Inter Press Service » Regional Alliances Turning the World Downside Up Sun, 29 Mar 2015 08:27:32 +0000 en-US hourly 1 Afghanistan’s Economic Recovery: A New Horizon for South-South Partnerships? Fri, 27 Mar 2015 14:39:08 +0000 Kanya DAlmeida The Asian Development Bank (ADB) has invested 1.2 billion dollars in Afghanistan for roads, railways, and airport projects. Credit: Giuliano Battiston/IPS

The Asian Development Bank (ADB) has invested 1.2 billion dollars in Afghanistan for roads, railways, and airport projects. Credit: Giuliano Battiston/IPS

By Kanya D'Almeida

First the centre of the silk route, then the epicenter of bloody conflicts, Afghanistan’s history can be charted through many diverse chapters, the most recent of which opened with the election of President Ashraf Ghani in September 2014.

Having inherited a country pockmarked with the scars of over a decade of occupation by U.S. troops – including one million unemployed youth and a flourishing opium trade – the former finance minister has entered the ring at a low point for his country.

“Our goal is to become a transit country for transport, power transmissions, gas pipelines and fiber optics.” -- Ashraf Ghani, president of Afghanistan
Afghanistan ranks near the bottom of Transparency International’s most recent Corruption Perceptions Index (CPI), tailed only by North Korea, Somalia and Sudan.

A full 36 percent of its population of 30.5 million people lives in poverty, while spillover pressures from war-torn neighbours like Pakistan threaten to plunge this land-locked nation back into the throes of religious extremism.

But under this sheen of distress, the seeds of Afghanistan’s future are slumbering: vast metal and mineral deposits, ample water resources and huge tracts of farmland have investors casting keen eyes from all directions.

Citing an internal Pentagon memo in 2010, the New York Times referred to Afghanistan as the “Saudi Arabia of Lithium”, an essential ingredient in the production of batteries and related goods.

The country is poised to become the world’s largest producer of copper and iron in the next decade. According to some estimates, untapped mineral reserves could amount to about a trillion dollars.

Perhaps more importantly Afghanistan’s landmass represents prime geopolitical real estate, acting as the gateway between Asia and Europe. As the government begins the slow process of re-building a nation from the scraps of war, it is looking first and foremost to its immediate neighbours, for the hand of friendship and mutual economic benefit.

Regional integration 

Speaking of his development plans at the New York-based Council on Foreign Relations (CFR) Thursday, Ghani emphasised the role that the Caucasus, as well as Pakistan and China, can play in the country’s transformation.

“In the next 25 years, Asia is going to become the world’s largest continental economy,” Ghani stressed. “What happened in the U.S. in 1869 when the continental railroad was integrated is very likely to happen in Asia in the next 25 years. Without Afghanistan, Central Asia, South Asia, East Asia and West Asia will not be connected.

“Our goal is to become a transit country,” he said, “for transport, power transmissions, gas pipelines and fiber optics.”

Ghani added that the bulk of what Afghanistan hopes to produce in the coming decade would be heavy stuff, requiring a robust rail network in order to create economies of scale.

“In three years, we hope to be reaching Europe within five days. So the Caspian is really becoming central to our economy […] In three years, we could have 70 percent of our imports and exports via the Caspian,” he claimed.

Roads, too, will be vital to the country’s revival, and here the Asian Development Bank (ADB) has already begun laying the groundwork. Just last month the financial institution and the Afghan government signed grant agreements worth 130 million dollars, “[To] finance a new road link that will open up an east-west trade corridor with Tajikistan and beyond.”

Thomas Panella, ADB’s country director for Afghanistan, told IPS, “ADB-funded projects in transport and energy infrastructure promote regional economic cooperation through increased connectivity. To date under the Central Asia Regional Economic Cooperation (CAREC) programme, 2.6 billion dollars have been invested in transport, trade, and energy projects, of which 15 are ongoing and 10 have been completed.

“In the transport sector,” he added, “six projects are ongoing and eight projects have been completed, including the 75-km railway project connecting Hairatan bordering Uzbekistan and Mazar-e-Sharif of Afghanistan.”

Afghanistan’s transport sector accounted for 22 percent of the nation’s gross domestic product (GDP) during the U.S. occupation, a contribution driven primarily by the presence of foreign troops.

Now the sector has slumped, but financial assistance from the likes of the ADB is likely to set it back on track. At last count, on Dec. 31, 2013, the development bank had sunk 1.9 billion dollars into efforts to construct or upgrade some 1,500 km of regional and national roads, and a further 31 million to revamp four regional airports in Afghanistan, which have since seen a two-fold increase in usage.

In total, the ADB has approved 3.9 billion dollars in loans, grants, and technical assistance for Afghanistan since 2002. Panella also said the bank allocated 335.18 million dollars in Asian Development Fund (ADF) resources to Afghanistan for 2014, and 167.59 million dollars annually for 2015 and 2016.

China too has stepped up to the plate – having already acquired a stake in one of the country’s most critical copper mines and invested in the oil sector – promising 330 million dollars in aid and grants, which Ghani said he intends to use exclusively to beef up infrastructure and “improve feasibility.”

Both India and China, the former through private companies and the latter through state-owned corporations, have made “significant” contributions to the fledgling economy, Ghani said, adding that the Gulf states and Azerbaijan also form part of the ‘consortium approach’ that he has adopted as Afghanistan’s roadmap out of the doldrums.

‘A very neoliberal idea’

But in an environment that until very recently could only be described as a war economy, with a poor track record of sharing wealth equally – be it aid, or private contracts – the road through the forest of extractive initiatives and mega-infrastructure projects promises to be a bumpy one.

According to Anand Gopal, an expert on Afghan politics and award-winning author of ‘No Good Men Among the Living’, “There is a widespread notion that only a very powerful fraction of the local elite and international community benefitted from the [flow] of foreign aid.”

“If you go to look at schools,” he told IPS, “or into clinics that were funded by the international community, you can see these institutions are in a state of disrepair, you can see that local warlords have taken a cut, have even been empowered by this aid, which helped them build a base of support.”

Although the aid flow has now dried up, the system that allowed it to be siphoned off to line the pockets of strongmen and political elites will not be easily dismantled.

“The mindset here is not oriented towards communities, it’s oriented towards development of private industries and private contractors,” Gopal stated.

“When you have a state that is unable to raise its own revenue and is utterly reliant on foreign aid to make these projects viable […] the straightforward thing to do would be to nationalise natural resources and use them as a base of revenue to develop the economy, the expertise of local communities and the endogenous ability of the Afghan state to survive.”

Instead what happens is that this tremendous potential falls off into hands of contracts to the Chinese and others. “It’s a very neoliberal idea,” he added, “to privatise everything and hope that the benefits will trickle down.

“But as we’ve seen all over the world, it doesn’t trickle down. In fact, the people who are supposed to be helped aren’t the ones to get help and a lot of other people get enriched in the process.”

Indeed, attempts to stimulate growth and close the wealth gap by pouring money into the extractives sector or large-scale development – particularly in formerly conflict-ridden countries – has had disastrous consequences worldwide, from Papua New Guinea, to Colombia, to Chad.

Rather than reducing poverty and empowering local communities, mining and infrastructure projects have impoverished indigenous people, fueled gender-based violence, and paved the way for the concentration of wealth in fewer and fewer hands.

A far more meaningful approach, Gopal suggested, would be to directly fund local communities in ways that don’t immediately give rise to an army of middlemen.

It remains to be seen how the country’s plans to shake off the cloak of foreign occupation and decades of instability will unfold. But it is clear that Afghanistan is fast becoming the new playground – and possibly the next battleground – of emerging players in the global economy.

Edited by Kitty Stapp

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Argentina Moves Towards Marriage of Convenience with China Mon, 23 Feb 2015 22:33:52 +0000 Fabiana Frayssinet The entrance to Chinatown in Buenos Aires, where a sign promotes the renovation of Argentina’s railways, partly financed by Beijing. Credit: Fabiana Frayssinet/IPS

The entrance to Chinatown in Buenos Aires, where a sign promotes the renovation of Argentina’s railways, partly financed by Beijing. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES, Feb 23 2015 (IPS)

The government of Argentina is building a marriage of convenience with China, which some see as uneven and others see as an indispensable alliance for a new level of insertion in the global economy.

The process forms part of a radical change with respect to Argentina’s diplomacy, which years back involved ties with the United States described as “carnal relations.”

President Cristina Fernández called the new relationship with China an “integral strategic alliance,” after signing a package of 22 agreements with Chinese leader Xi Jinping in Beijing on Feb. 4.

The accords include areas like space technology, mining, energy, financing, livestock and cultural matters. They cover the construction of two nuclear and two hydropower plants, considered key to this country’s goal of energy self-sufficiency.

“Although they are important, the new agreements and others that were signed earlier are insufficient to gauge the dimension of the bilateral commitment,” said Jorge Castro, the director of the Strategic Planning Institute and an expert on China.

“For Argentina, the relationship with China has elements that are essential for insertion into the international system of the 21st century, along with other countries of the South, headed by Brazil,” he told IPS.

“These ties are between the new fulcrum of the global economy, China-Asia, and Argentina as a nation and as a regional unit,” he said.

Castro pointed out that Asia’s giant is currently South America’s leading trade partner, due to the volume of its purchases of raw materials, which implies a level of interdependence given that “China has placed the food security of its population in the hands of South American countries.”

In the case of Argentina, China is its second-largest trading partner, after neighbouring Brazil – displacing long-time partners like the United States and European countries.

In 2014, exports to China totalled five billion dollars while imports stood at 10.8 billion dollars – a bilateral record which represented 11.5 percent of this country’s trade balance, according to Argentina’s Chamber of Commerce.

Prior accords that cemented the alliance

Before Fernández’s visit to China, the two countries had already signed investment agreements in strategic sectors, such as the one between China’s Sinopec and Argentina’s YPF, two state-owned oil companies, for the exploitation of one of the Loma Campana deposits of unconventional oil and gas resources in Vaca Muerta in southern Argentina.

There was also an accord for China to provide some 2.5 billion dollars in financing for the reconstruction of the railway of the Belgrano Cargas y Logística company, which will transport Argentine and Brazilian agricultural products to Chilean ports on the Pacific ocean.

“The investment agreements with China are important to the extent that they facilitate the conditions to continue generating, for example, the infrastructure for development that Argentina needs, in a scenario” of a shortage of foreign currency, economist Fernanda Vallejos told IPS.

The Chinese space station under construction in the southern Argentine province of Neuquén, rejected by the political opposition of all stripes and social groups. Credit: Courtesy of DesarrolloyDefensa

The Chinese space station under construction in the southern Argentine province of Neuquén, rejected by the political opposition of all stripes and social groups. Credit: Courtesy of DesarrolloyDefensa

In July 2014, Argentina reached an 11 billion dollar currency swap agreement with China, to shore up this country’s weakened foreign reserves, of which it received one billion dollars in December.

