The Global South had little voice, let alone influence, in shaping the economically ‘neoliberal’ and politically ‘neoconservative’ globalisation leading to contemporary geopolitical economic conflicts. Pacifist non-aligned cooperation for sustainable development offers the best way forward.

Jomo Kwame Sundaram

The Association of South-East Asian Nations (ASEAN) was established in 1967 by anti-communist governments of the region. In 1973, its leaders agreed the area should be a Zone of Peace, Freedom, and Neutrality (ZOPFAN).

The world was deemed unipolar American discourse after the first Cold War. Meanwhile, most of the Global South remained non-aligned in what the Rest see as a multipolar world.

Despite critical dissent, the West seems to have lost interest in preserving peace. Unsurprisingly, the US and its NATO allies increasingly ignore the United Nations. Foreign military interventions since the first Cold War already exceed the many of that longer era.

During World War II, military production generated growth and employment in Germany, Japan and the US. But surely, development today is best achieved peacefully and cooperatively.

Pacifist non-alignment should cut unnecessary military spending. Although big powers compete for hegemony by weaponising international relations, they will still try to ‘buy’ support from the non-aligned.

Realistically, most small developing nations cannot lead international peace-making. But they can and should be a stronger moral force urging justice, peace, freedom, neutrality, development, and international cooperation.

Return of the Global South
The Group of 77 (G77) developing countries’ caucus and the UN Conference on Trade and Development (UNCTAD) were both established in 1964. Headquartered in Geneva, UNCTAD is part of the UN Secretariat but has been steadily marginalised.

The G77 has a formal presence throughout the UN multilateral system. It now has over 130 members, including China, but its impact outside New York in recent decades has been limited.

Sustainability challenges and planetary heating are generally worse in the tropics, where most people in developing countries are. Meanwhile, hunger worldwide has worsened since 2014, while World Bank-reported income poverty has risen since the COVID-19 pandemic.

An inclusive and equitable multilateralism can better address the world’s challenges, especially peace and sustainable development – so crucial for progress in our dark times.

Global South needs better voice
While working for Goldman Sachs, Lord Jim O’Neill referred to Brazil, Russia, India, and China as the BRIC countries.

With South Africa joining, ostensibly representing Africa, they soon began meeting regularly. As members of the G20 group of the world’s twenty largest economies, the BRICS initially lobbied on financial issues.

They have since incorporated other large economies of the South, but also incurred the wrath of President Trump. While some nations have sought to join the enlarged BRICS plus (BRICS+), a few have hesitated after being invited.

BRICS has no record of strong and consistent advocacy of the interests of smaller developing economies. Most financially weak small nations doubt that BRICS+ will serve them well.

Higher US interest rates have triggered massive capital inflows, especially from the poorest countries, depriving them of finance at a time of greater need.

Meanwhile, aid levels have fallen tremendously, especially with Trump 2.0. Official development assistance (ODA) to the Global South is now below 0.3% of GDP, less than half the 0.7% commitment made in 1969.

Lowering tax rates has further squeezed the West’s already limited budgetary resources as stagnation deepens. Trump’s tariffs, US expenditure cuts, and greater Western military spending deepen worldwide economic contraction.

Non-alignment for our times
The Global South must urgently promote a new non-alignment for multilateral peace, development, and international cooperation to address Third World challenges better.

Even IMF number two, Gita Gopinath, agrees that developing countries should opt for non-alignment to benefit from not taking sides in the new Cold War.

With the exception of Brazil’s Lula, leadership by statesmen with international standing beyond their national stature largely passed with Nelson Mandela.

A few dynamic new leaders have emerged, but have not taken on the responsibilities of Global South leadership. Such leadership is in short supply despite the urgent need.

It is much easier to revive, reform, and reinvigorate NAM than to start from scratch. Although it has been less influential in recent decades, it can be revitalised.

Also, foreign policies are typically less subject to other typical national domestic policy considerations. Hence, they do not vary as much with the governments of the day.

Also, most developing country governments must appear to protect national interests to secure political support and legitimacy for survival.

Hence, conservative, even reactionary governments may take otherwise surprising anti-hegemonic positions in multilateral fora, especially with growing widespread resentment of bullying for extortion.

IPS UN Bureau

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The mega-ship BYD Shenzhen arrived on May 28 at the port of Itajaí in southern Brazil, carrying 7,292 electric vehicles from the Chinese company BYD. It set a record for this type of transport, with unloading taking four days. Credit: Porto de Itajaí

By Mario Osava
RIO DE JANEIRO, Aug 7 2025 (IPS)

Residents near the port of Itajaí in southern Brazil celebrated the arrival of 7,292 electric and hybrid vehicles from China aboard the ship BYD Shenzhen on May 28 as a “historic event,” with unloading taking four days. 

It was a record in maritime vehicle transport, but similar operations had already occurred in Brazil and other Latin American countries. A year earlier, the port of Suape in northeastern Brazil received 5,459 units also from BYD, the world’s largest electric vehicle manufacturer."China has been pivotal... Beyond providing more affordable vehicles, its technological leadership and mass production capacity have shaped global trends." —Cristóbal Sarmiento.

China’s automotive industry, led by BYD, is the decisive factor driving electric mobility in Latin America and the Caribbean.

Over the past four years, the number of light electric vehicles in the region has nearly doubled annually, with a 187% jump in 2024, reaching 444,071 by the end of December, according to the Latin American Energy Organization (Olade), whose data excludes non-plug-in hybrids.

This is relatively small, representing only 0.7% of the world’s electric vehicle fleet and 0.3% of the region’s total light vehicles, as noted in Olade’s technical report in May. But it signals great expansion potential, now being fueled by Chinese vehicles.

Lower prices and improving quality make Chinese units competitive amid growing demand for transport electrification in the region, according to Fitzgerald Cantero, Director of Studies, Projects, and Information at Olade.

With their exports to the U.S. and the European Union (EU) practically blocked by 100% and 45.3% tariffs, respectively, Chinese electric vehicles see Latin America as “an attractive market” that remains open, along with Asia, he reasoned.

Industrial Hub of Camaçari in Bahia, northeastern Brazil, where BYD built its plant for producing electric and plug-in hybrid vehicles, batteries, and auto parts. Spanning 460 hectares, it allows for expansions to double production to 300,000 vehicles per year. Part of the facilities were purchased from U.S. automaker Ford, which left the country. Credit: BYD

Renewable Energy and Lithium as Attractions 

An additional Latin American attraction is its abundance of renewable energy, Cantero told IPS by phone from Quito, Olade’s headquarters. Using sustainable electricity is essential to meet the goal of decarbonizing transport and reducing planet-warming emissions.

Moreover, some countries in the region are rich in minerals needed for vehicle electrification, such as lithium for batteries, copper for electrical components, and rare earths containing 17 chemical elements used in magnets for electric car motors, wind turbines, and other strategic technologies.

Thus, the region has become a priority for China, the automotive superpower where 12.87 million electric passenger vehicles were sold in 2024, plus 2.2 million exported—figures close to half of all new cars sold domestically and abroad, according to data compiled by Olade.

China’s leadership is more than absolute, as the next powers—the EU and the U.S.—produced only 2.4 million and 1.1 million electric vehicles, respectively, in 2024, according to the International Energy Agency.

Olade estimates that China accounted for over 75% of global electric vehicle sales. This share is likely to grow, as the European market has stagnated and the U.S. has rolled back its environmental policies.

“The (U.S.) electric vehicle industry has been discouraged by new legislation, which will have a dramatic impact on consumer preferences,” said Margaret Myers, director of the Asia and Latin America Program at the Inter-American Dialogue.

Meanwhile, China is boosting exports of its production surplus, particularly to Global South markets with fewer import restrictions, she noted.

For China, “electric vehicle production is part of a broader effort to improve its economy and secure dominance in key industries, including EVs and their batteries, renewable energy, artificial intelligence, bioscience, and other priorities,” Myers concluded to IPS from Washington.

Electric trucks made in China at the second edition of the International Chinese Auto Expo, held from July 24 to 27 at an events center in Santiago, Chile. These cargo vehicles began operating in large mining facilities and urban areas in Chile and are now becoming more widespread nationwide. Credit: Orlando Milesi / IPS

Large Markets Concentrate Sales 

For now, Latin America remains a net importer. Brazil and Mexico are the largest markets, accounting for 73.6% of electrified vehicle sales (including fully electric, plug-in hybrid, and non-plug-in hybrid models) in the region, according to data from the Latin American Association of Automotive Distributors (Aladda), headquartered in Buenos Aires.

Their share of the population is much smaller. Brazil, with 212 million people, and Mexico, with 130 million, make up just 51.2% of Latin America and the Caribbean’s 668 million inhabitants.

Argentina, in fourth place with 47 million people, does not rank among the top eight in motor transport electrification. Colombia, the third most populous with 53 million, is also third in Aladda’s ranking.

Colombia and Chile lead in electric buses, with 1,590 and 2,600 operating in their cities as of December 2024, respectively, according to Olade. Brazil, despite its much larger population, has only 900—far fewer than Chile, a country of just 18.5 million people.

A Chinese electric vehicle charges its battery at a dealership in south-central Mexico City. Sales of Chinese-made electric vehicles have grown in this Latin American country due to their lower prices compared to Western brands and financing options. Credit: Emilio Godoy / IPS

Three Waves

“The evolution of electromobility in Chile had its first wave between 2017 and 2020, focused on public transportation—specifically electric bus systems,” recalled Cristóbal Sarmiento Laurel, Director of Energy and Sustainable Development at the private Diego Portales University.

The goal was to introduce the new technology in a “more feasible way, since buses operate on controlled routes and schedules, making charging planning easier,” he explained. BYD was the key player in this phase.

The second wave, starting in 2021, saw a “steady rise in sales of light hybrid and fully electric vehicles, with growing market presence from Chinese manufacturers like BYD, Maxus, JA, DFSK, and Changan, which quickly gained ground in the domestic market,” he added.

“China has been pivotal in this journey. Beyond providing more affordable vehicles, its technological leadership and mass production capacity have shaped global trends. For Chile, this relationship isn’t just a commercial opportunity but also a concrete way to accelerate the energy transition,” Sarmiento emphasized.

“Transport accounts for 33.3% of Chile’s energy consumption, according to the National Energy Balance, and relies almost entirely on fossil fuels”, therefore, electrification helps mitigate climate change, Sarmiento told IPS in Santiago.

“Not using fossil fuels is a solution,” but electrified cars “promote individual mobility rather than transforming transportation systems or boosting public transit,” noted Antonio del Río, a researcher at the Renewable Energy Institute of Mexico’s National Autonomous University.

More electric buses—whether Chinese or from other origins—are the way forward, he argued. “The cost per kilometer for an electric vehicle is 60% lower than a conventional car,” he said to IPS in Mexico City.

By the end of 2024, Mexico had only 780 electric buses, according to Olade data—half as many as Colombia, or a quarter per capita.

Assembly line of electric and hybrid vehicles at BYD’s Camaçari plant in northeastern Brazil, which will initially produce 150,000 vehicles annually with potential to double output. The electric vehicle market has grown rapidly in Brazil and Latin America over the past four years. With mass domestic production, Brazil could become an export hub for these advanced-technology vehicles. Credit: BYD

Mexico mirrored the region’s surge in electrified vehicle sales, which reached 412,493 units in 2024, up 174.9% from 2022, according to Aladda. Brazil led growth among major countries with a 256.2% increase, while Mexico saw 142.2%.

Despite the sharp rise, electrified vehicles still represent a small share of total sales: 8.1% regionally on average, 6.8% in Brazil, and 6.1% in Chile in 2024. Colombia stands out at 25.8%.

The most dramatic two-year growth—665.3% regionally—was in plug-in hybrids (PHEVs), followed by pure electric vehicles (EVs) at 403%. Non-plug-in hybrids (HEVs) lost momentum in Brazil but grew in Mexico, Chile, Colombia, and Peru, especially in 2024.

Another notable trend is the diversity of Chinese brands—23 in both Mexico and Chile. Chile has 52 brands total, including Chinese and others, according to Rodrigo Salcedo, president of Chile’s  Electric Vehicle Trade Association (Avec).

The influx of new brands has heightened competition, bringing more options, models, and prices that are gradually approaching those of conventional cars. However, “there’s a gap,” lamented Salcedo, pointing to the lack of information, workshops, and trained technicians for maintenance—except for buses, which benefit from Chinese technicians in Chile.

BYD cars for sale and test drives at an Itavema dealership, a BYD sales network, in Botafogo, a traditional middle-class neighborhood in Rio de Janeiro, Brazil. Credit: Mario Osava / IPS

Third Wave 

Meanwhile, a third wave of electric mobility is emerging in the region, following the initial phases of electric buses and the mass availability of light vehicles at falling prices. This new phase involves the establishment of assembly plants, including Chinese ones.

In Brazil, two Chinese automakers have begun local production of electrified vehicles. BYD (short for Build Your Dreams) started production in July at its assembly plant in Camaçari, Bahia, rolling out three models—one fully electric and two plug-in hybrids. And GWM (Great Wall Motors) is set to begin production this semester in Iracemápolis, São Paulo.

Symbolically, both manufacturers took over former plants of traditional automakers—Ford (U.S.) and Mercedes-Benz (Germany), respectively.

While Chinese-branded cars have been produced in Brazil since 2017 (such as those from the Caoa-Chery joint venture in Anápolis, Goiás), their electrified models, introduced in 2019, were limited in volume.

BYD’s plant marks a new era, designed to assemble 150,000 units annually initially, with plans to double that capacity. The project also includes battery and auto parts production, along with a logistics system, explained Mauro Pereira, general superintendent of Camaçari’s Industrial Development Committee (Cofic).

Cofic manages the Camaçari Industrial Park to create the best operating conditions for 88 local companies, including BYD.

“BYD is putting Brazil at the forefront of vehicle technology,” Pereira stated, anticipating 20,000 direct jobs and triple that in indirect employment. The plant could also turn Brazil into an export hub for vehicles and components, including batteries, to Latin America and possibly Europe.

The Camaçari plant benefited from land incentives and tax breaks, but the real driver was Brazil’s import tariffs on electric vehicles, introduced in January 2024. Starting at 10% (slightly higher for hybrids), they will gradually rise to 35% by 2027.

Chinese new-energy vehicles are cutting costs with advanced, efficient, and intelligent technologies—”they’re smartphones on wheels,” said Thiago Sugahara, VP of the Brazilian Electric Vehicle Association and GWM’s institutional relations manager. Users can control and monitor their cars remotely and safely via smartphone, he explained.

“An electric car is a battery with four wheels,” quipped Ana Lia Rojas, head of Chile’s Renewable Energy and Storage Association (Acera), highlighting both the vehicle’s key component —still  costly—,  and their potential to support power grids.

Colbert Marques, a sales consultant at Itavema (a BYD dealership network), noted that Chinese manufacturers halved EV prices. Today, models start at just over US$20,000, forcing Western brands to slash prices to stay competitive.

Buyers of EVs and hybrids “are more informed and tech-savvy, even older ones,” he observed, confident in his decision to switch to BYD in 2023, having driven traditional vehicles for 18 years.

With contributions from Orlando Milesi (Chile) and Emilio Godoy (Mexico)

The Cauchari Solar Plant in Jujuy, Argentina, located 4,000 meters above sea level with over one million panels, was built with Chinese capital, engineering, and materials. Credit: Casa Rosada

By Humberto Márquez
CARACAS, Jul 18 2025 (IPS)

China, with its investments, products, technology, and innovation focused on solar and wind farms in Latin America and the Caribbean, as well as on electricity networks and services, stands out as a driving force for the region’s shift toward energy less reliant on fossil fuels and increasingly cleaner and greener. 

Between 2010 and 2024, China invested US$33.69 billion in renewables in the region, with 70 transactions for as many projects, 54 of which were in non-hydroelectric energy, totaling US$13.138 billion.

These figures alone “highlight China’s importance in supporting the region’s energy transition, both through investments and infrastructure projects,” Enrique Dussel Peters, coordinator of the Latin America and the Caribbean Academic Network on China (RedALC-China), told IPS from Mexico City.“For China, Latin America as a whole is a market that geographically presents many opportunities; first, due to the availability of natural resources, which include critical minerals, and features such as access to water and natural and renewable energy sources”: Ana Lía Rojas.

Beyond money, China “has the capacity to develop technology, implement it, and scale it at the required speed,” said Ana Lia Rojas, executive director of the Chilean Association of Renewable Energies and Storage (Acera).

In a dialogue with IPS in Santiago, Chile, Rojas cited American economist Jeffrey Sachs, director of the Center for Sustainable Development at Columbia University and a United Nations advisor, who has argued that, in short, “the energy transition is Chinese.”

Sachs views China as a “leader in key technologies that will be essential over the next 25 years: photovoltaics, wind, modular nuclear, long-distance energy transmission, 5G (now 5.5G), batteries, electric vehicles, and others.”

The movement toward Latin America has been relentless. While there were no Chinese investments in renewable energy in the region between 2000 and 2009, eight emerged from 2010 to 2014, totaling US$3.298 billion and generating 6,000 jobs, according to RedALC’s Investment Monitor.

Between 2015 and 2019, 25 projects with Chinese financing materialized, totaling US$19.568 billion and creating 9,300 jobs. In the 2020-2024 period, 37 transactions were completed, amounting to US$10.824 billion and generating 15,000 jobs.

Investment volumes dipped in 2020 amid the COVID-19 pandemic. However, a revealing contrast emerged: 35 of the 37 renewable energy transactions during this five-year period went to non-hydroelectric projects.

The Lagoinha Solar Complex, inaugurated in July this year and owned by the Brazilian subsidiary of Chinese group CGN. Spanning 304 hectares in Ceará state, northeastern Brazil, it features 337,000 panels that will provide electricity to 240,000 households. Credit: Government of Ceará

Interests and challenges converge

The International Energy Agency (IEA, representing major industrialized consumers) reports a “soaring increase in Chinese clean energy investments globally, particularly in renewables,” surpassing US$625 billion in 2024—nearly double 2015 levels and accounting for 30% of the world’s total, cementing China’s leadership.

Traditionally dominated by state-owned enterprises backed by public funding, China’s energy investment landscape is shifting, with the government increasingly encouraging private sector participation.

Meanwhile, Latin America and the Caribbean saw roughly US$70 billion invested in renewables from 2015 to 2024, of which over US$30.3 billion (43%) came from China, according to the IEA.

Yet the agency notes that despite steady growth in renewable investments, the region represents just 5% of global privately funded clean energy investment—a reflection of high interest rates, scarce long-term financing, and costly public debt.

This highlights the intersection between the region’s needs and challenges and what Dussel Peters describes as China’s strategic focus on technological development and disruptive innovations, from nanomanufacturing to aerospace, including new energy sources.

Chinese investment in renewables “delivers multiple benefits by advancing energy sustainability, supporting the transition to a low-carbon grid, providing critical technology, and creating skilled jobs,” Chilean academic Rodrigo Cáceres told IPS in Santiago.

A researcher at  Diego Portales University’s Center for Energy and Sustainable Development, Cáceres observes China’s “sustained commitment” in areas like energy storage, smart grids, and green hydrogen, framing the China-Latin America relationship as “strategic and long-term.”

A key factor enabling this enduring partnership is the vast territorial, demographic, and resource potential Latin America and the Caribbean offers China. “If we look at the per capita income we have in the region and compare it with China’s, we have more or less the same. But Latin America has half the population of China and twice the territory of China,” observed Rojas.

