Inter Press Service » IBSA http://www.ipsnews.net Journalism and Communication for Global Change Thu, 17 Apr 2014 10:36:54 +0000 en-US hourly 1 http://wordpress.org/?v=3.8.3 The Emerging Economies and the G20 Summit at St. Petersburg http://www.ipsnews.net/2013/09/the-emerging-economies-and-the-g-20-summit-at-st-petersburg/?utm_source=rss&utm_medium=rss&utm_campaign=the-emerging-economies-and-the-g-20-summit-at-st-petersburg http://www.ipsnews.net/2013/09/the-emerging-economies-and-the-g-20-summit-at-st-petersburg/#comments Tue, 17 Sep 2013 14:54:11 +0000 Shyam Saran http://www.ipsnews.net/?p=127557 * Shyam Saran, a former Indian foreign secretary and the current chairman of the National Security Advisory Board, writes in this column that the Syrian crisis overshadowed economic coordination issues at the recent G-20 summit. Saran, current chairman of the Research and Information Systems for Developing Countries and a senior fellow at the Centre for Policy Research in New Delhi, also discusses the deliberations by BRICS leaders on the sidelines of the meeting.

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* Shyam Saran, a former Indian foreign secretary and the current chairman of the National Security Advisory Board, writes in this column that the Syrian crisis overshadowed economic coordination issues at the recent G-20 summit. Saran, current chairman of the Research and Information Systems for Developing Countries and a senior fellow at the Centre for Policy Research in New Delhi, also discusses the deliberations by BRICS leaders on the sidelines of the meeting.

By Shyam Saran
NEW DELHI, Sep 17 2013 (Columnist Service)

The eighth G20 Summit convened in St. Petersburg on Sept. 5-6, 2013 was dominated by the Syrian crisis, deflecting attention from the mandate of the gathering to serve as the premier forum for international economic coordination.

When leaders of the most influential countries meet it is inevitable that the pressing political issues of the day take centre stage.

Shyam Saran

Shyam Saran

The G7 too began as a forum for economic consultation and coordination among the world’s advanced market economies in 1975, to cope with the fallout of the 1973 oil crisis.

Just three years later, in 1978, the G7 issued its first Political Declaration and became, thereafter, the political, security and economic steering committee of the most powerful nations.

The G20 has taken its first steps in the same direction and it is likely that its role as a political and security forum will evolve steadily though informally at first. This trend will be reinforced if the United Nations Security Council remains a relic of a bygone international order.

That the G20 provided a platform on which the U.S. and Russia initiated steps leading to an eventual understanding on Syria’s chemical weapons is an indication of the potential political utility of the forum. These steps were taken against a strong prevailing sentiment at the summit against a military strike against Syria, favoured by the U.S. and some, but not all, of its allies.

The emerging economies were able to reflect some of their key concerns in the Summit declaration. The unconventional monetary policies pursued by reserve currency countries such as the U.S. and lately Japan, involving significant injections of liquidity into the system and keeping interest rates at zero or near zero, have confronted emerging economies like Brazil and India with volatile capital flows and exchange rate instability.

The declaration acknowledged for the first time that monetary policies pursued by advanced economies should be “calibrated and clearly communicated”. This falls short of a coordinated approach of the G20 but will help calm markets by promising greater predictability.

Developing countries would also take satisfaction over the G20 consensus, reflected in the declaration that the profits of transnational corporations should be taxed in the country where they are generated. African countries, in particular, have been victims of the tax avoidance practices of such companies.

An Indian proposal to create an infrastructure financing facility at the World Bank to extend funding for infrastructure projects in developing countries will be the subject of a study. However, in a situation of financial stringency in most developed economies, it is doubtful whether any significant financing window for this purpose will see the light of day soon.

The leaders of BRICS (Brazil, Russia, India, China and South Africa) met on the sidelines of the G8 summit. Their deliberations focused on two landmark initiatives which were announced at their fifth regular summit in Durban on Mar. 27.

On the New Development Bank (NDB) it has been agreed that its initial capital will be 50 billion dollars, a somewhat modest amount given the expectations aroused when the proposal was first made. India had wanted a figure closer to 100 billion dollars.

It is still not clear how the equity will be distributed among the five partners. China has been willing to contribute a larger share but it is reported that Russia wanted each to have an equal share. South Africa is unable to contribute a significant amount given the smaller size of its economy.

On the Contingency Reserve Arrangement (CRA), the leaders announced a figure of 100 billion dollars, with China contributing 41 billion, Brazil, India and Russia 18 billion each, and South Africa five billion.

The CRA will serve as a multi-country currency swap mechanism which will help the BRICS deal with balance of payments problems. It is similar to the Chiang Mai initiative among ASEAN, China, Japan and South Korea, but which is currently 240 billion dollars and partially linked to a parallel though partial International Monetary Fund aid programme.

Whether the CRA will follow a similar pattern is not yet clear. Nevertheless China’s role as a leading partner among the BRICS is now amply apparent. It is possible that the equity distribution in the NDB may follow a similar pattern.

It may be noted that none of the BRICS members forms part of the U.S.-sponsored Trans Pacific Partnership (TPP) or the Trans-Atlantic Trade and Investment Partnership (TTIP) – regional trade arrangements which will fragment the global trading system and marginalise the emerging economies. It is surprising, therefore, that this challenge did not figure in the deliberations of the BRICS nor at the G-20 either.

China’s pre-eminence in the BRICS is a trend likely to be reinforced with the current economic slowdown and economic difficulties being faced by most emerging economies, in particular Brazil, India and South Africa.

Russia is a special case, not an emerging economy in the same category as the other BRICS members. It has escaped economic distress thanks to rising energy prices in the wake of spreading turmoil in the Middle East.

China’s economy is likely to decelerate in the coming months. Its growing debt, now over 200 percent of GDP, is causing concern. If the Chinese economy undergoes a major crisis as some analysts predict, its role as the prime mover in BRICS would certainly diminish.

For the present, however, China, with its seven percent growth and its three trillion dollars of foreign exchange reserves, is likely to be acknowledged as the most emerged of the emerging countries.

(END/COPYRIGHT IPS)

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Africa in Debt to Brazil: Forgiveness Isn’t Always Free http://www.ipsnews.net/2013/09/africa-in-debt-to-brazil-forgiveness-isnt-always-free/?utm_source=rss&utm_medium=rss&utm_campaign=africa-in-debt-to-brazil-forgiveness-isnt-always-free http://www.ipsnews.net/2013/09/africa-in-debt-to-brazil-forgiveness-isnt-always-free/#comments Tue, 10 Sep 2013 23:25:54 +0000 Fabiana Frayssinet http://www.ipsnews.net/?p=127412 The Brazilian government projects the cancellation of nearly 900 million dollars in debt owed by a dozen African countries as a gesture of solidarity. But others simply see an aim to expand the economic and political influence of South America’s powerhouse. The decision by the left-wing government of Dilma Rousseff, which is now being studied […]

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Brazil’s investments in Africa are steadily growing. The Odebrecht company leads the firms building the Cambambe hydropower complex on the Kwanza River in Angola. Credit: Mario Osava/IPS

Brazil’s investments in Africa are steadily growing. The Odebrecht company leads the firms building the Cambambe hydropower complex on the Kwanza River in Angola. Credit: Mario Osava/IPS

By Fabiana Frayssinet
RIO DE JANEIRO, Sep 10 2013 (IPS)

The Brazilian government projects the cancellation of nearly 900 million dollars in debt owed by a dozen African countries as a gesture of solidarity. But others simply see an aim to expand the economic and political influence of South America’s powerhouse.

The decision by the left-wing government of Dilma Rousseff, which is now being studied by Congress, will especially benefit the Republic of Congo, which owes 350 million dollars, Tanzania (237 million), and Zambia (113 million).

The other beneficiaries are Ivory Coast, Gabon, Guinea-Bissau, Mauritania, Democratic Republic of Congo, Republic of Guinea, São Tomé and Príncipe, Senegal and Sudan.

The decision was described by Rousseff as a “two-way street that benefits both the African countries and Brazil.”

But it was not interpreted the same way by the opposition, and some lawmakers are seeking to block congressional approval.

Cases that have been called into question include those of Republic of Congo, Gabon and Sudan, which are facing international legal action for cases of corruption and even genocide.

Authorities in those countries are “corrupt figures who buy Louis Vuitton and Mercedes Benz luxury cars. Writing off the debt of governments that enjoy such privileges sends the wrong message,” said Senator José Agripino of the opposition Democratic Party.

A statement issued by Brazil’s foreign ministry says the forgiveness of the debt is based on the rules and principles of the Paris Club of rich creditor nations, aimed at easing the debt burden of poor countries.

The communiqué said the move was not just something that occurred to Brazil in a vacuum, but formed part of “an international practice with clear objectives to keep the debt burden from being an impediment to economic growth and anti-poverty efforts.”

In an interview with IPS, political scientist Williams Gonçalves at the Rio de Janeiro State University said the argument raised about dictatorships and “supposedly corrupt governments…has nothing to do with international relations.”

Gonçalves said the critics “were not scandalised” when the United States and other economic powers “protected and financed dictatorships in Latin America.”

“And today they are protecting similar regimes in the Middle East,” he said. “Nor are the defenders of human rights and democracy raising their voices.”

Brazil’s foreign policy defends respect for national sovereignty, Gonçalves said.

“Attaching political strings and interfering in local political systems is a common practice by the United States and other major powers,” he said. “Just as we don’t want anyone to meddle in our political life, we suppose others feel the same way.”

There are other aspects to the controversy.

Senator Alvaro Dias of the Brazilian Social Democracy Party mentioned the economic objectives.

Cancellation of the debt would reopen credit lines at Brazil’s National Economic and Social Development Bank (BNDES) and bolster the involvement of leading Brazilian business consortiums in the African countries in question.

Trade between Brazil and Africa climbed from five billion dollars in 2000 to 26.5 billion dollars in 2012, according to foreign ministry figures.

In Africa, Brazilian public and private enterprises have invested in sectors like oil, mining and major infrastructure works.

Marcelo Carreiro, a history professor at the Federal University of Rio de Janeiro, told IPS that Brazil’s Africa policy has “strategic objectives” such as “the extension of a strategic security area and the expansion of market access.”

That is reflected by the selection of countries, many of which are in West Africa, geographically across the ocean from Brazil’s impoverished but fast-growing Northeast, he said.

That could give rise to “the creation of a geostrategic Brazilian sphere in the south Atlantic, responsible for conceptually expanding this country’s frontier towards the African coast,” he said.

This would safeguard “not only its strategic pre-salt area (the ultra-deep oil reserves hidden under a thick layer of salt off the coast of Brazil) but also the vast extension of Atlantic coast, in a ‘mare brasiliensis’,” protecting this country from future access by enemies to its territory.

The history professor said “this new carving up of Africa” is indicated by the inclusion of “the only country on the planet governed by a leader facing genocide charges,” the president of Sudan, Omar al-Bashir, who is wanted by the International Criminal Court.

“Sudan is triply attractive for Brazil: it is rich in oil, in need of civil construction, and hungry for industrial and agricultural goods,” Carreiro said.

“It is possibly the most advantageous market in Africa, for the Brazilian economy,” he added.

Closer ties would bring additional advantages, such as support for Brazil’s aspirations to a permanent seat on the United Nations Security Council.

But Gonçalves is not shocked by this interpretation. “The forgiveness of the debts of small states by large economies is a common thing,” he said.

“The technical explanation for this cancellation is clearing the slate for those countries to pave the way for loans from the BNDES that favour the activities of large (Brazilian) companies,” he added.

But the political science expert does not see this as running counter to the principles of aid. “Solidarity and cooperation are carried out by means of loans and the implementation of projects,” he said.

“International economic relations occur under the capitalist system, which means the aim is always profit,” he said.

But the analyst believes that unlike other kinds of aid, “these projects will be carried out under financial conditions and with social objectives that do not awaken the interest of the big industrialised economies.”

Investments by South America’s giant also reach Africa through the Brazilian Cooperation Agency (ABC), with a total of 50 million dollars in projects in agriculture, health and education in 2010.

Carreiro pointed out that shortly before the debt cancellation plan was announced in May, the Rousseff administration reported that ABC would be overhauled, and its aid would be increased by 300 million dollars, mainly for Africa.

“But that was apparently seen as too little, and Rousseff decided to speed up the decision, directly buying influence in key countries in Africa,” he said.

“Earmarking 300 million dollars for cooperation projects and writing off some 900 million dollars in debt for corrupt governments are two contradictory practices in a chaotic foreign policy,” Carreiro said.

A 2012 study by the Don Cabral Foundation showed that Brazil’s presence in Africa was growing, with 34 Brazilian multinational corporations operating in the continent. In the view of 44 percent of the companies surveyed, the government’s foreign policy over the last decade has fuelled expanding international involvement by Brazilian firms.

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What’s Good for Brazil Is Good for Africa http://www.ipsnews.net/2013/07/whats-good-for-brazil-is-good-for-africa/?utm_source=rss&utm_medium=rss&utm_campaign=whats-good-for-brazil-is-good-for-africa http://www.ipsnews.net/2013/07/whats-good-for-brazil-is-good-for-africa/#comments Tue, 02 Jul 2013 11:45:54 +0000 Matthew Newsome http://www.ipsnews.net/?p=125390 As Africa transforms its economy, it will need modern jobs and increased productivity to fight hunger on the continent, African leaders agreed at a two-day summit. The leaders agreed that agricultural investment and budgeting for the continent’s poor will end extreme hunger and boost the development of African economies when they met at the “End […]

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Isaac Ochieng Okwanyi has had his most successful harvest ever after using lime to improve the quality of his soil. African leaders agreed that agricultural investment and budgeting for the continent’s poor will end extreme hunger.  Credit: Isaiah Esipisu/IPS

Isaac Ochieng Okwanyi has had his most successful harvest ever after using lime to improve the quality of his soil. African leaders agreed that agricultural investment and budgeting for the continent’s poor will end extreme hunger. Credit: Isaiah Esipisu/IPS

By Matthew Newsome
ADDIS ABABA , Jul 2 2013 (IPS)

As Africa transforms its economy, it will need modern jobs and increased productivity to fight hunger on the continent, African leaders agreed at a two-day summit.

The leaders agreed that agricultural investment and budgeting for the continent’s poor will end extreme hunger and boost the development of African economies when they met at the “End Hunger in Africa by 2025” summit in Addis Abba from Jun. 30 to Jul. 1.