The swap “has been a very powerful instrument,” which is added to measures by the government and the Central Bank to promote exchange stability and help slow down inflation, said Vallejos, a member of a group that advises the Ministry of the Economy and Public Finance.

Critical voices

Sectors of the business community are critical of the alliance with Beijing, such as the Argentine Industrial Union (UIA) or the Chamber of Exports, which sounded a warning about the asymmetrical nature of the relationship.

This country’s exports to China are only half of what it imports from the Asian giant, and they are basically raw materials or farm products. A full 75 percent is soy or by-products.

Imports, by contrast, are mainly machinery and electronics, computers, telephones, chemical products, motorcycles or parts for household appliances.

The UIA said the framework agreement on economic cooperation and investment, signed in July 2014 and pending final approval by the legislature, “contains clauses that pose an enormous risk to Argentina’s development.”

“Over the last decade, China’s strategy has pursued two central objectives: to consolidate its transnational companies in global value chains and to obtain commodities and inputs with little value-added, for its growing productive and employment needs,” the UIA said in a communiqué.

“In free trade agreements in this era of globalisation, the essential thing is not trade but investment,” said Castro, who questioned the concept of “asymmetry” and backed the agreement with China.

The China expert said the relationship should be analysed in a broader context. For example, by remembering that in the next 10 years, China’s foreign direct investment is estimated to climb to 1.1 trillion dollars.

“The question is how to manage to be part of China’s flow of investment in industry in the next 10 to 20 years,” Castro said.

The UIA agrees that it is important to be part of that current, but with allocations that would not harm local goods and services, which have no chance of receiving Chinese financing, the business chamber said.

The UIA and some trade unions also worry that Chinese labour power, which is included in several projects, will displace local workers.

“Don’t worry, we continue to defend Argentine workers and the business community’s participation,” said centre-left President Fernández, who urged those sectors to engage in technical discussions about the accords.

The new empire?

Some in Argentina see the China of the 21st century as the new England of the 19th century or the United States of the 20th century, in terms of economic and territorial hegemony and domination.

They also question the construction of a Chinese space tracking and control station in the southern Argentine province of Neuquén, which according to the government will monitor, control and gather data as part of China’s programme of missions to explore the moon and outer space.

Raúl Dobrusin, an opposition legislator from Neuquén, told IPS that the agreement, which grants China the use of 200 hectares for 50 years and is opposed by left-wing groups and social organisations, did not go through the Neuquén provincial legislature, which was not informed of the details of the accord.

So far there is no Chinese military presence in the construction project, said Dobrusin, but in his view, the space station poses “major geopolitical risks.”

“If there is a confrontation between powerful nations, we will be a place to be taken into account by the enemies of China…In short, we are getting into an area where the possibility of deciding whether or not to participate in conflicts is no longer a sovereign decision, they won’t ask us,” he warned.

“The alliance transcends economic matters and forms part of the search for independence, on both the economic and political fronts, which makes it possible to reach economic and social development goals, by breaking the yoke of neoliberalism and the empire-dependence logic,” said Vallejos.

China, in her view, “is far from the voracity of the Western powers…It is part of a new global order that is struggling to be born, where the role of emerging countries is no longer one of colonialism but of assuming the position of builders of our own destiny,” said the economist.

“That does not mean that China isn’t obtaining benefits from its ties with our nations, but that it is possible to build a win-win relationship for all of the parties involved,” she said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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OPINION: A New Era of Hemispheric Cooperation Is Possible Sun, 18 Jan 2015 18:34:54 +0000 Luis Almagro Luis Almagro, Minister for Foreign Affairs of Uruguay, addresses the opening of the 16th session of the Human Rights Council, in Geneva, Switzerland. Credit: UN Photo/Jean-Marc Ferré

Luis Almagro, Minister for Foreign Affairs of Uruguay, addresses the opening of the 16th session of the Human Rights Council, in Geneva, Switzerland. Credit: UN Photo/Jean-Marc Ferré

By Luis Almagro
MONTEVIDEO, Jan 18 2015 (IPS)

Two decades after the first Summit of the Americas, a lot has changed in the continent and it has been for the good. Today, a renewed hemispheric dialogue without exclusions is possible.

Back in the mid-1990s, at the time of the Miami summit, it was the time of imported consensus, models of economic and social development exclusively based on the market and its supposed perfect allocation of resources through the invisible hand.Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

Hidden under a development rationale, the greatest wave of privatisation and deregulation took over the continent. The role of the state was reduced to be a facilitator of a process based on the principle of survival of the fittest. Solidarity, equity and justice were all values from the past and poverty a necessary collateral damage.

However, these values were in the top of the minds of the people of the hemisphere, who turned their backs to these policies and instead during the past 15 years, have forcefully supported the alternatives that combine economic growth with social inclusion, broadening opportunities for all citizens.

Economic growth went hand in hand with social inclusion, adding millions to the middle class – which today accounts for 34 percent of Latin Americans – surpassing the number of poor for the first time in the history.

If this was possible it was because governments added to the invisible hand of the market, the very visible hand of the state.

And this took place within the context of the worst post war global financial crisis that led to an unprecedented recession in the United States and Europe, which the latter still strives to leave behind.

Growth with social equity turned out to be the new regional consensus.

Today, this binds the region together.

Today, conditions are present to set up a more realistic cooperation in the Americas, where all members could partner in equal conditions, from the most powerful to the smallest islands in the Caribbean.

Today, nobody holds the monopoly over what works or does not; neither can anybody impose models because the established truths have crashed against reality. While in the 1990s social exclusion in domestic policies and voice exclusion at the international level were two sides of the same token, this in not any longer acceptable.

Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

To the existing bodies, the region has added in this past decade the dynamic UNASUR in South America and CELAC in the Americas, thus leaving the OAS as the only place for dialogue among all countries of the Americas, whether large, medium, small, powerful or vulnerable.

But, governmental or inter-governmental actors by themselves are not the only answer to the problems of today´s world. Non-state actors of the non-governmental world, the private sector, trade unions and social organisations must be part of the process.

Leaders need to interpret the time in order to generate an agenda for progress, but progress that is tangible for people, for citizens, to whom we are accountable to.

Therefore, in a more uncertain international economic environment, we should focus on maintaining and expanding our social achievements and a new spirit of cooperation in the Americas can be instrumental for that.

The Summit of the Americas in Panama, in April 2015, may be the beginning of this new process of confidence building, where all countries can feel they can benefit from a cooperative agenda. This will be a historical moment because this time there will be no exclusions.

The recent good news on the diplomatic front related to the normalisation of diplomatic ties between the U.S. and Cuba and the participation of Cuba in the Summit represent an additional positive signal. Panama deserves the support of the entire region before and during the Summit.

This will be a great opportunity to strengthen democratic values, the defence of human rights, institutional transparency and individual freedoms together with a practical agenda for cooperation for shared prosperity in the Americas.

Edited by Kitty Stapp

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Can China’s Silk Road Vision Coexist with a Eurasian Union? Thu, 20 Nov 2014 00:03:26 +0000 Chris Rickleton Russian President Vladimir Putin meets with Chinese President Xi Jinping at a signing ceremony of bilateral documents during the APEC summit in Beijing on Nov. 9. The two big powers are looking separately toward Central Asia to expand trade, economic, and political relations. Credit:  Russian Presidential Press Service

Russian President Vladimir Putin meets with Chinese President Xi Jinping at a signing ceremony of bilateral documents during the APEC summit in Beijing on Nov. 9. The two big powers are looking separately toward Central Asia to expand trade, economic, and political relations. Credit: Russian Presidential Press Service

By Chris Rickleton
BISHKEK, Nov 20 2014 (EurasiaNet)

There is a good chance that economic jockeying between China and Russia in Central Asia will intensify in the coming months. For Russia, Chinese economic expansion could put a crimp in President Vladimir Putin’s grand plan for the Eurasian Economic Union.

Putin has turned to China in recent months, counting on Beijing to pick up a good portion of the trade slack created by the rapid deterioration of economic and political relations between Russia and the West. Beijing for the most part has obliged Putin, especially when it comes to energy imports. But the simmering economic rivalry in Central Asia could create a quandary for bilateral relations.At the APEC gathering, Xi and Putin were all smiles as they greeted each other, dressed in summit attire that was likened by journalists and observers to Star Trek-style uniforms. Yet, the public bonhomie concealed a “complicated relationship."

Chinese President Xi Jinping elaborated on Beijing’s expansion plans, dubbed the Silk Road Economic Belt initiative, prior to this year’s Asia Pacific Economic Cooperation (APEC) forum, which concluded Nov. 12.

The plan calls for China to flood Central Asia with tens of billions of dollars in investment with the aim of opening up regional trade. Specifically, Xi announced the creation of a 40-billion-dollar fund to develop infrastructure in neighbouring countries, including the Central Asian states beyond China’s westernmost Xinjiang Province.

An interactive map published on Chinese state media outlet Xinhua shows Central Asia at the core of the proposed Silk Road belt, which beats a path from the Khorgos economic zone on the Chinese-Kazakhstani border, through Kyrgyzstan and Tajikistan, before snaking into Uzbekistan and Iran. Turkmenistan, already linked to China by a web of pipelines, would not have a hub on the main route.

The fund’s aim is to “break the bottleneck in Asian connectivity by building a financing platform,” Xi told journalists in Beijing on Nov. 8. Such development is badly needed in Central Asia, where decaying Soviet-era infrastructure has hampered trade among Central Asian states, and beyond.

No matter the need, Russia, which is busy promoting a more protectionist economic solution for the region in the form of the Eurasian Economic Union (EEU), may not share Beijing’s enthusiasm for the Silk Road initiative.

At the APEC gathering, Xi and Putin were all smiles as they greeted each other, dressed in summit attire that was likened by journalists and observers to Star Trek-style uniforms. Yet, the public bonhomie concealed a “complicated relationship,” according to Bobo Lo, an associate fellow at the Russia and Eurasia Program at Chatham House.

The Silk Road Economic Belt is a case in point, explained Lo. The “mega project”, much like the original Silk Road, could eventually encompass several routes and benefit Russia’s own infrastructurally challenged east, he noted. But it might well dilute Russian influence in its traditional backyard of Central Asia.

“If you are sitting in Moscow, you are hoping that Russia will be the main trunk line [of the belt], but it seems likely it will be more of an offshoot,” said Lo. “[The belt’s] main thrust will be through Central and South Asia.”

Chinese leaders are intent on linking their Silk Road initiative to a broader project, the Free Trade Area of the Asia Pacific (FTAAP), which they touted during the APEC gathering.