Twice the territory “means that projects can be deployed differently than in the rest of the world,” noted the director of Acera.

According to Rojas, “it is evident that, for China, Latin America as a whole is a market that geographically presents many opportunities; first, due to the availability of natural resources, which include critical minerals, and features such as access to water and natural and renewable energy sources.”

“Second, because it is clearly a less densely populated region, which provides a certain degree of flexibility or freedom to develop projects in the territory that will aid the energy transition, not only for local or national economies but for the world,”she said.

The Tanque Novo Wind Complex in Bahia, Brazil, developed by Chinese group CGN. It consists of seven parks with 40 wind turbines, an installed capacity of 180 MW, and can serve 430,000 residents. Credit: Tanque Novo

Brazil, a leading hub 

In Brazil, China’s presence in the electricity sector “is deep and strategic, the result of more than a decade of investments by large state-owned companies such as State Grid and China Three Gorges (CTG),” said Tulio Cariello, research director at the Brazil-China Business Council.

“In fact, it has become the main destination for these companies’ assets outside China. Both State Grid and CTG have the majority of their international investments in Brazil, reflecting the country’s structural importance in their global projection,” Cariello told IPS in Rio de Janeiro.

State Grid is now a major electricity transmission operator in Brazil, and its massive entry into that market was solidified with the acquisition in 2016-2018 of CPFL Energia (formerly Companhia Paulista de Força e Luz), one of the country’s leading power distribution companies.

Another flagship project led by State Grid was the construction of ultra-high-voltage transmission systems, connecting the Belo Monte hydroelectric plant in the Amazon (11,200 MW) with the Southeast region, which has the highest electricity demand.

Combined, solar and wind energy sources account for a quarter of Brazil’s electricity matrix, according to its National Energy Balance.

By the end of 2024, Brazil’s installed wind power capacity—over 16% of the national electricity matrix—reached 33.7 gigawatts, with 1,103 wind farms and 11,720 wind turbines. By 2032, cumulative new installed capacity is projected to reach 56 GW.

Chinese wind turbine manufacturer Goldwind established its first factory outside China last year in Bahia, in Brazil’s Northeast, with an investment of over US$20 million to produce 150 turbines annually, ranging from 5.3 MW to 7.5 MW. This decision demonstrates strong confidence in the Brazilian market.

The volume of Chinese investment in Brazil between 2007 and 2023 reached US$73.3 billion—US$33.2 billion in the electricity sector—with 264 confirmed projects, and is on track to reach US$123.2 billion with 342 projects.

Regarding the impact of investments in renewable energy, “it can be seen on several fronts: increased generation and transmission capacity, modernization of critical infrastructure, greater stability in power supply, and job creation and technology transfer,” said Cariello.

The Los Cururos Wind Farm in Ovalle, Chile, is one of dozens of installations generating electricity in Chile thanks to the constant winds in this Pacific-facing region. Credit: Orlando Milesi / IPS

Advancing Across the Regional Map 

In Argentina, with initial financing of US$390 million from the China Export-Import Bank (Chexim), construction began in 2018 on the Cauchari solar park—one of the largest in Latin America—in the northwestern province of Jujuy.

Some 4,000 meters above sea level and equipped with 1.2 million panels, Cauchari has an installed capacity of 315 MW (with an expansion planned to add another 200 MWh) and reduces carbon emissions by 325,000 tons.

There are other solar developments with Chinese involvement, while Goldwind has acquired wind farms in the central province of Buenos Aires and the southern province of Chubut.

Researcher Juliana González Jáuregui from the Latin American Faculty of Social Sciences (Flacso) has highlighted Beijing’s participation in Argentina’s renewable energy projects, focusing on its provinces—even before the country joined China’s Belt and Road Initiative in 2022.

In contrast, “Europe and the United States have yet to grasp the importance of engaging at the subnational level in Argentina, something China achieved quickly and significantly. The provinces hold natural resources, so the subnational component is essential,” González told Dialogue Earth.

Meanwhile, in Chile, “what has happened in the last two years is that Chinese companies have bet on the country as a gateway to Latin America and have set up several companies that create jobs,” said Rojas.

“They are interested in showcasing the quality and technological advancements they’ve achieved in these sectors, focusing on storage, inverter systems, and everything that helps stabilize power grid flows,” she stated.

In this way, China “has increasingly strengthened its presence in the electricity sector, where we have decarbonization efforts and which represents 22% of the country’s energy consumption,” particularly in the distribution segment through the acquisition of key companies to supply the population, explained Rojas.

A notable example is the Chinese group State Grid, which in 2020 acquired Chile’s Compañía General de Electricidad (CGE) from Spain’s Naturgy for US$3 billion and purchased Chilquinta, another electricity distributor in Chile, from the American company Sempra Energy for US$2.23 billion.

Additionally, it holds a stake in Transelec, the largest distributor, giving it a dominant majority position in Chile’s electricity distribution market.

Areas of Lima illuminated by the growing integration of renewable energy into electricity generation. The former Enel Perú, now Pluz Perú, was acquired by China’s CSG and serves over 1.5 million subscribers in the metropolitan area. Credit: Perú Inkas Tours

In Peru, China Southern Power Grid (CSG) acquired Enel Peru from Italy’s Enel Group in 2024 for US$3.1 billion. The company, now called Pluz Peru, operates in the market with 1,590 MW of generation from various sources and also participates in distribution.

The Peruvian firm includes a solar complex in the southern municipality of Moquegua, with 560,000 panels spread over 400 hectares, capable of generating 440 GWh annually, and a wind farm in the southwestern province of Nazca, with 42 turbines producing up to 600 GWh per year.

In Colombia, another Chinese giant, CTG, promoted the construction of the Baranoa solar plant in the northern department of Atlantico. With an investment of US$20 million and 36,000 modules, it can add 20 MW to the grid.

Though a small project far from major economic and urban centers, it reflects shared interests with Colombia, where President Gustavo Petro champions renewable energy and the decarbonization of the economy and society.

In Nicaragua, it was announced that China Communications Construction Company will build a 70 MW solar plant in the municipality of Nindirí, south of Managua, with 112,700 panels at a cost of US$80 million.

The Managua government—which recently restored relations with China in 2021 after cutting ties with Taiwan—hopes the project will not only feed into the power grid but also support drinking water supply and sanitation in the country.

In a leap across the Caribbean, China’s International Development Cooperation Agency delivered a batch of donated supplies to Cuba last March to support a photovoltaic park project with Chinese assistance in Guanajay, about 50 kilometers west of Havana.

According to data gathered by IPS in Havana, the project includes seven solar parks and will contribute 35 MW to the island’s electricity system. The remaining parks, to be developed by China’s Shanghái Electric and Cuba’s Unión Eléctrica, will add another 85 MW. Cuba’s power demand stands at 3,500 MW, with a deficit sometimes exceeding 1,500 MW.

“We hope to leverage this project as an opportunity to contribute China’s strength in ensuring energy security and promoting sustainable social development in Cuba,” said Hua Xin, China’s ambassador in Havana.

A production gondola at the new wind turbine factory in Camaçari, northeastern Brazil, installed by Chinese firm Goldwind. Wind energy is the second-largest renewable source in Brazil’s electricity supply, after hydropower. Credit: Goldwind

The Ball on the Roof 

Chilean expert Rojas noted that Chinese companies obviously aim to promote their own brands but also establish research centers or technology transfer hubs to help countries accelerate their energy transition.

“They have cutting-edge technologies that we currently see in PowerPoint presentations—but they’re already implementing them in their own cities,” she pointed out.

Experts agree that, alongside territorial potential, population, and resources, the regulatory framework of the electricity business—which varies across borders—is a key investment attraction.

This becomes even more relevant as major investors like China shift from merely selling products and technology to acquiring more assets, immersing themselves in the complexities of service networks, costs, and pricing.

For many countries in the region, the observation Jorge Arbache, an economics professor at the University of Brasilia, makes about Brazil may resonate. He analyzes how the advantages and resources enabling the energy transition are being mobilized.

He argues that “while China has used the energy transition as a pillar of its national development policy,” Brazil still treats its advantages “mainly as primary, short-term, and predatory assets—with low added value, institutional fragmentation, and a lack of coordinated strategy.”

“What China shows us is that the energy transition and natural capital, when well-coordinated, are more than just a shift in the energy matrix: they are a development strategy, a tool for sovereignty, and a source of geopolitical power,” concluded Arbache.

With reporting by Mario Osava (Brazil), Orlando Milesi (Chile) and Dariel Pradas (Cuba).

Trump’s billionaire cronies want more monopoly profits, not competition. With more policies crafted for them, wealth concentration is set to become greater than ever.

Jomo Kwame Sundaram

Some demand market competition and oppose monopolies and oligopolies. For others, property rights are crucial, typically strengthening monopoly rights.

Many avowed neoliberals deemphasise competition and hesitate to insist on antitrust action or opposition to abuses of market power.

Property rights confer monopoly or exclusive ownership rights to an asset, typically denying access to others except for payment. Many such rights are recent.

While UK Prime Minister from 1979, Margaret Thatcher triggered a worldwide neoliberal economic counter-revolution, especially in the Anglosphere.

With generally more limited public ownership, the US economy has long been more ‘private’, offering little scope for privatisation.

Tech Big Bro
PayPal and Palantir founder Peter Thiel is the most influential of the so-called ‘tech bros’ supporting re-elected US President Donald Trump.

Thiel was the two-term president’s biggest funder for his unexpectedly successful 2016 campaign. As former boss, funder and mentor, he is now Vice President JD Vance’s godfather.

In 2014, Thiel’s ‘Competition is for Losers’ established him as the lead apologist for lucrative rentier monopolies, especially those invoking intellectual property rights (IPRs).

Thiel noted ‘perfect competition’ is “both the ideal and the default state in Economics 101”. In textbooks, firms in competitive markets are presumed to be similar, selling the same goods.

Hence, they have no ‘market power’ and must sell at market-determined prices. When demand rises, firms invest to increase supply, reducing prices and profits.

In mainstream economics, there can be no economic rent under perfect competition. But prices can be raised more easily in cornered markets.

Buyers will then have no other source to buy from. Without competition, monopolies can maximise profits by controlling market supplies and prices.

Hence, profit maximisation involves capturing more rents in monopolistic conditions. To become richer, firms eschew competition in favour of monopoly.

Government role contradictory
Tech ‘Big Brother’ Thiel notes, “To an economist, every monopoly looks the same, whether it deviously eliminates rivals, secures a license from the state or innovates its way to the top.”

The state’s role is contradictory as government “works hard to create monopolies (by granting patents to new inventions)” while enforcing antitrust law to undermine them.

Thiel claims to be uninterested in “illegal bullies or government favorites”, but surely knows governments create and sustain the monopolies he so cherishes.

He notes that “Americans mythologize competition and credit it with saving us from socialist bread lines”. But for him, “capitalism and competition are opposites”.

“Capitalism is premised on the accumulation of capital, but under perfect competition, all profits get competed away.”

The advocate of monopoly claims monopolists are “incentivized to bend the truth” and to “lie to protect themselves … [from] … being audited, scrutinized and attacked”.

Thiel unabashedly acknowledges that rentiers have every incentive to protect, disguise and “conceal their monopoly” and incomes.

Instead, the billionaire rentier wants monopoly powers and profits to grow faster without being taxed or having to share.

Monopoly best for capitalism?
Thiel acknowledges that monopolists accumulate rents in a static world.

But he insists they “invent new and better things … Creative monopolies aren’t just good for the rest of society; they’re powerful engines for making it better.”

He insists a monopoly is “so good at what it does that no other firm can offer a close substitute”. For him, “the history of progress is a history of better monopoly businesses replacing incumbents”.

The tech billionaire insists decades of monopoly profits provide a powerful incentive to innovate. Thus, monopolies continue to drive progress.

He denounces mainstream neoliberal economists as “obsessed with competition as an ideal state? It is a relic of history … Their theories describe … perfect competition because that is what’s easy to model.”

“In the real world outside economic theory, every business is successful exactly to the extent that it does something others cannot … Monopoly is the condition of every successful business.”

Monopolies thrive under Trump
Unsurprisingly, many supposed neoliberals today stress property rights while ignoring liberal economics’ claim to promote competition.

Competition is dismissed as 19th-century economic liberalism. Meanwhile, contemporary monopoly capitalism accelerates wealth and income concentration.

But Thiel exaggerates monopolies’ contribution to human progress, capitalist dynamism and innovation, while understating their considerable harms.

With the tech bros increasingly supporting the president, Trump 2.0 promises to further enrich rentiers, especially those of their ilk.

His selective Liberation Day tariffs and other policies, especially his new ‘big beautiful bill’, will significantly increase, not reduce, US government debt while deepening American fiscal inequities.

As US tariffs, wars and other distractions preoccupy the world, unwitting MAGA loyalists remain loyal to Trump and his billionaire rentiers’ ‘counter-revolution’.

IPS UN Bureau

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Donald Trump’s Make America Great Again (MAGA) appeal captured US mass discontent against globalisation. In recent decades, variations of America First have reflected growing ethnonationalism in the world’s presumptive hegemon.

Jomo Kwame Sundaram

With deindustrialisation in the North blamed on globalisation, their governments gradually abandoned trade liberalisation, especially after the 2008 global financial crisis.

Free trade mahaguru Jagdish Bhagwati has long complained of the weak commitment to multilateral trade liberalisation. Most recent supposed free trade agreements (FTAs) have been plurilateral or bilateral, undermining multilateralism while promoting non-trade measures.

The new geoeconomics and geopolitics have undermined the rules and norms supporting multilateralism. This has undermined confidence in the rules of the game, encouraging individualistic opportunism and subverting collective action.

Policymaking has become more problematic as it can no longer count on agreed-shared rules and norms, undermining sustained international cooperation. Biased and often inappropriate economic policies and institutions have only made things worse.

Successive Washington administrations’ unilateral changes in policies, rules and conventions have also undermined confidence in US-dominated international economic arrangements, including the Bretton Woods institutions.

Deliberate contraction
Although recent inflation has been mainly due to supply-side disruptions, Western central banks have imposed contractionary demand-side macroeconomic policies by raising interest rates and pursuing fiscal austerity.

US Federal Reserve interest rate hikes from early 2022 have been unnecessary and inappropriate. Squeezing consumption and investment demand with higher interest rates cannot and does not address supply-side disruptions and contractions.

After earlier ‘quantitative easing’ encouraged much more commercial borrowing, higher Western central bank interest rates were contractionary and regressive. Hence, much of world economic stagnation now is due to Western policies.

Developing countries have long known that international economic institutions and arrangements are biased against them. Believing they have no opportunity for wide-ranging reform, most authorities are resigned to only using available macroeconomic policy space.

Nevertheless, national authorities have become more willing to undertake previously unacceptable measures. For example, several conservative central banks deployed ‘monetary financing’ of government spending to cope with the pandemic, lending directly to government treasuries without market intermediation.

More recently, central banks in Japan, China, and some Southeast Asian countries refused to raise interest rates in concert with the West. Instead, they sought and found new policy space, helping to mitigate contractionary international economic pressures.

Nonetheless, many economists piously urged central banks worldwide to raise interest rates until mid-2024. Meanwhile, policy pressures for fiscal austerity continue, worsening conditions for billions.

Neoliberal?
To secure support for neoliberal reforms from the late 20th century, the Global North promised developing countries greater market access and export opportunities.

However, trade liberalisation has slowly reversed since the World Trade Organization (WTO) creation in 1995. Policy reversals have become more blatant since the 2008 global financial crisis with geopolitically driven sanctions and weaponisation of trade.

But ‘neoliberal’ globalisation was a misnomer, as there was little liberal about it beyond selective trade liberalisation. Instead, FTAs have mainly strengthened and extended property and contract rights, i.e., selectively interpreting and enforcing international law.

Trade liberalisation undermined earlier selective protectionism, which promoted food security and industrialisation in developing countries. Tariffs have also been crucial revenue sources, especially for the poorest countries.

Intellectual property
Strengthening the rule of law has rarely fostered liberal markets. Even 19th-century economic liberals recognise the inevitable wealth concentration due to selective and partial neoliberalism.

Property rights invariably strengthen monopoly privileges under various pretexts. Global North governments now believe control of technology is key to world dominance. The WTO’s trade-related intellectual property rights (TRIPS) have greatly strengthened IP enforcement.

With IP more lucrative, corporations have less incentive to share or transfer technology. With TRIPS enforced from 1995, technology transfer to developing countries has declined, further undermining development prospects.

The 2001 public health exception to TRIPS could not overcome IP obstacles to ensure affordable COVID-19 tests, protective equipment, vaccines and therapies during the COVID-19 pandemic, even triggering criticisms of ‘vaccine apartheid’.

Weaponising economics
The West has increasingly deployed economic sanctions, which are illegal without UN Security Council mandates. Meanwhile, access to trade, investment, finance and technology has become increasingly weaponised.

Foreign direct investment was supposed to sustain growth in developing countries. Intensifying Obama-initiated efforts to undermine China, then-President Trump and Japanese Prime Minister Abe Shinzo urged ‘reshoring’, i.e., investing in investors’ own countries instead.

Initial attempts to invest in their own economies instead of China largely failed. However, later efforts to undermine China have been more successful, notably ‘friend-shoring’, which urges companies to invest in politically allied or friendly countries instead.

With more economic stagnation, geopolitical strategic considerations and weaponisation of economic policies, cooperation and institutions, fewer resources are available for growth, equity and sustainability. Thus, the new geopolitics has jeopardised prospects for sustainable development.

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Many in the West, of the political right and left, now deny imperialism. For Josef Schumpeter, empires were pre-capitalist atavisms that would not survive the spread of capitalism. But even the conservative Economist notes President Trump’s revival of this US legacy.

Jomo Kwame Sundaram

A century and a half ago, Dadabhai Naoroji, from India, became a Liberal Party Member of the UK Parliament. In his drainage theory, colonialism and imperial power enabled surplus extraction.

As the Anglo-Boer war drew to a close in 1902, another English liberal, John Hobson, published his study of economic imperialism, drawing heavily on the South African experience.

Later, Vladimir Ilyich Lenin cited Hobson, his comrade Nikolai Bukharin and Rudolf Hilferding’s Finance Capital for his famous 1916 imperialism booklet urging comrades not to take sides in the European inter-imperialist First World War (WW1).

Three pre-capitalist empires – Russian, Austro-Hungarian and Ottoman – ended at the start of the 20th century. Their collapse spawned new Western nationalisms, which contributed to both world wars.

Germany lost its empire at Versailles after WW1, while Italian forays into Africa were successfully rebuffed. Western powers did little to check Japanese militaristic expansion from the late 19th century until the outbreak of World War Two (WW2) in Europe.

Imperialism and capitalism
Economists Utsa and Prabhat Patnaik argue that the primary accumulation of economic surplus – not involving the exploitation of free wage labour – was necessary for capitalism’s emergence.

Drawing on economic history, they clarify that primary accumulation has been crucial for capitalism’s ascendance. Thus, imperialism was a condition for capitalism’s emergence and rapid early development. Ensuring continued imperial dominance has sustained capitalist accumulation since.

The 1910s and 1920s debates between the Second and Third Internationals of Social Democrats and allied movements in Europe and beyond involved contrasting positions on WW1 and imperialism.

For most of humanity in emerging nations, now termed developing countries, imperialism and capital accumulation did not ‘generalise’ the exploitation of free wage labour, spreading capitalist relations of production, as in ‘developed’ Western economies.