“Africa is discussing the transformation of its economy and to do this we need to put the (focus) on what losses are being made because of hunger on the continent, and what needs investment,” Carlos Lopes, executive secretary of the United Nations Economic Commission for Africa, told IPS.

“The need for investment in agribusiness, modernisation of agriculture and a transformation of Africa’s industrial base is what I have been impressing on heads of state. Africa needs modern jobs and a totally different type of productivity,” he said.

The summit was the biggest meeting focused on ending hunger in Africa since the Comprehensive Agricultural African Development Programme (CAADP) declaration in 2003. CAADP was established as an initiative for the mobilisation of resources, for south–south commitment and for countries to dedicate a portion of their national budgets to poverty reduction via investment in smallholder farmers.

The International Monetary Fund and the World Bank estimate economic growth in sub-Saharan Africa will reach 5.5 percent in 2013 and 6.1 percent in 2014, well above the global average. Yet one quarter of all Africans still suffer from chronic hunger.

But Africa is looking to Brazil for solutions. In 2003, former Brazilian President Luiz Inácio Lula da Silva launched the widely-praised Zero Hunger programme in his country, which helped 28 million people overcome extreme poverty in two years.

Lula advised African leaders at the summit to see pro-poor spending as an investment and not as an expense. “It was a stimulus to Brazil’s economic growth, where the poor quickly became consumers,” he said.

Brazil currently buys 30 percent of the ingredients for school meals from smallholder farmers. The country, which has the fastest-growing middle class in Latin America, annually invests 500 million dollars in purchasing food from smallholder farmers and 12 billion dollars in direct cash transfers to assist farmers “grow” out of poverty.

“If it’s possible in Brazil, then it’s possible in Africa,” da Silva said.

African leaders agreed to boost their support to farmers by increasing cash transfers and purchases of produce to guarantee demand for small farmers’ produce.

Brazilian Minister of Social Development and Hunger Alleviation Tereza Campello told IPS that overcoming hunger was not only a moral imperative “but a choice of model economic development with heightened social inclusion.

“In Brazil, the creation of formal employment, the increase of the minimum wage, the strengthening of small-scale farmers and the implementation of conditional cash transfer programmes have all helped to minimise hunger,” Campello said.

Forngueh Alangeh Romanus Che, councillor of the Regional Platform of Farmers’ Organisations in Central Africa, said that although the Zero Hunger programme was successful in Brazil, any similar initiative launched in Africa must be mindful of the regional context.

“We need the Zero Hunger scheme to be given an African context. We need regional integration on the continent for the free movement of people and goods,” Che told IPS.

He said that Africa needed more than a social protection scheme.

“We need to develop social and economical schemes that fast track agricultural production. Pro-poor spending in Africa needs to give farmers access to credit and access to land,” he said.

Malawi is one of the African countries that have achieved the Millennium Development Goal (MDG) of halving hunger by 2015. The southern African nation has come to acknowledge in recent years that investment in agricultural development positively impacts other MDGs such as access to clean water, healthcare and the economic empowerment of women.

Domestic spending in Malawi’s agricultural sector has been increasing by between five to eight percent per year. The country currently devotes 18 percent of its annual national budget to agriculture, while CAADP requires only 10 percent of a country’s national budget.

“Agricultural investment is essential to our country, otherwise we risk total collapse in terms of food security, the economy and the population,” Malawi’s Minister of Agriculture and Food Security Peter Mwanza told IPS.

Malawi’s economy is agriculturally dependent on the export of sugar, cotton, legumes and cassavas. Eighty-five percent of foreign exchange is earned from the farming sector, and 80 percent of the labour force is employed in the food and agriculture sector. Government and private sector investment in Malawi’s farmers is now seen as more critical than ever to the country’s resilience.

And, Mwanza said, investment in commercial agriculture to produce Malawi’s staple foods – cassava, maize and rice – will create a surplus that will in turn guarantee food security and a higher income for small farmers.

“It’s time to think big. We need private large-scale commercial production of our agriculture for export purposes. We want to attract more investors as they will make the economy strong and therefore our farmers stronger as a result of greater employment and income,” he said.

 

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Developing World to Dominate Global Investment by 2030 http://www.ipsnews.net/2013/05/developing-world-to-dominate-global-investment-by-2030/?utm_source=rss&utm_medium=rss&utm_campaign=developing-world-to-dominate-global-investment-by-2030 http://www.ipsnews.net/2013/05/developing-world-to-dominate-global-investment-by-2030/#comments Fri, 17 May 2013 00:41:26 +0000 Carey L. Biron http://www.ipsnews.net/?p=118917 Over the next decade and a half, a major global shift will result in the developing world controlling roughly half of the world’s capital, up from less than a third today. According to new scenarios released Thursday by the World Bank, developing countries could control some 158 trillion dollars (at 2010 rates) by 2030, particularly […]

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China and India are expected to be the largest investors by 2030, accounting for 38 percent of all global investment. Credit: Bigstock

China and India are expected to be the largest investors by 2030, accounting for 38 percent of all global investment. Credit: Bigstock

By Carey L. Biron
WASHINGTON, May 17 2013 (IPS)

Over the next decade and a half, a major global shift will result in the developing world controlling roughly half of the world’s capital, up from less than a third today.

According to new scenarios released Thursday by the World Bank, developing countries could control some 158 trillion dollars (at 2010 rates) by 2030, particularly in East Asia and Latin America. By that time, the developing world could account for 87 to 93 percent of global growth.“It’s one thing for the pie to be increasing, but how equitably is it being distributed?” -- Economist Dev Kar

Under certain scenarios, “financial markets in economies like Brazil, India, and those of the Middle East will develop considerably, with these countries attaining, by 2030, a level of financial development comparable to the United States in the early 1980s,” a new report from the Washington-based development lender states. “Similarly, the quality of institutions in developing countries will tend to improve significantly.”

This analysis suggests that developing countries will soon gain the resources necessary to bankroll the major investments that the bank says will be necessary, particularly in infrastructure and services. This would mark a stark contrast with the past.

Further, World Bank analysts foresee a massive escalation of global investment from these countries. Whereas in 2000 international investment from developing economies constituted just a fifth of the global total, this could now triple over the next decade and a half.

“We found that developing economies will come to dominate investment,” Maurizio Bussolo, a World Bank lead economist and author of the new Global Development Horizons report, told reporters Thursday.

“By 2030, for every dollar invested around the world, 66 cents will be in developing countries. That’s a dramatic change, as for almost four decades such investments made up just 20 cents on the dollar.”

In fact, Bussolo suggests that developing countries will overtake the developed world in this regard much sooner, perhaps by the end of this decade.

Fast-strengthened systems

China and India are expected to be the largest investors by 2030, accounting for 38 percent of all global investment, almost as much as all high-income countries combined. In fact, China alone could be responsible for nearly a third of global investment by that time, the bank says, while Brazil, India and Russia will together constitute a larger investment bloc than the United States, at around 13 percent.

This means that total investments in the developing world could be half again as large as among developed countries, at 15 versus 10 trillion dollars.

Such changes will require the exponential development and strengthening of financial sectors in developing countries, as emerging economies inevitably move to quickly integrate with the international financial system in a way never before seen.

“Developing countries are currently almost absent from international financial markets, so you can see that we have a very long way to go in a historically short time period – 15 or 20 years for developing financial markets is not long,” Hans Timmer, director of the Development Prospects Group at the World Bank, told reporters.

“But we have seen in high-income countries that if you deregulate too rapidly you have a very dangerous situation. So we have a dilemma: the role of developing countries is increasing very rapidly, but we must deepen these financial markets only very gradually.”

Already, weak financial systems across the developing world are allowing for illicit outflows of capital that are at times far greater than the countries’ external debt, inexorably impacting on those countries’ ability to finance their public sector.

One report last year estimated that North African countries alone lost nearly a half-trillion dollars over the past four decades, almost the equivalent of their combined gross domestic product for 2010.

“It’s important to note that the World Bank is only talking about recorded capital here, but there’s so much illicit capital currently sloshing around that the multilateral institutions haven’t yet gotten their heads around,” Dev Kar, formerly with the International Monetary Fund (IMF) and currently the chief economist with Global Financial Integrity, a Washington advocacy group, told IPS.

“Our studies suggest that the unrecorded capital coming from developing countries is absolutely huge – the losers are losing far more than the gainers are gaining. As a result of these developments, you can understand why the North African countries blew up, as that kind of massive outflow of resources must have some kind of social impact.”

A level field

Of potentially considerable concern in the bank’s projections is where this new wealth will end up being concentrated.

“It’s one thing for the pie to be increasing, but how equitably is it being distributed?” Kar asks.

“Equity is a huge problem, as the rich seem to be getting richer and the poor getting poorer. Further, it seems the nouveau riche in the developing countries are a bit more callous than the established rich in developed countries.”

Kar notes that income inequality is generally not being helped through current redistribution mechanisms aimed at ensuring broader equal opportunity. Meanwhile, the poor, being unable to take advantage of globalisation, are being left behind across the globe.

According to the World Bank and numerous other analysts, wealth in developing countries is today largely locked up among the elite.

“For most of these countries, the first quarter of the population provides almost no savings. The bulk of savings comes from the richest quarter – there is lots of concentration,” the World Bank’s Bussolo told IPS.

In a separate statement, he noted: “Even if wealth will be more evenly distributed across countries, this does not mean that, within countries, everyone will equally benefit. Policymakers in developing countries have a central role to play in boosting private saving through policies that raise human capital, especially for the poor.”

In particular, the new report places significant focus on increasing government funding for education. It points to analysis from Mexico suggesting that changes in education could result in a five percent greater household saving rate by 2050.

“If the distribution of education among workers of future generations were to remain as unequal as it is today, this would perpetuate inequality of earning capacity, saving, and wealth in the future,” the report states.

“Leveling the playing field in terms of educational opportunities could thus be supported not just in terms of fairness but also – given the positive effect on private saving – in terms of efficiency.”

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Q&A: A Healthy Verdict from India http://www.ipsnews.net/2013/04/qa-a-healthy-verdict-from-india/?utm_source=rss&utm_medium=rss&utm_campaign=qa-a-healthy-verdict-from-india http://www.ipsnews.net/2013/04/qa-a-healthy-verdict-from-india/#comments Fri, 05 Apr 2013 14:06:47 +0000 Gustavo Capdevila http://www.ipsnews.net/?p=117761 Gustavo Capdevila interviews GERMÁN VELÁSQUEZ, former WHO official

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Gustavo Capdevila interviews GERMÁN VELÁSQUEZ, former WHO official

By Gustavo Capdevila
GENEVA, Apr 5 2013 (IPS)

India’s refusal to grant patent protection for the anti-cancer drug Glivec, developed by Swiss drugmaker Novartis, is a victory for the developing world, which depends on low-cost exports of generic medicines from the Asian giant, said public health specialist Germán Velásquez.

The triumph celebrated by the Colombian expert, who is a special adviser for health and development at the South Centre, was a landmark ruling against Novartis handed down Monday Apr. 1 by India’s Supreme Court.

The Geneva-based South Centre is an intergovernmental organisation of more than 50 developing countries that functions as an independent policy think tank.

Velásquez, who worked for over 20 years in the World Health Organization, explains in this interview with IPS his point of view on the legal battle in the courts in New Delhi and its consequences for developing countries.

Q: How do you interpret the ruling by the Supreme Court of India?

A: There are problems with the information that is being reported. Nearly everyone says that India rejected the patent for Glivec. That’s true, but it’s not all the verdict says.

Q: Could you explain?

A: At the heart of the verdict is the ratification of the criteria set by the Indian law for the approval of drug patents. That is, whether or not it meets the requisite of containing a genuine innovation.

Q: Could you describe the legal battle?

A: It all starts with the adoption of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), one of the treaties established at the same time the WHO was born, in 1995.

India was the only developing country to use the (entire 10-year) transition period to enforce TRIPS, in 2005, when it passed the patent act.

Q: What happened to the patent applications presented during that decade-long transition?

A: They accumulated, until there were around 10,000 applications, and it was not until 2005 that the patent office began to examine them. They included the application for the Glivec patent.

But the new standards turned out to be stricter, such as the one that indicates that the innovation can’t be just a small change to a molecule, but has to be something substantial. In short, the patent for local sales of Glivec was denied in 2006.

Q: How does the story continue from there?

A: Novartis challenged that decision and brought a lawsuit in a court in the city of Madras (the capital of the southern state of Tamil Nadu; the city was renamed Chennai in 1996.) But the High Court of that city, three years later, also rejected the application. That year, 2009, the company appealed the decision – and lost again.

Q: What options are left to the company?

A: This is the aspect that hasn’t been sufficiently reported. In a cynical, perverse and very serious move, Novartis says (prior to the ruling): “If they didn’t give me the patent, I’ll go to the Supreme Court, but to ask this time for the elimination of the strict criterion established in article 3 of the patent act.”

“If more flexible, lower standards are set, then my medicine will be in,” was its reasoning.

Q: So the dispute took on this other face?

A: Yes, because with the intention of introducing its drug by force, the transnational corporation was trying to modify the law of a country – and of a country like India. I think that its executives were being short-sighted when they made that decision. This has been very costly for them in terms of their image.

Q: How do you reach that conclusion?

A: It is clear that it was a misstep to denounce India’s patent law, with the risk of losing. The transnational industry in general had suffered a blunder in South Africa, when it was forced in 2001 to back down from legal action against a law that authorised the patenting of lower-price imported medicines in order to address the AIDS epidemic.

You could suppose that “Big Pharma”, as the major pharmaceutical companies are called, had learned the lesson. Especially knowing that Glivec was patented in 40 countries, including the United States, China and Russia.

Q: Are you insinuating that there may be a domino effect?

A: If Novartis loses in India, as it did on Monday, any of the governments of the 40 countries could ask themselves: “Why don’t I review that patent and revoke it?” That authority is granted by the legislation of all of those countries.

Q: What standing do those 40 countries that recognise the Glivec patent have?

A: Most of them are industrialised states, large markets. But they also include some that are currently experiencing severe economic difficulties, like Greece or Spain, whose authorities could ask themselves why they should pay 2,500 dollars a month per person for a treatment against cancer. They could say: “Why don’t I just have it produced as a generic drug, and invalidate this patent.”

