy is not really flourishing at this time,” the economist said.

So for them and the rest of the members of the bloc, “joining together with a periphery country that makes up the G20 [Group of 20] would seem to be a decision of interest to the BRICS countries,” he said.

The G20 block of leading industrialised and emerging economies “is in somewhat of a crisis itself, because of the crisis that the central countries are still immersed in.”

For that reason, according to Tereschuk, Argentina would be useful to the BRICS so that the voice of their two South American leaders, Argentina and Brazil, “would be heard in unison in the greatest number of places possible.”

The political scientist said Brazil and Argentina have led a “shift to the left with growth, reduction of poverty and inequality in a framework of democracy and greater political, civilian and social rights for their citizens.

“The other members of BRICS cannot offer all of these characteristics combined,” he said.

Vallejos, for her part, stressed Argentina’s role as a supplier of raw materials. “We are an agricultural powerhouse,” she pointed out.

In addition, “Argentina has the world’s second-largest reserves of lithium, one of the biggest reserves of gold – nearly 10,000 tonnes – 500 million tonnes of copper, and 300,000 tonnes of silver, while we are becoming the third-largest global exporter of potassium,” she said.
“We are sitting on the world’s third- largest platform of unconventional fossil fuels. And to that you have to add our technological development, and the development of nuclear energy for peaceful purposes,” she added.
So would it be “BRICAS”, “ABRICS” or “BRICSA”? At any rate, what is at stake is a bit more than deciding on a new acronym.

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