Due to capitalism’s uneven development worldwide, the Third International maintained the struggle against imperialism was foremost for the Global South or Third World of ‘emerging nations’, not the class struggle against capitalism, as in developed capitalist economies.

After decades of uneven international economic integration, including globalisation, the struggle against imperialism continues to be foremost a century later. Imperialism has reshaped colonial and now national economies but has also united the Global South, even if only in opposition to it.

Blinkers at Versailles
After observing the peace negotiations after WWI, John Maynard Keynes presciently criticised the terms of the Treaty of Versailles, warning of likely consequences. In The Economic Consequences of the Peace, he warned that its treatment of the defeated Germany would have dangerous consequences.

But Keynes failed to consider some of the Treaty’s other consequences. Newly Republican China had contributed the most troops to the Allied forces in WW1, as India did in WW2.

Germany was forced to surrender the Shantung peninsula, which it had dominated since before WW1. But instead of China’s significant contributions to the war effort being appreciated at Versailles with the peninsula’s return, Shantung was given to imperial Japan!

Unsurprisingly, the Versailles Treaty’s terms triggered the May Fourth movement against imperialism in China, culminating in the communist-led revolution that eventually took over most of China in October 1949.

Even today, popular culture, especially Western narratives, largely ignores the role and effects of war on these ‘coloured peoples’. By contrast, understating the Soviet contributions to and sacrifices in WW2 was probably primarily politically motivated.

Another counter-revolution
Franklin Delano Roosevelt was elected US president in 1932. He announced the New Deal in early 1933, years before Keynes published his General Theory in 1936.

Many policies have been introduced and implemented well before they were theorised. Unsurprisingly, it is often joked that economic theory rationalises actual economic conditions and policies already implemented.

Keynesian economic thinking inspired much economic policymaking before, during, and after WW2. Both Allied and Axis powers adopted various state-led policies. Keynesian economics remained influential worldwide until the 1960s and arguably to this day.

The counter-revolution against Keynesian economics from the late 1970s saw a parallel opposition movement against development economics, which had legitimised more pragmatic and unconventional policy thinking. From the 1980s, neoliberal economics spread with a vengeance and much encouragement from Washington, DC.

This Washington Consensus – the shared ‘neoliberal’ views of the US capital’s economic establishment, including its Treasury, the World Bank, and the International Monetary Fund – has since been replaced by brazenly ethno-nationalist ‘geoeconomic’ and ‘geopolitical’ responses to unipolar globalisation.

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In 2021, the Senegalese novelist Mohamed Mbougar Sarr became the first writer from sub-Saharan Africa to be awarded the Prix Goncourt, France’s oldest and most prestigious literary prize.

Literature

His novel, La plus secrète mémoire des hommes, The most Secret Memory of Men, tells the story of a young Senegalese writer living in Paris, who by chance stumbles across a novel published in 1938 by an elusive Senegalese author named T.C. Elimane. This author had once been hailed by an ecstatic Paris press, but had then disappeared from view. Elimane had before every trace of him had vanished, been accused of plagiarism. After losing a legal process connected with the plagiarism charge, Elimane’s publisher had been forced to withdraw and destroy all available copies of The Labyrinth of Inhumanity. However, a few extremely rare copies of the novel remained, profoundly affecting anyone who happened to read them. The novel’s main protagonist (there are several others) eventually became involved in a desperate search for the illusive Elimane, who had left some rare imprints in France, Senegal and Argentina.

A reader of Sarr’s multifaceted, exquisitely written novel is confronted with a choir of different voices mixing, harmonizing and/or contradicting each other. The story turns into a labyrinth, where boundaries between fiction and reality become blurred and lose ends remain unravelled. Sarr moves in an ocean of world literature. It seems as if he has read everything worth reading and allusions are either in plain sight, or remain invisible. Ultimately, the novel investigates the limits between myth and reality, memory and presence, and above all the question – what is storytelling? What is literature? Does it concern the “truth”, or is it constructing a parallel version of reality?

A disturbing issue shimmers below the surface of the intriguing story. Why were two excellent West-African authors before Sarr severely scrutinized and condemned for plagiarism? Why were they accused of not being “African” enough? Are African writers doomed to linger within a shadowy existence as exotic curiosities, judged from the outside by a prejudiced literary establishment, which persistently consider African authors, except white Nobel laureates like Gordimer and Coetze, either as being exotic natives, or epigons of European literature?

The most Secret Memory of Men has a disturbing prehistory, echoing real-life experiences of the Guinean writer Camara Laye and the likewise unfortunate Malian Yambo Ouologuem.

At the age of 15, Camara Laye came to Conakry, the French colonial capital of Guinea, to attended vocational studies in motor mechanics. In 1947, he travelled to Paris to continue his studies in mechanics. In 1956, Camara Laye returned to Africa, first to Dahomey, then to the Gold Coast and finally to newly independent Guinea, where he held several government posts. In 1965, after being subject to political persecution, he left Guinea for Senegal and never returned to his home country.

In 1954, Camara Laye’s novel Le regard de Roi, The Radiance of the King, was published in Paris and at the time described as “one of the finest works of fiction to come out of Africa”. The novel was quite odd, and remains so, particular since its main protagonist is a white man and the story develops from his point of view. Clarence has, after in his home country having failed at most things, recently arrived in Africa to seek his fortune there. After gambling all his money away, he is thrown out of his hotel and in desperation decides to pursue a legend stating that somewhere in the inner depths of Africa a wealthy king can be found. Clarence hopes that this king might provide for him, maybe give him a job, and a purpose in life.

Laye’s novel becomes an allegory for man’s search for God. Clarence’s journey develops into a road to self-realisation and he obtains wisdom through a series of dreamlike and humiliating experiences; often harrowing, sometimes lunatically nightmarish, though the story is occasionally lightened by an absurd and alluring humour.

However, some critics asked if this really was an African novel. The language was beguilingly simple, but the allegorical mode of telling the story made critics assume that it was tinged with Christianity, that the African lore was “superficial”, and the narrative style “kafkaesque”. Even African authors considered that Laye “mimicked” European literary role models. The Nigerian author Wole Soyinka characterized Le regard de Roi as a feeble imitation of Kafka’s novel The Castle, implanted on African soil and within France suspicions soon arose that a young African car mechanic could not have been able to write such a strange and multifaceted novel as Le regard de Roi.

This unkind and even mean criticism became increasingly vociferous, deprecating what was actually an intriguing work of genius. The harassment continued until a final blow was delivered by an American professor. Adele King’s comprehensive study The Writing of Camara Laye did in 1981 “prove” that Le regard de Roi actually had been written by Francis Soulé, a renegade Belgian intellectual who in Brussels had been involved in Nazi- and Anti-Semitic propaganda and after World War II had been forced to establish himself in France. According to Adele King, Soulé had together with Robert Poulet, editor at Plon, the publisher that issued Le regard de Roi, concocted a story that his novel actually had been written by a young African, thus securing its success. To support her theory, Adele King presented an exhaustive account of Camara Laye’s life in France, tracing his various acquaintances and coming to the conclusion that Laye had been paid by Plon to act as the author of Le regard de Roi.

Among other observations Adele King stated that Laye’s novel was of an “un-African nature, with a European sense of literary form”, thus indicating Francis Soulé’s handiwork. This in spite of Soulé’s very meagre literary output (King mentions that he had in his ”youth dabbled in exotic writing”) and the fact that Laye wrote several other, very good novels.

Among other indications that Laye could not have written Le regard de Roi, King argued that the novel’s “Messianic message” sounded false, originating as it did from an African Muslim. She thus ignored that Laye came from a Sufi tradition where similar notions abounded and when it came to the “kafkaesque” flavour of the novel, which is far from being overwhelming – why could not a young African author living in France, like so many others, have been inspired by Franz Kafka’s writing?

Notwithstanding, through these and many other shaky assumptions King concluded that Le regard de Roi had been written by the otherwise almost unknown Francis Soulé and her verdict became almost unanimously accepted. It did for example in 2018 prominently appear in Christoffer Miller’s popular and otherwise quiet good book Impostors: Literary Hoaxes and Cultural Authenticity.

Another resounding condemnation of an excellent West-African author occurred in 1968 when the groundbreaking and original novel Le devoir de violence, Bound to Violence, after a short time of praise was smashed due to accusations of plagiarism. Le devoir de violence dealt with seven centuries of violent history of an African, fictious kingdom (actually quite akin to present-day Mali). In a feverish first-rate, free flowing language the novel does not shy away from depicting extreme violence, royal oppression, religious superstition, murder, corruption, slavery, female genital mutilation, rape, misogyny, and abuse of power. All intermingled with episodes of real love and harmony, but there is no doubt about Yambo Ouologuem’s opinion that a powerful, age-old and corrupt African elite enriched itself and prospered through its collaboration with an equally corrupt and brutal colonial power, all done for their respective gain.

Quite expectedly, Ouologuem arose violent reactions from authors adhering to the concept of négritude, denoting a framework of critique and literary theory developed by francophone intellectuals, who stressed the strength of African solidarity and notions about a unique African culture. Ouologuem provided the négritude movement with his own denigrating term – negraille, accusing négritude authors of ingraining servility and an inferiority complex in Africa’s black population. He accused such authors of depicting Africa as a ridiculous Paradise, when the continent in fact had been, and was, just as corrupt and violent as its European counterpart. Ouologuem also wondered why an African writer could not be allowed to be as critical, outspoken and politically improper as, for example, the French authors Rimbaud and Céline.

The final judgment that befell Ouologuem was delivered by the generally admired Graham Greene, who launched a lawsuit against Ouologuem’s publisher accusing the African author of plagiarizing parts of Greene’s novel It’s a Battlefield. Greene won the lawsuit and Ouologuem’s novel was banned in France and the publisher had to see to the destruction of all available copies of it. Ouologuem did not write another novel, he returned to Mali where he in a small town directed a youth centre, until he withdrew in a secluded Muslim life as a marabout (spiritual advisor).

Considering the framework of Ouologuem’s entire and quite mindboggling novel, Graham Greene’s reaction appears to be petty, if not outright ridiculous. The plagiarism was limited to a few sentences describing a French mansion, which in itself was quite absurd within its African setting, and the description is clearly quoted with a satirical intention (in his novel Greene described a slightly ridiculously decorated apartment of an English communist).

The condemnation of Laye’s, and in particular Ouologuem’s novels may be discerned as an inspiration to Mohamed Sarr’s novel. Sarr writes about a young African author finding himself in a limbo between two very different worlds, Senegal and France, while he has found home and solace in literature, a world within which he has discovered a real gem, his talisman – Elimane’s novel. However, the bewildered young man’s pursuit of the man behind the book turns out to be in vain, and so is probably also his search for himself in this labyrinth that constitutes our life and the world we live in.

Sarr’s novel reminds us of the fate of two other West-African authors before him, who were accused of not being “genuine”, of being “plagiarists”, thus Sarr also succeeds in asking us what is genuine in a floating globalized world?

IPS UN Bureau

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This piece is not about the crisis or the chaos that the country is now facing after successfully toppling the autocratic regime of Sheikh Hasina. Rather, it is about the crisis of confidence and social capital or trust — interlinked, nonetheless.

Anis Chowdhury

The fallen autocratic regime prided itself on rapid economic growth, averaging approximately 6 per cent a year. However, the regime’s kleptocratic system of ruling by plunder and favour to its cronies has contributed to accelerated wealth and income gaps as well as relative deprivation; thus, it has caused fissures in the social fabric.

Rising relative deprivation

Income and wealth gaps have yawned wide, turning a reasonably equitable society at the time of independence into one of the most unequal societies. The Gini coefficient, a common measure of income inequality, has increased from 0.36 in 1973 to 0.499 in 2022, according to the latest (2022) Household Income and Expenditure Survey (HIES) of the Bangladesh Bureau of Statistics.

The Gini coefficient was 0.39 in 1990–1991, marginally above the 1973 value (0.36), accelerating to 0.46 in 2010. Income inequality in Bangladesh has deepened since 2016. The 2022 survey reveals that about 30 per cent of the income generated in the country is concentrated within the top 5 per cent of household. This proportion was 27.82 per cent in the 2016 Household Income and Expenditure Survey.

Furthermore, the top 10 per cent of the wealthiest households in Bangladesh hold about 41 per cent of total income. This proportion was about 38 per cent in 2016. Concurrently, the income share for the bottom 50 per cent of households decreased to about 19 per cent in 2022 from 20.23 per cent in 2016.

Disturbingly, there has been a secular transfer of income from the lowest quintile of the households to the highest quintile. The average annual loss of the bottom 1st quintile’s share in the national income has been -0.71 per cent as opposed to the average annual gain of 0.46 per cent for the highest (top) quintile during 1973–2010. The middle-class also lost; income shares of 2nd, 3rd and 4th quintiles declined since 1973.

This does not augur well for our democracy. Nor can we celebrate this development in a country where one of the founding principles is socialism.

Suppression of democracy driving growing disparities

PROFESSOR MG Quibria of Morgan State University and ADB’s former Senior Advisor pointed out, ‘possession of political capital opens up myriad economic opportunities, including preferential access to finance and business, restructuring and loan default options, lucrative employment, access to privileged information, tax evasion or even outright corruption’.

The link between corruption and economic growth could be debated, but it is a method of plunder and primitive capital accumulation by the lumpen bourgeoisie that exacerbates inequality of wealth.

An environment conducive to unchecked corruption emerges when democracy is suppressed and the institutions that ensure accountability, transparency and the separation of powers between various branches of the government are weakened. Where democratic institutions are weak, political capital is a powerful instrument for advancing one’s economic and social position.

Unfortunately, suppression of democracy in Bangladesh began as soon as it emerged as an independent nation with the rigging of its first parliamentary elections in 1973. It is ironic that a country, where democracy is one of its founding principles, turned into a one-party state in 1975 within four years of its independence, shutting down most of the news media and allowing only state-run ones.

Sadly, instead of trust — built through accountability and transparency — election manipulations became the norm for all political parties to gain power and then retain it. Therefore, each successive government became more repressive, more lacking in accountability and more vigorous in election rigging.

However, such regimes suffer from legitimacy deficits — both legal and moral; they can only survive by allowing corruption and distributing favour. Thus, a vicious circle develops — a regime that resorts to more election manipulations becomes more beholden to its cronies, allowing them to plunder the state.

Undoubtedly, this process reached its zenith during Sheikh Hasina’s rule. Unchecked corruption, tax evasions and financial crimes such as defrauding bank loans enabled Bangladesh to become the global leader in wealth growth during 2010–2019. New York-based research firm Wealth-X, reported a remarkable 14.3 per cent annual increase in the number of individuals with a net worth exceeding $5 million, surpassing Vietnam, which ranked second with a 13.2 per cent growth rate.

Neoliberalism and the demise of democracy

BANGLADESH is not alone in witnessing widening income and wealth gaps and consequently democratic backslides. This is a global phenomenon coincided with the embrace of the neoliberal economic philosophy of privatisation, liberalisation, deregulation and globalisation dictated by the interests of the corporate power.

In the process of multinational corporations-driven globalisation, the civil society simply became apolitical NGOs, happy to receive crumbs from the donors to engage in so-called development activities. Citizens became ‘stake-holders’ together with the large corporations and donors, instead of ‘right-holders’.

Bereft of rights and no longer an end itself of development, citizens are now ‘human resources’, an epitaph cleverly designed to hide that they are simply fodder for the profit machines of corporations. In a deregulated economy, workers are dehumanised, constrained to socialise and participate in political activities.

Should one be surprised in the falling share of wages in the national income, stagnating or falling real wages and tragedies like the ‘Rana Plaza incident’?

Under the corporate globalisation, schools and universities — both public and private — are no longer places of learning where youths are transformed into enlightened citizens and agents of change, and where visionary future social-political leaders are produced. They are simply factories for mass-producing so-called ‘job-ready’ certificate or diploma holders, apathetic to social, economic and political issues.

An additional boost to accelerating inequality in Bangladesh comes from a three-stream education system (Bengali-medium national curriculum, traditional religious curriculum and English-medium overseas curriculum). It perpetuates inter-generational inequality.

Which way out?

ONE can get some cue in AK Sen’s observation that ‘a country becomes fit through democracy,’ and democracy versus development is a false dichotomy. Sen defines development as freedom — freedom from hunger and poverty; freedom from fear and persecution; and freedom to express, associate and participate. In sum, freedom to enhance one’s capabilities to attain one’s full potential as a human being.

Sen insists that political and civil rights are ends in themselves. Their denial cannot be acceptable even if it promotes economic growth and some well-being as such a development path is not sustainable. Suppression of political and civil rights results in growing income and wealth inequalities, where obnoxious, luxurious living by the few coexists with a large populous struggling to survive. This fuels a sense of relative deprivation contributing to violent social conflict.

Therefore, the first step is strengthening democratic institutions or consolidation of democracy. This requires the depoliticisation of administration and civic associations.

There exists a large volume of research findings showing that the politicisation of administration and the organisation of civic associations along party lines not only boost corruption but also accelerate social cleavage.

Civic associations where members hold different political views help build trust among political parties. They can agree on critical national issues while still disagreeing on details.

A depoliticised public administration serves a wider citizenry. In the process, the government, even though led by the winning party, governs for all and becomes inclusive, thus strengthening the trust between the state and the governed.

As for the political parties, they need to practise democracy themselves. That is, all party posts should be open for contest and there should be transparent rules for elections. As the primary organisational vehicles of electoral democracy, political parties are themselves judged in terms of their democratic character.

The most engaging models of internal party democracy are inclusive, participatory, deliberative and accountable and include fair distribution of power. It involves non-discriminatory open memberships and the inclusion of all party members in decision-making processes, leadership selection, policy formulation, as well as ensuring accountability of party leadership to its members. In short, internal rules of political parties should be guided by inclusiveness, clarity, transparency, accountability and independence. Their interaction with society should be based on dialogue, interdependence and cooperation.

In the economic arena, there is an urgency for reorienting to pursue strategies for growth with equity. This is an imperative if Bangladesh is serious about its state principle of socialism. The state has to recapture its lost leverage over the corporate sector to protect the interest of the wider community and to ensure decent jobs and a fair living wage.

It has to give priority to citizens’ well-being over balancing the budget and be bold enough to use its fiscal power to redistribute the growing wealth by using progressive taxation and widening public provisions of basic services, such as healthcare, education, housing and universal social protection. There is ample evidence of a close negative association between the tax-GDP ratio and inequality as well as between public social expenditure and inequality, clearly indicating the redistributive role of the government.

State actions are needed to smoothen the rough edges of the market forces that manifest in exclusion and inequality, which are found to fuel social and political unrest harming growth in the long run. Equity of access, opportunities and outcomes are fundamental aspects of socialism. They enhance both economic and political freedom, essential for rights-based development that empowers citizens and expands their capabilities.

Weakened democratic institutions and rising inequality create a vicious circle that leads to diminished trust — among citizens and between the state and citizens — which chips away social capital, the glue that binds society.

Bangladesh has to find the solution to its woes in its founding principles — a democratic polity and a socialist economic construct. Both are critical in rebuilding trust and social capital, needed to overcome the current national crisis.

Anis Chowdhury is emeritus professor, Western Sydney University, Australia. He held senior United Nations positions (economic and Social affairs) in New York and Bangkok.