I think the Novartis executives did not take that into account when they launched this legal battle. Obviously, after the first impetus, they continued on to the end, and today they’re going to see repercussions.

Q: What could those consequences be?

A: It should be a lesson for the rest of the countries of the developing South. They should try to follow India’s example and introduce in their legislation clauses like the ones contained in article 3d, which restricts and sets criteria with respect to what amounts to innovation, which is necessary in order to grant a patent. That there can’t just be a small change, which is sometimes merely cosmetic, to a molecule in the medication.

Q: What prospect is there for the spread of that criterion?

A: In India, the Philippines and Argentina, that prohibition already exists, while others are introducing it through alternative routes.

Q: And other consequences?

A: India will be able to continue to make generic versions of all new medicines that are not truly original, and it will continue exporting them without any problem. It’s necessary to take into account the fact that 95 percent of the antiretrovirals consumed in Africa come from that Asian country.

So that means the Indian Court’s ruling is extremely important, with very concrete repercussions for that medicine and some 10,000 others that are on the waiting list in the patent office in New Delhi.

Q: What percentage of those could get patents?

A: In 2010, Argentina approved 2,000 pharmaceutical patents, and China 4,000. But actually, just 40 or 50 products a year are true innovations.

Q: Why that enormous difference between patents that are granted and truly innovative products?

A: The pharmaceutical industry is facing huge difficulties in coming up with innovations.

So it clings to a very short-sighted way of thinking, very short-term, but enormously profitable. This consists of launching incremental innovations, as they are called – in other words, a small product with just a gradual change, but accompanied by a major marketing campaign.

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OP-ED: The BRICS and the Rising South http://www.ipsnews.net/2013/03/op-ed-the-brics-and-the-rising-south/?utm_source=rss&utm_medium=rss&utm_campaign=op-ed-the-brics-and-the-rising-south http://www.ipsnews.net/2013/03/op-ed-the-brics-and-the-rising-south/#comments Mon, 25 Mar 2013 13:32:50 +0000 Helen Clark http://www.ipsnews.net/?p=117437 Helen Clark, Administrator of the United Nations Development Programme, notes ahead of the BRICS summit that while the South still needs the North, the North also increasingly needs the South.

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Helen Clark, Administrator of the United Nations Development Programme, notes ahead of the BRICS summit that while the South still needs the North, the North also increasingly needs the South.

By Helen Clark
UNITED NATIONS, Mar 25 2013 (IPS)

On Tuesday, leaders of five large emerging economies – Brazil, Russia, India, China, and South Africa, known as the BRICS – will gather in Durban, South Africa to discuss harnessing their formidable resources on behalf of faster development progress in Africa and elsewhere.

UNDP Administrator Helen Clark. Credit: UNDP (CC BY-NC-ND 2.0)

UNDP Administrator Helen Clark. Credit: UNDP (CC BY-NC-ND 2.0)

The summit’s intent is to promote global policy reforms, and to draw on their own national experiences and comparative advantages to help solve global problems.

The gathering is important: it is another sign that the world as we knew it is quickly changing.

High on the BRICS agenda is a commitment to kick-start the stalled Doha round of world trade talks and to push for fairer rules governing commerce in agriculture and other critical areas. The BRICS bloc will also be exploring ways to boost growth and overall development progress in Africa through expanded trade, investment, technology transfer, and financial support.

In one especially bold initiative under consideration, the five countries will examine proposals to create their own BRICS development bank.

The readiness of the BRICS countries to offer their own new international development initiatives and policy ideas is a clear manifestation of the changing global development landscape examined in UNDP’s newly released 2013 Human Development Report, “The Rise of the South: Human Progress in a Diverse World”. 

This dramatic change in global dynamics, however, goes well beyond the BRICS. More than forty developing countries are estimated to have made unusually rapid human development strides in recent decades, according to the Report. Together, they represent most of the world’s population and a growing proportion of its trade and economic output.

The progress of these fast mover countries measured in human development terms has accelerated markedly in the past decade. These geographically, culturally, and politically varied countries share a keen sense of pragmatism and a commitment to people, as seen through investments in education, health care, and social protection, and their engagement with the global economy. Neither rigid command economies nor laissez-faire free marketeers, they are guided by what works in their own national circumstances.

The BRICS countries themselves, while not alone, are key movers behind the rise of the South. As the 2013 global Human Development Report documents, they are contributing to development elsewhere in the South through trade, investment, and bilateral assistance. There are now many opportunities to harness the collective experiences of the rising South for the benefit of those countries not developing as fast.

The 2013 Report proposes convening a new “South Commission”, drawing on the pioneering example of the South Commission led in the late 1980s by Julius Nyerere, then president of Tanzania, and Manmohan Singh, now prime minister of India.

Through such a commission, leaders of the South could put forward their own recommendations for more inclusive and effective global governance in the 21st century.

As the BRICS summit demonstrates, the nations of the South are not standing still, waiting for reforms to happen in global governance. They are putting increasing energy and resources into newer instruments of political and economic co-operation, including regional institutions from Southeast Asia, southern Africa, and South America, to the Gulf States, the Caribbean, and West Africa’s ECOWAS group.

They have good reason to do so. If better coordinated, through what the 2013 Report terms “coherent pluralism,” with a clear consensus on shared goals, this evolving ecosystem of bilateral, regional, and international groupings can help advance sustainable human development in decades to come.

Multilateral action remains crucial for problems requiring global solutions – climate change is perhaps the most urgent example.

Yet the system of global governance devised in the mid-20th century is increasingly distanced from 21st century realities. China, for example, is the world’s second biggest economy, and holds more than 3 trillion dollars in foreign exchange reserves – more than all of Europe combined. Yet it has a smaller voting share in the World Bank than do France or the United Kingdom. Africa and Latin America also have issues of under-representation in important world fora.

The rise of the South does not imply an eclipse of the North. Human development is not a zero-sum game. People everywhere benefit from a healthier, better educated, more prosperous, and more stable world. A better-balanced North-South partnership can help achieve those goals.

A greater voice for the South also means greater responsibility, with shared accountability for solving problems and sustaining progress. A more engaged, successful South, meanwhile, helps the North, through its economic dynamism and collaboration on global challenges. As the 2013 Human Development Report says, the South still needs the North, but, increasingly, the North also needs the South.

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Q&A: Rise of South “Unprecedented in Speed and Scale” http://www.ipsnews.net/2013/03/qa-rise-of-south-unprecedented-in-speed-and-scale/?utm_source=rss&utm_medium=rss&utm_campaign=qa-rise-of-south-unprecedented-in-speed-and-scale http://www.ipsnews.net/2013/03/qa-rise-of-south-unprecedented-in-speed-and-scale/#comments Thu, 14 Mar 2013 18:44:54 +0000 Thalif Deen http://www.ipsnews.net/?p=117175 IPS U.N. Bureau Chief Thalif Deen interviews KHALID MALIK, lead author of the 2013 Human Development Report

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IPS U.N. Bureau Chief Thalif Deen interviews KHALID MALIK, lead author of the 2013 Human Development Report

By Thalif Deen
UNITED NATIONS, Mar 14 2013 (IPS)

The world’s 132 developing nations, largely part of the global South, are ascending at a pace “unprecedented in its speed and scale”, according to the latest Human Development Report (HDR) released Thursday by the U.N. Development Programme (UNDP).

Khalid Malik. Photo Courtesy of UNDP

Khalid Malik. Photo Courtesy of UNDP

And “never in history have the living conditions and prospects of so many people changed so dramatically, and so fast,” says Khalid Malik, lead author of the study and director of the HDR Office.

“Without doubt, the South’s three largest economies – China, India and Brazil – are driving forces in this phenomenon, due both to their sheer size and the recent speed of their overall human development progress,” he tells IPS.

By 2020, the combined economic output of the three leading developing countries alone will surpass the aggregate production of Canada, France, Germany, Italy, the UK and the United States, says the 203-page study.

And “much of this expansion is being driven by new trade and technology partnerships within the South itself,” according to the HDR.

China has already overtaken Japan as the world’s second biggest economy while lifting hundreds of millions of people out of poverty.

India is re-shaping its future with new entrepreneurial creativity and social policy innovation, while Brazil is lifting its living standards through expanding international relationships and anti-poverty programmes that are being emulated worldwide, says the HDR.

Still, out of 187 countries, five of the top achievers in the Human Development Index are all from the North: Norway, Australia, the United States, the Netherlands and Germany.

The bottom five are from the developing world: Burkina Faso, Chad, Mozambique, the Democratic Republic of Congo and Niger.Rising living standards and education levels lead to greater expectations from, and demands on, governments.

Malik pointed out that the 2013 HDR identifies more than 40 developing countries – on all continents – that have performed much better than would have been predicted in HDI terms over the past two decades, with this progress accelerating notably in most since 2000, he added.

The study says the South is “developing at a pace unprecedented in human history, with hundreds of millions of people lifted out of poverty, and billions more poised to join a new global middle class.”

Asked if this phenomenon is largely confined to just the three leading countries while most developing nations are still lagging far behind in alleviating or eradicating poverty, Malik singled out the 40 countries categorised as being among the “human development high achievers”.

The 40 countries include Bangladesh, Chile, Ghana, Indonesia, Malaysia, Mauritius, Mexico, Rwanda, South Korea, Thailand, Tunisia, Turkey, Viet Nam and Uganda.

Malik said the HDR looks in greater detail at 18 of the 40 countries, and their paths to human development improvement. 

He pointed out that the 2013 HDR also looks at the potentially highly positive impact of this phenomenon on today’s 47 least developed countries (described as the poorest of the poor), which include new markets, new sources of investment, better access to appropriate technologies, and, most important, many useful policy lessons.

“And while a number of low-income countries will miss their own national goals of halving extreme poverty by 2015, it is important to emphasise that the world as a whole has already met this target ahead of time, largely due to massive poverty eradication in many of the leading South nations since 1990,” he added.

Excerpts from the interview follow.

Q: The rise of the global South includes countries such as Mexico, South Korea and Chile. But how do you justify their categorisation as part of the South when Mexico left the group of 77 developing nations to join the industrial world back in 1994, South Korea in 1996 and Chile in 2010? And do you still consider them part of the global South?

A: The terms “South” and “North” are used in the report to distinguish between the long-established advanced industrial nations (the latter) and more recently emerging economies.

The OECD (Organisation for Economic Cooperation and Development in Paris, described as the rich man’s club)) does indeed include Mexico, South Korea, Chile and Turkey as well – all countries which belong nonetheless to the ‘South’ in that broad sense.

The geographical origins and connotations of the terms are of course inexact: Australia and New Zealand are rather counter-factually assigned to the ‘North’ for this purpose.

Q: The HDR takes a critical look at “global governance” – which includes multi-party democracy, human rights, transparency and accountability – as a political benchmark for the rise of the global South. If so, how do you account for the fact that China, considered by the West to be a non-democratic regime with the absence of rule of law and a free press, emerging as the world’s second biggest economy outranking Japan? Shouldn’t multi-party democracy be an integral part of economic progress in the South?

A: The 2013 report identifies more than 40 developing countries, China included, that have made remarkable human development gains in recent decades, with progress accelerating in the past 10 years. These countries represent a variety of national histories and evolving political systems. Most of these countries, though not all, would be characterised today as multi-party democracies.

The report argues strongly in favour of the importance of giving people a greater voice and opportunities for meaningful participation in civic life, which has long been central to the human development philosophy.

The report says further that rising living standards and education levels lead to greater expectations from, and demands on, governments, in terms of accountability, responsiveness, and effective delivery of social services.

The report also looks at the increasing importance of civil society in driving human development change in countries spotlighted in its ‘Rise of the South’ analysis.

That some East Asian and Latin American “developmental states” were not democracies in different stages of their development has prompted a misconception that the most effective developmental states are typically autocratic.

But evidence of the purported relationship between authoritarianism and development is scant. Democratic countries such the United States and post-World War II Japan were highly successful developmental states.

Since the 1950s, the Scandinavian countries have also acted as developmental states, where political legitimacy is derived from social services and full employment rather than from rapid growth. In Brazil, Mexico, Chile and elsewhere in Latin America, human development progress has accelerated since the consolidation of democratically elected civilian rule over the past two decades.

China’s political culture is fast evolving as living standards continue to rise, with an increasingly well-informed citizenry demanding greater government accountability. And India, a prime force in the Rise of the South, has been the world’s largest representative democracy for more than six decades.

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Native Women Bring Solar Energy to Chile’s Atacama Desert http://www.ipsnews.net/2013/03/native-women-bring-solar-energy-to-chiles-atacama-desert/?utm_source=rss&utm_medium=rss&utm_campaign=native-women-bring-solar-energy-to-chiles-atacama-desert http://www.ipsnews.net/2013/03/native-women-bring-solar-energy-to-chiles-atacama-desert/#comments Wed, 13 Mar 2013 20:05:23 +0000 Marianela Jarroud http://www.ipsnews.net/?p=117138 Three indigenous communities from the Chilean highlands have just received solar panels, which will be set up and maintained by unlikely solar engineers: five native women who travelled halfway around the world to India and overcame language and other barriers to bring photovoltaic energy to their villages. Luisa and Liliana Terán are cousins from Caspana, […]

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The five Chilean women, before heading to the Barefoot College in India. Credit: Courtesy of National Women’s Service

The five Chilean women, before heading to the Barefoot College in India. Credit: Courtesy of National Women’s Service

By Marianela Jarroud
SANTIAGO, Mar 13 2013 (IPS)

Three indigenous communities from the Chilean highlands have just received solar panels, which will be set up and maintained by unlikely solar engineers: five native women who travelled halfway around the world to India and overcame language and other barriers to bring photovoltaic energy to their villages.

Luisa and Liliana Terán are cousins from Caspana, an Atacameña indigenous community; Elena Achú and Elvira Urrelo are from the Quechua village of Ollagüe; and Nicolasa Yufla is an Aymara Indian from Toconce. The three villages, with a combined population of 1,000, are in the Atacama desert.

Water is scarce and there is no electricity in their villages, located more than 3,000 metres above sea level in the Chilean altiplano, near the Bolivian border.

“We get power from a generator for just two and a half hours late in the evening,” Luisa Terán, an artisan, told IPS.

Last year, the five women travelled to the village of Tilonia in the northwestern Indian state of Rajasthan, which is home to the Barefoot College.