FTAAP and the Silk Road Economic Belt, along with a similar strategic plan called the 21st Century Maritime Silk Road, are pro-trade in the broadest sense, seeking to break “all sorts of shackles in the wider Asia-Pacific region to usher in a new round of higher level, deeper level of opening up,” according to Li Lifan, an associate research professor at the Shanghai Academy of Social Sciences.

Under the Chinese vision, its “grand idea” would seek to “absorb the Eurasian economic integration [project] led by Russia,” Li told via email.

In contrast to the expansive Chinese vision for Eurasia, early evidence suggests a Russia-led union, with its tight border controls and levied tariffs, could end up stifling cross-border trade among members and non-members. Under such conditions, Central Asian states could experience a decline in their current level of trade with China. The existing Kremlin-dominated Customs Union is set to evolve into the Eurasian Economic Union on Jan. 1.

At least since the build-up to the 2013 summit of the Shanghai Cooperation Organization (SCO), a Central Asia-focused security organisation of which China and Russia are both members, Beijing has been very public about wielding its economic might in the region. Back then, Xi jetted across the region speaking of the belt for the first time as he signed deals worth tens of billions of dollars, most notably energy contracts with Turkmenistan and Kazakhstan.

Ever since, discussions of how to turn the belt into a reality have been uncomfortable. Moscow is reportedly steadfastly opposed to the idea of turning the SCO – which also comprises all four Central Asian countries positioned along the proposed belt’s route – into an economic organisation.

Uzbekistan has refused to join the Customs Union, which also excludes China. But the Kremlin expects Kyrgyzstan to join at the beginning of next year and Tajikistan to follow. Currently, the bloc’s only members other than Russia are Kazakhstan and Belarus.

For countries that have already been on the receiving end of Chinese largesse, the prospect of deeper economic integration with Russia may begin to seem like a limitation.

During a Nov. 7 meeting in Beijing ahead of the APEC summit, Xi and Tajik President Emomali Rahmon signed agreements securing Chinese credit for a railway to connect Tajikistan’s north and south, a new power plant and local agricultural projects. They also agreed on investments for the state-owned aluminium smelter Talco, an entity that once enjoyed close ties with the Russian conglomerate RusAl. Bilateral trade for the first eight months of this year increased by 40 percent compared with the same period last year, reaching 1.5 billion dollars.

“If we compare something like the Customs Union to the Silk Road Economic Belt, then of course the belt is preferable for Tajikistan,” Muzaffar Olimov, director of the Sharq analytical centre in Dushanbe, told in a telephone interview. Tajikistan “has not decided” if it wants to join the economic bloc [the EEU], he added.

Editor’s note:  Chris Rickleton is a Bishkek-based journalist. This story originally appeared on

Edited by Kitty Stapp

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As Winds of Change Blow, South America Builds Its House with BRICS Fri, 18 Jul 2014 14:36:36 +0000 Diana Cariboni Russian President Vladimir Putin, Prime Minister of India Narendra Modi, President of Brazil Dilma Rousseff, President of China Xi Jinping and South African President Jacob Zuma take a family photograph at the 6th BRICS Summit held at Centro de Eventos do Ceara' in Fortaleza, Brazil. Credit: GCIS

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

By Diana Cariboni
MONTEVIDEO, Jul 18 2014 (IPS)

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

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

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

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

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

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

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

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

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

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

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

Transparency clause

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Public Stockholding Programmes for Food Security Face Uphill Struggle Thu, 17 Jul 2014 22:12:26 +0000 Ravi Kanth Devarakonda By Ravi Kanth Devarakonda
GENEVA, Jul 17 2014 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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International Reform Activists Dissatisfied by BRICS Bank Thu, 17 Jul 2014 21:39:24 +0000 Mario Osava Chandrasekhar Chalapurath, an economist at Jawaharlal Nehru University in New Delhi, talks about development banks in India, at the International Seminar on the BRICS Bank. Credit: Mario Osava/IPS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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BRICS Forges Ahead With Two New Power Drivers – India and China Thu, 17 Jul 2014 18:07:51 +0000 Shastri Ramachandaran By Shastri Ramachandaran
NEW DELHI, Jul 17 2014 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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New BRICS Monetary Fund May Reproduce Inequalities Sat, 12 Jul 2014 00:11:13 +0000 Mario Osava Mega-projects like the Itaipú hydropower station shared by Brazil and Paraguay could in future be financed by the new fund and new bank to be launched by BRICS leaders in the Brazilian city of Fortaleza. Credit: Mario Osava/IPS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Argentina Once More on the Map, Invited by BRICS Wed, 18 Jun 2014 18:55:43 +0000 Fabiana Frayssinet “Family photo” at the fifth BRICS Summit, held in 2013 in Durban, South Africa. Credit: Government of South Africa

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The interest would appear to be mutual.

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

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

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

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

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

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

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

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

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

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Asian Nations Bare Teeth Over South China Sea Wed, 11 Jun 2014 20:38:51 +0000 Richard Heydarian Chinese People's Liberation Army-Navy sailors stand watch on the submarine Yuan at the Zhoushan Naval Base. Credit: Chairman of the Joint Chiefs of Staff/CC-BY-2.0

Chinese People's Liberation Army-Navy sailors stand watch on the submarine Yuan at the Zhoushan Naval Base. Credit: Chairman of the Joint Chiefs of Staff/CC-BY-2.0

By Richard Heydarian
SINGAPORE, Jun 11 2014 (IPS)

China’s early-May decision to dispatch the state-of-the-art oil rig, HYSY981, into Vietnam’s 200-nautical-mile Exclusive Economic Zone (EEZ), has intensified ongoing territorial disputes in the South China Sea, raising fears of uncontrolled military escalation in one of the world’s most important waterways.

It wasn’t long before Vietnamese and Chinese maritime forces were locked in a dangerous naval standoff, which led to low-intensity clashes in the high seas.

China’s unilateral action sparked outrage across Vietnam, paving the way for unprecedented anti-China protests, which snowballed into massive destruction of foreign-owned factories, principally owned by China and Taiwan, and the exodus of thousands of Chinese citizens to neighbouring Cambodia.

The whole episode undermined years of painstaking negotiations between Hanoi and Beijing aimed at peacefully resolving bilateral territorial disputes across the South China Sea.

Shortly after, the Philippines also released photos suggesting Chinese construction activities on the Johnson South Reef, a disputed feature that falls within the Philippines EEZ in the Spratly Island chain in the South China Sea.

Later, China confirmed that it was indeed engaged in reclamation activities on the disputed reef, but it tried to justify it by claiming it exercised “indisputable and inherent” sovereignty over the said feature based on Beijing’s notorious “nine-dash-line” doctrine, which covers almost the entirety of the South China Sea.

The Philippines and Vietnam contend that China has flagrantly violated the 2002 Declaration on the Conduct of Parties in the South China Sea, which explicitly discourages claimant states from unilaterally altering the status by engaging in, among other things, construction activities on disputed features.

Alarmed by the intensifying territorial disputes between China and other claimant states, the Association of Southeast Asian Nations (ASEAN) expressed “serious concern” and called for a rule-based, peaceful resolution of the disputes.

Expecting a more vigorous response from ASEAN, Vietnamese and Filipino leaders called for the swift finalisation of a legally-binding Code of Conduct (CoC) in the South China Sea, and vowed to forge a bilateral “strategic partnership” to counter China’s territorial assertiveness. Meanwhile, other Pacific powers such as Japan and the U.S. have also stepped up their criticism of China’s recent actions, underscoring their direct national interest in preserving freedom of navigation in international waters.

“Whatever construction China carries out on the [Johnson South] reef is a matter entirely within the scope of China’s sovereignty,” argued China’s Ministry of Foreign Affairs Spokeswoman Hua Chunyin, dismissing protests by Filipino officials.

Confronting an increasingly assertive and powerful China, the Philippines and Vietnam have moved closer to a genuine alliance. On the sidelines of the World Economic Forum (WEF) on East Asia in late-May, Philippine President Benigno Aquino III and visiting Vietnamese Prime Minister Nguyen Tan Dung agreed to forge a bilateral strategic partnership, with a particular focus on maritime and defense cooperation vis-à-vis the ongoing disputes in the South China Sea.

“We face common challenges as maritime nations and as brothers in ASEAN,” declared Aquino during his meeting with his Vietnamese counterpart, underscoring Manila’s desire to establish a closer partnership with neighbouring countries.

“In defense and security, we discussed how we can enhance confidence building, our defense capabilities and interoperability in addressing security challenges.”

“More than ever before, ASEAN and the international community need to continue raising a strong voice in protesting against [China’s territorial assertiveness], securing a strict observance of the international law, and peace and stability in the region and the world,” lamented Dung, underscoring Hanoi’s urgent desire for the multilateral resolution of the ongoing disputes.

Recognising China’s military superiority, and the inefficacy of existing diplomatic mechanisms, both the Philippines and Vietnam have been looking towards external powers such as Japan and the U.S. to counter China’s territorial assertiveness.

Much of Asia’s trade and energy transport passes through the South China Sea, and there is a growing fear that ongoing territorial disputes will spiral into a prolonged, destructive conflict, which could affect all regional economies.

Influential actors across the region have been desperately searching for new mechanisms to deescalate ongoing territorial tensions, preventing claimant states, primarily China, from undertaking any destabilising action.

“Japan intends to play an even greater and more proactive role than it has until now in making peace in Asia and the world something more certain,” declared Japanese Prime Minister Shinzo Abe in the recently-concluded 13th Shangri-La Dialogue in Singapore, which brought together leading defense officials, experts, and journalists from around the world, and saw spirited exchanges between top officials from Japan, the U.S. and China.

During the high-level gathering, Abe, the keynote speaker, sought to present Japan as a counterweight to China, with Tokyo relaxing its self-imposed restrictions on arms exports, increasing its defense spending, and seeking new ways to expand its security role in the Asian region.

“We take no position on competing territorial claims [in the South China Sea]… But we firmly oppose any nation’s use of intimidation, coercion or the threat of force to assert these claims,” argued U.S. Defense Secretary Chuck Hagel, underscoring Washington’s growing alarm over China’s territorial posturing in the Western Pacific.

In response, China’s top representative, Lt. Gen. Wang Guanzhong, deputy chief of staff of the Chinese military, was uncharacteristically blunt in his criticisms, describing Hagel’s remarks as “excessive beyond . . . imagination [and] suffused with hegemonism . . . threats and intimidation.”

Under a new nationalist government, led by Prime Minister Narendra Modi, India is also expected to play a more pro-active role in the region, given New Delhi’s growing trade with East Asia and its large-scale investments in the hydrocarbon-rich areas of the South China Sea. The U.S.’ treaty allies such as Australia have also stepped up their efforts at containing China’s rising territorial assertiveness, as the two Pacific powers deepen their naval interoperability and defense cooperation.