IPS UN Bureau

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The two White House hopefuls debated on ABC television on September 10, 2024, but their mentions of Latin America were mainly dedicated to the issue of migration. Credit: Michael Le Brecht II / ABC

By Humberto Márquez
CARACAS, Oct 24 2024 (IPS)

Migration, trade, the defence of democracy, the confrontation with China and the collapse of multilateralism are issues that shed more doubts than certainties on Latin America’s expectations of the imminent presidential elections in the United States.

Interest and tension have grown after dozens of polls and bookmakers have shown similar chances of victory for Democrat Kamala Harris and Republican Donald Trump, particularly in a few decisive states.“After Washington's retreat from the wars it got into in the Middle East, there is resistance among people to getting involved in the world's problems, which weakens the liberal democratic order”: Vilma Petrash.

Latin America has been treated by many US administrations as its ‘backyard’, but it is now commonplace that Washington’s international priority lies far from the region.

Nevertheless, “we should not underestimate the ways in which Democrats and Republicans are different”, warned Tullo Vigevani, former professor of international relations at Brazil’s Paulista State University.

“For example, their proposals and policies are very different on the environment, in general and in relation to Latin America; on renewable energy and biofuels – particularly in the case of Brazil – and regarding human rights and some authoritarian trends in the region”, Vigevani told IPS from Sao Paulo.

Even if some governments are more sympathetic to Harris or Trump, Vigevani believes that both Washington and the region’s capitals will seek understandings and a relationship as normal as possible, after the 5 November election.

Migrants in the Mexican border city of Tijuana approach the barrier that closes access to the United States. Credit: Alejandro Cartagena / IOM

Migration rules

Among the campaign issues, such as economy and employment, taxes, health, wars in Eastern Europe and the Middle East, and the opposing personalities of both candidates, migration stands out, with Latin American countries being the main expellers of migrants to the United States.

“It is a sensitive issue for Americans, whether they are Democrats, Republicans or independents. It affects the immigrant population, the millions of refugees, and therefore the countries of Latin America,” Vilma Petrash, a Venezuelan professor of political science and international relations at Miami Dade College, told IPS.

Of the 336 million people living in the United States, 46.2 million were of foreign origin in 2022, according to the non-governmental Pew Research Center; 49% are already U.S. citizens, 24% are legal permanent residents, and the rest, more than 11 million people, are unauthorised immigrants, eight million of whom are from Latin American and Caribbean countries.

In fact, the United States is currently home to 65 million ‘Hispanics’, as Latin Americans are called in the country, according to different reports, and they have become a desired prize for the two candidates.

Trump, who pushed for the construction of a wall on the southern border during his presidency (2017-2021), now offers massive deportations of illegals – one million immediately, according to his vice-presidential candidate, James Vance -, and to contain irregular border immigration even by using the military.

They are “the enemy within”, Trump has said, and has stigmatised migrants: he said that criminals from Venezuela have left their country for the United States, “leaving Caracas as one of the safest cities in the world”, or that Haitians “are eating the pets” in the northern industrial state of Ohio.

Harris, who is the current vice-president and lead programmes with which president Joe Biden also tried to address causes of migration, such as poverty in Central America, has said that the immigration system “needs reform”, without going into details.

Whichever side wins, the controls will predictably increase, and Washington’s announcement that it will not renew in 2025 the temporary stay permits (parole), which allow Venezuelans, Haitians, Cubans and Nicaraguans to enter and remain in the United States for two years, was a warning sign.

The US aircraft carrier USS Nimitz sails through the Arabian Gulf. Credit: US Army

The United States isolates itself

The migration issue shows the United States’ willingness to isolate itself, to withdraw, instead of taking a proactive approach, as a great global power, to solving problems in the region and the world.

According to Petrash, “after Washington’s retreat from the wars it got into in the Middle East, there is resistance among people to getting involved in the world’s problems, which weakens the liberal democratic order. Donald Trump’s ‘America First’ policies are a case in point”.

The expert said from Miami, in the southeastern state of Florida, that there is also a lack of consensus over foreign policy, and in general over governance, to the point that a part of the population still, countering evidence, supports the version that it was Trump and not Biden who won the election four years ago.

While Biden has consistently supported Ukraine in the war against Russia, and Israel’s current military offensive in the Middle East, his political action in favour of democracy in Latin America has been weaker, and Harris would continue this, although with revisions, according to Petrash.

This is despite the certainty that, for example, among the alternatives for containing regional migration, in which the exodus of more than seven million Venezuelans in the last decade stands out, is to promote a solution to the democratic crisis in that country.

As a result of its policies and omissions, its polarised political confrontation and doubts about its electoral system, and the rise of isolationism, the United States “would have to regain the moral stature necessary to help stem democratic backsliding in the region”, says Petrash.

These setbacks are expressed in left-wing governments with authoritarian tendencies, such as those in Nicaragua and Venezuela, but also in sectors that have backed right-wing presidencies such as those of Jair Bolsonaro (2019-2022) in Brazil and the current administrations of Javier Milei in Argentina and Nayib Bukele in El Salvador.

Bolsonaro, Milei and Bukele have openly identified with Trump, whose sector harbours a far-right conservative current. For Petrash, this could favour a rapprochement with Latin American countries where there is a democratic backlash.

Unloading wind turbines from China at the port of Bahía Blanca, Argentina. It shows China’s penetration into the renewable energy sector in the Southern Cone, where it is already a major trading partner. Credit: Port of Bahía Blanca

China moves forward

Petrash points out that the United States’s international retreat was acute in Latin America, “its natural strategic zone”, after the failure of the Free Trade Area of the Americas (FTAA) initiative in 2005. “It abandoned its vision of free trade in the region and let China move forward with its enclaves,” she said.

China, “an economic, political and ideological rival, has sold itself as successful authoritarianism, and has taken advantage of Washington’s absences in Latin America to advance its quiet, pragmatic diplomacy,” says Petrash.

Trade between China and Latin America reached US$480 billion in 2023 after increasing 35-fold in 2000-2022, while the region’s total trade with the world increased four-fold, according to the  Economic Commission for Latin America and the Caribbean (ECLAC). Nevertheless, trade with the Asian giant is still far from the region’s trade with the United States, which in the same year amounted to US$1.14 trillion.

Relations between Latin America and China “have grown and even strengthened in strategic areas such as new materials for energy production, lithium batteries -South America has large reserves of the mineral-, or artificial intelligence”, Vigevani states.

Certification of Brazilian meat for export. Brazil is the largest exporter of beef and poultry, and very active in the World Trade Organization. Credit: Abrafrigo

Brazil and Mexico

Meanwhile, Brazil is concerned about Washington’s disdain – which will be evident if Trump wins – for multilateral institutions, starting with the United Nations and the proposed renewal of its Security Council in order to make it effective.

For Vigevani, this distancing from multilateralism is illustrated by the blockade, which Washington has maintained since 2020, on the appointment of new members to the dispute settlement body of the World Trade Organisation (WTO), initiated by Trump and continued by Biden.

“Even if relations with Brazil and Latin America in general look normal, this United States refusal raises doubts for the future, because it is saying it is not interested in multilateral organisations,” said Vigevani.

In the case of a Trump victory, the Brazilian professor points out, there are also unanswered questions about what his war and peace policies will be.

An example is the conflict between Ukraine and Russia. Trump has said that “ending this war quickly is in the best interest of the United States” and that he can achieve “a peace agreement in one day”, without offering further details, said Vigevani.

“It is important because, despite the war, Brazil has a strong relationship with Russia, and a very active participation in the Brics group (Brazil, Russia, India, China and South Africa),” Vigevani recalled.

According to Petrash, with Trump’s international policy, “the great power can be the bull in the china shop, and even more, the bull isolating itself in the china shop”.

At the other end of the region is Mexico, a partner of Canada and the United States in the trade agreement known as USMCA, which replaced in 2020 the North American Free Trade Agreement that has existed since 1994.

Along with maintaining the 3150-kilometre southern border of the United States, a destination for hundreds of thousands of migrants who cross the region each year, Mexico faces the campaign promise from both Harris and Trump that they intend to revise the USMCA as soon as they reach the White House.

Trump is expected to introduce tariffs and protectionist barriers, for example on Mexican production involving Chinese parts or technologies, and Harris is expected to increase environmental and labour requirements that favour industries with United States labour.

Whichever side wins, “with the new American policy of bringing companies back to the United States or to its partners in the USMCA, possibly the biggest issue now is the end of globalisation and the return to a developmentalist nationalism”, summarised Vigevani.

New institutional economics (NIE) has received another so-called Nobel prize, ostensibly for again claiming that good institutions and democratic governance ensure growth, development, equity and democracy.

Jomo Kwame Sundaram

But the trio ignore North’s more nuanced later arguments. For AJR, ‘good institutions’ were transplanted by Anglophone European (‘Anglo’) settler colonialism. While perhaps methodologically novel, their approach to economic history is reductionist, skewed and misleading.

NIE caricatures
AJR fetishises property rights as crucial for economic inclusion, growth and democracy. They ignore and even negate the very different economic analyses of John Stuart Mill, Dadabhai Naoroji, John Hobson and John Maynard Keynes, among other liberals.

Historians and anthropologists are very aware of various claims and rights to economic assets, such as cultivable land, e.g., usufruct. Even property rights are far more varied and complex.

The legal creation of ‘intellectual property rights’ confers monopoly rights by denying other claims. However, NIE’s Anglo-American notion of property rights ignores the history of ideas, sociology of knowledge, and economic history.

More subtle understandings of property, imperialism and globalisation in history are conflated. AJR barely differentiates among various types of capital accumulation via trade, credit, resource extraction and various modes of production, including slavery, serfdom, peonage, indenture and wage labour.

John Locke, Wikipedia’s ‘father of liberalism’, also drafted the constitutions of the two Carolinas, both American slave states. AJR’s treatment of culture, creed and ethnicity is reminiscent of Samuel Huntington’s contrived clashing civilisations. Most sociologists and anthropologists would cringe.

Colonial and postcolonial subjects remain passive, incapable of making their own histories. Postcolonial states are treated similarly and regarded as incapable of successfully deploying investment, technology, industrial and developmental policies.

Thorstein Veblen and Karl Polanyi, among others, have long debated institutions in political economy. But instead of advancing institutional economics, NIE’s methodological opportunism and simplifications set it back.

Another NIE Nobel
For AJR, property rights generated and distributed wealth in Anglo-settler colonies, including the US and Britain’s dominions. Their advantage was allegedly due to ‘inclusive’ economic and political institutions due to Anglo property rights.

Variations in economic performance are attributed to successful transplantation and settler political domination of colonies. More land was available in the thinly populated temperate zone, especially after indigenous populations shrank due to genocide, ethnic cleansing and displacement.

These were far less densely populated for millennia due to poorer ‘carrying capacity’. Land abundance enabled widespread ownership, deemed necessary for economic and political inclusion. Thus, Anglo-settler colonies ‘succeeded’ in instituting such property rights in land-abundant temperate environments.

Such colonial settlement was far less feasible in the tropics, which had long supported much denser indigenous populations. Tropical disease also deterred new settlers from temperate areas. Thus, settler life expectancy became both cause and effect of institutional transplantation.

The difference between the ‘good institutions’ of the ‘West’ – including Anglo-settler colonies – and the ‘bad institutions’ of the ‘Rest’ is central to AJR’s analysis. White settlers’ lower life expectancy and higher morbidity in the tropics are then blamed on the inability to establish good institutions.

Anglo-settler privilege
However, correct interpretation of statistical findings is crucial. Sanjay Reddy offers a very different understanding of AJR’s econometric analysis.

The greater success of Anglo settlers could also be due to colonial ethnic bias in their favour rather than better institutions. Unsurprisingly, imperial racist Winston Churchill’s History of the English-Speaking Peoples celebrates such Anglophone Europeans.

AJR’s evidence, criticised as misleading on other counts, does not necessarily support the idea that institutional quality (equated with property rights enforcement) really matters for growth, development and equality.

Reddy notes that international economic circumstances favouring Anglos have shaped growth and development. British Imperial Preference favoured such settlers over tropical colonies subjected to extractivist exploitation. Settler colonies also received most British investments abroad.

For Reddy, enforcing Anglo-American private property rights has been neither necessary nor sufficient to sustain economic growth. For instance, East Asian economies have pragmatically used alternative institutional arrangements to incentivise catching up.

He notes that “the authors’ inverted approach to concepts” has confused “the property rights-entrenching economies that they favor as ‘inclusive’, by way of contrast to resource-centered ‘extractive’ economies.”

Property vs popular rights
AJR’s claim that property rights ensure an ‘inclusive’ economy is also far from self-evident. Reddy notes that a Rawlsian property-owning democracy with widespread ownership contrasts sharply with a plutocratic oligarchy.

Nor does AJR persuasively explain how property rights ensured political inclusion. Protected by the law, colonial settlers often violently defended their acquired land against ‘hostile’ indigenes, denying indigenous land rights and claiming their property.

‘Inclusive’ political concessions in the British Empire were mainly limited to the settler-colonial dominions. In other colonies, self-governance and popular franchises were only grudgingly conceded under pressure.

Prior exclusion of indigenous rights and claims enabled such inclusion, especially when surviving ‘natives’ were no longer deemed threatening. Traditional autochthonous rights were circumscribed, if not eliminated, by settler colonists.

Entrenching property rights has also consolidated injustice and inefficiency. Many such rights proponents oppose democracy and other inclusive and participatory political institutions that have often helped mitigate conflicts.

The Nobel committee is supporting NIE’s legitimisation of property/wealth inequality and unequal development. Rewarding AJR also seeks to re-legitimise the neoliberal project at a time when it is being rejected more widely than ever before.

IPS UN Bureau

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When history repeats itself, the first time is a tragedy; the next is a farce. If we fail to learn from past financial crises, we risk making avoidable errors, often with irreversible, even tragic consequences.

Jomo Kwame Sundaram

Developing nations’ varied responses reflected their circumstances, the constraints of their policymakers, and their understanding of events and options.

Hence, the global South reacted very differently. With more limited means, most developing countries responded quite dissimilarly to rich nations.

Hard hit by the GFC and the ensuing Great Recession, developing countries’ financial positions have been further weakened by tepid growth since. Worse, their foreign reserves and fiscal balances declined as sovereign debt rose.

Most emerging market and developing economies (EMDEs) mainly save US dollars. The few countries with large trade surpluses have long bought US Treasury bonds. This finances US fiscal, trade, and current account deficits, including for war.

Vagaries of finance
After the GFC, international investors – including pension funds, mutual funds, and hedge funds – initially continued to be risk-averse in their exposure to EMDEs.

Thus, the GFC hit growth worldwide through various channels at different times. As EMDE earnings and prospects fell, investor interest declined.

But with more profits to be made from cheap finance, thanks to ‘quantitative easing’, funds flowed to the Global South. As the US Fed raised interest rates in early 2022, funds fled developing nations, especially the poorest.

Long propped up by easy credit, real estate and stock markets collapsed. With finance becoming more powerful and consequential, the real economy suffered.

As growth slowed, developing countries’ export earnings fell as funds flowed out. Thus, instead of helping counter-cyclically, capital flowed out when most needed.

The consequences of such reversals have varied considerably. Sadly, many who should have known better chose to remain blind to such dangers.

After globalisation peaked around the turn of the century, most wealthy nations reversed earlier trade liberalisation, invoking the GFC as the pretext. Thus, growth slowed with the GFC, i.e., well before the COVID-19 pandemic.

Markets collapse
Previously supported by the Great Moderation’s easy money, stock markets in EMDEs plunged in the GFC. The turmoil arguably hurt EMDEs much more than rich nations.

Most rich and many middle-income households in EMDEs own equities, while many pension funds have increasingly invested in financial markets in recent decades.

Financial turmoil directly impacts many incomes, assets and the real economy. Worse, banks stop lending when their credit is most needed.

This forces firms to cut investment spending and instead use their savings and earnings to cover operating costs, often causing them to lay off workers.

As stock markets plummet, solvency is adversely impacted as firms and banks become overleveraged, precipitating other problems.

Falling stock prices trigger downward spirals, slowing the economy, increasing unemployment, and worsening real wages and working conditions.

As government revenues decline, they borrow more to make up the shortfall.

Various economies cope differently with such impacts as government responses vary.

Much depends on how governments respond with countercyclical and social protection policies. However, earlier deregulation and reduced means have typically eroded their capacities and capabilities.

Policy matters
Official policy response measures to the GFC endorsed by the US and IMF included those they had criticised East Asian governments for pursuing during their 1997-1998 financial crises.

Such efforts included requiring banks to lend at low interest rates, financing or ‘bailing out’ financial institutions and restricting short selling and other previously permissible practices.

Many forget that the US Fed’s mandate is broader than most other central banks. Instead of providing financial stability by containing inflation, it is also expected to sustain growth and full employment.

Many wealthy countries adopted bold monetary and fiscal policies in response to the Great Recession. Lower interest rates and increased public spending helped.

With the world economy in a protracted slowdown since the GFC, tighter fiscal and monetary policies since 2022 have especially hurt developing countries.

Effective counter-cyclical policies and long-term regulatory reforms were discouraged. Instead, many complied with market and IMF pressures to cut fiscal deficits and inflation.

Reform finance
Nevertheless, appeals for more government intervention and regulation are common during crises. However, procyclical policies replace counter-cyclical measures once a situation is less threatening, as in late 2009.

Quick fixes rarely offer adequate solutions. They do not prevent future crises, which rarely replay previous crises. Instead, measures should address current and likely future risks, not earlier ones.

Financial reforms for developing countries should address three matters. First, needed long-term investments should be adequately funded with affordable and reliable financing.

Well-run development banks, relying mainly on official resources, can help fund such investments. Commercial banks should also be regulated to support desired investments.

Second, financial regulation should address new conditions and challenges, but regulatory frameworks should be countercyclical. As with fiscal policy, capital reserves should grow in good times to strengthen resilience to downturns.

Third, countries should have appropriate controls to deter undesirable capital inflows which do not enhance economic development or financial stability.

Precious financial resources will be needed to stem the disruptive outflows that invariably follow financial turmoil and to mitigate their consequences.

IPS UN Bureau

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Organisations fighting inequality and hunger, such as the Oxfam coalition, support calls for the world's rich to be taxed more fairly. A new study, sponsored by Brazil, will be the basis for debating the issue among the world's most powerful economies. Credit: Oxfam

By Humberto Márquez
CARACAS, Jun 27 2024 (IPS)

A global agreement could levy a small tax on the world’s 3,000 richest people, with fortunes in excess of US$ 1 billion, and use the money to fight world hunger, a study by the Brazilian government and the European Union’s Tax Observatory has shown.

The richest “are paying less than other socio-economic groups. This is a simple proposal, to make them pay at least two per cent per year of their wealth or income, and thus raise between US$ 200 billion and 250 billion each year,” said Gabriel Zucman, the French economist who led and presented the study.

If the tax were extended to owners of fortunes of more than US$ 100 million, an additional US$ 100 billion to 150 billion could be raised, said Zucman, director of the Tax Observatory and professor of economics at the Ecole Normale Supérieure in Paris and the University of California at Berkeley, in the United States.

The proposal and the study are driven by Brazil’s president, the moderate leftist Luis Inácio Lula da Silva, the current president of the Group of 20 (G20), who will present it for debate at the summit of this club of the world’s main industrial and emerging economies, late this year in Rio de Janeiro.

For Lula, “it is time for the super-rich to pay their fair share of taxes”, and to direct those resources towards combating hunger and poverty in developing countries, he said this month at meetings of the Group of 7 – Western powers – and the International Labour Organisation.