The College has been working since 1972 to improve the lives of the rural poor by addressing basic needs for water, electricity, housing, health, education and income. It is now training poor, rural women from Africa, Asia and Latin America as solar engineers, to bring solar lighting to remote inaccessible villages off the energy grid.

For six months, the five Chilean villagers received hands-on training at the College in fabricating, installing and maintaining solar lighting systems.

“An ad reached us that said they were looking for women between the ages of 35 and 40 to receive training in India. I was interested from the start, but when they told me it would be for six months, I was hesitant, because that was a long time to be so far away from the family,” Terán said.

Encouraged by her sister, who took care of her two daughters, and her mother, she decided to make the journey. But she left the village without telling anyone else where she was going.

Now that the solar panels have arrived, she’s afraid that she has forgotten what she learned, after six months without being able to apply her knowledge.

“I knew what I was there for, but it still took me three months to adapt, mainly to the food and the incredible heat,” she said.

The five women left on Mar. 15, 2012, as part of an initiative organised by the Barefoot College, Chile’s National Women’s Service (SERNAM), the Regional Secretariat of the Energy Ministry, and the Italian company Enel Green Power, which donated the equipment.

The three solar kits that arrived in the villages this month each include a 12-volt panel, a 12-volt battery bank, a 4-Amp LED light, and an 8-Amp charge controller.

So far, 700 women from 49 countries in Asia, Africa and Latin America have taken the course to become “barefoot solar engineers”.

In that capacity, they are responsible for installing, repairing and providing maintenance for solar lighting units in the households of their villages, for a minimum of five years. They are also expected to set up a rural electronic workshop to store the necessary components, which functions as a mini-electric plant with a potential of 320 watts per hour.

Thanks to this and other Barefoot solar initiatives, 450,000 people in remote villages in different regions now have light, and the carbon emissions caused by burning fuel and firewood have been reduced by 13 metric tonnes a day.

In Latin America, the aim is to bring light to 1,000 homes.

In Chile, “it is very important for communities to learn about our potential for the development of renewable energies, and solar energy projects in particular,” Carlos Arenas, the regional energy ministry secretary for the Macro Zona Norte in northern Chile, told IPS.

The northern region has vast potential, especially the Atacama desert, which has one of the highest solar radiation levels worldwide, according to studies by the University of Chile: between 7 and 7.5 kwh per square metre.

In fact, solar panels covering an area of 400 square km could fully meet the country’s energy needs, experts say.

But most of the demand in the north comes from the mining industry, which absorbs 90 percent of the energy produced, while the remaining 10 percent goes towards household, commercial and public use.

“Our energy system is still being developed, and in many villages electricity comes from generators powered by fossil fuels such as diesel,” said Arenas. “But in some cases we are complementing these supplies with renewable sources, particularly wind and solar.”

For that reason, “we supported this initiative…an enriching experience for the people who live in such remote villages and who lack a steady energy supply, and in some cases pay a high cost for energy,” he added.

When the five Chilean women reached India, they found out that the course was in English. It was difficult for them to understand the instructors, Terán said, but in the end they managed to communicate through signs, gestures and drawings.

They also found themselves in a place radically different from their villages. “There were many bugs, lizards and other animals. We slept on mats on hard wooden beds. And the poverty there was terrible,” she said.

In the group, there were also five indigenous women from Peru “who were sad, and cried a lot,” she said. But now, those Peruvian mothers and grandmothers have brought solar lighting to the households in the village of Japopunco, 4,800 metres above sea level, Terán added.

“These are women with skills, but they live in remote places, which means it was an incredible personal experience for them,” Paola Diez, the director of the SERNAM department of women and work, told IPS.

Her office and Chile’s national indigenous development agency, CONADI, are implementing a plan to train native women around the country in sustainable enterprises, helping to pull them out of a subsistence economy.

The initiative is aimed at boosting women’s insertion in the labour market in Chile, where 47.7 percent of women work, and the government wants to bump that up to 50 percent.

Terán is ready to put her newfound knowledge to use in Caspana. “The idea is to start by bringing light to the houses, and maybe later we could install a refrigerator, which everyone wants,” she said.

“We also want to share our training, but we need help to start making and selling solar lamps. And people want us to teach them, so that the women themselves will know how to install solar lighting in their homes,” she added.

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Resentment as South Africa Speaks Business for Continent http://www.ipsnews.net/2013/03/resentment-as-south-africa-speaks-business-for-continent/?utm_source=rss&utm_medium=rss&utm_campaign=resentment-as-south-africa-speaks-business-for-continent http://www.ipsnews.net/2013/03/resentment-as-south-africa-speaks-business-for-continent/#comments Mon, 11 Mar 2013 14:07:34 +0000 John Fraser http://www.ipsnews.net/?p=117069 There is growing resentment in Africa about the way in which South Africa professes to speak for the rest of the continent in its role as a member of key developing nation blocs, researchers and experts have warned. South Africa is a member of the India, Brazil and South Africa (IBSA) developing nations grouping, as […]

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The newly-completed African Union building in downtown Addis Ababa. Ethiopia may be one of Africa’s poorest countries but its economy is expected to grow at a rate of seven percent for 2012/13, according to the International Monetary Fund. Credit: Mekonnen Teshome/IPS

The newly-completed African Union building in downtown Addis Ababa. Ethiopia may be one of Africa’s poorest countries but its economy is expected to grow at a rate of seven percent for 2012/13, according to the International Monetary Fund. Credit: Mekonnen Teshome/IPS

By John Fraser
JOHANNESBURG, Mar 11 2013 (IPS)

There is growing resentment in Africa about the way in which South Africa professes to speak for the rest of the continent in its role as a member of key developing nation blocs, researchers and experts have warned.

South Africa is a member of the India, Brazil and South Africa (IBSA) developing nations grouping, as well as the fledgling Brazil, Russia, India, China and South Africa (BRICS) club.

But international relations and trade consultant John Maré told IPS that South Africa might be walking “a political tightrope.”

“I think many African leaders, political and business, are resentful of South Africa having too great a role in the leadership of Africa,” he said.

While he added that there may be an increased pragmatism that accepted the strengths which South Africa has in many fields, it could soon become tiresome.

“The pragmatism may wear thin if South Africa overplays its hand, especially in such contexts as BRICS where other African countries do not enjoy parallel forms of special relationships,” he said. He added that other African countries did, however, have special relationships with the European Union, even though South Africa had originally been chosen as a special strategic partner with the bloc.

“The manner in which South Africa acts in the BRICS context becomes especially relevant and, given perceptions (outside Africa) that Africa wants South Africa to be its leader, it will not go down well – although voiced disapproval may be slow to emerge and will do so in a varied pattern,” he said.

He added that the growth of regional economies in Africa also helped undermine South Africa’s right to be the key gateway for the continent.

The African Development Bank (AfDB) predicted that despite the global economic slowdown, sub-Saharan Africa is expected to see economic growth of 6.6 percent in 2013. According to the World Bank’s “Africa’s Pulse” report, released in October 2012, “new discoveries of oil, gas, and other minerals in African countries will generate a wave of significant mineral wealth in the region.” In addition, Ethiopia may be one of Africa’s poorest countries but its economy is expected to grow at a rate of seven percent for 2012/13, according to the International Monetary Fund.

Memory Dube, a researcher at the South African Institute for International Affairs, an NGO that focuses on South Africa’s and Africa’s international affairs, suggested that South Africa needed to consult more to strengthen its credentials to speak on behalf of Africa.

“What South Africa needs to embark upon is a proper consultation process, particularly with the other key states such as Nigeria, Algeria, Kenya, Egypt and Ethiopia,” she told IPS.

“The BRICS leaders are going to engage with African institutions such as the New Partnership for Africa’s Development, the African Union (AU) and the AfDB as well as regional economic communities,” she said, adding that it would be a good move, especially if African priorities, as defined by South Africa, are drawn from a continental dialogue.

“However, bilateral relations still remain key and engagements with institutions should be complementary to these bilateral relations with other key African champions,” she said.

But South African Minister of Foreign Affairs Maite Nkoana-Mashabane dismissed suggestions that the country was not properly consulting its African neighbours.

“I sit in meetings where I know we truly and faithfully engage with all the independent countries on the continent,” she told IPS.

“They all have individual policy perspectives, but we all belong to the AU, and take decisions together. We have friendly and cordial relations with them and take none for granted,” she said adding that South Africa was an integral part of the continent.

“What we wish for South Africa, we wish for all the countries in the continent. We champion Africa’s cause, as Africa took the struggle for South Africa (against apartheid) as their cause.”

Nkoana-Mashabane was unrepentant about South Africa’s links with its BRICS and IBSA partners and gave her firm support to the developing nation economic blocs.

“We also champion South-South cooperation, and this is what our forefathers envisioned,” she explained. “Because of our history, we don’t ignore our historic links with countries of the north either.”

The minister suggested that there would be benefits for all from the BRICS summit, which will be hosted in Durban, South Africa from Mar. 26 to 27. She said that ahead of the summit, for the first time “BRICS leaders will be meeting in a retreat with about 20 heads of state of Africa.”

“The BRICS member states know investing in Africa is not charity – there is no better place to be but in Africa,” she emphasised. “They know they will get good returns for their investments, and on their own they have chosen Africa as a partner.”

Nkoana-Mashabane added that South Africa would call for investment in Africa’s infrastructure at the summit.

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New Development Bank to be Key BRICS Building Block http://www.ipsnews.net/2013/02/new-development-bank-to-be-key-brics-building-block/?utm_source=rss&utm_medium=rss&utm_campaign=new-development-bank-to-be-key-brics-building-block http://www.ipsnews.net/2013/02/new-development-bank-to-be-key-brics-building-block/#comments Thu, 28 Feb 2013 04:10:23 +0000 John Fraser http://www.ipsnews.net/?p=116785 Emerging market leaders want their Brazil, Russia, India, China and South Africa club to be taken seriously, and next month they are expected to make a decisive move towards setting up a development bank to give it real substance and credibility. “There is no doubt that the BRICS Development Bank will be a welcome development,” […]

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Sandile Zungu, the Secretary of South Africa’s Black Business Council said there is no doubt that the BRICS Development Bank will be a welcome development. Credit: John Fraser/IPS

Sandile Zungu, the Secretary of South Africa’s Black Business Council said there is no doubt that the BRICS Development Bank will be a welcome development. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Feb 28 2013 (IPS)

Emerging market leaders want their Brazil, Russia, India, China and South Africa club to be taken seriously, and next month they are expected to make a decisive move towards setting up a development bank to give it real substance and credibility.

“There is no doubt that the BRICS Development Bank will be a welcome development,” Sandile Zungu, the Secretary of South Africa’s Black Business Council, told IPS.

“The need for the bank is fairly obvious if you look at the growing trade among the BRICS countries and the frustrations these countries have had with existing development financing institutions like the World Bank and the IMF,”  he said.

Zungu particularly pointed to existing bureaucracy, the criteria for lending, the conditions attached to loans and the slow pace in processing applications.

“Then there’s the fact these countries have such massive infrastructure roll-out programmes, which gives all the more reason to create this bank – the need is there.”

Infrastructure financing within BRICS will indeed be a key focus of the bank, along with alternative models of cooperation to finance such projects, according to Hannah Edinger, head of Research and Strategy at emerging-markets consultancy group Frontier Advisory.

South African Finance Minister Pravin Gordhan earlier this week told parliament that the the bank’s establishment is “intended to mobilise domestic savings”  to co-fund these infrastructure projects in developing regions.

Talking to IPS, Edinger said that at least 15 trillion dollars is required in the BRICS countries over the next 10 to 20 years to finance such projects, especially in India and South Africa.

At a recent press briefing, Lynette Chen, Chief Executive Officer of the New Partnership of Africa’s Development Business Foundation, estimated that there cirrently is a 480-billion-dollar deficit in funding for infrastructure in Africa, which the new BRICS bank should help to tackle.

“The BRICS Development Bank could become the lender of choice for Africa,” Chen said.

“Other areas of finance include green technology projects, biofuels, dams and nuclear power plants in Africa,” according to Edinger. “Yet, financing to the African continent is expected to be a smaller share of total financing extended to the BRICS.”

While there will be some scope to fund environmentally friendly projects in Africa,  this will not initially be the prime focus of the new Bank, the strategist said.

Projects with a focus on sustainable development and climate change will be part of the mix particularly where they concern “larger and cross-border infrastructure-type projects in the transportation and power sectors, to promote regional integration and regional market building,” according to Edinger.

While the upcoming BRICS Summit in Durban at the end of March will be the first to be hosted on African soil,  officials have been holding a series of meetings in countries to ensure that the political club is given a real economic backbone.

Zungu predicted that the new bank would “cement” the BRICS spirit of co-operation by giving a tangible institutional foundation.

Edinger agreed. “The establishment of the BRICS Development Bank will be an important milestone for the BRICS grouping as it would add credibility, substance and ownership of the BRICS concept as the first institution coming out of this club.”

She said that while a number of working groups and forums exist as part of the BRICS mechanism, the establishment of the bank would signal a move away from just being a political discussion forum that proposes reforming the international financial system, creating a vehicle that is more attuned with the interests of the BRICS emerging markets, as well as the interests of the greater Global South.

Experts at South Africa’s Standard Bank believe that the BRICS Development Bank will initially be capitalised at 50 billion dollars, with 10 billion dollars from each of the BRICS members.

“The bank would also give a sense of assurance to private financiers,” according to Chen. She agreed that many infrastructure projects in Africa would be cross-border, involving “development corridors.”

Eyes on Durban

Economist Jeremy Stevens of South Africa’s Standard Bank, who is based in China, told IPS that more clarity about the bank would emerge in Durban.

“The main ambition of the bank is to direct development in a manner that reflects the BRICS’ priorities and competencies. Therefore, the bank will focus on infrastructure development and providing auxiliary support for project preparation, like feasibility studies,” according to Stevens.

“Later the working group will establish technical commitments and governance structures.”

The BRICS Development Bank provides an institutional underpinning to the group,  Stevens said,  while “contributing constructively to the development of more robust and inter-dependent ties between the BRICS members.”

He predicted that the scope of the bank’s activities might initially be limited, but could expand as it grows over time. He also asserted that its role would not be as a rival to existing development financing institutions, but as an auxiliary source of funding.

The symbolism of Shanghai

China is the largest economy in the BRICS and is expected to press for the new BRICS Development Bank to be headquartered in Shanghai, and for it to operate in the Chinese currency, the yuan.