Overall, it seems that China’s rising assertiveness has encouraged a flexible counter-alliance of like-minded countries, which are heavily concerned with the economic and geopolitical fallout of the brewing conflict in the South China Sea. It remains to be seen, however, whether China will relent on its territorial claims amid growing international pressure.


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Narendra Modi: More Continuity Than Change in Foreign Policy Fri, 23 May 2014 00:03:04 +0000 Rajan Menon Narendra Modi, India’s newly-elected prime minister. Credit: Narendramodiofficial/CC-BY-SA-2.0

Narendra Modi, India’s newly-elected prime minister. Credit: Narendramodiofficial/CC-BY-SA-2.0

By Rajan Menon
NEW YORK, May 23 2014 (IPS)

The Congress Party took a beating in India’s recent parliamentary election and has been now been sidelined by the Hindu nationalist Bharatiya Janata Party (Indian People’s Party, or BJP).

The spotlight is on Narendra Modi, the BJP’s leader who will be the next prime minister. A former tea vendor, Modi’s humble origins place him in a different world than the Nehru dynasty, which, via the Congress Party, has run India for all but a handful of its nearly seven decades of independence. Rahul Gandhi, Jawaharlal Nehru’s great-grandson, proved a dull campaigner — no match for the charismatic, silver-tongued Modi.

Modi knows that India can close the power gap with China only by achieving and sustaining high economic growth rates [...]. That means fixing what ails the Indian economy: corruption, red tape, and lousy infrastructure [...].
There appear to be two Narendra Modis. The first is the lifelong RSS (Rashtriya Swayam Sevak Sangh, National Volunteer Society) acolyte. Its anodyne name notwithstanding, the RSS is a hyper-nationalist Hindu movement known for its martial drills, uniforms, and belief in the specialness, indeed superiority, of Hindu civilisation.

The movement is committed to “Hindutva,” which sees “Indian” and “Hindu” as interchangeable. Modi has been drinking deeply from the RSS well for years, which is why Indian secularists and non-Hindus, especially Muslims (India has 170 million), are anxious.

Then there’s Modi the competent administrator (of Gujarat state, which he ran as chief minister from 2001-2014) and business-friendly manager who produces positive results, talks the lingo of business, prizes foreign investment, cuts through red tape, and shakes up the bureaucracy – the mastermind of the “Gujarat Miracle.”

Courting what political scientists call the median voter, these were the attributes Modi stressed during the campaign, artfully dodging, in the process, the ghosts of Gujarat’s 2002 communal riots that left 1,000 (mostly Muslims) dead, and 100,000 homeless. His message was basically: “Allow me to take the helm and I’ll do for the country what I did for Gujarat.”

The voters, disenchanted with the Congress, have put him in charge. Now the question is whether we’ll see Modi the ideologue or Modi the pragmatist. I believe the latter will prevail, though the former will inevitably make its presence known, both because Modi will play periodically to his BJP base and because his rhetoric is not just for effect: it reflects his deeply held beliefs.

Since the BJP’s sweeping victory, there’s been much speculation in this country about what kind of foreign policy Modi will pursue. Don’t expect any drastic course correction.

Modi will maintain India’s strong ties with Russia. There’s a long history of cooperation between New Delhi and Moscow that dates back to the early years of the Cold War. While trade and investment with Russia are now far less important for India, Moscow remains India’s chief arms supplier by far. Modi has no reason to rock that boat.

China: Both the Congress and the BJP have long believed that China is India’s principal geo-strategic adversary. That outlook won’t change. Yet things have become more complicated over the last two decades: China is now India’s main trade partner, so the relationship is not all about security and conflict. The Cold War alignment with Russia as a hedge against China won’t be as effective a strategy. China has surpassed Russia in just about every measure of power.

More importantly, the old Sino-Soviet schism is a thing of the past. Moscow and Beijing are united – and have been since the early 1990s – by what each calls a “strategic partnership”; they’ve put their territorial dispute to bed, Russia is China’s main weapons supplier, and Russian energy flows to China, as this week’s mammoth 30-year, 400-billion-dollar gas deal concluded by President Vladimir Putin and Chinese President Xi Jinping demonstrated rather dramatically.

Add to all this the economic and military weakness of India relative to China, and Modi, though he is a nationalist who’s attacked previous Indian leaders for not standing up to China, won’t be looking to pick fights with Beijing.

Modi knows that India can close the power gap with China only by achieving and sustaining high economic growth rates – that’s what made Beijing a global power after all. That means fixing what ails the Indian economy: corruption, red tape, and lousy infrastructure, for example. That’s going to take time, but expect Modi to shake thing up on that front.

But there’s another reason why the economy will top his agenda: he knows that’s what Indians care about most and largely why they elected him. Indian economic managers have failed the poor. As a populist and a man who himself arose from modest circumstances, Modi wants to lift up India’s least fortunate.

Pakistan will be Modi’s other foreign policy preoccupation but he’s likely to prove wrong those who think he’ll take a dramatically tougher line toward Islamabad. He has already surprised people by inviting Pakistani Prime Minister Nawaz Sharif to his swearing-in ceremony and doubtless understands that intermittent confrontations with Pakistan will divert him from focusing on the economy.

War with Pakistan has also become dicier given the risk of escalation to nuclear war. The wild card is a terrorist attack on India that’s traced back to Pakistan. Modi will find himself under tremendous pressure to act decisively, not least because the don’t-mess-with-India message is a key part of his appeal.

India under Modi will continue to strengthen its ties with Israel. The BJP generally and Modi in particular admire Israel and believe that India’s traditional pro-Palestinian policy has earned it little goodwill in the Arab world, which, when the chips are down, backs Pakistan. Modi has visited Israel twice, professing admiration for its economic and technological achievements. Look for more cooperation on economic issues and intelligence sharing on terrorism. Israel can’t supplant Russia as an arms supplier, but India, already a major importer of Israeli arms, will likely buy even more Israel weaponry, especially drones.

Talk of an alliance between India and the U.S. to balance China is hyperbole. New Delhi and Washington have been steadily upgrading their defense co-operation over the years and that will continue; but neither country wants to commit to an alliance.

One country with which Modi is eager to step up its security ties is Japan. The Congress laid the foundation for this, and the BJP will build on it. Japanese Prime Minister Shinzo Abe was the chief guest at India’s Republic Day celebration in January, and Modi has invited also him to his inauguration. India is the one Asian power that’s not unnerved by Abe’s commitment to change Japan’s minimalist defense policy. New Delhi wants a strong partner on China’s eastern flank and sees Japan, with its economic and technological prowess, as well suited to that role. Both Tokyo and New Delhi see China as their biggest security problem. Likewise, India will strengthen its ties with Vietnam, another Asian country that is deeply concerned about China’s territorial claims and intentions, as demonstrated last week by clashes between them in South China Sea.

In all, those expecting big changes from Modi on the foreign policy front are apt to be disappointed. While he believes that India is destined to be a global power, he also understands that that goal will never be met unless India gets its economic act together. If Modi makes big changes, they’ll be on the home front.


Rajan Menon is the Anne and Bernard Spitzer Professor of Political Science at the Powell School, City College of New York/City University of New York and a Senior Fellow at the South Asian Center of the Atlantic Council. Among his publications are ‘Soviet Power and the Third World ‘(1986) and ‘The End of Alliances’ (2007).


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Is Putin’s Eurasian Vision Losing Steam? Thu, 15 May 2014 14:03:09 +0000 Joanna Lillis By Joanna Lillis
ASTANA, May 15 2014 (EurasiaNet)

Victory Day on May 9 was an occasion for Russians to indulge in patriotic flag waving in Moscow. Russian President Vladimir Putin used the previous day to muster a show of diplomatic support for his efforts to bring formerly Soviet states closer together.

On May 8, Putin met with the presidents of Armenia, Belarus, Kyrgyzstan, and Tajikistan in the Kremlin. Following the success of the Euromaidan movement in Kyiv, Putin has made it a priority to shore up support among other formerly Soviet states for Russia’s geopolitical agenda, in particular the establishment of a regional economic union as a precursor to a wider political union of Eurasian states.“It’s hard to predict anything these days, but it seems to me that the treaty will be signed -- but in a reduced form, with most difficult issues to be resolved after signing,. -- Nargis Kassenova

A treaty on the formation of a Eurasian Economic Union (EEU) is due to be signed in Astana in late May, paving the way for its launch in January 2015. The body would be an outgrowth of the existing Customs Union, a free trade zone comprising Russia, Belarus, and Kazakhstan. Armenia and Kyrgyzstan are slated to join the Customs Union before the end of the year.

As Putin warmly welcomed existing and potential union members in Moscow on May 8, ostensibly for security talks unrelated to the economic integration project, the question on the lips of Kremlin watchers was: will they or won’t they put pen to paper on the EEU founding document in less than three weeks’ time?

The Moscow meeting came on the heels of a disastrous Customs Union summit in Minsk on Apr. 29, where expectations of finalising the treaty fizzled as Putin and his counterparts, Alexander Lukashenko of Belarus and Nursultan Nazarbayev of Kazakhstan, admitted that, at this late stage, they have differences over the pact’s wording.

Nazarbayev’s conspicuous absence from the May 8 talks in Moscow, convened under the auspices of the Collective Security Treaty Organisation, set tongues wagging about differences of opinion. Contacted by telephone by, Nazarbayev’s office said it had no comment — but some observers interpreted his no-show as a snub to Putin from one of his closest allies.

As other regional leaders were cozying up to the Kremlin, Nazarbayev was having a tete-a-tete in Astana with a senior official from the United States, Moscow’s arch-rival in the geopolitical struggle over Ukraine. Deputy Secretary of State William Burns used the meeting to assure Nazarbayev of America’s “enduring” commitment to Kazakhstan and Central Asia, the State Department said, as the Ukraine crisis helps “underscore what’s at stake.”

Regional analysts tend to believe that the recent signs are not indicators of insurmountable problems surrounding the EEU’s formation.

“It’s hard to predict anything these days, but it seems to me that the treaty will be signed — but in a reduced form, with most difficult issues to be resolved after signing,” Nargis Kassenova, director of the Central Asian Studies Center at Almaty’s KIMEP University, told

“If it’s not signed it will be a blow to the reputation of Vladimir Putin, but also to some extent that of Nursultan Nazarbayev,” she added. “Both invested a lot of personal image capital into it.”

Alex Nice, a regional analyst at the London-based Economist Intelligence Unit, also feels that integration plans are more or less on track.

“It’s possible there might be a further delay to the final signing of the document, but I’m confident that the treaty will come into force as planned next January,” he told, pointing out that “negotiations on the EEU treaty are very far advanced.”

“Of course, some of the more controversial provisions will be subject to lengthy transition periods,” Nice added.