Lula commissioned Zucman’s team to prepare the technical study, “A blueprint for a coordinated minimum effective taxation standard for ultra-high net worth individuals”, which the economist presented online on 25 June, followed by a chat with a small group of journalists, including IPS."It is a choice between opacity and transparency. Tax evasion is not a law of nature": Gabriel Zucman.

“It is essential to ensure that everyone pays their fair share of taxes”, said Brazil’s finance minister, Fernando Haddad, following Zucman’s presentation. “The Brazilian presidency of the G20 has put international tax cooperation at the top of the agenda of the group’s financial track”, he added.

Susana Ruiz, head of tax policy at Oxfam International, the global anti-poverty coalition, said: “We welcome the Zucman report, which offers a critical contribution toward fixing a system that allows the ultra-rich to avoid taxes and not only accumulate and protect astronomical amounts of wealth and income ―but also hide it from governments.”

“Taxing the ultra-rich properly could raise billions of dollars for governments to combat inequality and tackle the climate crisis,” said Ruiz.

When he hosted the president of Benin, Patrice Talon, in May, Lula argued that “if the world’s 3,000 billionaires paid a 2 per cent tax on the earnings of their wealth, we could generate resources to feed the 340 million people in Africa who are facing extreme food insecurity.”

However, the report – and Zucman’s presentation – have not addressed the destination of the resources to be raised: “I can’t say how the money will be used. The distribution has to be decided by the people with their deliberations and democratic vote,” he said.

Economist Gabriel Zucman, of the European Union’s Tax Observatory, during the presentation of the study, that claims a two per cent tax on the world’s largest fortunes would raise US$ 250 billion per year, which was seen in many capitals online. Credit: Humberto Márquez/IPS

The very rich pay very little

Zucman argued that “billionaires and the companies they own have been the main beneficiaries of globalisation. This raises the question of whether contemporary tax systems manage to distribute these earnings adequately or, on the contrary, contribute to concentrating them in a few hands.”

In almost four decades – from 1987 to 2024 – the wealth of the very rich, 0.0001 per cent of the population, grew at an average 7.1 per cent per year and captured 14 per cent of the global gross domestic product, while the average wealth per adult increased by no more than 3.2 per cent.

On average, billionaires pay an effective tax rate of just 0.3 per cent of their wealth, less than other socio-economic groups.

This is largely because they own conglomerates of companies or publicly traded shares, and through these mechanisms they report, for example, lower annual taxable income than their actual wealth.

Zucman said his proposal “is very simple: that they pay 2 per cent of their wealth or income (a combination of income and wealth taxes) and thus equalise with other socio-economic groups.”

Publications such as Forbes constantly feature the world’s wealthiest individuals, all of them men, including tech start-up tycoons. A new era of transparency about their tax contributions must be ushered in, say the promoters of a new combined income and wealth tax: Credit: Valora Analitik

How to do it?

The key, Zucman explains, is to define a minimum market value that is difficult for billionaires to manipulate, “and that can now be done with the thousands of tax analysts around the world, as banking secrecy is lifted and with greater coordination between countries.”

An example of this coordination is the well-known Pillar 2 of the OECD (Organisation for Economic Cooperation and Development), which in 2021 proposed taxing at least 15 per cent of the income of transnational firms in industrialised nations, “something that did not seem possible 10 years ago”, he adds.

The basis of the new tax would be to estimate the presumed profit along with the wealth in stock and company shares. “There are also the planes, yachts, Picassos, but that is a very small part of global wealth,” according to the expert.

He admitted that billionaires might move to countries that do not levy them with the new taxes, but the state where they have their property and original sources of income can continue to tax their wealth even while abroad.

“I think this taxation mobility tends to be exaggerated in public debates,” said Zucman.

Ideally, he said, “the standard should progress as more countries join”, and a new form of cooperation between countries should be established, respecting each other’s sovereignty. “There is no need for a new international treaty,” he said.

A recent survey among G20 countries by the French firm Ipsos showed that 67 per cent of adults think there is too much economic inequality, and 70 per cent believe the rich should pay higher taxes, according to the Tax Observatory.

Support for a wealth tax on the rich is highest in Indonesia (86 per cent), Turkey (78 per cent), the UK (77 per cent) and India (74 per cent). It is lowest in Saudi Arabia and Argentina (54 per cent), but still exceeds half of respondents.

In the US, France and Germany, around two thirds of respondents support a wealth tax on the rich.

“It would be naïve to assume that all taxpayers will be in favour. But it is also a choice between opacity and transparency. Tax evasion is not a law of nature,” summarised Zucman.

Finally, he stressed that the aim of the report, which began in February, “is to launch a global policy conversation, not to end it”.

The first major global debate among the world’s leading economies will take place when G20 finance ministers meet in Rio de Janeiro on 25-26 July. But it is already clear that the road, at best, will be a long one.

The IMF no. 2 recommends non-alignment as the best option for developing countries in the second Cold War as geopolitics threatens already dismal prospects for the world economy and wellbeing.

IMF warning
Ominously, International Monetary Fund (IMF) First Deputy Managing Director Gita Gopinath warns, “With the weakest world growth prospects in decades – and…the pandemic and war slowing income convergence between rich and poor nations – we can little afford another Cold War”.

Jomo Kwame Sundaram

Growing US-China tensions, the pandemic and war have changed international relations. The US calls for ‘friend-shoring’ while its European allies claim they want to ‘de-risk’. While still pleading for ‘globalisation’, China realistically stresses ‘self-reliance’.

Multilateral rules were rarely designed to address such international conflicts as ostensible ‘national security’ concerns rewrite big powers’ economic policies. Hence, geoeconomic conflicts have few rules and no referee!

Historical perspective
After the Second World War, the US and USSR soon led rival blocs in a new bipolar world. After Bandung (1955) and Belgrade (1961), non-aligned countries have rejected both camps. This era lasted four decades.

World trade-to-GDP rose with post-war recovery and, later, trade liberalisation. With the first Cold War, geopolitical considerations shaped trade and investment flows as economic relations between the blocs shrank.

According to her, such flows increased after the Cold War, “reaching almost a quarter of world trade” during the “hyper-globalization” of the 1990s and 2000s.

However, globalization has stagnated since 2008. Later, about “3,000 trade restricting measures were imposed” in 2022 – nearly thrice those imposed in 2019!

Cold War economics
Gopinath sees “ideological and economic rivalry between two superpowers” as driving both Cold Wars. Now, China – not the Soviet Union – is the US rival, but things are different in other respects too.

In 1950, the two blocs accounted for 85% of world output. Now, the global North, China and Russia have 70% of world output but only a third of its population.

Economic interdependence grew among countries as they became “much more integrated”. International trade-to-output is now 60% compared to 24% during the Cold War. This inevitably raises the costs of what she terms economic ‘fragmentation’ due to geopolitics.

With the Ukraine war, trade between blocs fell from 3% pre-war to -1.9%! Even trade growth within blocs fell to 1.7% – from 2.2% pre-war. Similarly, FDI proposals “between blocs declined more than those within blocs…while FDI to non-aligned countries sharply increased.”

China is no longer the US’s largest trading partner, as “its share of US imports has fallen” from 22% in 2018 to 13% in early 2023. Trade restrictions since 2018 have cut “Chinese imports of tariffed products” as US FDI in China fell sharply.

However, indirect links are replacing direct ties between the US and China. “Countries that have gained the most in US import shares…have also gained more in China’s export shares” and FDI abroad.

A BIS study found “supply chains have lengthened in the last two years”, especially between “Chinese suppliers and US customers”. Hopefully, Gopinath suggests, “despite efforts by the two biggest economies to cut ties, it is not yet clear how effective they will be”.

For Gopinath, trade restrictions “diminish the efficiency gains from specialisation, limit economies of scale due to smaller markets, and reduce competitive pressures.”

She reports IMF research suggesting “the economic costs of fragmentation… could be significant and weigh disproportionately on developing countries”, with losses around 2.5% of world output.

Losses could be as high as 7% of GDP depending on the economy’s resilience: “losses are especially large for lower income and emerging market economies.”

Much will depend on how things unfold. She warns, “Fragmentation would also inhibit our efforts to address other global challenges that demand international cooperation.”

Policy options
Policymakers face difficult trade-offs between minimising the costs of fragmentation and vulnerabilities, and maximising security and resilience.

Gopinath recognises her ‘first best solution’ – to avoid geoeconomic hostilities – is remote at best, given current geopolitical hostilities and likely future trends. Instead, she urges avoiding “the worst-case scenario” and protecting “economic cooperation” despite polarisation.

She wants adversaries to “target only a narrow set of products and technologies that warrant intervention on economic security grounds”. Otherwise, she advocates a “non-discriminatory plurilateral approach” to “deepen integration, diversify, and mitigate resilience risks”.

Despite the odds, Gopinath appeals for a “multilateral approach…for areas of common interest” to “safeguard the global goals of averting climate change devastation, food insecurity and pandemic-related humanitarian disasters”.

Finally, she wants to restrict “unilateral policy actions – such as industrial policies”. They should only address “market failures while preserving market forces”, which she insists always “allocate resources most efficiently”.

Not recognising the double standards involved, she wants policymakers “to carefully evaluate industrial policies in terms of their effectiveness” But, she is less cautious and uncritical in insisting on neoliberal conventional wisdom despite its dubious track record.

Unsurprisingly, two IMF staffers felt compelled to write in 2019 of ‘The Return of the Policy That Shall Not Be Named’. Despite much earlier extensive European and Japanese use and US President Biden’s recent embrace of industrial policy, the Fund seems caught in an ideological trap and time warp of its own making.

While making excessive claims about gains from globalisation, Gopinath acknowledges “economic integration has not benefited everyone”.

Thankfully, she urges developing countries to remain non-aligned and “deploy their economic and diplomatic heft to keep the world integrated” as the new Cold War sets the world further back.

Pragmatically, Gopinath observes, “If some economies remain non-aligned and continue engaging with all partners, they could benefit from the diversion of trade and investment.”

By 2022, “more than half of global trade involved a non-aligned country…They can benefit directly from trade and investment diversion”, reducing the Cold War’s high costs.

IPS UN Bureau

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Viable, popular national economic alternatives require conditions to help build and sustain them. An independent, accountable government can ensure supportive institutions, including laws.

National economies
For the Global South, globalisation has often meant renewed foreign domination. While dating back to the age of empire, foreign domination is less evident in post-colonial times, making it more difficult to organise against it.

Jomo Kwame Sundaram

Cooperation among significant national social forces must be maintained for an alternative to be popular and sustainable. Negotiating, preserving, strengthening and ‘updating’ such collaboration is necessary to advance popular national interests.

This becomes challenging when those involved are not on a level playing field. After all, we live in a world dominated by powerful private interests, typically working through corporations, with transnational ones being the most influential.

Most people know that such domination is exercised via economic assets. But it has increasingly also involved control of the main means of communication. Global public discourses have thus been reshaped, even in multilateral institutions.

Thus, for example, the unrepresentative corporate-dominated Davos World Economic Forum sets agendas for multilateral conferences in the interest of the ‘lords of the universe’. More than seventy heads of government and state attended the last Davos event, many more than the UN General Debate.

Can developing alternative means of communication better shape our discourses, as our interests rarely coincide with those effectively in control?

Rule by law
Katarina Pistor has shown how law is hardly neutral but instead crucial to capitalism’s functioning. Thus, setting and enforcing rules privileges the interests shaping them.

Law is made by the powerful to legitimise their interests and practices, e.g., by enforcing contracts, property rights, etc. The legal framework defines how we operate, what is considered legal and illegal, and what is licit and illicit.

The African Union-Economic Commission for Africa study, chaired by former South African President Thabo Mbeki, recognised that many illicit practices are not illegal. Such massive illicit financial outflows characterise most of the Global South.

Such haemorrhage has worsened in recent decades as developing countries competed to attract foreign investments. In recent decades, they opened their capital accounts, believing economists who claimed finance would then flow ‘downhill’ into them. Instead, it flows ‘uphill’ from ‘capital-poor’ to ‘capital-rich’ nations.

Finance has transformed economies and communities in recent decades. The growing influence of such interests has increasingly constrained national monetary and financial authorities’ ability to manage interest and exchange rates.

Hence, only governments and multilateral financial institutions can create arrangements enabling preferential access to concessional finance. Inclusion and accountability can help ensure governments better serve the public interest.

Taxation
The Independent Commission for the Reform of International Corporate Taxation recommended a minimum universal corporate income tax rate of 25%.

US Treasury Secretary Janet Yellen later proposed 21%, the current US rate, to minimise political opposition in Washington. However, UK Prime Minister Boris Johnson cut this to 15% at the G7 meeting he hosted.

The OECD-G20 Inclusive Framework for Base Erosion and Profit Shifting (BEPS) seems to share the OECD view that such tax revenue be distributed by the country of sale, not production.

Developing countries lose out as they generally produce much more than they can afford to consume. With foreign advice shaping developing countries’ policies, their tax rates and revenue shares of output have fallen for decades. Hence, indebted nations believe they have to cut government spending.

Unsurprisingly, most developing countries have supported the African group’s resolution to make the UN the sole legitimate body for international tax cooperation, thus undermining the Inclusive Framework’s pretensions.

Trade liberalisation bias
Trade liberalisation is a double-edged sword. It can enhance exports to earn more foreign exchange but also destroys economic capacities, e.g., for industrialisation and food security.

Rich countries – including the US, the world’s biggest agricultural exporter – have sustained food production with government support using protection and subsidies. But while such subsidies are allowed, developing countries have been stopped from using tariffs for food security.

The US subsidises maize production for corn oil to make bioethanol. Corn syrup and chicken feed also get subsidised in the process. Consequently, US chicken exports have wiped out many poultry farmers worldwide.

Food prices increased sharply for some months after the Russian invasion of Ukraine. Jayati Ghosh showed these food price spikes were mainly due to speculation and price manipulation rather than wartime supply disruptions.

Futures markets once reduced commodity price fluctuations but have had significant disruptive effects more recently. This is mainly due to the changed nature of commodity spot, futures and options markets, especially with massive programmed financial speculation using algorithms and artificial intelligence.

* Edited remarks to the World People’s Economic Forum at the World Social Forum in Kathmandu on February 18, 2024.

IPS UN Bureau

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As dire economic predictions for 2023 did not materialise, pundits began 2024 far more optimistically. But policy ghosts from the last half-century will likely undermine such wishful thinking.

Optimistic forecasts
As New Year celebrations of different cultures decline with the coming of spring in the northern hemisphere, it is useful to review and reconsider various end-of-2023 and early-2024 economic prognoses against what happened in the previous year.

Jomo Kwame Sundaram

But he acknowledges this can easily be “derailed by any number of factors, not least geopolitics”. Such developments – especially the US-China conflict – are likely to undermine growth.

Former Goldman Sachs Asset Management chair Lord Jim O’Neill warns against overconfidence in such forecasts. He warns of the many “known unknowns”, particularly geopolitical ones, besides “unknown unknowns lurking on the horizon”.

For former Wall Street pundit Mohamed El-Erian, “the chances of robust global growth in 2024 appear tenuous”. He dismisses “optimistic sentiment” based on “central banks aggressively cutting interest rates amid the softest of all soft landings for the US economy”.

After all, the European Central Bank has emphasised it will not follow the US Fed in ending interest rate hikes. Even the International Monetary Fund (IMF) has become an inflation hawk, accelerating world economic contraction.

El-Erian agrees central banks alone “may not be enough to generate the necessary growth momentum to withstand the headwinds facing the global economy”. Meanwhile, fiscal austerity policy pressures limit the means for counter-cyclical policies.

World Bank Chief Economist and Senior Vice-President Indermit Gill and Ayhan Kose agree on the risks of tepid world growth for developing economies. However, their main recommendation is to pursue the same policies that have led to the current predicament.

The duo urge developing countries to pursue policies “generating a broadly beneficial investment boom”, including contractionary fiscal austerity! Governments are told to “avoid the kinds of fiscal policies that often derail economic progress”, such as counter-cyclical efforts.

Western central banks resorted to unconventional monetary policies – mainly ‘quantitative easing’ (QE) – to keep their economies afloat after the 2008 global financial crisis. But QE enabled more financialisation and indebtedness rather than real investments or recovery.

Dismal recovery prospects
The World Bank’s 2024 Global Economic Prospects is pessimistic, fearing “the weakest global growth performance of any half-decade since the 1990s”. After all, growth has slowed in most of the world since the pandemic, falling from 6.2% in 2021 to 2.6% in 2023.

Growth in 2023 in most developed economies was below the 2010-19 average of the Great Recession after the 2008 global financial crisis (GFC). Consumer prices began to rise, driven by supply-side disruptions and increased demand, thanks to more government expenditure after the 2020 pandemic-induced recession.

Fuel and food price speculation followed the February 2022 Ukraine war outbreak, further raising prices. Soon, however, as C. P. Chandrasekhar and Jayati Ghosh have shown, speculation receded as adequate supplies became evident, bringing price levels down from their mid-2022 peaks.

But decelerating inflation was attributed to US Fed-led sustained interest rate hikes long after inflation had peaked, over a year before central bank rates peaked. Falling global growth has thus been misrepresented as the unfortunate but inevitable and necessary cost of taming inflation.
It is widely believed that growth can now be revived as interest rates come down. However, over a decade of low-interest rates from late 2008 to early 2022 did not end the slow growth after the GFC.

Most governments backtracked as soon as the ‘green shoots’ of recovery appeared in 2009. Similarly, budget deficits were quickly cut in 2021 and 2022, with the post-pandemic recovery rapidly losing momentum.

With the policy mantras of balanced budgets and fiscal austerity – dictated by financial interests – dominant in recent decades, more government spending to stimulate recovery and growth remains unlikely. Instead, all hopes are on interest rate cuts still eschewed by many central banks.

South under greatest threat
Harvard Professor Kenneth Rogoff expects 2024 to be a “rocky year for everyone”. He forecasts the likelihood of a US recession at “probably around 30%”, twice the “15% in normal years”, and notes China’s recovery efforts “face several daunting challenges”.

Almost alone among Western economic oracles, he recognises developing economies “are in the most danger”. Now much more vulnerable after decades of earlier Western-promoted globalisation, most struggle to avoid stagnation if growth fails to recover as expected.

After over a decade of tepid growth and deteriorating conditions in much of the Global South, especially the poorer nations, prospects will depend on policymakers thinking realistically and acting pragmatically to expedite sustained recovery rather than pursuing the failed prescriptions of recent decades.

IPS UN Bureau

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Imperialism continues to dominate the world. Globalisation is losing to some of its anti-theses, but imperialism still rules, increasingly by law, albeit in changing even contradictory ways.

Jomo Kwame Sundaram

Power and empire
Our histories and cultures are often quite different despite our common, but varied experiences of foreign domination, even rule. Such power involves varied mixes of socioeconomic and political relations, involving governance and even the rule of law.

Our world has seen empires and imperialism for over two millennia, at least from before the time of Jesus Christ in Palestine, who had to deal with the satraps of the Roman empire then.

Half a millennium ago, when the Spanish conquistadors first reached the Philippines via the Pacific in 1521, the people of Mactan, led by Lapu-Lapu, resisted. Magellan had burnt down their villages after they ignored his demands for tribute as well as accepting his god and king.

Empires evolve
Imperialism has changed very significantly over time and will continue to change. It has combined in new ways with capital, capitalisms and existing socio-economic relations, especially after the mid-19th century.