“As part of its development process, China needs to deepen its financial markets,” John Cairns, currency strategist at South Africa’s Rand Merchant Bank, told IPS.

“One part of this is to have a stronger and more flexible, market-determined, exchange rate. This, in turn, requires that the currency be traded openly like any other currency, and therefore be internationalised.

“China’s authorities hope that the currency will become as important as its economy, so as to allow local (Chinese) companies and investors the ability to quote in their own currency.”

He said that progress on this has been “slow but steady” but was not convinced that the benefits to China from its currency being used by the BRICS Development Bank would go much beyond the symbolic.

“I’m not sure that it means very much,” he said.

“This would just be the currency of denomination – practically, the yuan would have to be converted into dollars or another international currency when transactions with third parties are being made.”

 

 

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Tourism Lies at the Heart of the BRICS http://www.ipsnews.net/2013/02/tourism-lies-at-the-heart-of-the-brics/?utm_source=rss&utm_medium=rss&utm_campaign=tourism-lies-at-the-heart-of-the-brics http://www.ipsnews.net/2013/02/tourism-lies-at-the-heart-of-the-brics/#comments Tue, 26 Feb 2013 05:35:31 +0000 John Fraser http://www.ipsnews.net/?p=116718 As tourism between the emerging nations of Brazil, Russia, India, China and South Africa starts to increase, South Africa is determined to weld the iron while it is hot. “Given that tourism was identified and committed to by our government as a key driver for job creation, South Africa needs to secure every opportunity to […]

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South Africa is determined to promote its tourists destinations to the emerging nations of Brazil, Russia, India, and China. Pictured here, a giraffe in the Madikwe Game Reserve in South Africa’s North West Province. Credit: Nalisha Adams/IPS

South Africa is determined to promote its tourists destinations to the emerging nations of Brazil, Russia, India, and China. Pictured here, a giraffe in the Madikwe Game Reserve in South Africa’s North West Province. Credit: Nalisha Adams/IPS

By John Fraser
JOHANNESBURG , Feb 26 2013 (IPS)

As tourism between the emerging nations of Brazil, Russia, India, China and South Africa starts to increase, South Africa is determined to weld the iron while it is hot.

“Given that tourism was identified and committed to by our government as a key driver for job creation, South Africa needs to secure every opportunity to promote higher levels of tourism to our country,” head of the South African Chamber of Commerce and Industry, Neren Rau, told IPS.

“The BRIC nations hold substantial potential for encouraging tourism to South Africa, given that our conventional tourism markets were substantially impacted by the global economic crisis.”

Head of the South African Chamber of Commerce and Industry, Neren Rau, says South Africa needs to secure every opportunity to promote higher levels of tourism to the country. Credit: John Fraser/IPS

But since 2012, South Africa has seen successful growth in the industry, with rates at twice the global average, according to Rau.

As the industry expands, India, China and Brazil are important tourism targets, chief executive of South African Tourism, Thulani Nzima, told IPS.

“The organisation invests significantly in growing awareness of destination South Africa in those markets, and in implementing marketing campaigns there,” he said.

Fellow BRICS member Russia, meanwhile, remains somewhat sidelined in South Africa’s ambitions, largely because of the long distance and the lack of no direct air links between the two countries.

The upcoming BRICS summit hosted in Durban, South Africa, in March will provide an opportunity to showcase the country as a tourist destination, while also bringing immediate benefits to the tourism industry, Nzima suggested.

“It will enjoy significant editorial coverage in the BRICS nations, raising awareness about South Africa’s capability, beauty, accessibility and warm, welcoming, friendly culture towards tourists.”

The latest figures for tourism arrivals in South Africa show healthy growth from the other BRICS nations for the first nine months of 2012.

Tourist arrivals in that period showed a 51.7-percent increase of travellers hailing from Brazil, and a 62.8-percent rise in Chinese tourist. Indians and Russians, meanwhile, increased their travel to South Africa by 16.8 percent and 34.6 percent, respectively.

However, the combined BRICS travel into South Africa still does not surpass that of United Kingdom, which highlights the growth potential still to be realised in the emerging markets.

The Zimbali Lodge, a popular international tourist destination in KwaZulu-Natal Province, South Africa. Credit: Nalisha Adams/IPS

Michael Tatalias, the chief executive officer of the Southern Africa Tourism Services Association, SATSA, told IPS that the first step to boosting tourism between BRICS partners is by increasing air links – which will be good not just for tourism, but for trade as well.

“An initial key goal for South Africa would be to become an airline hub between South America and Asia,” he said.

He added that currently about one million people a year travel from South America to Asia via the Middle East and Europe and that South Africa could divert some of that air traffic.

“Where air links open up, business travellers follow, deals are made, and cargo and sea trade follows,” he said. “With increased air access, business and trade increases. But crucially, tourism gets economy class seats to use for leisure travel.”

“The tourism ministry has spoken strongly about the importance of opening the skies into Africa,” agreed Nzima. He added that making the visa application processes as easy as possible, and removing as many impediments as possible to visiting South Africa are crucial additional steps that are “receiving considerable Government priority”.

South Africa’s Tourism Minister Marthinus van Schalkwyk visited China in January to see how recent growth in tourism can be sustained, while emphasising the importance of this BRICS partner for tourism development.

“We are confident of continuing our exciting growth in a market set to become one of the world’s most important tourism markets in the future,” he said.

Van Schalkwyk has worked for a number of years to create a tourism component of the G20, called the Tourism-20 or T-20, a working group of the tourism ministers of the G20 nations.

“Similarly, we should work towards a T-5 grouping, to reflect the five partners in the BRICS,” suggested Tatalias. “This would focus on resolving bottlenecks and hindrances.”

Rau, meanwhile, warned that promoting tourism in South Africa faces some of the challenges as the promotion of the country itself.

“If tourism growth is to be sustained, it must be supported by strong redress of the inhibitors to tourism growth in South Africa, such as perceptions of rampant crime and widespread violent protest activity, as well as insufficient promotion of the facilities that South Africa has to offer,” he warned.

Now the challenge for the BRICS leaders is to move beyond the exchange of pleasantries – to a far greater exchange of tourists.

 

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BRICS Summit Means Business http://www.ipsnews.net/2013/02/brics-summit-means-business/?utm_source=rss&utm_medium=rss&utm_campaign=brics-summit-means-business http://www.ipsnews.net/2013/02/brics-summit-means-business/#comments Fri, 15 Feb 2013 04:15:53 +0000 John Fraser http://www.ipsnews.net/?p=116475 African nations and other emerging countries are expected to soon outperform the developed world, and South Africa wants to take advantage. South Africa is planning to improve business dynamics within the Brazil, Russia, India, China and South Africa (BRICS) club of emerging national economies, and also with other African nations, at the BRICS’ first African […]

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Maite Nkoana-Mashabane, South Africa’s Minister of International Relations and Cooperation has praised the Chinese for their decisive role in gaining South Africa membership to the BRICS club. Credit: John Fraser/IPS

Maite Nkoana-Mashabane, South Africa’s Minister of International Relations and Cooperation has praised the Chinese for their decisive role in gaining South Africa membership to the BRICS club. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG , Feb 15 2013 (IPS)

African nations and other emerging countries are expected to soon outperform the developed world, and South Africa wants to take advantage.

South Africa is planning to improve business dynamics within the Brazil, Russia, India, China and South Africa (BRICS) club of emerging national economies, and also with other African nations, at the BRICS’ first African summit in Durban next month.

“Emerging and developing economies are already playing an important role in the global economy,” the chief executive officer of South Africa’s First National Bank (FNB), Michael Jordaan, told IPS.

“The Chinese economy is already the second largest in the world, with a nominal GDP above seven trillion dollars, (and) growing at between seven and eight percent,” he said. “There are also several emerging market economies that have GDP levels above one trillion dollars, including Brazil, Russia, India and Mexico.”

He added, “The outlook for advanced economies, in contrast, is mediocre, given that they are largely encumbered by high debt burdens.”

Jordaan said that there are opportunities at the summit for promoting some of the innovative banking products that South Africa has developed.

“For example, mobile cash and banking facilities, such as cell phone banking, have great potential in Africa and other developing countries – as this technology is most applicable in emerging markets,” he explained.

Preliminary meetings

Preparations for the summit are accelerating: Russian Foreign Minister Sergey Lavrov travelled to Pretoria earlier this week and met with Maite Nkoana-Mashabane, South Africa’s Minister of International Relations and Cooperation.

The two agreed that there are a number of important global issues in which the BRICS should co-operate, such as pushing for reforms in the United Nations, the International Monetary Fund and other global institutions.

Their Chinese counterpart, Foreign Minister Yang Jiechi, is slated to make a pre-summit trip to South Africa next week.

Nkoana-Mashabane has praised the Chinese for their decisive role in gaining South Africa membership to the BRICS club.

“I do believe that China’s key role in securing South Africa’s membership of the BRICS was the correct initiative to create a nexus between Africa and the BRICS,” she said.

“South Africa is deeply grateful for the role that China has played in this regard,” she added.

Taking Care of Business

When they attend the Durban summit, each of the BRICS leaders will be accompanied by a sizeable business delegation – and a lot of work is taking place behind the scenes to ensure that there will be productive business dialogues.

A big challenge for South African President Jacob Zuma and the other leaders will be to make it easier for business leaders, like Jordaan, to further shift their focus toward working with emerging nations.

Trade ministers from the five-nation club will hold a special joint session with business delegations from the member nations on the eve of the summit, and a permanent BRICS Business Council is due to launch after the summit.

“This business council will be a more permanent mechanism for business interaction,” Xavier Carim, deputy director general at the South African Department of Trade and Industry, told IPS.

But there has been concern in South Africa that many members of business delegations, who have in the past accompanied Zuma to BRICS gatherings, have been chosen because they are his close supporters, and not necessarily because their presence would help forge new business links.

Beijing-based South African business consultant and CEO of the Beijing Axis, Kobus van der Wath, has been part of the business delegations at two BRICS summits. However, he is not convinced that there has been enough value for the business delegates.

Business events staged on the fringes of past BRICS summits have not always been well prepared.

“I hope we can organise it well, to allow proper networking with a digital database of who is there, and then it could be very worthwhile,” he told IPS.

Jordaan said his bank and its parent Rand Merchant Bank (RMB) are already involved in India and China, but South Africa’s membership to the BRICS may help to strengthen these links. He welcomed efforts to give the BRICS a business backbone.

“We do believe that South Africa’s membership is important and will benefit our growing operations in these countries,” he said. “We support our government’s initiatives to create new avenues for growth via BRICS-related partnerships.”

However, Jordaan emphasised that while the BRICS relationship is important, Africa will remain his main external growth priority.

“We are strongly focused on growth opportunities across Africa as a primary strategy for the expansion of our banking services,” he stated.

Van der Wath suggested that China’s activities in Africa would be happening anyway – with or without the BRICS.

“China has certain objectives in global markets in terms of investment, trade and alliances – and the investments I have seen so far in Africa are not BRICS-related,” Van der Wath said.

“However, BRICS is helpful in networking, in government-to-government linkages,” he added.

According to experts, the Durban summit will be judged on its success in strengthening ties between the BRICS club and Africa.

However, the politicians will not be able to fully capitalise on these closer political ties unless they can also add a practical dimension to the relationship, by bringing BRICS business on board – something the South African hosts are working hard to achieve.

 

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Q&A: Raising Tariffs “Common Sense” Not Protectionism http://www.ipsnews.net/2013/01/qa-raising-tariffs-common-sense-not-protectionism/?utm_source=rss&utm_medium=rss&utm_campaign=qa-raising-tariffs-common-sense-not-protectionism http://www.ipsnews.net/2013/01/qa-raising-tariffs-common-sense-not-protectionism/#comments Wed, 30 Jan 2013 07:22:41 +0000 John Fraser http://www.ipsnews.net/?p=116128 South Africa has denied that it is taking a protectionist stance to protect its own producers against foreign competition, but says it is justified in boosting tariffs where this is allowed under international trade agreements. Trade and Industry Minister  Rob Davies spoke to IPS in Pretoria about the current trade landscape and the challenges the country […]

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South African Trade and Industry Minister Rob Davies announced plans to increase tariffs where there is scope for this on chicken imported from Brazil and other countries. Courtesy: Department of Trade and Industry.

South African Trade and Industry Minister Rob Davies announced plans to increase tariffs where there is scope for this on chicken imported from Brazil and other countries. Courtesy: Department of Trade and Industry.

By John Fraser
JOHANNESBURG, Jan 30 2013 (IPS)

South Africa has denied that it is taking a protectionist stance to protect its own producers against foreign competition, but says it is justified in boosting tariffs where this is allowed under international trade agreements.

Trade and Industry Minister  Rob Davies spoke to IPS in Pretoria about the current trade landscape and the challenges the country will face in 2013.

He recently announced plans to increase tariffs where there is scope for this on chicken imported from Brazil and other countries, a move that was questioned by some South African trade experts, who had expected measures just against Brazil.

Excerpts of the interview follow.

Q: South Africa is to host the BRICS (Brazil, Russia, India and China) Summit in Durban in March, and you have been preparing for this through meetings with some other BRICS Trade Ministers at the World Economic Forum in Davos? What are the big issues on which you are focusing?

A: There will be a World Trade Organization (WTO) ministerial meeting in Bali at the end of the year.

A process is going on about a small package of issues for agreement at Bali, starting with trade facilitation, which will be easier for developed countries to meet. Many developing countries have resource issues. There is concern in the BRICS group that this is not self-balancing – many developing countries may have to take measures, but what are the benefits to them in other areas?

There is also the Doha Round (a wide-ranging WTO negotiation which has been going on without conclusion for over a decade). The BRICS say the Doha mandate is still valid, while some forces see that agenda being surpassed by an agenda on trade facilitation.

Q:  Given the slow progress to date on the Doha Round, do you still see the WTO as relevant?

A: Through the WTO, there is a set of rules which are in place which are very important, and which set the parameters for any member country. As the negotiation of the Doha Round remains a slow task, the (WTO’s) dispute mechanism is becoming rather over-loaded.

I think there is an attempt to get developing countries to remove the space between their applied (actual) tariffs and bound rates (the higher tariffs which could be applied). The gap allows us space for implementing policy, and is something which was not in place in the 1930s.