The chances of the agreement being signed on time are “quite high,” concurred regional security expert Aida Abzhaparova of the University of the West of England. Nazarbayev is a cheerleader for integration, she pointed out, and signing the treaty in Astana would have huge “symbolism” for him: Nazarbayev first proposed the notion of a Eurasian union long before Putin took it up, and sees himself as “the father of the idea.”

Speculation that the union might be heading off the rails was fueled by reports on May 7 that Kyrgyzstan’s prime minister, Joomart Otorbayev, wished to postpone membership for a year — but his spokeswoman denied the claim. Otorbayev had, on the contrary, said Kyrgyzstan would complete the legislative groundwork to join by the end of the year, Gulnura Toraliyeva told by telephone.

Armenia is expected to join sooner – but is currently bogged down trying to negotiate some 900 exemptions to the union’s single customs tariff.

Analysts believe that incorporating the weaker economies of Armenia and Kyrgyzstan into the union is a sticking point in the treaty negotiations; Kazakhstan and Belarus are believed to be wary of the economic implications amid Russian efforts to expand its geopolitical clout.

Perhaps the biggest threat to the EEU’s success is Russia’s actions in Ukraine, suggests Kassenova.

“The Ukraine crisis undermined Russian policy in the post-Soviet space,” Kassenova said. “Now it’s seen as a bully without any respect for the sovereignty of its neighbors. Plus, the crisis undermined the economy of Russia and made it less capable of serving as the locomotive of integration.”

“On the one hand, the crisis should give more bargaining power to Belarus, Kazakhstan, and Kyrgyzstan,” she continued. “On the other, the overall destiny of the project is in doubt: will Russia have the will and resources to support and sponsor it further?”

Editor’s note:  Joanna Lillis is a freelance writer who specialises in Central Asia. This story originally appeared on

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U.S. Blasted on Failure to Ratify IMF Reforms Sat, 12 Apr 2014 00:31:45 +0000 Jim Lobe By Jim Lobe
WASHINGTON, Apr 12 2014 (IPS)

While Republicans complain relentlessly about U.S. President Barack Obama’s alleged failure to exert global leadership on geo-political issues like Syria and Ukraine, they are clearly undermining Washington’s leadership of the world economy.

That conclusion became inescapable here during this week’s in-gathering of the world’s finance ministers and central bankers at the annual spring meeting here of the International Monetary Fund (IMF) and the World Bank.The delays are clearly damaging Washington’s global economic and geo-political agenda: persuading other G20 countries to adopt expansionary policies and punish Moscow for its moves against Ukraine.

In the various caucuses which they attended before the formal meeting began Friday, they made clear that they were quickly running out of patience with Congress’s – specifically, the Republican-led House of Representatives – refusal to ratify a 2010 agreement by the Group of 20 (G20) to modestly democratise the IMF and expand its lending resources.

“The implementation of the 2010 reforms remains our highest priority, and we urge the U.S. to ratify these reforms at the earliest opportunity,” exhorted the G20, which represent the world’s biggest economies, in an eight-point communiqué issued here Friday.

“If the 2010 reforms are not ratified by year-end, we will call on the IMF to build on its existing work and develop options for next steps…” the statement asserted in what observers here called an unprecedented warning against the Bretton Woods agencies’ most powerful shareholder.

The message was echoed by the Group of 24 (G24) caucus, which represents developing countries, although, unlike the G20, its communique didn’t mention the U.S. by name.

“We are deeply disappointed that the IMF quota and governance reforms agreed to in 2010 have not yet come into effect due to non-ratification by its major shareholder,” the G24 said.

“This represents a significant impediment to the credibility, legitimacy and effectiveness of the Fund and inhibits the ability to undertake further, necessary reforms and meet forward-looking commitments.”

The reform package, the culmination of a process that began under Obama’s notoriously unilateralist Republican predecessor, George W. Bush, would double contributions to the IMF’s general fund to 733 billion dollars and re-allocate quotas – which determine member-states’ voting power and how much they can borrow – in a way that better reflects the relative size of emerging markets in the global economy.

In addition to enhancing the IMF’s lending resources, the main result of the pending changes would increase the quotas of China, Brazil, Russia, India, and Turkey, for example, at the expense of European members whose collective representation on the Fund’s board is far greater than the relative size of their economies.

Spain, for instance, currently has voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of Brazil’s. And of the 24 seats on the IMF’s executive board, eight to ten of them are occupied by European governments at any one time.

The reforms would only change the status quo only modestly. While the European Union (EU) members currently hold a 30.2 percent quota collectively, that would be reduced only to 28.5 percent. The biggest gains would be made by the so-called BRICS (Brazil, Russia, India, China, and South Africa) – from 11 percent to 14.1 percent — although almost all of the increase would go to Beijing.

Washington’s quota would be marginally reduced – from 16.7 percent to 16.5 percent, preserving its veto power over major institutional changes (which require 85 percent of all quotas). Low-income countries’ share would remain the same at a mere 7.5 percent collectively, although their hope – shared by civil-society groups, such as Jubilee USA and the New Rules for Global Finance Coalition — is that this reform will make future changes in their favour easier.

Thus far, 144 of the IMF’s 188 member-states, including Britain, France, and Germany and other European countries that stand to lose voting share, have ratified the package. But, without the 16.7 percent U.S. quota, the reforms can’t take effect.

The Obama administration has been criticised for not pressing Congress for ratification with sufficient urgency. But, realising that its allies’ patience was running thin, it pushed hard last month to attach the reform package to legislation providing a one-billion-dollar bilateral aid package for Ukraine during the crisis with Russia over Crimea.

While the Democratic-led Senate approved the attachment, the House Republican leadership rejected it, despite the fact that Kiev would have been able to increase its borrowing from the IMF by about 50 percent under the pending reforms.

House Republicans – who, under the Tea Party’s influence, have moved ever-rightwards and become more unilateralist on foreign policy since the Bush administration – have shown great distrust for multilateral institutions of any kind.

Both the far-right Heritage Foundation and the neo-conservative Wall Street Journal have railed against the reforms, arguing variously that they could cost the U.S. taxpayer anywhere from one billion dollars to far more if IMF clients default on loans, and that the changes would reduce Washington’s ability to veto specific loans.

They say the IMF’s standard advice to its borrowers to raise taxes and devalue their currency is counter-productive and could become worse given the Fund’s new emphasis on reducing income inequalities; and that, according to the Journal, the reforms “will increase the clout of countries with different economic and geo-political interests than America’s.”

Encouraged by, among others, the U.S. Chamber of Commerce and their Wall Street contributors, some House Republicans have indicated they could support the reforms. But thus far they have insisted that they would only do so in exchange for Obama’s easing new regulations restricting political activities by tax-exempt right-wing groups.

Meanwhile, however, the delays are clearly damaging Washington’s global economic and geo-political agenda – persuading other G20 countries to adopt expansionary policies and punish Moscow for its moves against Ukraine – during the meetings here.

“The proposed IMF reforms are a no-brainer,” according to Molly Elgin-Cossart, a senior fellow for national security and international policy at the Center for American Progress. “They modernise the IMF and restore American leadership on the global stage at a time when the world desperately needs it, without additional cost for American taxpayers.”

Further delay, especially now that the G20 appear to have set a deadline, could in fact reduce Washington’s influence.

While she stressed she was not prepared to give up on Congress, IMF managing director Christine Lagarde told reporters Thursday the Fund may soon have to resort to a “Plan B” to implement the reforms without Washington’s consent.

While she did not provide details of what are now backroom discussions, two highly respected former senior U.S. Treasury secretaries suggested in a letter published Thursday by the Financial Times that “the Fund should move ahead without the U.S. …by raising funds from others while depriving the U.S. of some or all of its longstanding power to block major Fund actions.”

C. Fred Bergsten and Edwin Truman, who served under Jimmy Carter and Bill Clinton, respectively, suggested that the IMF could make permanent an initiative to arrange temporary bilateral credit lines of nearly 500 billion dollars from 38 countries who could decide on their disposition without the U.S.

More radically, they wrote, the Fund could increase total country quota subscriptions that would remove Washington’s veto power over institutional changes.

“The U.S. deserves to lose influence if it continues to fail to lead,” the two former officials wrote.

Jim Lobe’s blog on U.S. foreign policy can be read at

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Russia Expelled From G8, but G20? Not So Fast Tue, 01 Apr 2014 21:42:55 +0000 Thalif Deen Russian President Vladimir Putin awaits leaders arriving for the G20 Summit in St. Petersburg on Sep. 5, 2013. Credit: UN Photo/Eskinder Debebe

Russian President Vladimir Putin awaits leaders arriving for the G20 Summit in St. Petersburg on Sep. 5, 2013. Credit: UN Photo/Eskinder Debebe

By Thalif Deen

When Western powers, led by the United States, decided to throw Russia out of the Group of 8 (G8) industrial nations, it was aimed at punishing and “isolating” President Vladimir Putin for his intervention in Ukraine and “annexation” of Crimea.

“What’s next? Expel Russia from the United Nations and the G20?” an Asian diplomat jokingly asked one of his colleagues at the U.N. delegate’s lounge last week, hinting at what could only be construed as a Western political fantasy.The procedure the G7 followed to transform itself to G8 in 1998 (with the inclusion of Russia) was as opaque as the process that led to Moscow’s virtual expulsion.

The G8 move was pretty tame because it was a decision taken by seven Western industrial nations: the United States, Britain, France, Germany, Canada, Italy and Japan, along with the European Union.

But Russia is also a member of the G20, a coalition of both developed and developing countries, as well as the economic powerhouse called BRICS (comprising Brazil, Russia, India, China and South Africa).

Australia has reportedly warned that Russia may be excluded from the next G20 summit meeting in Brisbane in November. But that is more easily said than done.

On the sidelines of last week’s Nuclear Security Summit in The Hague, the foreign ministers of BRICS warned Australia against any such action.

In a statement released during the summit, the foreign ministers of BRICS said “the custodianship of the G20 belongs to all member states equally and no one member state can unilaterally determine its nature and character.”

The G20 members include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States and the European Union (EU).

At a General Assembly vote last Friday, on a resolution implicitly critical of Russia on the upheaval in Ukraine, Russia’s four BRICS partners abstained, joining 54 others.

The final vote was 100 for the resolution, 11 against, but with 58 abstentions in an Assembly with 193 votes.

Chakravarthi Raghavan, editor-emeritus of the Geneva-based South-North Development Monitor, told IPS, “The G7/G8 and the G20 are at best self-appointed informal gatherings, without any legitimacy, mere costly annual exercises, where occasionally side-event meetings are of some help.”

He pointed out that the G7/G8 originally came into being in the wake of the oil crisis to tackle economic issues and promote a dialogue of the G5/G7 with the Organisation of Petroleum Exporting Countries (OPEC) to promote agreements and avoid confrontations.