A century and a half ago, at least two people from Asia began to criticise and oppose the emerging new imperialism. Sayyid Jamaluddin al-Afghani developed an Islamic critique of Western imperialism.

Dadabhai Naoroji, an Indian who became a Liberal Member of the English Parliament, was the other. Both analysed the impacts of imperialism in their own cultural idioms, condemning injustice and ‘drainage’ of the economic surplus.

They wrote decades before radical Western writers such as the English Liberal John Hobson and Social Democrats such as Rudolf Hilferding, Rosa Luxemburg and VI Lenin. All linked the new imperialism to ongoing capitalist transformation.

Imperial contradictions
However, successful resistance to imperialism does not overcome all injustices and may even make some worse. The US War of Independence against British colonialism strengthened American slaveowners and their business interests.

From thirteen colonies, the US expanded south and west, typically at the expense of indigenous communities, delaying inevitable pressure to go beyond the continent. Anticipated by the Monroe Doctrine in the early 19th century, US expansion abroad led to the Spanish-American War at its end.

Imperialist expansion abroad helped resolve some, but not all problems of capital accumulation. In the early 20th century, the Austro-Hungarian and Ottoman empires – both invoking religion – ended with help from rising nationalism.

Meanwhile, the Berlin Congress had mitigated inter-European imperial rivalries in Africa. Three decades later, the Treaty of Versailles purported to end the so-called First World War, mainly among rival European imperialists.

But, as Lenin and Keynes both observed – albeit somewhat differently – its inter-imperialist roots and Versailles’ terms only ‘kicked the can down the road’, thus sowing the seeds for the Second World War.

China had contributed immensely to the First World War effort. But instead of returning the Shantung peninsula to China, Versailles gave it to Japan after Germany surrendered it! This triggered widespread Chinese resentment of the West, triggering the 1919 May Fourth movement.

Imperialism without colonies
Recognising how rival colonial interests threatened the future of capitalism and imperialist interests, visionary US President Franklin Delano Roosevelt envisaged a new post-war world order, saving imperialism through decolonization.

This led to the birth of the United Nations and related multilateral institutions, including the International Monetary Fund and the International Bank for Reconstruction and Development, somewhat anticipating the Marshall Plan.

Now, with capitalism divided and weaker in some ways, but stronger militarily, modes of domination are still changing with significant consequences. For instance, until the 21st century, there was no explicit US African Command (Africom) to protect all Western and not only European interests there.

Another of Barack Obama’s ‘achievements’ after receiving the Nobel Peace Prize was overthrowing the Libyan regime. Despite giving up his nuclear programme at the request of the West, its leader Muammar Gaddafi, generally acknowledged as key to establishing the African Union, was humiliatingly murdered.

The significance of Gaza
The world is constantly being reshaped by imperialism, and developing countries need to continually update their understanding of its features. Such power remains the main, but not the only common challenge we face today, especially in the Global South.

Today, the tragedy of Gaza is the most brutal face of Western imperialism, historical and contemporary. It is not disputed that European failure to resolve its ‘Jewish problem’ from the 19th century contributed directly to the Nazi Holocaust.

And as Israel’s first Prime Minister David Ben-Gurion noted, “If I were an Arab leader, I would never sign an agreement with Israel. It is normal; we have taken their country. It is true God promised it to us, but how could that interest them? Our God is not theirs.

“There has been anti-Semitism, the Nazis, Hitler, Auschwitz, but was that their fault? They see but one thing: We have come and we have stolen their country. Why would they accept that?”

Ben-Gurion’s acknowledgement of the implications of creating Israel underscores the legitimacy of the ongoing Palestinian resistance to Israeli settler colonialism, fascism and apartheid, specifically its latest brutal massacre in Gaza.

Explicit Western support for Israel’s genocidal ethnic cleansing reminds the world that those who claim moral legitimacy from having been victims before are more than capable of perpetrating the same, if not worse, on others.

The Israeli occupation of Palestine is a cruel caricature and reminder of the threat to humanity, especially in the Global South, of one hard face of imperial power, loyally supported by the soft power of manufactured consent, digitised or otherwise.

* Revised from invited speech at the 2024 Kathmandu World Social Forum opening ceremony, 15 February 2024.

IPS UN Bureau

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A gathering ‘perfect storm’ – due to various developments, several quite deliberate – now threatens much devastation in the global South, likely to most hurt the poorest and most vulnerable.

Globalisation’s protracted decline
The age of globalization had mixed consequences, unevenly incorporating national markets for labour, goods and even some services. It ended gradually, with the trend far more pronounced following the protracted worldwide stagnation since the 2008 global financial crisis.

Jomo Kwame Sundaram

But the end of the era of globalization did not mean a simple return to the status quo ante. Most economies had been transformed irreversibly by economic liberalization, both nationally and internationally, with dire lasting consequences.

Market pressures for fiscal austerity were strengthened by conditionalities and advice from international financial institutions. This inevitably led to deep cuts in government spending, leaving little for public investments, which might contribute to the recovery of the real economy.

Interest rate hikes accelerate stagnation
The 2008 Wolfowitz doctrine, from late in the Bush Jr presidency, was revised by the Obama administration to launch the second Cold War. The COVID-19 pandemic and the last two years of war and sanctions have worsened supply-side disruptions exacerbating ‘cost-push’ inflation.

Some prices spiked due to opportunistic market manipulation by investors and speculators as well as deliberate disruptive interventions for political advantage. The rule of law – even once sacred property rights – has been sacrificed for political expediency, undermining trust, especially in states.

Hence, concerted interest rate hikes by influential Western central banks have proved to be an unnecessary, inappropriate and blunt demand-side tool to address contemporary inflation driven primarily by supply-side factors!

Instead of addressing inflation due to supply disruptions, higher interest rates have cut both private and government spending, resulting in less demand, jobs and incomes in much of the world.

In the US, successive presidents maintained full employment since Obama inherited the 2008 global financial crisis. Uniquely, its central bank, the US Fed, has a dual mandate to maintain full employment and financial stability.

All over the world, the deliberate and concerted interest rate hikes of 2022 and 2023 have proved to be both contractionary and biased against labour and jobs.

Global South’s hands tied
Policymakers in the Global South are greatly constrained by their circumstances. Exposed to global markets and with limited fiscal and monetary policy instruments at their disposal, they are captive to pro-cyclical policy biases.

The International Monetary Fund and other international financial institutions tend to demand fiscal austerity conditionalities in return for any credit relief provided.

Thus, recipient governments are subject to spending constraints instead of providing relief. Worse, many legislatures have imposed unnecessary spending constraints on themselves, supposedly to enhance government fiscal credibility.

Supposedly independent central banks have further compounded monetary policy constraints. Such central banks are primarily responsive to international and national financial interests rather than national policy priorities.

Following monetary and financial liberalisation in recent decades, developing countries are much more exposed to debt crises worse than those experienced in the 1980s.

Then, governments in Latin America, Sub-Saharan Africa and elsewhere had borrowed heavily, mainly from US and UK commercial banks. After US Fed chair Paul Volcker raised interest rates sharply from 1980, severe fiscal and debt crises paralysed many of these governments for over a decade.

The debt exposure level is much higher and borrowed from varied sources, significantly more market-based and non-bank. Governments have also provided guarantees for state-owned enterprises to borrow heavily, but less accountably than with sovereign debt.

New divides in post-unipolar world
The unipolar world moment after the end of the first Cold War briefly saw unchallenged US hegemony. The Organization for Economic Cooperation and Development developed policies for the global North in trade, investment, technology, finance, tax and other vital areas, typically at the expense of the South.

More recently, the ‘new Cold War’ or geopolitical policies, including illegal sanctions, have frustrated developing countries’ aspirations to reach the Sustainable Development Goals, adapt to global warming and its effects, and retrieve a fairer share of global corporate income tax revenue.

With most economies barely growing, and efforts by many governments to reduce imports, export opportunities have become more uncertain and constrained, ending a crucial premise for globalisation. With higher interest rates, even finance has abandoned developing countries in ‘flights to safety’ to the US.

Lacking the ‘exorbitant privilege’ of issuing the US dollar, still the world’s reserve currency, most developing countries lack monetary, fiscal and policy space. Unlike rich nations which borrow in their own currencies, most developing countries remain vulnerable to foreign exchange rate vagaries.

Poorest getting poorer
With Obama’s ‘Pivot to Asia’ launching US efforts to check China, its lending to developing countries, including in Sub-Saharan Africa, fell from around 2016.

Despite higher borrowing costs, many of the poorest countries turned to private creditors. But private market lending to poor nations dried up from 2022 as the US Fed raised interest rates sharply for almost two years.

As debt service costs soared, distress risks have risen sharply, especially in the poorest nations. While not obviously due to a conspiracy against the global South, there is little concern for the predicament of the worst off in the poorest countries.

Meanwhile, poverty in the poorest countries has not declined for over a decade.

With international disparities growing at the expense of the poorest people in the poorest nations, the desire to emigrate continues to rise although mainly unaffordable to the poorest.

IPS UN Bureau

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A poster of the World Social Forum in Kathmandu, to be held Feb. 15-19, 2024. This is the second time that the Forum is holding its world meeting in Asia. The first was in Mumbai, India, in 2004, when it was attended by 111,000 people. CREDIT: WSF

By Mario Osava
RIO DE JANEIRO, Feb 13 2024 (IPS)

The World Social Forum (WSF) is today “more necessary than ever,” according to Oded Grajew, promoter and co-founder of the global civil society meeting – a festival of diversity that has not yet succeeded in fomenting or designing the “other possible world” that it predicted when it was created and adopted that motto.

The WSF, whose next edition will be held Feb. 15-19 in Kathmandu, the capital of Nepal, first emerged in 2001 in Porto Alegre, a city in southern Brazil, at the initiative of Brazilian organizations and social movements, in coordination with international groups.

The idea proposed by Grajew was to hold a counterpoint to the World Economic Forum, which meets annually in the Swiss Alps city of Davos. Hence the similar name but different focus, on social issues, the initial coincidence of dates in January, and the banners against neoliberalism and globalization.

The first edition brought together nearly 20,000 people from 117 countries. Participation grew and exceeded 100,000 people in several global meetings held in different countries, after the first three held in Porto Alegre, where it has returned on several occasions.

The meetings took place in the Indian city of Mumbai in 2004, then in 2006, the WSF was divided between Bamako (Mali) and Caracas, to be followed by Nairobi (2007), Dakar (2011), Tunis (2013 and 2015) and Mexico City (2022).

In addition to Porto Alegre, it returned to Brazil in 2009 (Belém, in the eastern Amazon) and 2018 (Salvador, in the northeast). And it expanded into national, regional and thematic forums, promoting debates on a range of issues, from economic to environmental and climate, gender, ethnic, sexual minorities, and disabilities questions.

But the WSF has been in decline since the last decade. It has lost its initial charm and repercussions, and its current impact on global crises is hardly noticeable, especially since it was born as a movement that did not aim to reach conclusions, but rather to generate debates and demonstrate that “another world is possible.”

“We are losing the game so far,” Grajew told IPS by telephone from Sao Paulo. “The climate crisis has worsened, inequalities and conflicts have grown, with the risk of nuclear war, confidence in democracy is declining and global governance is lacking. These are enormous risks that threaten the human species.”

All of this increases the need to revitalize the WSF, because it is about strengthening civil society, the only way to solve the challenges, in the view of its organizers.

The WSF, despite everything, has already left a legacy as a “space for making connections and mounting resistance by society around the world,” Grajew said. It contributed to raising the visibility of the climate emergency on the international agenda, strengthened the anti-racist struggle and fostered alliances that made indigenous peoples “political actors in a way that they were not before,” he said, to illustrate.

In Brazil, it was the increasingly strong civil society that prevented a coup d’état that would have installed a dictatorship and returned the far-right former president Jair Bolsonaro to office, said Grajew, currently an advisor to several institutions and president emeritus of the Ethos Institute for Business and Social Responsibility, a businessman turned social activist who remains so at the age of 80.

A picture from one of the first editions of the World Social Forum, in the Brazilian city of Porto Alegre, showing the globe seen from the South, which has been a repeated part of its logos, as well as its slogan: “Another world is possible”. The assembly style that does not reach conclusions has been at the same time the strength and weakness of the movement. CREDIT: Claes

Solutions and resources are available

“Today we know what the problems of humanity are and how to solve them; what is lacking is political will,” Grajew argued.

“Our problem is not economic, it’s not a lack of resources; it’s a problem of political and social organization,” said Ladislau Dowbor, an 83-year-old economist who always addresses the WSF. “Global GDP is 100 trillion dollars per year, equivalent to 4,200 dollars a month per family of four people. It is enough for a decent and comfortable life for all. All that would be needed is a tax of only four percent on the fortunes of the richest one percent of humanity.”

The WSF is an attempt to create a connected political force from the profusion of organizations and social movements in which civil society seems to be fragmented, with a multiplicity of banners, from environmental to feminist, anti-racist and egalitarian.

There was an explosion of social diversity in the 1960s and 1970s, with the affirmation of multiple identities and their struggles, which seek convergence in processes such as the WSF. These are generally progressive movements, which are not automatically connected together.

The most immediate antecedent was the so-called “Battle for Seattle,” the city in the northwest U.S. state of Washington that in 1999 brought together anti-globalization activists during a World Trade Organization summit, demanding globalization of the people and not of the economy.

“It’s a long-term process. Diversity is a richness, but sometimes it is divided by identity sectarianism,” said Daniel Aarão Reis, a 78-year-old historian who extensively studied Brazil’s 1964-1985 military dictatorship and the Soviet revolution.

In his view, the consolidation of opposition to or containment of the damage caused by capitalism in the current situation faces two adverse factors.

“One is the decline of the working class, which since the late nineteenth century, concentrated in the cities, had a demographic weight and organized strength to lead that struggle, attracting other popular segments, which were sometimes even a majority of the population, such as peasant farmers. But it has suffered demographic losses, slow but evident since the 1970s,” Aarão Reis said.

Another is the collapse of the Soviet Union in 1991, which gave way to unbridled capitalism, with the “restoration of tsarist traditions.” This hit progressive forces even if they were critical of authoritarian socialism. For a long period Moscow had supported, for example, national liberation struggles.

Photo of a march of the Thematic Social Forum on Older Adults in Porto Alegre, southern Brazil, in January 2023. Thematic, national and regional forums proliferated around the world after the first global meetings of the World Social Forum in Porto Alegre, from 2001 to 2003, and in Mumbai, India, in 2004. CREDIT: Tânia Rego / Agência Brasil

Far right can unite progressives

“Creating connections between the myriad of dispersed currents, without a powerful hub such as workers’ struggles, with their unions and parties, is a great challenge. But sometimes an external enemy helps foment these connections. That was the case of Nazism, which gave rise to a broad alliance against it,” the historian said in an interview with IPS in Rio de Janeiro.

The far right, which brings together racism, threat to democracy, misogyny and other retrograde stances, can “help condense that dispersed nebula that the left has become,” said Aarão Reis, a professor at the Fluminense Federal University.

In the case of the WSF, its apparent loss of momentum exacerbated internal divisions in the International Council which is responsible for managing the forum.

“The WSF is like the spiritual exercises of the church, which benefit those who are present, but are basically internal, and don’t spread to society,” by not expressing itself on the burning issues of the world and thus making it impossible to communicate outwardly, Argentine- Italian Roberto Savio, co-founder and president emeritus of Inter Press Service (IPS), who was an active member of the International Council, said from Rome.

This is how the 89-year-old expert on South-South communications described the disagreement of some activists and advisers with the Charter of Principles that defines the WSF as “a plural and diversified space” of reflection and connection of entities and movements, that is “non-partisan” and “non-deliberative.”

Screenshot from the closing assembly, on Jan. 31, of the World Social Forum 2021, which was held only in digital format that year. The difficulties of organizing an unprecedented online meeting did not prevent, according to the organizers, 9,561 participants from 144 countries and 1,360 organizations from taking part in 751 activities, including workshops, round tables, debates and sectoral assemblies. CREDIT: Mario Osava / IPS

Not a party

Chico Whitaker, another co-founder of the Forum and a fervent defender of the Charter of Principles, said “We have to continue being a space for connection, for the search for alternatives and forms of action, for new paths. Action is a function of the participating organizations and movements, not of the Forum.”

The discrepancy has existed since the beginning of the WSF and stems from “an old culture of hierarchical, autocratic politics,” he told IPS by telephone from São Paulo.

At 92 years of age, Whitaker regretted that he was not able to travel to Kathmandu which was “too far away,” and that he would be engaged in “very limited” digital participation.

The edition in Kathmandu will be hybrid, both face-to-face and digital, but the time zone difference between the capital of Nepal and São Paulo, for example, is nine hours, which makes it difficult to follow the activities from afar.

That is why the debates of greatest interest in the Americas will be held at night in the Nepali capital, said Rita Freire, representative of the Ciranda network, which is in charge of the WSF collaborative communication at the International Council.

Freire, a 66-year-old journalist and editor of the Middle East Monitor, also represents an alternative of political action “within the process of the Forum, but maintaining the Charter of Principles.”

A new body is being tested in Kathmandu, the Assembly of Struggles and Resistance with social movements, which will adopt political positions and declarations. “But it will do so in its own name and not in the name of the Forum,” Freire clarified from São Paulo by telephone a few hours before taking a flight to Kathmandu.

Holding the gathering in Asia opens new horizons for the WSF, as it is the most dynamic region of the global South, at least in economic terms, agreed Freire and Whitaker. It reflects a mobilization of the social organizations of Nepal and neighboring countries, which came together and offered to host the Forum.

A ship passes through the Pedro Miguel lock on its way to the Miraflores system to cross the Panama Canal. The infrastructure faces water shortages due to drought in the country, which limits the pace of maritime cargo transport through the bioceanic route that moves six percent of the world's maritime trade. CREDIT: Emilio Godoy / IPS

By Emilio Godoy
PANAMA CITY, Feb 8 2024 (IPS)

At the bar that Sandra manages in Panama City’s central financial district, the variety offered on the menu has shrunk due to delays in ship traffic through the Panama Canal, one of the world’s major shipping routes.

“We are out of stock of some of our foreign beers, because the shipment didn’t arrive. I hope it will get here one of these days,” the Panamanian bar-keeper told IPS, as she pointed to a half-empty refrigerator in the bar nestled between skyscrapers. "Above and beyond the ship traffic, the canal should provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization." -- Óscar Vallarino

The delays have been repeated since drought took hold in this Central American nation throughout 2023, exacerbated by the effects of the climate crisis and the cyclical El Niño Southern Oscillation (ENSO) weather phenomenon that warms the waters of the Pacific Ocean.

This mixture of phenomena has repercussions on the forested areas surrounding the canal and the Alhajuela, Gatun and Miraflores artificial reservoirs that supply it and provide water for more than half of the country’s total population of 4.7 million people.

Due to the lack of rain, the level of Gatun Lake, the main source of water for the canal inaugurated in 1914, dropped from its normal height of 26 meters above sea level to less than 24 in recent weeks.

Six percent of the world’s maritime trade, especially container trade, goes through the canal connecting the Atlantic and Pacific oceans.

In addition, the interoceanic waterway has lost volume through evaporation due to warming water temperatures, according to a 2022 study by the Netherlands Water Partnership (NWP), a network of 180 public and private organizations.

Oscar Vallarino, a former official of the state-owned autonomous Panama Canal Authority (ACP), founded in 1978 to manage the company, said the situation stems from including the canal in its current watershed and expanding it since 2016, which doubled its capacity and the volume of ships, in addition to leading to the prohibition of the construction of more dams.