Q: You recently announced that instead of imposing targeted anti-dumping measures against chicken imports from Brazil, you would apply a general tariff increase which would mostly impact those countries which do not have a specific free trade agreement with South Africa. Why this approach?

A:  This is an issue which is covered by WTO rules and there are quite tight rules. We imposed provisional anti-dumping measures and then did an investigation. Brazil indicated they had concerns, which seemed enough for them to go to a (WTO) dispute settlement mechanism. We put a team in place to look at this.

We were well aware the Brazilians were going to fight this all the way through, as they do not have any anti-dumping duties against their chicken exports and this could have become a precedent.

Who knows if we would have won or not? We looked at the impact of the provisional duty (which South Africa imposed early in 2012 against chicken imports from Brazil). It was not that local production took the place of allegedly dumped Brazilian chicken. It was other imports (that filled the gap). The issue is imported chicken from all parts of the world. There is space to increase (the general tariff) and this will probably deliver better results for South Africa.

Chicken on sale in a South African supermarket. South Africa’s major current trade spat is with Brazil and other nations over cheap chicken imports which local producers claim are threatening their livelihood. Credit: John Fraser/IPS

Q: Aside from the issue of Brazilian chicken, South African trade officials have said recently that tariffs may be increased on other imports. This is been interpreted as a move towards protectionism. How do you respond?

A: What we are saying is common sense. We haven’t set zero tariffs for everything across the world. We say there are ceilings on tariffs, but we never said tariffs can’t increase. With the onset of the recession, there are calls that we should use that space (between actual tariffs and the ceiling). We say protectionism is when you act against the rules, because the rules govern the status quo.

We haven’t seen a breaking of the rules, which has been a contribution to seeing that the crisis didn’t end in a great depression. We have seen a triple-dip recession in parts of the world – but that has little to do with tariffs.

Q: South Africa is hosting the BRICS Summit at the end of March.  What can we expect?

A: This is the first time we will have hosted a BRICS Summit in Africa, and we are building a relationship between BRICS and Africa. Our ambition is to take the establishment of the BRICS Development Bank further forward.

There will also be a Trade Ministers’ meeting, linked to a business forum.  There will be the launch of a BRICS Business Council to strengthen inter-BRICS relations. There will also be a BRICS’ co-operatives meetings. We are starting to define a programme of inter-BRICS cooperation.

We will use this as a platform for building cooperation with other countries, for example the African countries. The BRICS Development Bank isn’t just for the BRICS countries, but we also have an ambition to see it play a role in financing infrastructure in Africa, outside our borders.

Q: There is an overlapping organisation to the BRICS, known as IBSA (India, Brazil, and South Africa). Does the BRICS grouping make this smaller grouping irrelevant?

A: IBSA continues – there are some very important programmes. We have, for example, a strong set of co-operative agreements between small business agencies. These have been very valuable. The IBSA partnership was the basis on which we engaged in serious learning about industrial policy from Brazil, which was the basis of our own industrial policy action plan. This is not replicated in the BRICS.

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Reviving Family Farming in Angola, Carrot by Carrot http://www.ipsnews.net/2012/12/carrots-and-cabbages-reviving-family-farming-in-angola/?utm_source=rss&utm_medium=rss&utm_campaign=carrots-and-cabbages-reviving-family-farming-in-angola http://www.ipsnews.net/2012/12/carrots-and-cabbages-reviving-family-farming-in-angola/#comments Fri, 28 Dec 2012 21:54:21 +0000 Mario Osava http://www.ipsnews.net/?p=115528 “We never used to eat carrots, but now we like them,” said Rebeca Soba, admiring her vegetable garden, an island of diversity in the midst of a vast sugarcane plantation. Vegetable gardening has been introduced at the Capanda Agroindustrial Pole (PAC) as a source of income for local small farmers. The vegetable gardens are part […]

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Women working in the vegetable gardens at the Capanda Agroindustrial Pole in Angola. Credit: Mario Osava/IPS

Women working in the vegetable gardens at the Capanda Agroindustrial Pole in Angola. Credit: Mario Osava/IPS

By Mario Osava
CAPANDA, Angola, Dec 28 2012 (IPS)

“We never used to eat carrots, but now we like them,” said Rebeca Soba, admiring her vegetable garden, an island of diversity in the midst of a vast sugarcane plantation.

Vegetable gardening has been introduced at the Capanda Agroindustrial Pole (PAC) as a source of income for local small farmers.

The vegetable gardens are part of a social programme, Kulonga pala Kukula (“education for development” in Kimbundu, the local African language), which also includes actions to promote health, water availability and education.

Women and a few men plant a variety of seeds brought from Brazil in 10 villages close to the Capanda hydroelectric plant, 360 kilometres from Luanda.

Some species were unknown to the local population, like parsley and arugula, which they cook rather than eat in salads. “It’s very bitter,” said Soba, a 45-year-old mother of five, who is one of the leaders of the agriculture programme for small farmers.

She and her group grow cabbage, peppers, tomatoes, kale and other vegetables on low-lying land that is too wet to be suitable for sugarcane.

Fifty-four percent of the families in the 10 villages involved were living in extreme poverty, with incomes of less than 34 cents of a dollar a day, according to a study carried out in 2009, said Kimputu Ngiaba, an agronomist with the programme who is responsible for production.

Now some women are making over 500 dollars a month when there is a good harvest, according to his records. They have also changed their eating habits, resulting in better nutrition. A decisive factor is guaranteed sales.

The Nosso Super supermarket chain, which has 29 outlets around the country and is controlled by Odebrecht, the same Brazilian group that runs Kulonga pala Kukula, buys a large proportion of the produce.

Other purchasers include the canteens that feed thousands of workers on the other PAC projects, such as the Companhia de Bioenergia de Angola (BIOCOM), a biofuel concern which currently employs some 800 people planting sugarcane and building industrial plants for the production of sugar, ethanol and electricity, beginning in 2013 if all goes well.

Initially there was little enthusiasm for the project, because the 27-year civil war had broken down bonds of trust and undermined good working habits. But after the first payment from the sale of vegetables, “the number of participants doubled,” said Ngiaba. Now, 1,020 families are involved and selection mechanisms have been put in place, he said.

Soba bought a gasoline-fuelled generator with the first payment she received – an item that is coveted by many rural and urban Angolans who want to be prepared for frequent power failures.

And Rosa André, a mother of three, was able to buy medicine and get health care for her ailing husband, who helps her in the vegetable garden when he can.

For many of the 38 families in the village of Luxilo, the money serves to support their children who are studying in Luanda. Of the seven children of Antonica José Agostina, a 63-year-old widow, three left for the capital. “Everyone goes to Luanda to study,” she said. Her husband died in the war, in 1999.

“Angolans are keen to learn,” said Felismina Lageslau, in charge of promotion of the Kulonga programme. Last year there was no malaria in the villages, and this year there was only one case, she said, referring to the success of the preventive health actions.

Wells providing drinking water in the larger villages, and rainwater harvesting in the smaller ones, contributed to reducing diarrhoea, and hence infant and child mortality, while training provided for traditional midwives reduced the perinatal mortality rate by 60 percent, said Lageslau, who is a social psychology student.

The programme is also trying to improve the production chain for cassava, a traditional crop in the region, by increasing production and commercialisation of cassava flour, a staple food in Angola. Fruit production – pineapples, pawpaws, bananas and watermelons – is also being introduced in the vegetable gardens.

Reviving family farming – which was a traditional way of life in colonial-era Angola, but took a nosedive after independence – will be a great legacy to the nation, said Felipe Cruz, head of investment in PAC, who is responsible for Odebrecht’s support for the agroindustrial sector.

Kulonga is a pilot plan set to expand in a rural area that is home to 70,000 people, stimulating production, improving health and strengthening the sense of citizenship. This plan will demand “technical insistence”, as Cruz calls steady outside support to bring small farmers out of the subsistence culture and into the world of commercial marketing.

This is the second of three lines of action to consolidate the PAC in a territory of 411,000 hectares which benefits from existing infrastructure: water and energy from the Kwanza river, roads, and a railway, Cruz said.

The first line is to attract “anchor companies”, like BIOCOM and large plantations that grow and industrialise basic grains, producing oils, flours, animal feeds and other derivatives. The absence of production chains hinders agricultural development in Angola, he said.

And the third, which is “more complex and longer-term,” is to form “a rural entrepreneurial class which is non-existent in Angola.” Small farmers, for example, will have to form their own self-managed cooperatives, he said.

Odebrecht is in the lead in the effort to rebuild and modernise Angolan agriculture, as well as executing key projects in the field of energy and restructuring the Luanda metropolitan area.

Four of the six seats on the board of the Society for the Development of the Capanda Agroindustrial Pole (SODEPAC) are occupied by Odebrecht. SODEPAC administers all the local initiatives, runs the Kulonga project, and manages BIOCOM in conjunction with its partners, the state oil firm Sonangol and the private Angolan firm Damer Indústria.

BIOCOM plans to produce 260,000 tons of sugar, substituting for imports, and 30 million litres of anhydrous ethanol, which added to gasoline makes combustion engines less polluting, as well as generating 45 megawatts of electricity from sugarcane bagasse (the fibrous material remaining after crushing).

Ethanol production in Angola “has not been proved to be viable, either economically or technically,” said Fernando Pacheco, an agronomist who is known to be critical of government plans and an activist in favour of family agriculture and cooperatives.

The PAC in its entirety is “too ambitious for the institutional and human capacity of Angola,” and the different projects “are not coordinated or integrated,” he said.

In his view, the priority in Angola is “to generate jobs for young people on a mass scale, but agribusiness does not do this, and it requires a great deal of scientific and technical knowledge, much of which has been lost since the 1970s,” Pacheco said.

Up to 1973, Angola produced most of the food that it consumed, and exported coffee, maize and cotton. In contrast, its harvests are now meagre and food imports have soared, according to a report published this year by the Catholic University’s Centre for Scientific Studies and Research.

This transformation was due to the war, “which destroyed production capacity and mobility,” but “also to political mistakes over many years,” such as a lack of investment in infrastructure, an overvalued local currency, and the rural exodus, the study says, while complaining about the lack of credible national agricultural statistics.

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Amazon Regional Alliance to Confront the Climate Emergency http://www.ipsnews.net/2012/12/amazon-regional-alliance-to-confront-the-climate-emergency/?utm_source=rss&utm_medium=rss&utm_campaign=amazon-regional-alliance-to-confront-the-climate-emergency http://www.ipsnews.net/2012/12/amazon-regional-alliance-to-confront-the-climate-emergency/#comments Thu, 27 Dec 2012 14:04:14 +0000 Milagros Salazar http://www.ipsnews.net/?p=115495 “When someone in Peru sneezes, someone in Brazil catches a cold. When a barrel of oil is produced in Ecuador, a neighbouring country ends up buying it,” says prominent environmentalist Yolanda Kakabadse. Everything that happens in Latin American countries is closely connected, as if they were vital organs shared by the same body, maintains Kakabadse, […]

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Coffee growing in the forests of Puno, Peru illustrates the displacement of crops by climate change. Credit: Milagros Salazar/IPS

Coffee growing in the forests of Puno, Peru illustrates the displacement of crops by climate change. Credit: Milagros Salazar/IPS

By Milagros Salazar
PUERTO MALDONADO, Peru, Dec 27 2012 (IPS)

“When someone in Peru sneezes, someone in Brazil catches a cold. When a barrel of oil is produced in Ecuador, a neighbouring country ends up buying it,” says prominent environmentalist Yolanda Kakabadse.

Everything that happens in Latin American countries is closely connected, as if they were vital organs shared by the same body, maintains Kakabadse, former environment minister of Ecuador and current regional director for Latin America and the Caribbean of the Climate and Development Knowledge Network (CDKN).

This is why the CDKN is promoting an initiative that will allow Brazil, Colombia, Peru, Ecuador and Bolivia to exchange and assess evidence-based information on the risks, impacts and threats of climate change shared by the countries of the Amazon region.

The aim is not only to measure impacts that are already evident, but also to foresee damages in the medium to long term. What will be the implications for the lives of the most vulnerable people if global temperatures increase two degrees by 2025? This is the kind of questions that need to be asked, explained Carolina Navarrete of the International Center for Tropical Agriculture (CIAT), which is also supporting the initiative.

For example, Navarrete told Tierramérica*, “a two-degree increase in temperature could make it necessary to move coffee crops up 300 meters higher, and the same thing would happen with other crops. How can we prepare for this situation without causing pressure on sensitive areas, such as protected natural areas, for example?”

The goal of the project is help the region’s authorities respond to these crucial questions for the population’s survival with concrete actions, Kakabadse and Navarrete told journalists from the five countries gathered in Puerto Maldonado, the capital of the Peruvian Amazonian region of Madre de Dios.

Kakabadse announced that Peruvian Environment Minister Manuel Pulgar Vidal would be responsible for convening his counterparts, between the months of January and February, in order to jointly define measures to be adopted. It is hoped that a formal agreement will then be reached by April or May.

But the Ministry of Environment has yet to make an official statement in this regard, as it is still “working with other sectors and agencies involved in environmental affairs,” according to a communiqué received by Tierramérica at press time.

Nevertheless, as Kakabadse stressed to Tierramérica, the initiative must reach beyond the particular governments in power at a given moment, because “there is a great deal that needs to be done in the medium and long term.”

As a first step, a scientific working group has just completed a preliminary report that reveals the vulnerability of the Amazon region in a scenario of climate change.

For the report, coordinated by the Global Canopy Programme and CIAT and financed by the CDKN, the team of specialists reviewed more than 500 publications from the last 15 years and consulted websites and databases on deforestation and hydrologic modeling.

The report places emphasis on the threats to water, food and energy resources and how they are interrelated. Without water security in the region, there can be no food, energy and health security, it stresses.

The greatest impact will be on water quality, due to deforestation, energy extraction, mining and the use of fertilizers, among other activities that threaten the rainforest and its natural wealth, says the report.

In the last decade, the Amazon region suffered two unprecedented droughts in 2005 and 2010, while floods wiped out thousands of hectares of crops. According to the UK-based Met Office Hadley Centre for climate change research, extreme events like these will intensify and could occur every two years by 2025.

Under this scenario, competition for water will increase. The most powerful users will likely have greater control over this vital resource, while local populations, almost always the poorest, will have access to water of lesser quality and in smaller quantities, warns the report.