Soon, it became clear the G7 process was not effective, and the initial aim of informal but frank and spontaneous exchange of views among the leaders failed.

“Their own bureaucracies and ministries in governments did not want this process to move forward,” said Raghavan, a veteran journalist and a former editor-in-chief of Press Trust of India (PTI) who has covered the United Nations, both in Geneva and New York, for several decades.

But instead of abandoning the annual meetings, he said, the G7 continued to meet, with the original economic focus lost, and with costly preparations and meetings of “sherpas”, where the gatherings themselves became too formalised, and where the outcome had been already decided or agreed to at the lowest common measure of accord.

He also pointed out that the G7/G8 increasingly began pronouncing themselves on all kinds of subjects – with none of the leaders able to ensure the decisions were carried out in their own countries.

Vijay Prashad, author of “The Poorer Nations: A Possible History of the Global South”, told IPS the procedure the G7 followed to transform itself to G8 in 1998 (with the inclusion of Russia) was as opaque as the process that led to Moscow’s virtual expulsion.

The Group of Seven (Canada, France, Germany, Italy, Japan, UK and USA) came together in 1974 to consolidate their response to the major thrust from the Third World Project: an assault of the oil weapon of 1973 that consolidated in the U.N. General Assembly resolution 3201 in May 1974 for a New International Economic Order (NIEO).

The G7 was formed, as former U.S. President Gerald Ford put it, “to ensure that the current world economic situation is not seen as a crisis in the democratic or capitalist system,” Prashad said.

“It had to be seen as a momentary shock, not a systematic challenge,” he added.

The collapse of the Third World Project, the rise of a new International Monetary Fund (IMF)-driven neo-liberal dispensation and the demise of the Union of Soviet Socialist Republics (USSR) moved the G7 to welcome battered Russia into its arms, said Prashad, who is the Edward Said Chair at the American University of Beirut in Lebanon.

Membership in the G7 came with the promise that the North Atlantic Treaty Organisation (NATO) would not move one step closer to Russia than the German border, he added.

Raghavan told IPS the annual G20 meeting pronounces itself on a range of political, economic and other arenas — but with less and less effect — whether (as they have done several times) for concluding Doha trade negotiations or other areas.

Some of their views on global financial stability – addressed to the Bank of International Settlements – have factually been very diluted in actual decisions and norms because of the lobbying of the big financial groups, both in New York and London, said Raghavan, author of the just released “Third World in the Third Millennium”.

Prashad said when the credit crisis startled the West in 2007, the G8 hastened to China and India, asking for funds.

If the money came – as it did – the G8 would wind up its operations and the G20 (with Brazil, China, India and South Africa as members) would take over as the effective executive managers of planetary affairs – which it did not, he added.

The G20 had been formed during the Asian financial crisis of 1997-98 to ward off any nationalistic reactions to that crash.

“As the Western stock markets rallied by 2011, the promise was forgotten,” he said.

The G8 continued – much to the chagrin of the BRICS bloc, which had assumed it would now share power.

They agree the West’s move east is dangerous, and it is unlikely they will allow for the expulsion of Russia from the G20 – itself of limited consequence, he noted.

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Commonwealth Works to Raise Climate Resilience on Global Agenda Mon, 31 Mar 2014 14:07:50 +0000 Peter Richards Seychelles Foreign Minister Jean Paul Adams (centre), flanked by Commonwealth Secretary General Kamalesh Sharma (left) and another Commonwealth official. Credit: Peter Richards/IPS

Seychelles Foreign Minister Jean Paul Adams (centre), flanked by Commonwealth Secretary General Kamalesh Sharma (left) and another Commonwealth official. Credit: Peter Richards/IPS

By Peter Richards
CASTRIES, St. Lucia, Mar 31 2014 (IPS)

As they fine-tune preparations for the Small Island Developing States (SIDS) Conference in Samoa and the United Nations post-2015 development framework meeting in September, Commonwealth states are focusing on getting the international community to pay more attention to the challenges they face.

“One of the key reasons that climate change is actually a substantial topic in terms of the international arena is because of the advocacy of island states,” Seychelles Foreign Minister Jean Paul Adams told IPS at the 53-member Commonwealth‘s third Biennial Conference on Small States last week."We are vulnerable, but we are not weak." -- Seychelles Foreign Minister Jean Paul Adams

“I think we are vulnerable, but we are not weak. We’ve got a lot to offer, we have a lot of strengths and we must use those strengths,” he said.

The two-day meeting targeted five key areas of concern for small states, including redirecting funding for climate change initiatives.

“Exposure to environmental shocks, together with the deeply integrated nature of small states’ economies, social wellbeing and the natural resource base, make environmental management an important element of resilience building in these countries,” the Commonwealth said in an outcome statement.

It said the meeting shared ideas on environmental governance indicators for resilience-building and reviewed approaches to ocean governance to maximise the benefits accruing to small states from their extensive marine areas.

St. Lucia’s Foreign Minister Alva Baptiste said it was impossible to speak about development “if we do not consider sustainability and protecting our patrimony for succeeding generations.

“Less than 20 years ago, some of the most powerful nations on the planet were trying to dodge the warnings about climate change because they felt it was a problem of poor countries, but today as the devastation of climate change continues its decimating march across Europe, North America and other parts of the globe, the inescapable reality seems to be finally hitting home,” he said.

“So America has acknowledged that colder winters are not climatic accidents. Russia has accepted its warmer winter as a phenomenon of climate change, and Europe has recognised its wetter rains as climate change in action,” he said.

“There must be a recognition, especially among the richer nations, that regardless of our GDP (gross domestic product) status, we are resource-poor and in need of financial resources to undertake resilience-building work,” he said.

Delegates also highlighted the need for ocean forecasting to predict impacts from climate change; action on land-based sources of pollution; and efforts to strengthen oceans and seas issues in the Third International Conference on SIDS process (SIDS 2014).

Secretary General Kamalesh Sharma said the London-based Commonwealth Secretariat has the capacity to represent small island states within the international community on their concerns.

“The Commonwealth is the preferred interlocutor for the group of 20 working group on development and they look forward to all the input that we can bring from the outer world,” he told IPS.

“We say very often that 90 percent of the world’s GDP is on the table of the G20, but 90 percent of the world’s countries are outside [that bloc of large economies]. So who is going to make available the dilemmas and the anxieties and the expectations of the outside world? The Commonwealth does it in a variety of ways.”

Sharma said the grouping is in the process of developing a financial instrument that would stem the economic “free-fall” of any economy should it suffer from the downsides of global development.

“The instruments that we are developing now…are both on the concept of resilience as well as the practical tool kit for various types of counter cyclical loans; which means that once an external shock is experienced, your financial obligations get naturally and immediately readjusted’, Sharma said, hinting at a debt swap for climate change, “a practical suggestion now being considered by the international community at large”.

Adams said that small island states are among the first to feel the impact of climate change “whether it be through extreme weather events or sea level rise or other issues that affect basically how we are able to create wealth that can be shared amongst our people.

“We don’t have huge natural resources that we can suddenly start exploiting. We don’t have huge populations to get economies of scale so we have to look at the things that we are able to offer…and create a framework which is more conducive for those issues,” he told IPS.

Recalling the devastation caused by heavy rains to his island, Dominica and St. Vincent and the Grenadines over the Christmas holidays, St. Lucia’s Prime Minister Dr. Kenny Anthony said the question remains how much longer small states will have to lobby for an internationally accepted differentiated approach to aid for small states.

“You can turn to Grenada with Hurricane Ivan in September of 2004, where damages were well over a billion U.S. dollars, or nearly 200 percent of GDP,” he said. “You can go through nearly all the islands of the Caribbean and you would see the impact of such extreme weather events.”

The problems confronting the region are not limited to extreme weather events, he noted. Last week, the regional countries participated in a simulation for a tsunami.

“We have seen the earthquake destruction of Haiti in the year 2010 and the volcanic disaster of Montserrat. We have been warned to expect a ‘big one’, an earthquake of immense destructive power,” he added. “In response to these calamities, the pledges are often many; the delivery of the promises, not so many.”

He said the realities of climate change must catapult small states to be leaders in climate change adaptation, “because we exist largely as coastal populations threatened by sea-level rise, the bleaching of coral reefs and the desertification of some territories.”

“The economic and environmental imperative is that we commit more forcefully to renewable energy and energy efficiency,” Anthony said.

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Putting Climate Polluters in the Dock Mon, 24 Mar 2014 13:30:25 +0000 Desmond Brown Workmen clear a road blocked by a landslide in Trinidad. Compensation for loss and damage from climate change has become a major demand of developing countries. Credit: Desmond Brown/IPS

Workmen clear a road blocked by a landslide in Trinidad. Compensation for loss and damage from climate change has become a major demand of developing countries. Credit: Desmond Brown/IPS

By Desmond Brown
BRIDGETOWN, Barbados, Mar 24 2014 (IPS)

Can Caribbean governments take legal action against other countries that they believe are warming the planet with devastating consequences?

A former regional diplomat argues the answer is yes. Ronald Sanders, who is also a senior research fellow at London University, says such legal action would require all Small Island Developing States (SIDS) acting together."There is a moral case to be raised at the United Nations...It would require great leadership, great courage and great unity." -- Ronald Sanders

He believes the Hague-based International Court of Justice (ICJ) would be amenable to hearing their arguments, although the court’s requirement that all parties to a dispute agree to its jurisdiction would be a major stumbling block.

“It is most unlikely that the countries that are warming the planet, which incidentally now include India and China, not just the United States, Canada and the European Union…[that] they would agree to jurisdiction,” Sanders told IPS.

“The alternative, if countries wanted to press the issue of compensation for the destruction caused by climate change, is that they would have to go to the United Nations General Assembly.”

Sanders said that the Caribbean Community (CARICOM) countries could “as a group put forward a resolution stating the case that they do believe, and there is evidence to support it, that climate change and global warming is having a material effect… on the integrity of their countries.

“We’re seeing coastal areas vanishing and we know that if sea level rise continues large parts of existing islands will disappear and some of them may even be submerged, so the evidence is there.”

Sanders pointed to the damaging effects of flooding and landslides in St. Vincent and the Grenadines, St. Lucia, and Dominica as 2013 came to an end.

The prime minister of St. Vincent and the Grenadines, Dr. Ralph Gonsalves, described the flooding and landslides as “unprecedented” and gave a preliminary estimate of damage in his country alone to be in excess of 60 million dollars.

“People who live in the Caribbean know from their own experience that climate change is real,” Sanders said.

“They know it from days and nights that are hotter than in the past, from more frequent and more intense hurricanes or freak years like the last one when there were none, from long periods of dry weather followed by unseasonal heavy rainfall and flooding, and from the recognisable erosion of coastal areas and reefs.”