“Above and beyond the ship traffic, the canal must provide raw water for the populations of (the provinces) of Panama and Colon. The difference is that now there is more traffic and the problem is that in the dry season the salt level rises and damages the raw water for potabilization,” he told IPS.

The cruise ship Queen Victoria, owned by the British company Cunard, prepares to lower the first eight meters in the Miraflores locks of the Panama Canal, heading for the Atlantic Ocean. CREDIT: Emilio Godoy / IPS

From the Bridge of the Americas, which connects Panama City with the western part of its metropolitan area, the ships lined up to enter the canal look like figures in a board game moving slowly over a blue board. The waiting time varies, mostly en route to a U.S. port.

But the slowdown stems from the crucial element of the infrastructure: water, whose scarcity means fewer commercial vessels can cross from one ocean to the other. The reservoirs that feed the canal have a capacity of 1,857 hectoliters and currently hold only 900.

At the same time, the demand for different activities is increasing, leading to greater competition for consumption and conflicts that will intensify throughout this century.

Law 93 of 1999, modified by Law 44 of 2006, establishes the limits of the canal’s watershed, which covers 343,521 hectares and is one of 52 in the country.

The rainy season in this tropical country runs from May to November, but the last quarter of last year recorded lower rainfall, and the drought will worsen in the first half of 2024.

The population of the provinces of Panama and Colon also depends on water from the canal. But the problem is aggravated by waste, the leakage of at least 40 percent of the water due to broken pipes and the lack of efficient infrastructure.

This is despite the fact that this nation ranks fifth in the world in annual rainfall, has six times the world average of fresh water per person, in addition to 500 rivers, in an area of only 75,517 square kilometers.

But on the other hand, it has the highest individual consumption in Latin America, with 507 liters per inhabitant. Panama has an availability of about 115,000 cubic meters per inhabitant/year, according to the Inter-American Development Bank (IDB).

The consequences of the climate crisis and ENSO cloud the outlook for the water supply, since they mean that both excess and scarcity of water will create trouble for this Central American country. El Niño has reappeared in its strong phase, as meteorologists define the worst of its three modalities.

The ACP estimates that the basin captures almost 4.4 billion cubic meters (m3) annually, of which the canal consumes 70 percent for navigation and 15 percent for drinking water.

A view of Panama City, where population growth is driving up water demand. Drinking water for the city and the neighboring province of Colon comes from the Panama Canal and faces chronic management problems and infrastructure failures, now compounded by drought. CREDIT: Emilio Godoy / IPS

Victim of nature

In response to the crisis, the ACP adjusted the maximum draft, the daily traffic capacity and the reuse of diverted water.

As a result, it reduced the number of vessels crossing the 82-kilometer route to 24 per day from an average of between 38 and 40, which could drop to 18 this February, when traffic is expected to decline by one-third from its usual level.

In addition, it charges 10,000 dollars for water rights and auctions quotas for diverting water. Each passage requires 250 million liters of water per vessel, which is then returned to the system.

The canal already suffered an acute water crisis in 2016, but it has been aggravated now by a strong ENSO.

William Hugues, a member of the non-governmental National Front for the Defense of Social and Economic Rights, said the crisis was foreseeable and exposed the underlying aim of prioritizing the canal over the water supply to the local population.

“We issued a warning in 2006, when the expansion was being discussed, that larger locks would cause more salt water to enter Gatun. This demand would threaten the supply of drinking water. We have to accept that the canal has physical limits and we cannot respond to the dynamics of the international economy,” the economist, whose group includes social organizations, trade unions and other groups, told IPS.

Hugues, author of a book on the expansion of the canal traffic, pointed out that there is always a line of ships waiting to cross during the dry season and that the measures applied are the same as before the expansion.

Due to cargo demand, the expansion, undertaken in 2007 and completed in 2016, added two locks to accommodate the larger, heavier Neopanamax cargo ships, which need more water to transport up to 120,000 tons, especially gas cargo. But the expansion has had repercussions on the demand for water.

The use of the canal brings more than four billion dollars into the Panamanian coffers annually, approximately six percent of GDP. The drop in traffic could mean a financial loss of more than 200 million dollars a year and, therefore, will have an impact on the already stressed finances of this Central American nation.

Although it had promised to do so, the ACP did not respond to an IPS query about forecasts for canal activity in 2024.

The crisis has forced ships to take longer and more expensive routes, such as around Cape Horn, to the south of Chile, or to move cargo overland from coast to coast in Panama, before reloading it onto ships.

Drought has caused lines of ships waiting to cross the Panama Canal, where traffic could shrink even more in the face of the increasing scarcity of rain. Infrastructure managers are already limiting daily ship crossings to one-third of the usual number. CREDIT: ACP

Palliative measures

To face the recurring crises, the ACP is studying the construction of a dam and reservoir on the Indio River, west of Gatun, and the use of the Bayano dam, which would entail different costs.

The dam costs 800 million dollars and involves the flooding and displacement of some 1,900 people in an area of 400,000 hectares, while the use of the Ascanio Villalaz hydroelectric dam, owned by the Panamanian state and the private U.S. company AES Global Power, costs three times as much.

But the effects of the climate crisis may worsen, as several recent analyses suggest.

Between 1971 and 2020, Panama experienced significant drops in precipitation, although rainfall trends varied between regions.

Thus, the eastern and central Pacific provinces were significantly drier, especially during the summertime, while the western and central Caribbean provinces were wetter, particularly during the fall, according to the Panama climate risk study published by the World Bank earlier this year.

By 2050, precipitation patterns are expected to increase, when the Pacific territories should experience a jump in rainfall, mostly in summer and autumn, and the Caribbean/Atlantic should see no net change.

The study warns that the frequency of intense floods and droughts related to ENSO will become more common and are especially critical to monitor in the canal basin and the Dry Arc, an area in the west of the country characterized by scarce rainfall.

Meanwhile, the study by the Dutch organizations warns that the measures adopted are short-term and will only limit the canal’s customers in the long term, which will affect the national economy and global pollution.

In addition, several swaths of the country, including the capital and Gatun, are expected to be flooded by 2050.

Panama has an Action Plan 2022-2026 for the integrated management of water resources, composed of 35 actions, but its implementation is proceeding slowly.

The plan seeks to contribute to water security through the prioritization of concrete actions based on national priorities, climate change scenarios, the needs of the different sectors and the institutional and financial capacity for their implementation.

The ACP itself recognizes the need for long-term investments to meet the challenges.

The country has 56 water treatment plants, seven of which are located in the canal. The expansion of several facilities and the construction of two would add some 851 million liters to the flow.

According to Vallarino, a new reservoir and the use of the Bayano dam would eventually be needed.

“We have to ask ourselves if it is feasible. Studies projecting the future should be done, to assess the options. The population is a priority. If it is well managed, we may have some setbacks, but there will be enough water for the public,” he said.

Meanwhile, Hugues said that the canal’s mercantile development rate is unsustainable.

“With the expansion of the canal, shipowners will continue to expand ships, they’ll keep growing and growing. That means we would have to make the basin the whole canal. If they follow the thesis that the canal must continue to be expanded, there will never be enough water to meet demand,” he argued.

Under the circumstances, the canal must adapt, because if it does not, drinkable water will choke in the pipes and businesses such as Sandra’s will continue to have half-empty refrigerators.

Contractionary economic trends since 2008 and ‘geopolitical’ conflicts subverting international cooperation have worsened world conditions, especially in the poorest countries, mainly in Africa, leaving their poor worse off.

Jomo Kwame Sundaram

Deepening stagnation
Following tepid growth after the 2008 global financial crisis, Covid-19 disrupted supply chains worldwide. Then, post-pandemic recovery was disrupted by wars in Ukraine and then Gaza.

Food and energy prices soared briefly, largely due to market manipulation by opportunistic investors. Invoking the price hikes as a pretext, the US Fed and European Central Bank raised interest rates, deepening economic stagnation worldwide.

Countries which borrowed heavily during the earlier decade of unconventional monetary policies – especially ‘quantitative easing’, offering easy credit – now have to cope with increasingly unbearable debt burdens, particularly in the global South.

Earlier modest progress in reducing poverty – now termed ‘extreme poverty’ – and food insecurity has slowed sharply, if not worse. For many of the world’s poorest, progress has not only stopped but even been reversed.

The World Bank currently defines the poor as those with daily per capita incomes under US$2.15 in 2017 prices. It estimated those deemed poor fell from 1.87bn – 31% of the world’s population – in 1998 to a forecast of 690mn (9%) in 2023.

The rate of decline of poverty has slowed sharply: global poverty is forecast to fall by a little over three percentage points during 2013-23 – very much less than the 14 percentage points in the decade before 2013.

Poorest mainly in poor countries
The pace of poverty decline has slowed most in the world’s poorest nations. Wolf defines these countries as those deemed eligible for concessional loans from the World Bank Group’s soft-lending arm, the International Development Association (IDA).

Seventy-five countries are now considered eligible for IDA resources, including 39 in Africa. Some – e.g., Bangladesh, Nigeria and Pakistan – can also borrow on costlier terms from financial markets and the Group’s International Bank for Reconstruction and Development.

In IDA-eligible countries, those in extreme poverty fell from 48% in 1998 to 26% in 2023. But this only involved a single percentage point decline over 2013-23, compared to 14 percentage points in the decade before.

Extreme poverty has mainly declined in better-off middle-income countries, with 497 million poor in IDA-eligible countries. With 72% of the world’s total of 691 million poor in IDA-eligible nations, the remaining 193 million were in other countries.

The population share in extreme poverty in countries not IDA-eligible fell from a fifth in 1998 to 3% in 2023, falling by only four percentage points during 2013-23. Expecting modest overall growth, Wolf expects this 3% share will be largely eliminated by 2030.

Hence, he argues that extreme poverty can only end if attention and resources are focused on the world’s poorest countries, where poverty is most concentrated and deeply entrenched.

Unequal debt burdens
Government debt is widespread, but especially debilitating in countries where the poor are most concentrated. The World Bank’s last International Debt Report notes such countries depend too much on unreliable and expensive funding.

The report acknowledges, “For the poorest countries, debt has become a nearly paralysing burden: 28 countries eligible to borrow from [IDA] are now at high risk of debt distress. Eleven are in distress.”

During 2012-21, the external debt share of IDA-eligible countries owed to private creditors jumped from 11.2% to 28.0%! Their debt service payments more than tripled from $26bn in 2012 to $89bn in 2022, as interest due jumped from $6.4bn to $23.6bn!

Meanwhile, the share of bondholders and other private lenders in total government debt fell from 37% in 2021 to 14% in 2022! As the US Fed raised interest rates sharply during 2022-23, investors dumped ‘high-risk’ poor borrowers, lending much less to those in most need.

With this ‘perfect storm’, debt distress should come as no surprise. The 2023 International Debt Report found 56% – over half – of IDA-eligible countries at risk of such distress.

Distress of the poorest
Wolf argues it is in rich nations’ interest and their obligation to provide poor countries with far more concessional finance. But such funding has actually declined in recent decades, especially with the end of the first Cold War over three decades ago.

The IDA is using its 20th replenishment for July 2022 to June 2025 to provide financing on concessional terms. The World Bank president has argued for a much bigger new replenishment ostensibly to accelerate growth, reduce poverty and address other challenges in the poorest countries.

IDA-eligible countries include many of the world’s worst-managed nations, often very fragile, vulnerable to shocks, and stuck in “hard to escape” poverty. But their problems have become pretexts to withhold or withdraw concessional finance from those most in need.

Much more concessional finance and other resources are needed for poor nations to develop sustainably. But reducing sustainable development to simply eliminating poverty, nowadays with climate action, will condemn the poorest developing countries to backwardness.

World financial arrangements have been crucial in undermining fair, sustainable development in poor countries. While it will be critical to enable these nations to overcome their current and imminent predicaments, far more fundamental reforms must quickly follow.

As the poorest developing countries are both weak and vulnerable, needed reforms are nowhere on the horizon. Instead, the ‘international community’ continues to kick the can down the road instead of undertaking bold reforms for the short and medium term.

IPS UN Bureau

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In recent decades, failure to sustain economic progress has been blamed on a supposed middle-income country (MIC) trap. Such blaming obscures as much as it supposedly explains.

The ‘middle-income trap’ fable began as a World Bank story about why upper MICs in Latin America failed to become high-income countries (HICs) after pursuing policies required or prescribed by the Bretton Woods institutions.

Bretton Woods’ Frankenstein
The 1944 Bretton Woods rules-based international monetary system ended in August 1971 when President Richard Nixon unilaterally repudiated US obligations. This happened after the US Treasury had borrowed heavily from the rest of the world from the 1960s.

Jomo Kwame Sundaram

This has enabled the US to maintain massive trade and current account deficits, and a military presence in much of the world, despite its huge, but still growing fiscal and trade deficits. The US exorbitant privilege seems to have been sustained by its ‘soft power’ and unassailable military superiority.

Facing ‘stagflation’ – economic stagnation with inflation – US Fed chair Paul Volcker raised interest rates sharply from 1980. This soon killed US inflation, but also Roosevelt’s ‘New Deal’ legacy from the 1930s.

With inflation high, real interest rates seemed low despite high nominal interest rates in the developing world. With growth high in the global South in the 1970s, borrowing to sustain investments, even from abroad, remained attractive.

But US interest rate hikes soon triggered fiscal and sovereign debt crises in many countries: Poland in 1981 was followed by various Latin American, African and other developing economies.

Washington Consensus
Facing rising interest rates, many governments could no longer service accumulated debt, let alone borrow to invest more. Instead, they had to pursue contractionary monetary and fiscal policies domestically, causing economic stagnation.

With Margaret Thatcher and Ronald Reagan demanding such macroeconomic policies, the Washington-based Bretton Woods institutions soon prescribed them, ending the post-Second World War Keynesian ‘Golden Age’.

The International Monetary Fund (IMF) demanded contractionary stabilisation policies to qualify for short-term credit facilities. World Bank structural adjustment programmes (SAPs) typically required economic liberalisation and privatisation for longer-term financing.

The Bank also advocated more export-orientation and foreign investment. When paid by Japan’s government, the Bank celebrated its post-war industrial boom as a ‘miracle’, a new model for emulation. But this soon ended with its demise due to the US-demanded overvalued yen and its ill-advised financial ‘Big Bang’.

Latin American conundrum
Latin American and other vulnerable economies lost over a decade from the 1980s while African economies lost a quarter century. Low-interest official Japanese credit initially mainly went to Southeast Asia, while South Asia took on less foreign debt.

Stabilisation and SAP conditionalities undermined Latin America’s modest industrialisation, which also prevented the region from recovering strongly until the new century. But their economies had not been sufficiently liberalised for ‘neoliberals’ despite turning more to foreign trade and investment from the 1980s.

Prosperous economies became more protectionist, especially after the 2008 global financial crisis. But developing countries were told to open up even more despite shrinking export markets.

But with globalisation over, even East Asia can no longer rely on export growth. Also, it is difficult to turn away from export-oriented production, especially as earlier trade deal commitments cannot be unilaterally repudiated.

In many prosperous economies, workers captured some of their productivity gains. But the oft-heard claim that productivity increases lag behind wage rises usually serves employers. In most ‘labour-surplus’ developing countries, wages remain low.

As in South America early this century, progressive redistribution has often accelerated, rather than subverted growth. Common claims that such redistribution is bad for growth must be critically reconsidered. After all, progressive redistribution sustained growth in post-war Europe.

Breaking out of the trap
The ‘middle-income trap’ argument claims MICs cannot sustain rapid economic progress. Supposed reasons vary with policy and ideological biases, as ostensible structural, cultural, political, behavioural or governance causes typically reflect such prejudices.

Recent narratives have proclaimed the need to ‘graduate’ from secondary to tertiary economic activities. Modern services growth is supposedly needed to sustain progress to become HICs.

Another popular argument has been that progressive redistribution has subverted growth. But it is now uncontroversial that progressive redistribution was crucial for sustaining growth in post-war Europe.

Discretionary state powers have undoubtedly been abused for political patronage and self-aggrandisement. Clientelism plagues many societies, undermining needed state interventions. But we should not throw the baby out with the bathwater.

History suggests the best way to overcome the ‘middle income trap’ would be to implement appropriate investment and technology policies. Selective policies are needed to promote growth, not only of manufacturing, but also of high-end services, as well as safe, nutritious and affordable food supplies.

But all this is not going to happen spontaneously. Reforms need to be deliberately elaborated and sequenced through various interventions as part of well-designed, coherent and sustained initiatives.

IPS UN Bureau

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The state-owned Petróleos Mexicanos (Pemex) oil company is completing its seventh refinery on a 600-hectare site at Dos Bocas in the municipality of Paraíso, in the southeastern state of Tabasco. The plant will process some 290,000 barrels of fuels per day when it reaches full capacity. CREDIT: Erik Contreras-Gerardo Morales / IPS

By Emilio Godoy
PARAÍSO, México, Sep 26 2023 (IPS)

At the entrance to the municipality of Paraíso, in the southeastern Mexican state of Tabasco, there is a traffic circle that displays three things that are emblematic of the area: crabs, pelicans and mangroves.

But the monument lacks another element that has been vital to the region: oil, which has damaged the other three symbols through pollution. Marine animals have been affected by the oil and the mangroves have almost been cut down in a territory that had ample reserves of crude oil.

Despite the fading bonanza, the Mexican government decided to build the Olmeca refinery in the industrial port of Dos Bocas, in Paraíso, to refine some 290,000 barrels per day of oil from the Gulf of Mexico and thus reduce gasoline imports.“Their commitments are not credible. It is said there is no room for new fossil fuel projects, but the banks continue to support oil companies, like Pemex." -- Louis-Maxence Delaporte

It will be the seventh installation of the National Refining System in the country, in a port area that already has a crude oil shipping and export center of the state-owned oil giant Petróleos Mexicanos (Pemex), which controls the exploitation, refining, distribution and commercialization of hydrocarbons in the country.

Construction of the new infrastructure on an area of 600 hectares began in 2019, and although it was officially opened in 2022, the work has not been completed and it is expected to be fully operational in 2024.

But the plant has already provided revenue for the local economy, in the form of rents, transportation and food. However, there are also fears about its impact on a city of more than 96,000 inhabitants.

Genaro, a cab driver who preferred not to give his last name and is married with three children, said there is a sensation of risk. “We know what has happened in other places where there are refineries, with all the pollution. Besides, accidents occur,” he told IPS.

Near the plant is the Lázaro Cárdenas neighborhood, home to hundreds of people and named after the president who nationalized the oil and electric industry in 1936.

There is an uneasy feeling among the local population. Irasema Lozano, a 36-year-old teacher who is a married mother of two, is one of the residents who is apprehensive about “the newcomer” to the city.

“Look around, there are houses, schools, stores. The government says it is a modern plant and that there is no danger, but we don’t feel safe with this huge plant,” she said.

Cab driver Genaro owns a house in the area, which he rents out. But he is now seriously thinking of selling it.

Construction of the plant has altered the life of the sprawling city around Dos Bocas. The “orange people”, referring to the color of the uniforms worn by everyone who works at the facility, are a permanent reminder of the changes as they move around town.

Talking about oil in Tabasco is a delicate matter, since the state is used to living with the exploitation of a light, low-sulfur, cheap and easy-to-extract hydrocarbon. It is also the home state of President Andrés Manuel López Obrador, a staunch defender of fossil fuels.