Energy generation also depends to a large extent on the Amazon. In Peru, the rainforest accounts for 73 percent of total oil and natural gas production. Hydroelectric plants in the Amazon provide over a third of electricity in Ecuador and Bolivia.

Meanwhile, the appetite for the large proven reserves of crude oil in the Amazon is exerting pressure on the protection of fragile ecosystems in a context where hydroelectricity generation could be compromised by changes in the flow of rivers.

In the Brazilian Amazon region, the total hydroelectricity potential is estimated at 116 gigawatts (GW), of which only 16 GW is currently exploited. Of the rest of this potential, 25 percent would affect indigenous territories, while 16 percent is located in protected natural areas, notes the report.

At the same time, there are growing exports of foods supplied by the Amazon rainforest – a region in which, paradoxically, one out of every three inhabitants suffers from hunger.

The appearance of vectors of diseases in areas where they were previously unimaginable – such as malaria, a hot-climate disease, in the cold environs of Lake Titicaca – also demands that the problem of climate change be confronted by the region’s countries as a bloc, say the experts.

All of these impacts and projections demonstrate that “long-term planning is as important as risk management in the present,” said Navarrete.

Kakabadse, for her part, stressed that no matter what, it is crucial not to lose sight of the enormous importance of the conservation of the Amazon and its protected natural areas. They are the “savings account” that must be preserved for the even more difficult times ahead, she said.

* This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

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BRICS Seeks New Dialogue with Africa http://www.ipsnews.net/2012/12/brics-seeks-new-dialogue-with-africa/?utm_source=rss&utm_medium=rss&utm_campaign=brics-seeks-new-dialogue-with-africa http://www.ipsnews.net/2012/12/brics-seeks-new-dialogue-with-africa/#comments Thu, 27 Dec 2012 06:49:22 +0000 John Fraser http://www.ipsnews.net/?p=115478 South Africa plans to boost links between Africa and its partners in the Brazil, Russia, India and China alliance at a landmark summit, which will be held in this country in March, Xavier Carim, deputy director general at the Department of Trade and Industry, told IPS. “The summit theme is BRICS and Africa – a […]

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Xavier Carim, deputy director general at the Department of Trade and Industry, said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners. Credit: John Fraser/IPS

Xavier Carim, deputy director general at the Department of Trade and Industry, said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Dec 27 2012 (IPS)

South Africa plans to boost links between Africa and its partners in the Brazil, Russia, India and China alliance at a landmark summit, which will be held in this country in March, Xavier Carim, deputy director general at the Department of Trade and Industry, told IPS.

“The summit theme is BRICS and Africa – a partnership for development, integration and industrialisation,” explained Carim of the meeting to be held in Durban, South Africa.

“We want to align our interests to support the integration agenda in Africa, not just to focus on access to resources.”

There have been suggestions that because South Africa is the smallest of the BRICS nations in terms of population and GDP, it therefore may not deserve a place in this club of leading developing nations.

However, one answer to this criticism is that South Africa can offer its BRICS partners better access to the mineral-rich African continent and hence plays not just a national role, but a regional one, in the BRICS.

The heads of government who will be attending the BRICS summit will be invited to a meeting immediately after the main event with the New Partnership for Africa’s Development (NEPAD) Steering Committee.

“This will be at presidential level and will help to link the BRICS with Africa,” explained Carim.

Pretoria-based international affairs consultant John Maré welcomed the plan to boost relations between Africa and the BRICS grouping at the Durban summit.

“This is important. In particular, it means South Africa is facilitating an Africa-China business dialogue.

“It is important that business deals ensure there is no exploitation of Africa by the Chinese,” he told IPS.

He emphasised the importance of China in particular for Africa, suggesting that the Asian giant is the key member of the original BRIC grouping from Africa’s perspective.

“The BRIC grouping invited South Africa to join, making it the BRICS, as we are seen as the most suitable gateway to Africa,” he said.

“If there is this emphasis on Africa at the Durban summit, it will mean South Africa is playing the role everyone assumed we would play when we were invited to join.”

Maré suggested that the BRICS should seek a new dialogue with Africa along the lines of this continent’s existing one with the European Union (EU).

“The EU has a specific dialogue with Africa, through the African Union Secretariat,” he noted.

“This linkage between NEPAD and the BRICS could be a mirror image of that – and would give the BRICS a relationship with Africa which neither the United States nor Japan has.

“I am sure this Durban meeting will be the first of a regular dialogue.”

Johannesburg-based independent analyst Ian Cruickshanks also welcomed the prospect of South Africa facilitating a closer link between Africa and the BRICS.

“I welcome any extension of South African influence in global economic and political groupings,” he told IPS.

“The BRICS is seen as a new vibrant group with political and growing economic clout, access to capital, able to influence new fixed investment in Africa - which is the last frontier in exploitable energy and industrial commodity reserves.”

Cruickshanks noted that Africa presently only contributes about three percent of global GDP, with South Africa accounting for around one percent.

“But Africa has the potential to advance faster than the developed world, provided that there is better access to capital, and this could be tapped through the BRICS industrial powerhouses,” he predicted.

He noted that South African resources are already significantly exploited, but questioned whether shale oil might provide new energy reserves, with the possibility of these reserves being developed through partnerships with BRICS partners, with export potential to the rest of Africa.

“South Africa’s advanced financial sector could provide the basis of a gateway to Africa for the BRICS, bringing a huge economic boost, and contributing to funding President Jacob Zuma’s promised 900-billion Rands in infrastructure development plans,” said Cruickshanks.

In another development, Carim said that there was work underway to try to anticipate and defuse trade friction within the BRICS.

He gave examples of applications for South African anti-dumping duties against chicken imports from Brazil and against paper imports from China.

“These things do come up, and it’s inevitable when you see how our trade is growing,” he explained.

“The more you trade, the more frictions – it’s a normal part of the relationship.”

However, he said that in dealing with BRICS partners “we are looking at ways of taking the sting out of these matters, before they happen.”

Carim insisted that companies which believe they are the victims of dumped goods – goods sold in a foreign market at lower prices than they are sold domestically, and which do damage to foreign rivals – do have the right to apply to their governments for protective measures.

He said that ways must also be explored to get a better balance in trade with South Africa’s BRICS partners.

“When South Africa’s imports go up, there is an impact on our domestic industries,” he argued.

“There has to be some way to alleviate the pressures, to find outlets for our exports and to find ways to support our exports – such as wine to Brazil.”

However, Carim said that the conditions are not yet ripe for a Free Trade Area among the BRICS nations.

“No one is talking of a Free Trade Area (FTA), because with an FTA you open your markets, and you can lose sectors,” he explained.

“India is vulnerable with its agriculture, and if you look at manufactured goods, the Chinese are extremely competitive. Meanwhile, Brazil is extremely competitive in agriculture.

“You run risks from a free-trade perspective.”

He emphasised that there is a lot of scope for the BRICS nations to learn from one another, and gave the example of the ways in which Brazil has an effective development finance institution – from which South Africa’s Industrial Development Corporation can learn lessons.

Meanwhile, the Chinese and Indians are good at developing Industrial Development Zones – an area in which South Africa has yet to excel.

“We should look at sharing experiences, rather than destructive competition,” Carim concluded.

 

 

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Q&A: Will the BRICS Bury IBSA? http://www.ipsnews.net/2012/12/qa-will-the-brics-bury-ibsa/?utm_source=rss&utm_medium=rss&utm_campaign=qa-will-the-brics-bury-ibsa http://www.ipsnews.net/2012/12/qa-will-the-brics-bury-ibsa/#comments Mon, 24 Dec 2012 12:58:10 +0000 John Fraser http://www.ipsnews.net/?p=115447 China’s presence in the leading developing nations alliance of Brazil, Russia, India and China has given the bloc an advantage that another developing nations club, India, Brazil and South Africa, has hitherto been lacking, according to Peter Draper, one of South Africa’s leading experts on international relations and trade. “There seems to be substantial business […]

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Peter Draper, one of South Africa’s leading experts on international relations and trade, says that since the BRICS emerged IBSA has slipped below the radar. Credit: John Fraser/IPS

Peter Draper, one of South Africa’s leading experts on international relations and trade, says that since the BRICS emerged IBSA has slipped below the radar. Credit: John Fraser/IPS

By John Fraser
JOHANNESBURG, Dec 24 2012 (IPS)

China’s presence in the leading developing nations alliance of Brazil, Russia, India and China has given the bloc an advantage that another developing nations club, India, Brazil and South Africa, has hitherto been lacking, according to Peter Draper, one of South Africa’s leading experts on international relations and trade.

“There seems to be substantial business interest in the BRICS, which has perhaps ironically become a marketing label for each member state government to use to propel trade and economic ties among their respective business communities,” Draper, a senior research fellow at the South African Institute of International Affairs, who just returned home from a series of G20-related meetings in Moscow, told IPS.

Excerpts of the interview with IPS follow:

Q: Is it commerce and economics, or mainly politics, which was behind the creation of IBSA and the BRICS?

A: Politics is the primary driver of both. IBSA was established with the express purpose of lobbying for United Nations Security Council seats for each member. Along the way it has morphed into broader foreign policy and, of course, economic realms. The fact that each of its members is a significant democratic developing country power gives it an extra “glue”, but it is not obvious to me that this can sustain the grouping.

Indeed, there is a view that one of China’s principle aims in supporting South Africa’s BRICS membership was to undermine IBSA, thus bringing each country closer to its authoritarian/state capitalist mode of governance. Having said that, I think that the principle driver of the BRICS is geo-economic, particularly the reform of the international financial and trade systems.

Q: Do we need both IBSA and the BRICS, and are they sustainable?

A: From a South African point of view I think we do. The discussion among democratic developing states is important; otherwise we risk being too influenced by the big Eurasian authoritarian powers of China and Russia.

Geographically we are also closer to these two countries – India and Brazil – and we are in some currently small measure well placed to facilitate trade and economic links between ourselves. In other words, we have more in common with India and Brazil than with Russia or China.

But leveraging China’s weight in particular, in international geo-economic discussions, is a good goal to aim for even if it is challenging to deliver in practice. Hence that is where I would push the BRICS discussion.

Q: What is the next step in the evolution of either or both blocs? A move to a Free Trade Area, or the establishment of a full-time secretariat?

A: Neither. I think they will both remain informal groupings for the foreseeable future, coordinated by member state governments. In this light I wouldn’t call them “blocs” per se, rather “clubs” or “groupings” – to convey their informal and non-binding nature. More like the G7 or G8 in design.

Q: Do you foresee greater coordination of policy, and thus negotiation clout by these developing nations, in global fora on economics, the environment and so on?

A: There is already quite a lot of coordination on the international stage, with varying degrees of success. I expect this to continue, to the extent that key targeted organisations, such as the UNFCCC (United Nations Framework Convention on Climate Change) and the WTO (World Trade Organization), or groupings, and especially the G20, are actually advancing.

Q: Do you think there is any conflict between South Africa’s relationships with other leading emerging markets and its ambitions in Africa?

A: If the primary focus is external economic diplomacy, as I described earlier, then not really. In fact, SA can leverage its relationships with these powers – especially China – to support African development and even moderate its partners’ behaviour at the margins. At the business level there is obviously substantial competition, but also an emerging set of partnerships oriented towards African markets, such as the relationship between South Africa’s Standard Bank and China’s ICBC (Industrial and Commercial Bank of China).

Q: Is much notice being taken in Brussels, Washington and Tokyo of the BRICS and IBSA?

A: The BRICS have attracted a lot of attention, much of it deeply sceptical. IBSA attracted considerable attention when it was formed, but since the BRICS emerged it has slipped below the radar, in my view. Obviously any formation that includes China will be closely scrutinised in the West.

Q: You have just returned from Moscow. What is your current assessment of Russian backing for the BRICS? 

A: I get the sense that they take the BRICS seriously, and they see value in the BRICS for coordinating policy in international negotiations and as a way to support efforts to replace the dollar in global transactions. However, I don’t see them supporting a BRICS Development Bank, which has been suggested, as they have already set up a Eurasian Development Bank, and their reserves are being dedicated to that. When it comes to big, grand projects, BRICS has its limitations.

 

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BRICS Tracking Where the Money Flows http://www.ipsnews.net/2012/12/brics-tracking-where-the-money-flows/?utm_source=rss&utm_medium=rss&utm_campaign=brics-tracking-where-the-money-flows http://www.ipsnews.net/2012/12/brics-tracking-where-the-money-flows/#comments Wed, 19 Dec 2012 07:15:24 +0000 John Fraser http://www.ipsnews.net/?p=115293 The five leading developing nations grouped in the BRICS alliance – Brazil, Russia, India, China and South Africa – are planning to intensify efforts to collect accurate trade data, so they can get a better picture of trade flows. The exercise will help with economic planning, and will give improved insight into the economic links […]

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The port of Pecém in Brazil's impoverished Northeast region received a large order to unload and store cement factory equipment imported from China. Credit: Mario Osava/IPS

The port of Pecém in Brazil's impoverished Northeast region received a large order to unload and store cement factory equipment imported from China. Credit: Mario Osava/IPS

By John Fraser
JOHANNESBURG, Dec 19 2012 (IPS)

The five leading developing nations grouped in the BRICS alliance – Brazil, Russia, India, China and South Africa – are planning to intensify efforts to collect accurate trade data, so they can get a better picture of trade flows.

The exercise will help with economic planning, and will give improved insight into the economic links between the five members of the club.

“We can never agree on what our trade is,” Xavier Carim, deputy director general in South Africa’s Department of Trade and Industry, told IPS.

“We collect statistics differently, and we will seek to see why they don’t match. It’s a technical exercise.”

The statistical review is expected to be given a boost at the BRICS summit in Durban in March 2013, which will be attended by heads of government and economy ministers from the five member nations.

“Obviously it is always good to have better data,” Pretoria-based economist Dawie Roodt of the Efficient Group told IPS.

“The better the data, the more efficiently economists can identify trends – and the better they can advise on policy.”

Another leading South African economist, Mike Schussler of economists.co.za, agreed on the need for accurate data.

Leading South African economist, Mike Schussler of economists.co.za, agreed on the need for accurate data in the BRICS alliance. Credit: John Fraser/IPS

“You must have proper data,” he told IPS. “If you give advice based on data which is wrong, this will have led you to the wrong conclusions.”

He gave the example of South Africa’s trade deficit with China, which appears larger if Beijing’s data is used, and smaller if based on South African numbers.