For the first time in several years, Antigua's main water source, Portworks Dam, has run out of water as drought continues. Credit: Desmond Brown/IPS

For the first time in several years, Antigua’s main water source, Potworks Reservoir, has run out of water as drought continues. Credit: Desmond Brown/IPS

At the U.N. climate talks in Warsaw last November, developing countries fought hard for the creation of a third pillar of a new climate treaty to be finalised in 2015. After two weeks and 36 straight hours of negotiations, they finally won the International Mechanism for Loss and Damage (IMLD), to go with the mitigation (emissions reduction) and adaptation pillars.

The details of that mechanism will be hammered out at climate talks in Bonn this June, and finally in Paris the following year. As chair of the Alliance of Small Island States (AOSIS), Nauru will be present at a meeting in New Delhi next week of the BASIC group (Brazil, South Africa, India and China) to try and build a common platform for the international talks.

“It isn’t just the Caribbean, of course,” Sanders said. “A number of other countries in the world – the Pacific countries – are facing an even more pressing danger than we are at the moment. There are countries in Africa that are facing this problem, and countries in Asia,” he told IPS.

“Now if they all join together, there is a moral case to be raised at the United Nations and maybe that is the place at which we would more effectively press it if we acted together. It would require great leadership, great courage and great unity,” he added.

Pointing to the OECD countries, Sir Ronald said they act together, consult with each other and come up with a programme which they then say is what the international standard must be and the developing countries must accept it.

“Why do the developing countries not understand that we could reverse that process? We can stand up together and say look, this is what we are demanding and the developed countries would then have to listen to what the developing countries are saying,” Sir Ronald said.

Following their recent 25th inter-sessional meeting in St. Vincent, Jamaican Prime Minister Portia Simpson Miller praised the increased focus that CARICOM leaders have placed on the issue of climate change, especially in light of the freak storm last year that devastated St. Lucia, Dominica and St. Vincent and the Grenadines.

At that meeting, heads of government agreed on the establishment of a task force on climate change and SIDS to provide guidance to Caribbean climate change negotiators, their ministers and political leaders in order to ensure the strategic positioning of the region in the negotiations.

In Antigua, where drought has persisted for months, water catchments are quickly drying up. The water manager at the state-owned Antigua Public utilities Authority (APUA), Ivan Rodrigues, blames climate change.

“We know that the climate is changing and what we need to do is to cater for it and deal with it,” he told IPS.

But he is not sold on the idea of international legal action against the large industrialised countries.

“I think what will cause [a reversal of their practices] is consumer activism,” he said. “The argument may not be strong enough for a court of law to actually penalise a government.”

But Sanders firmly believes an opinion from the International Court of Justice would make a huge difference.

“We could get an opinion. If the United Nations General Assembly were to accept a resolution that, say, we want an opinion from the International Court of Jurists on this matter, I think we could get an opinion that would be favourable to a case for the Caribbean and other countries that are affected by climate change,” he told IPS.

“If there was a case where countries, governments and large companies knew that if they continue these harmful practices, action would be taken against them, of course they would change their position because at the end of the day they want to be profitable and successful. They don’t want to be having to fight court cases and losing them and then having to pay compensation,” he added.

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Brazilian Innovation for Under-financed Mozambican Agriculture Wed, 12 Mar 2014 08:15:41 +0000 Amos Zacarias Erasmo Laldás on his strawberry farm in Naamacha, Mozambique. Credit: Amos Zacarias/IPS

Erasmo Laldás on his strawberry farm in Naamacha, Mozambique. Credit: Amos Zacarias/IPS

By Amos Zacarias
MAPUTO, Mar 12 2014 (IPS)

Some of the technological excellence that revolutionised Brazil’s tropical agriculture is reaching small producers in Mozambique. But it is not enough to compensate for the underfinancing of the sector.

Last year, Erasmo Laldás, a 37-year-old farmer who has worked for 15 years in Namaacha, a village 75 kilometres from Mozambique’s capital Maputo, planted 15,000 seedlings of Festival, a new strawberry variety originated in the United States.

Laldás produced seven tonnes of strawberries, employing eight workers. He sold all his produce in Maputo, and in January was the lead vendor in that market, because there was already a shortage of the fruit in South Africa, his main competitor.Mozambique invests very little in the agricultural sector, although it has been increasing its expenditure. In 2013 it devoted 7.6 percent of its budget to agriculture, equivalent to some six billion dollars.

“The fruit is very good quality, it does not require as many chemical products as the South African strawberries and its harvesting season is longer than the native variety that I was growing before,” he told IPS.

Laldás is the first Mozambican producer to benefit from Brazilian and U.S. aid through technical support to the Mozambique Food and Nutrition Security Programme (PSAL).

Created in 2012, the project brings together the Mozambique Institute of Agricultural Research (IIAM), the Brazilian Agricultural Research Corporation (EMBRAPA) and the U.S. Agency for International Development (USAID), to expand production and distribution capabioities for fruit and vegetables in this African country.

First of all, studies were needed to adapt seeds to the local climate.

IIAM received more than 90 varieties of tomato, cabbage, lettuce, carrot and pepper, which are being tested at the Umbeluzi Agricultural Station, 25 kilometres from Maputo.

“The results of the trials are encouraging; we identified 17 varieties that have the desired phytosanitary characteristics, and are ready to be distributed to farmers.

“We are waiting for them to be registered and approved under the seal of Mozambique,” IIAM researcher Carvalho Ecole told IPS, regretting that his country has not registered new fruit and vegetable varieties for the past 50 years.

Fruit and vegetable growing is a key sector for generating employment and income among small farmers, as this produce represents 20 percent of family expenditure, according to Ecole.

“For a long time, horticulture was neglected. When talking about food security the government thought only about maize, sorghum and cassava,” Ecole said. Moreover, “our producers still do not have credit or financing,” he complained.

South Africa is the largest supplier of fruit and vegetables for southern Mozambique. IIAM figures show that prior to 2010, nearly all the onions, 65 percent of tomatoes and 57 percent of cabbages consumed in the cities of Maputo and Matola were South African. And those proportions have been maintained.

As a result, prices are high. A kilo of tomatoes costs between 50 and 60 meticals (between 1.60 and 2 dollars) and onions a little less. When the new varieties that have been tested are available for national small farmers, prices will be lower, Ecole said.

Mozambique also imports mangos, bananas, oranges, avocados, strawberries and other fruit from South Africa.

“We need to train and empower local small farmers so that in the years to come they can produce enough to supply the domestic market,” José Bellini, EMBRAPA’s coordinator in Mozambique, told IPS.

Agricultural cooperation is the path chosen by Brazil, ever since the Luiz Inácio Lula da Silva government (2003-2011), to consolidate its development aid policy, especially in Africa.

Embrapa, a state body made up of 47 research centres located throughout Brazil and several agencies abroad, has worked to transfer part of the knowledge of tropical agriculture accumulated over its 41 years of existence to other countries of the developing South. Its office for Africa was installed in Ghana.

But Brazil’s presence in Mozambique became unequalled with the creation of ProSAVANA, the Triangular Co-operation Programme for Agricultural Development of the Tropical Savannah in Mozambique, supported by the Brazilian and Japanese cooperation agencies (ABC and JICA, respectively), inspired by the experience that made the South American power a granary for the world and the largest exporter of soya.

The goal in the next two decades is to benefit directly 400,000 small and medium farmers and indirectly another 3.6 million, strengthening production and productivity in the northern Nacala Corridor.

Brazil is to build a laboratory for soil and plant analysis in the city of Lichinga. Embrapa is training IIAM researchers and modernising two local research centres.

But ProSAVANA is a controversial programme.

Small farmers and activists are afraid that it will reproduce Brazilian problems, such as the predominance of agribusiness, monoculture, the concentration of land tenure and production by only a few transnational companies, in a country like Mozambique where 80 percent of the population is engaged in family agriculture.

Students at the Agrarian Middle Institute in Inhambane study the development of a variety of lettuce at the Umbeluzi Agricultural Station in Mozambique. Credit: Amos Zacarias/IPS

Students at the Agrarian Middle Institute in Inhambane study the development of a variety of lettuce at the Umbeluzi Agricultural Station in Mozambique. Credit: Amos Zacarias/IPS

Supporting the PSAL makes sense in a very different way. It focuses on vegetable growing, and is clearly aimed at small producers and improving local nutrition. But it suffers from limitations of scale and resources.

“We cannot improve our production system without investment. We have taken a giant step, there is more research and technology transfer, but large investments are needed as well,” said Ecole.

Mozambique invests very little in the agricultural sector, although it has been increasing its expenditure. In 2013 it devoted 7.6 percent of its budget to agriculture, equivalent to some six billion dollars.

Thirty percent of the country’s population are hungry, according to 2012 figures from the Technical Secretariat for Food and Nutrition Security. And nearly 80,000 children under the age of five die every year from malnutrition, according to Save the Children, an NGO.

There is no justification for these figures in Mozambique, which has a favourable climate and plentiful labour for large-scale agricultural production, Ecole said.

Namaacha illustrates the contradiction. It is the only district in the country that produces strawberries. It was able to supply the entire Maputo market, but many producers were bankrupted by lack of credit, said Cecília Ruth Bila, the head of the fruits section in IIAM.

“The small farmers find it difficult to get financing, and our banks do not help much, so producers give up,” she complained.

Nearly 150 strawberry farmers in Namaacha gave up growing them in the last five years because they lacked access to credit, according to information from the section.

Laldás is one of the few to continue. Perhaps that is why his dreams are so ambitious. This year he has asked for 150,000 seedlings to expand his growing area to three hectares, and meanwhile he is seeking financing to put in electricity, three greenhouses, an irrigation system and a small improvement industry.

“It will cost me a total of nearly six million meticals [nearly 200,000 dollars],” he said with optimism.

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

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Bachelet to Recalibrate Chile’s Foreign Policy Tue, 11 Mar 2014 22:21:29 +0000 Marianela Jarroud Michelle Bachelet speaking to international media correspondents. Credit: Marianela Jarroud/IPS

Michelle Bachelet speaking to international media correspondents. Credit: Marianela Jarroud/IPS

By Marianela Jarroud
SANTIAGO, Mar 11 2014 (IPS)

For the past four years, the foreign policy of Chile, South America’s “miracle”, has focused more on economic  than political issues.

Socialist Michelle Bachelet, sworn in this Tuesday Mar. 11 for her second (but not consecutive) term as president, must now recalibrate those policies, which have scored some successes but have also sparked tensions and conflicts.

During her election campaign, Bachelet said the foreign policy of the outgoing president, rightwing Sebastián Piñera, had a “mercantile emphasis,” and promised she would employ a more political approach.

Her government programme contains a harsh critique.

“Chile has lost presence in the region, its relations with its neighbours are problematic, a commercial vision has been imposed on our Latin American links, and external integration options have been ideologised,” the programme says.

The War of the Pacific

Chile fought against the adjacent countries of Bolivia and Peru in the War of the Pacific (1879-1883) in which an estimated 14,000 to 23,000 people were killed.

The embers of the conflict are still very much alive, especially in Bolivia and Peru, which lost significant amounts of territory to Chile.

Peru lost what is now the Chilean region of Tarapacá, and Bolivia lost what is now Antofagasta, as well as its access to the Pacific ocean.

Chile and Bolivia broke off diplomatic relations in 1978 and the tension between them continues, due to Bolivia’s demand for the recovery of its outlet to the sea.
International analyst Francisca Quiroga of the Universidad Arcis says that this country “must rebuild relationships because it has had latent, manifest, and some critical conflicts, and has invalidated and excluded its relations with neighbouring countries.”

During the Piñera government, “which had less political talent and lacked a narrative,”  discourse on Chile as an economically and commercially successful country was emphasised, something that had been present in its foreign policy since 25 years ago, Quiroga, a professor at the Diplomatic Academy, told IPS.

Bachelet (2006-2010) has ample political capital in the region and in the world, which was enhanced by her role as executive director of U.N. Women.

In her last international appearance as the president of Chile, at the 21st Rio Group Summit in Mexico in 2010, Bachelet’s leadership qualities were evident in her speech, which received an enthusiastic ovation.

“You can count on Chile, today and tomorrow, to work for our continent and for our Community of Latin American and Caribbean States (CELAC). You can always count  on today’s president of Chile, who will always be a woman of Chile,” she said.

Bachelet has a close relationship with Brazilian President Dilma Rousseff, who said she looks forward to deepening ties with Chile and affirmed that they both have “a clear understanding of the role of integration in South America.”

She is also close to Argentine President Cristina Fernández, who calls her a “dear friend,” and is on good terms with Ecuadorian President Rafael Correa.

Piñera, in contrast, was closer to Colombian President Juan Manuel Santos, and promoted the Pacific Alliance which also includes Mexico and Peru, seeking to create a free trade area, boost economic competitiveness and become a platform for exercising influence, especially in the Asia Pacific region.

Fundamental aspects of Piñera’s foreign policy “were subordinated to certain commercial and economic interests,” political scientist Fabián Pressacco, of the Universidad Alberto Hurtado, told IPS.

However, Piñera denies that his government neglected regional political, social and cultural issues. “That does not correspond with reality,” he told IPS during a press conference with foreign journalists.

The emphasis on the Pacific Alliance, created in 2011, “did not mean that we neglected the continent,” Piñera said.

His government worked for global integration and promoted “wider strategies that included political, social and cultural aspects,” he added.

And it participated actively in mechanisms like CELAC and the Union of South American Nations (UNASUR), among others, Piñera said.

But according to Quiroga, his handling of foreign policy has created some urgent challenges.

The first of these is strengthening relations with Argentina, Bolivia and Peru, the countries with which Chile shares borders.

Next, “a long-term working agenda should be established, to strengthen Latin American integration, in which relations with Brazil, Ecuador and Mexico should be secured by means of a strategy of public policies and not only commercially motivated actions,” said Quiroga.

Bachelet has nominated distinguished diplomat Heraldo Muñoz, a former ambassador of Chile to the United Nations and a high official of the United Nations Development Programme (UNDP), as her foreign minister.

Muñoz will have to address the ongoing conflicts with Peru, which Piñera dealt with by a policy known as “cuerdas separadas” (separating commercial issues and territorial disputes as “separate strings”), maintaining relations almost entirely on the commercial plane, while the International Court of Justice (ICJ) debated a bilateral maritime dispute.

The new foreign minister will also have to face problems with Bolivia, a country with which Chile broke off diplomatic relations in 1978. Bolivia took its claim for a sovereign outlet to the sea to the ICJ in The Hague in 2013.

In spite of the tensions and exchanges of words with Piñera, Bolivian President Evo Morales decided to attend the handover ceremony, and his vice president, Álvaro García Linera, announced he would visit Chile at the end of March as a gesture of “rapprochement,” his advisers told IPS.

With Bachelet as president, relations with Argentina will also be smoother, analysts say.

Ties with Argentina have been strained by the political asylum granted by Buenos Aires to Galvarino Apablaza, a former guerrilla prosecuted in Chile for the 1991 murder of rightwing senator Jaime Guzmán, and by a dispute between the Chilean airline LAN and Argentine airport authorities.

“UNASUR should become a point of convergence for integration initiatives in South America, while CELAC should be a platform for political coordination in the region,” says Bachelet’s government programme.

“In the Bachelet government, Latin America is going to be more important in a wide sense, and not just in the commercial-ideological dimension given it by the Piñera government,” Pressacco said.

An expert analyst of Latin American affairs, he predicted that the outlook of the new  team “will be more comprehensive, broader, more aware that international relations, as well as politics in general, do not work solely on the basis of economic agreements.”

Delegates from more than 20 countries will be attending Bachelet’s investiture, including nearly all the region’s presidents.

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CELAC Summit Targets Inequality Thu, 30 Jan 2014 18:40:49 +0000 Patricia Grogg Heads of state at the Second Summit of the Community of Latin American and Caribbean States (CELAC), at the Palacio de la Revolución, Havana. Credit: Jorge Luis Baños/IPS

Heads of state at the Second Summit of the Community of Latin American and Caribbean States (CELAC), at the Palacio de la Revolución, Havana. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Jan 30 2014 (IPS)

Heads of state and government at the Second Summit of the Community of Latin American and Caribbean States (CELAC) made a joint commitment to reduce poverty, hunger and inequality, and declared their region a “zone of peace”.

The goals, which even the presidents regard as “ambitious”, came at the end of two days of deliberations in the Cuban capital, and include action for food security, access to education and better job opportunities, as instruments to reduce inequalities in the most unequal region of the world.“We have to integrate for the sake of our own development, but this is not just about more wealth and consumption, it is the struggle for human happiness." -- Uruguayan President José Mujica

By proclaiming a continent-wide zone of peace – with the exception of Canada and the United States – the region committed itself to act “as a space of unity within diversity”, and confirmed the two-year-old CELAC as the regional political forum for dialogue and collective action at the highest level, regardless of ideology.

The summit, held in Havana Jan. 28-29, was attended by the heads of all Latin American and Caribbean countries except Panama, Belize and El Salvador (in the last two cases because of illness). The meeting of 30 presidents also put an end to Cuban isolation.

“This is a historic summit,” because it has decided to address an issue that has long been demanded by the Latin American peoples: the fight against inequalities, hunger and poverty, said Brazilian President Dilma Rousseff.

Another woman, Chilean president-elect Michelle Bachelet who is due to take office Mar. 11, said “poverty and hunger are not the only forms of inequality,” and emphasised that governments must address “all inequalities,” including gender divisions, urban-rural disparities, and the injustice faced by indigenous people and Afro-descendants.

The 83 paragraphs of the Declaration of Havana ratified the commitment to promoting social inclusion and sustainable development with quantifiable policies, measures and goals, in order to spread “the enjoyment and exercise of economic, social and cultural rights” to all the population, especially the most vulnerable.

Among the major goals, it says, are strengthening food and nutritional security, literacy, universal free public education, land tenure and agricultural development, including family and peasant agriculture.

It also calls for decent, long-term jobs, universal public health, the right to adequate housing, and industrial and productive development as “essential factors for eradicating hunger, poverty and social exclusion.”

The Economic and Social Panorama of the Community of Latin American and Caribbean States 2013, a study presented at the summit by the Economic Commission for Latin America and the Caribbean (ECLAC), shows inequality statistics for this region of over 600 million people.

The study says that the poorest one-fifth of the population on average accounted for five percent of total income, and even less in countries like Bolivia, Honduras and the Dominican Republic. Meanwhile, the wealthiest fifth received up to 55 percent in countries like Brazil.

In 2012 the poverty rate was 28.2 percent, and 11.3 percent of the population lived in extreme poverty. This means that 164 million people live in poverty and, of them, 66 million are extremely poor. These “shameful figures,” as some presidents called them, were the centre of discussions at the meeting.

Progress in recent years has been “slow, fragmented and unstable,” Cuban president and summit host Raúl Castro said in his opening speech.

According to figures from 2011 and 2012, the rate of inequality reduction has been above one percent a year only in Argentina, Brazil, Peru, Uruguay and Venezuela, and above 0.5 percent a year in Chile, Colombia, Ecuador and Panama.

Poverty has its greatest impact on children and teenagers, since its incidence is higher in households with a large number of dependent children. A total of 70.5 million children under 18 are affected, of whom 28.3 million live in extreme poverty, according to ECLAC.

Child poverty is greatest in Bolivia, El Salvador, Guatemala, Honduras, Nicaragua and Peru, where an average of 72 percent of children are extremely poor, based on data from 2000-2011.

The countries with the lowest child poverty rates (19.5 percent) mentioned by ECLAC were Argentina, Chile, Costa Rica, Ecuador and Uruguay.

Alicia Bárcena, ECLAC’s executive secretary, said Latin America is a “region of contrasts” and recommended that its governments should promote public policies that contribute to poverty reduction. Employment, she said, is the “master key” to remediating inequality.

At the summit, Castro handed over the rotating presidency of CELAC to Costa Rica. In his view, Latin America and the Caribbean have all the necessary conditions to change the unbalanced social panorama outlined by ECLAC, since they possess natural riches ranging from extensive mineral reserves to one-third of the world’s fresh water.

The sub-continent also has 12 percent of the world’s arable land, the highest potential for expanding food production and 21 percent of all natural forests.

The populations of the región, said Castro, want fairer distribution of wealth and income, universal, free and high-quality education, full employment, better wages, the elimination of illiteracy, real food security, health care for all, and the right to decent housing, drinking water and sanitation.

Uruguayan President José Mujica’s contribution reflected his characteristic humanism. “We have to integrate for the sake of our own development, but this is not just about more wealth and consumption, it is the struggle for human happiness,” he said.

“We cannot attempt development that goes against human happiness. That would not be development,” said Mujica. “Defending life means being able to put aside waste and pollution,” and he asked his colleagues, “Why do we waste so much?”

Cuban analyst Carlos Alzugaray told IPS that, beyond the goals reflected in the Declaration of Havana, CELAC has emerged from its second summit “facing the challenge of consolidation” as a forum for political integration “that will foment regional cooperation and build a regional profile with a single voice.”

It also has the challenge, said the political scientist, of persuading other blocs in other world regions to “accept and recognise it as a legitimate and authoritative voice to negotiate in the name of the entire region.” This can only be achieved by “sustained, firm but cautious work,” he said.

With additional reporting from Ivet González.

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