“Meanwhile, our surplus with some African trade partners may be bigger than the records show,” Schussler suggested.

“The South African Reserve Bank needs accurate data when it is deciding what to do about interest rates.

“It is only fair that we look at data from both sides.”

A South African trade expert, who asked not to be identified because he is not authorised to speak to the media, told IPS that one reason for differences in the numbers may be because there is an incentive to undervalue imports, and to boost the value of exports.

“The customs value of a shipment being imported is the trigger for the import duties which you pay,” he said.

“Therefore there is a strong incentive to under-declare the value of your goods, because you will then pay less duty. Say the goods are worth 100,000 dollars and you declare their value at 50,000 dollars. You pay only half the duty.”

He noted that while most countries have import duties on goods which arrive at their borders, there are far fewer export duties on goods leaving a country.

“As a result, customs authorities pay less attention to exports, and indeed some countries may wish to inflate the value of their exports, as this gives them the appearance of a better trade balance.

“And some countries pay export incentives, which are based on the value of the goods, and this means there is every incentive for the exporter to make that value as high as possible, to maximise the incentive. There tend to be very few checks.”

The trade expert said that when government officials are looking at trade data, there is a standing joke that if the numbers tally exactly, something must be wrong.

“But there are ways of getting a more rounded view of what is going on,” he argued. “What you can do is look not just at the trade statistics but at the flows of money as well.

“It is the job of a Central Bank to look at money flows, while the country’s statistics department will look at the trade flows.”

He said that even if all trade data is collected rigorously, there is still scope for legitimate differences between the data in two trade partners.

“In South Africa we value goods based on a shipping term Free On Board (FOB),” he noted.

“We are one of only a handful of countries to do this. In most countries around the world, the value is calculated on the term Customs, Insurance, Freight (CIF). You can’t assume you will get the same result from these two different methods, as CIF will invariably be larger than FOB.”

Carim said that as well as looking at better coordination of trade data, BRICS governments are working on other initiatives. These will be discussed at a meeting of trade and economy ministers, which will take place alongside the main BRICS summit in Durban.

He said there will be a discussion of areas of “inter-BRICS collaboration, with coordination in multilateral fora such as the G20 and the WTO.”

There will be a discussion on how to promote trade.

“Our trade with all the BRICS is growing, especially with China and India,” said Carim. “Trade with Brazil and Russia is off a lower base.”

He said South Africa tends to export minerals and commodities to its BRICS partners, and would like to diversify this profile “with higher-value manufactured goods.”

Discussions at the summit are also expected on customs cooperation, support for small business, and boosting investment.

While the BRICS grouping has no secretariat or formal structures, it is clear that efforts are underway to give an economic and trade backbone to the club, and one test of the success of the Durban summit will be the extent to which concrete measures on all this can be put in place.

 

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South-South Political Alliances Yet to Influence Business http://www.ipsnews.net/2012/12/south-south-political-alliances-yet-to-influence-business/?utm_source=rss&utm_medium=rss&utm_campaign=south-south-political-alliances-yet-to-influence-business http://www.ipsnews.net/2012/12/south-south-political-alliances-yet-to-influence-business/#comments Mon, 17 Dec 2012 11:13:03 +0000 John Fraser http://www.ipsnews.net/?p=115189 Politicians in the leading developing nations have been active in boosting mutual ties, as one way of counterbalancing the influence of the developed world. But the economic success of the Brazil, Russia, India, China, and South Africa and the India, Brazil, and South Africa groupings will depend on the extent to which businesses take advantage […]

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South African trade lawyer Emile Myburgh, of Johannesburg law firm Bowman Gilfillan, has not detected much response from the Brazilian and South African companies with which he deals. Credit: John Fraser/IPS

South African trade lawyer Emile Myburgh, of Johannesburg law firm Bowman Gilfillan, has not detected much response from the Brazilian and South African companies with which he deals. Credit: John Fraser/IPS

By John Fraser
JOHNNESBURG, Dec 17 2012 (IPS)

Politicians in the leading developing nations have been active in boosting mutual ties, as one way of counterbalancing the influence of the developed world. But the economic success of the Brazil, Russia, India, China, and South Africa and the India, Brazil, and South Africa groupings will depend on the extent to which businesses take advantage of the new opportunities which are being created.

South African trade lawyer Emile Myburgh, of Johannesburg law firm Bowman Gilfillan, has not detected much response from the Brazilian and South African companies with which he deals.

“I have not seen any evidence or heard any of my clients say that business among BRICS countries is any easier than with non-BRICS countries,” he told IPS.

“Philosophically one might think the countries might promote business or attempt to attract more investments from fellow BRICS countries, but so far the practice does not show that.” 

Myburgh noted that the challenges of conducting business between Brazil and South Africa are numerous, “but fortunately they are not insurmountable.

“The language issue is always important, but it is becoming less of an issue as a new generation of (Portuguese-speaking) Brazilians, who are fluent in English, enter the market.

“Brazilian tax and compliance are still major issues for South African investors, just as for any other foreign investor, but with business opportunities abounding many companies face up to the challenge and do their best to adapt.”

He has observed that South Africa presents its own problems to Brazilians.

“The first one is unnecessary hurdles put in place when Brazilians apply for work permits to work in South Africa,” he complained.

“The South African Department of Home Affairs has an unfortunate tendency to impose internal requirements for work permits which are not published and not based on law, and then to turn down valid applications for work permits.

“This is a political issue because the Department of Home Affairs seems to be under the impression that, by being unduly difficult with work permits, they protect South African jobs.”

However, he warned that the reality is that these practices destroy South African jobs “as the disgruntled investors would rather not hire a South African, invariably citing the same reason each time: the lack of capability and of suitable South African candidates.”

Two of South Africa’s regional neighbours – Angola and Mozambique – share the Portuguese language with Brazil, and Myburgh suggested that it is not surprising that “Brazilians do more business with Angola and Mozambique – not only because of the language, but because there are more opportunities there.

“Brazilians have traditionally invested strongly in infrastructure projects in those countries, and there are fewer infrastructure opportunities in South Africa than in Angola and Mozambique.

“However, Brazilian companies do invest heavily in other non-Portuguese speaking African countries, like Ghana, the DRC, Nigeria, and Tanzania, so language is definitely not the only factor,” he said.

Myburgh concluded that in future a county’s membership of the BRICS or IBSA clubs may affect where businessmen choose to form partnerships. “This may change in the future, but it is regrettably not the case today.”

Johannesburg-based consultant on developing nations Martyn Davies agreed with Myburgh that to date the business element of South-South partnerships has yet to reflect the more advanced political relationships.

“I believe these loose associations may offer benefit but most often – and due to the disconnect between business and the state – these opportunities are insufficiently exploited,” Davies, the CEO of the Frontier Advisory consultancy, told IPS.

“IBSA is primarily designed as a south-south developing grouping focused on trade liberalisation. With the prominence of the G20 and BRICS, it has lost its lustre somewhat.

“Also, without China being part of the grouping, IBSA does not have the necessary clout to drive through its policy proposals.”

Davies reported that the BRICS grouping is “undoubtedly generating the most interest and excitement amongst our clients.

“They are aware and interested, but while the macro-economic enabling environment of these emerging-market associations is obvious, the practical benefits to business are not always that apparent.

“There has been a great deal of hype around BRICS, which is generating excitement, but beyond the realm of the state and state-owned enterprises, private business is not easily able to leverage the geopolitics for commercial advantage,” he said.

Davies called for far greater and closer connections to be made between the business communities of each BRICS member state.

Johannesburg-based business leader Neren Rau, who is the CEO of the South African Chamber of Commerce and Industry, agreed on the need for more work in exploiting the opportunities presented by the BRICS and IBSA alliances, and he complained that there has not been enough strategising to date.

“The chamber’s concern is that South Africa did not have a defined strategy going into these relationships,” he told IPS.

“The securing of South Africa’s standing within these arrangements was considered as an end, or victory, in itself. For South African Business to leverage real value, an established strategy to support South African business within these arrangements would be required.

“That being said, membership of these arrangements does create a platform, which would have otherwise not existed, for businesses which seek to pursue opportunities with other member countries.”

Davies suggested that as the BRICS grouping becomes more institutionalised, more opportunities will emerge for private companies.

South Africa is hosting a BRICS summit meeting in Durban next year, and Davies said there will be a business forum for approximately 250 companies from the BRICS nations, with 50 firms from each of the BRICS members.

“There will be a great deal of media interest in the outcomes of these business discussions and the sizeable deals that will be announced by the attending heads of state of each BRICS country,” he predicted.

“I notice a great deal of interest amongst the Chinese business community in the BRICS meeting, buoyant interest from India and Brazil and perhaps less interest coming out of from Russia.

“Arguably, South Africa is embracing the BRICS meeting with the most enthusiasm.”

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Brazil’s Economic Model Offers Ray of Hope http://www.ipsnews.net/2012/12/brazils-economic-model-offers-ray-of-hope/?utm_source=rss&utm_medium=rss&utm_campaign=brazils-economic-model-offers-ray-of-hope http://www.ipsnews.net/2012/12/brazils-economic-model-offers-ray-of-hope/#comments Thu, 13 Dec 2012 23:54:01 +0000 A. D. McKenzie http://www.ipsnews.net/?p=115125 As governments struggle to find ways out of the persistent global financial crisis, Brazil’s development model offers an alternative path to recovery and growth, according to some economists and politicians. “Brazil provides hope for African as well as European nations because Brazil has shown that you can succeed at globalisation by opting resolutely not only […]

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Santo Antônio hydropower station under construction, October 2010. Credit:Mario Osava/IPS

Santo Antônio hydropower station under construction, October 2010. Credit:Mario Osava/IPS

By A. D. McKenzie
PARIS, Dec 13 2012 (IPS)

As governments struggle to find ways out of the persistent global financial crisis, Brazil’s development model offers an alternative path to recovery and growth, according to some economists and politicians.

“Brazil provides hope for African as well as European nations because Brazil has shown that you can succeed at globalisation by opting resolutely not only for growth but also for a better distribution of wealth,” Togolese economist Kako Nubukpo told IPS.

The former head of economic analysis and research for the West African Economic and Monetary Union (WAEMU) was in Paris to participate in a two-day ‘Forum for Social Progress’ that took place here this week, headed by Brazil’s ex-president Luiz Inácio Lula da Silva, current president Dilma Rousseff and French president François Hollande.

Focusing on how to ‘choose growth’ and ‘exit the crisis’, the forum was also a space for progressive experts to call for a new kind of global governance that “puts people first” and ensures environmental sustainability.

“Brazil has shown us that the challenge is to take people’s aspirations into account as much as possible, because with enlightened leadership we can win in the development process,” Nubukpo said.

“In Africa today we have the impression that our leaders are more accountable to the International Monetary Fund and the World Bank than to their own people.”

Nubukpo and other participants praised the “usefulness” of the forum, but Lula himself said he was tired of meetings held simply to discuss the crisis. In a passionate speech, he called on governments to find the courage to adopt “obvious” solutions, especially regarding the poor.

“If a ruler cannot offer democracy, dignity and hope to his people, what do we need governments for?” he asked.

Describing how he embarked on plans to make Brazil a respected player on the world stage, Lula described policies that have been both lauded and criticised. His administration notably instituted the ‘bolsa familia’ (family grant) programme, a national system of cash transfers for poor families to assist them in keeping their children in school.

The government also set up a ‘pro-uni’ (pro-university) programme in which low-income students receive scholarships for university, with the aim of providing the country with more skilled workers.

Some critics say that the measures have had unintended consequences, such as families sending children to school just to get the funds, but Lula defended the policies.

“I had the conviction that it was necessary to do something different than what had been done (before) in Brazil,” he said at the forum, which was co-hosted by the French Jean-Jaurès Foundation and by the Instituto Lula, an organisation Lula founded after leaving the presidency in 2011.

“We decided to pay the bolsa familia through bank branches, (using) magnetic cards that were given to the women in each household (not to the men, who could go out and spend the money on beer) and…this was a revolution for building bank accounts for low-income brackets,” he added.

One of Instituto Lula’s goals is to “bring Brazil and Africa closer together” and to “improve Brazil’s integration with Latin America” – two objectives that the former president said would change the global status quo.

“It’s necessary to build new paradigms so that we can discuss trade issues and not be locked in the traditional gaze of looking to the United States or the European Union to solve our problems for us,” he said.

According to Lula, if industrialised countries did more for Africa, they would also reap benefits in the future. “Why doesn’t the developed world, which is facing a consumption problem, extend long-term funding to African countries at lower interest rates so that Africa can develop their own industries and agriculture?” he asked.

He said that the ocean between Latin America and Africa should be seen as a conduit for, rather than a barrier to, trade.

African anti-poverty activist Bruno Ondo Mintsa, president of the Association Printemps du Quart-Monde, told IPS that the “Brazilian miracle” was a source of motivation for Africans.

For Africa, which has immense natural wealth but continues to be plagued by abject poverty, “Brazil shows that the problem is one of democracy, of governance and wealth distribution,” Mintsa said. “It’s scandalous that such a rich continent as Africa should have people living in such poverty.”

For some European socialists, Brazil exemplifies a middle way between what French president Hollande called the “outright rejection of globalisation and the gullible acceptance of even its (most) extreme consequences”.

“Although we’re looking for growth, we know all too well that the kind of growth we had before the crisis is no longer sustainable,” Hollande told participants at the forum.

The solution will not be found by looking back, he added. Instead, “We have to create a new era.”

According to Hollande, the priorities have to be growth, jobs for young people, energy transition and fighting inequality. He is all too familiar with the perils of ignoring these key areas – French unemployment rose to 10.3 percent in the third quarter of this year, the highest in 13 years, and youth unemployment is close to 25 percent.

On Tuesday, just as the Forum for Social Progress began, the French government’s own National Conference for the Fight Against Poverty drew to a close with the announcement of an ambitious two-billion-euro plan for moving forward.

The roadmap includes increasing income support, extending free national healthcare, creating emergency housing and providing an allocation of funds for unemployed young people aged 18 to 25. Some opposition politicians criticised the plan as a handout, but activists said it was time real political attention was given to the poor.

“France can learn a lot from Brazil,” retired French medical doctor and professor Alain Goguel told IPS. “We prop up the banks with trillions, but re-launching the economy by helping the poor is an original idea. It should be imitated if it works.”

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