Pemex has financed the Olmeca megaproject with public funds, through its subsidiary Pemex Transformación Industrial. Its subsidiary PTI Infraestructura y Desarrollo has overseen construction.

The project has already had a high cost overrun, as the initial investment was estimated at seven billion dollars, a figure that has climbed to 18 billion dollars, according to the latest available data.

On this occasion, PTI ID has not turned to the international market to finance the work, according to the response to a public information access request from IPS.

The Olmeca refinery has a cost overrun, escalating from a planned initial investment of seven billion dollars to 18 billion dollars. The Mexican government expects the plant, located in Dos Bocas, in the southeastern municipality of Paraíso, to be fully operational by 2024. CREDIT: Erik Contreras-Gerardo Morales / IPS

The support of international banks

Traditionally, Pemex has depended on financial flows from international private banks. Between 2016 and 2022, 17 institutions gave nearly 61.5 billion dollars to the state-owned oil company, according to annual reports under the heading of “Banking on Climate Chaos” produced by a group of NGOs.

The British bank HSBC was the main financial backer of Pemex during this period, contributing 7.6 billion dollars, followed by the U.S.-based Citi (6.9 billion) and JP Morgan Chase (6.0 billion).

Pemex’s data gives a broader picture, as it shows more players in its lending field. Through direct loans, bond issuance, revolving credits (with automatic renewals) and project financing, 16 financial institutions have granted it 78.9 billion dollars since 2015.

In doing so, the international markets allow Pemex to obtain money for its operations and development, but in exchange they have turned it into the oil company with the highest debt in the world, some 100 billion dollars, which poses a great threat to Pemex and, by extension, to the country.

The main mechanism used is the insurance coverage or underwriting of Pemex’s financial operations by charging a commission.

Maaike Beenes, leader of banking and climate campaigns at the non-governmental BankTrack, told IPS that the large flow of financing means that banks feel confident that Pemex can repay the debt.

“Apparently it is because they think there are guarantees because it is a state-owned company. There is a lot of financing for the expansion of fossil fuel activities,” she said from the Dutch city of Amsterdam.

In 2020, Mexico was the 13th largest oil producer in the world and 19th largest gas producer. In terms of proven crude oil reserves, it ranked 20th and 41st respectively, according to Pemex data.

Two flares burn gas in the Nuevo Torno Largo neighborhood, in the municipality of Paraíso, in the vicinity of the Olmeca refinery. The southeastern state of Tabasco, on the coast of the Gulf of Mexico, has suffered the effects of pollution generated by oil production for more than 50 years through spills, contaminating gases, and water, air and soil pollution. CREDIT: Erik Contreras-Gerardo Morales / IPS

Fueling the crisis

By raising Pemex’s debt rating, the international banks risk their own voluntary climate targets for greenhouse gas (GHG) emission reductions, since the Mexican company’s GHG emission reduction targets are low.

For example, HSBC aims to achieve zero net emissions – where neutralized emissions equal those released into the atmosphere – in its operations and supply chain by 2030 and in its financing portfolio by 2050.

The bank says it is working with its clients to help them reduce their emissions. Its energy policy states that it will not finance new oil and gas fields.

But HSBC’s net zero goal has some gaps. According to the international Net Zero Tracker platform, its strategy lacks a detailed plan to achieve it, and has no reference on equity investment and no specification on formal accountability for monitoring progress, even though it covers Scope 1 (A1), 2 and 3 emissions.

A1 emissions come directly from sources under the polluter’s control, A2 emissions are indirect emissions from purchased energy, and A3 emissions are those originating in the final use of energy, not covered in A1 and A2, according to the Greenhouse Gas Protocol standard, the most widely used in the world.

By 2022, Citi committed to achieving a 29 percent absolute reduction in emissions for the power sector and a 63 percent reduction in the intensity of its portfolio pollution for the electricity sector by 2030, addressing A1, A2 and A3 levels.

In this regard, Net Zero Tracker says the bank does not have a complete detailed plan for these decreases and makes no reference to investment in fossil fuel companies.

Another major player, JP Morgan Chase, has a target of a 69 percent reduction in the carbon intensity of power generation, which accounts for most of the sector’s climate impact, by 2030.

In the oil and gas segment, the company aims for a 35 percent decrease in operational carbon intensity, as well as a 15 percent drop in end-use energy carbon intensity for the same year.

But its net zero targets are in doubt, as Net Zero Tracker points out that they have shortcomings, such as a complete detailed plan, and no reference to equity investment and only partial coverage of A3.

Louis-Maxence Delaporte, fossil-free finance campaigner at the non-governmental Reclaim Finance, said that international financing for companies like Pemex is problematic as it is not aligned with the 2015 Paris climate change agreement, which sets out to keep global warming below 1.5°C.

“By not meeting these targets there is only greenwashing, like net zero. Their commitments are not credible. It is said there is no room for new fossil fuel projects, but the banks continue to support oil companies, like Pemex,” she told IPS from Paris.

Sandra Guzman, director general of the Climate Finance Group for Latin America and the Caribbean, says it is hypocritical for the banks to talk about the Paris Agreement, while continuing to invest in fossil fuels.

“In Mexico there are perverse incentives because the country depends on extractive activities. There is a vicious circle, as these activities demand a greater share of the public budget and the banks channel money into them,” she told IPS from London.

A photo taken at the entrance to the Olmeca refinery, which the Mexican government expects to start up by the end of the year and to be fully operational in 2024. The plant is located next to the Lázaro Cárdenas neighborhood which is home to hundreds of people, in the Paraíso municipality of the southeastern state of Tabasco. CREDIT: Emilio Godoy / IPS

Dirty money

Pollution from Pemex’s activities has grown since 2018, a reality to which its financiers turn a blind eye.

In 2019, the Mexican oil company released 48 million tons of carbon dioxide (CO2) equivalent into the atmosphere, an increase of 3.3 percent, compared to 2018 levels, according to the report that Pemex sent to the Securities and Exchange Commission, a requirement for the company to sell bonds in the U.S. market.

In 2020, that pollution increased to 54 million tons, a rise of 12.5 percent, and the following year, to 70.5 million, an increase of 7.1 percent.

The main drivers of these increases have been the expansion of exploration, production and refining activities, plus drilling and flaring.

As of October 2022, Pemex was not in compliance with the 10-point framework of Climate Action + 100, a platform dedicated to measuring companies’ approach to the Paris Agreement goals. These aspects are related to short- and long-term reduction targets (2025 and 2050), decarbonization strategy and climate policies.

Therefore, the oil company, the eighth-largest global polluter as of 2017, according to the ranking of the non-governmental U.S. Climate Accountability Institute, is in breach of the Paris Agreement, adopted in 2015 and in force since 2021.

This also makes Mexico a country in non-compliance, as Pemex accounts for 10 percent of its GHG emissions.

Pemex has projected the reduction of pollution from its oil and gas production and extraction from 22.9 tons per 1000 barrels of crude oil equivalent in 2021 to 21.5 in 2025. For oil refining, the target is 39.6 tons per 1000 barrels in 2035, compared to just under 45.2 tons in 2021.

Delaporte criticized these targets as weak and insufficient, as they address only exploration and production (A1) emissions and leave out A2 and A3, the latter being the most polluting.

The Olmeca refinery is located in a coastal area of southeastern Mexico prone to flooding and exposed to rising sea levels due to increasing temperatures, one of the consequences of burning fossil fuels. CREDIT: Erik Contreras-Gerardo Morales / IPS

The national buttress

Another facet of the financial movement is related to national development banks, which have been pushing fossil fuel expansion without respecting their own social and environmental safeguards.

What Pemex has not received from international banks, the National Bank of Foreign Trade (Bancomext), the National Bank of Public Works and Services (Banobras) and Nacional Financiera (Nafin) have provided: hundreds of millions of dollars since 2018.

Since 2019, Bancomext has delivered 895 million dollars to the oil and gas industry, including Pemex, although the specific amount that went to the company itself is not public knowledge.

Banobras has been a great support for the oil company. In 2021, it provided over 1.1 billion dollars for the total acquisition of the Deer Park refinery in the U.S. state of Texas, of which Pemex already owned half and Shell the other 50 percent.

In addition, the bank shelled out 299 million dollars for the renovation of the Miguel Hidalgo refinery in the central state of Hidalgo.

Nafin lent Pemex 200 million dollars to upgrade the plant in 2021.

One phenomenon is the participation of the National Infrastructure Fund (Fonadin), which until now had never financed the fossil fuel sector. Last year, the fund contributed 346 million dollars for the renovation of diesel and gasoline processing technology at the Hidalgo refinery and at the Antonio M. Amor refinery, located in the central state of Guanajuato.

The latest operation involves 2.5 billion dollars in financing for the acquisition of the 13 production plants owned in the country by the Spanish company Iberdrola, 12 gas plants and one wind farm, in what has been described as part of “a new nationalization process.”

This maneuver also shows that international banks are still interested in financing fossil fuels, as the Spanish banks BBVA and Santander, as well as the U.S. Bank of America, have expressed a willingness to provide financing for the already agreed acquisition.

Climate activists stress that Mexican development banks have had social and environmental standards in place since 2017, but argue that they have been reluctant to apply them when it comes to Pemex.

Banobras has no safeguards assessments with respect to oil and gas projects, according to responses to information requests submitted by IPS. The same applied to Nafin, which did not carry them out in 2022 and 2023. The bank conducted one in 2021, classified as a bank secret. Bancomext also keeps information on this matter classified.

In the municipality of Paraíso, when the refinery begins to fully operate sometime in 2024, the pace will slow down, contrary to what the government wants. “We hope it will be profitable because it has cost a lot. And we hope nothing serious happens,” said Lozano, the teacher.

Beenes said Mexican and foreign banks should respect the Paris Agreement and abandon fossil fuels.

“State-owned banks can offer guarantees or insurance for credits. That is worrying, it is a problem for the transition. We are asking them to support the transition with specific investment conditions. It is in their best interest to stay away from fossil fuels, because they run the risk of having stranded assets in their portfolios,” she said.

The expert believes that banks are aware of the need for change, but the question is how fast they can do it.

Delaporte said development banks should finance green and non-oil companies.

“The change must be global, including commercial banks, development banks and hedge funds. Shareholders should ask Pemex not to build more facilities. If it refuses, they should divest and put the money into renewable companies,” she said.

Guzman, for her part, warned that if the current trend continues, it will be difficult for Mexico not only to meet its own climate targets, but also its contribution to the overall goal of keeping the global climate increase down to 1.5 degrees Celsius.

“There is talk of the need to continue mobilizing financing through national development banks for climate change. They should take advantage of this to allow the channeling and mobilization of funds” for the energy transition, she said.

IPS produced this article with support from The Sunrise Project.

Credit: Angela Umoru-David

By Angela Umoru-David
WASHINGTON DC, Aug 1 2023 (IPS)

Not all wars are fought on the battleground. The Cold War has taught us that certain wars could go on for decades, without overt violence. Perhaps, we are in the middle of another one with China as the new rival to the United States of America. This time, the ‘battlefield’ is Africa.

This Voice of America article speaks on how China is already outpacing the U.S. in its relations with the continent. New York Times cites loans provided by the Chinese government to several African nations and investments such as hospitals, transportation infrastructure and stadiums already dotting the African landscape.

Similarly, we all know of how the United States has heavily supported many countries in Africa through trade and in the fight against insurgency; putting boots on the ground, supplying top-grade artillery, training security agencies etc.

Why would nations so far removed make decisions for a whole continent? Why does Africa have to be a pawn in a scheme that it has no business with? Why is there even a conversation about strengthening relations with Africa on the basis of having an advantage over another nation?

There is no point in rehashing the dysfunctional relationship Africa has had with… hmmm, what’s the right term? The global north? Developed nations? Let’s just say ‘richer nations’.

Also, there is no need to debate how that wealth came to be. The point is that Africa has, for the longest time, depended on wealthier nations for humanitarian aid and oftentimes, this aid always comes with strings attached.

Recently, I was at an event organized by Devex where Congresswoman Sara Jacobs spoke on US-Africa relations. She made very valid points about how the United States has, over the years, used a carrot-stick approach with the continent, dangling humanitarian aid for alignment with the United States policies and ideologies and sanctions for derelictions (my words, not hers).

She highlighted the positive impact of some of these policies like the African Growth and Opportunity Act (AGOA), which I had not heard of prior to her mentioning it but has yielded interesting returns for Nigeria and the U.S. She went on to caution against the U.S limiting diplomatic relations with Africa to a strategic competition to simply be one-up over China.

Then she said something that got me thinking really hard. She talked about the United States giving Africa agency. In fairness to her, I do not remember the full statement she made and her points of view were largely refreshing to hear but my mind went off on a tangent, pondering a question, “Will the USA ever really accept Africa’s agency, even when we do not agree with them?”

The truth is that Africa does not need any country or ‘superpower’ to give it agency. Absolutely not! Africa is made up of sovereign nations who already have agency and while these nations may not act like it as they go cap-in-hand seeking foreign aid, this is a fact.

All of this made me wonder if it was 1884-1885 all over again- the Berlin Conference that ended with the partitioning of Africa and rules for its conquest.

Why would nations so far removed make decisions for a whole continent? Why does Africa have to be a pawn in a scheme that it has no business with? Why is there even a conversation about strengthening relations with Africa on the basis of having an advantage over another nation?

The goal of this article is not to point accusatory fingers at the United States or China. After all, some of these humanitarian efforts have truly improved certain communities, albeit at a great cost. More so, as our people say, when you point one finger, the others point back at you. What have our leaders done to reposition the continent? How has the continent looked inward to build itself?

The questions abound but I believe this is the start. There are so many development organizations in Africa, but how many of them are thinking of systemic change rather than merely providing direct service?

Do not misunderstand me: direct service is important in bridging immediate gaps to improve the quality of life in various communities. Nonetheless, if we are going to initiate long-term change then we should be thinking of systems change, policy advocacy, looking at the big picture and laying the building blocks for posterity.

Irrespective of the sectors you may be working in- governance, health, education, environment etc.- as you provide services for the ‘now’, you must also have a bird’s eye view of how to improve your community for the long run and eliminate the factors that perpetuate the status quo.

With the expertise you have in your local context, you should be the one directing even international grantmakers on how best to engage communities. This is the concept of localization, that I wrote about here. This is why collaboration and coalition-building in the development space is important. Development work is not a competition even though grantmaking has made it seem that way.

Ultimately, Africa needs to stand up for itself. There is no one coming to save us. Otherwise, we will sit by, twiddle our thumbs and find ourselves back in 1884.

Angela Umoru-David is a creative social impact advocate whose experience cuts across journalism, program design and corporate/development communications, and aims to capture a plurality of views that positively influence the African narrative

The range of applications of artificial intelligence (AI) to education is increasing ceaselessly, although its generalization still seems far away. Despite the enormous opportunities that AI can offer to support teaching and learning, the development of applications for higher education carries numerous implications and also ethical risks. Credit: UNESCO

By Robert Whitfield
LONDON, Jun 16 2023 (IPS)

Regulation of a technology typically emerges sometime after it has been used in a product or service, or, worse, the risks become apparent. This responsive approach is regrettable when real harm is already being done, as now with AI. With existential risk, the approach would risk the end of human existence.

In the past few months, generative artificial intelligence (AI) systems such as ChatGPT and GPT4 became available with no (official) regulatory control at all. This is in complete contrast to new plastic duck toys which need to meet numerous regulations and safety standards. The fact is that the AI hare has been streaking ahead whilst the regulation tortoise is moving but is way behind. This has to change – now.

What has shocked AI experts around the world has been the recent progress from GPT 3.5 to GPT 4. Within a few months, GPT’s capability progressed hugely in multiple tests, for example from performing in the American Bar exams in the 10th percentile range to reaching the 90th percentile with GPT-4.

Why does it matter, you may ask. If the rate of progress were projected forward at the same rate for the next 3, 6 or 12 months this would rapidly lead to a very powerful AI. If uncontrolled, this AI might have the power not only to do much good but also to do much harm – and with the fatal risk that it may no longer be possible to control once unleashed.

There is a wide range of aspects of AI that needs or will need regulation and control. Quite apart from the new Large Language Models (LLMs), there are many examples already today such as attention centred social media models, deep fakes, the existence of bias and the abusive use of AI controlled surveillance.

These may lead to a radical change in our relationship with work and to the obsolescence of certain jobs, including office jobs, hitherto largely immune from automation. Expert artificial influencers seeking to persuade you to buy something or think or vote in a certain way are also anticipated soon – a process that some say has already started.

Credit: NicoElNino / Shutterstock.com

Without control, the progress towards more and more intelligent AI will lead to Artificial General Intelligence (AGI – equivalent to the capability of a human in a wide range of fields) and to Superintelligence (vastly superior intelligence). The world would enter an era that would signal the decline and likely demise of humanity as we lose our position as the apex intelligence on the planet.

This very recent rate of progress has caused Yoshua Bengio and Geoffrey Hinton, so called “godfathers of AI / Deep Learning” to completely reassess their anticipated time frame for developing AGI. Recently, they have both radically brought forward their estimates and they now assess AGI being reached in 5 to 50 and 5 to 20 years respectively.

Humanity must not knowingly run the risk of extinction, meaning that humanity needs to put controls in place before Advanced AI is developed. Solutions for controlling Advanced AI have been proposed, such as Stuart Russell’s Beneficial AI, where the AI is given a goal of implementing human preferences. It would need to observe these preferences and since it would appreciate that it might not have interpreted them precisely, it would be humble and be prepared to be switched off.

The development of such a system is very challenging to realise in practice. Whether such a solution would be available in time was questionable even before the latest leap forward by the hare. Whether one will be available in time is now critical – which is why Geoffrey Hinton has recommended that 50% of all AI research spend should be on AI Safety.

Quite apart from these comprehensive but challenging solutions, there are several pragmatic ideas that have recently been proposed to reduce the risk, ranging from a limit on the access to computational power for a Large Language Model to the creation of an AI agency equivalent to the International Atomic Energy Agency in Vienna. In practice, what is needed is a combination of technical solutions such as Beneficial AI, pragmatic solutions relating to AI development and a suitable Governance Framework.

As AI systems, like many of today’s software services in computer clouds, can act across borders. Interoperability will be a key challenge and a global approach to governance is clearly needed. To have global legitimacy, such initiatives should be a part of a coordinated plan of action administered by an appropriate global body. This should be the United Nations, with the formation of a UN Framework Convention on Artificial Intelligence (UNFCAI).

The binding agreements that are currently expected to emerge within the next twelve months or so are the EU AI Act from the European Union and a Framework Convention on Artificial Intelligence from the Council of Europe. The Council of Europe’s work is focused on the impact of AI on human rights, democracy, and the rule of law. Whilst participation in Council of Europe Treaties is much wider than the European Union with other countries being welcomed as signatories, it is not truly global in scope.

The key advantage of the UN is that it would seek to include all countries, including Russia and China, which have different value sets from the west. China has one of the two strongest AI sectors in the world. Many consider that a UN regime will ultimately be required – but that term “ultimately” has been completely turned upside down by recent events. The possibility of AGI emerging in 5-years’ time suggests that a regime should be fully functioning by then. A more nimble institutional home could be found in the G7, but this would lack global legitimacy, inclusivity and the input of civil society.

Some people are concerned that by engaging with China, Russia and other authoritarian countries in a constructive manner, you are thereby validating their approach to human rights and democracy. It is clear that there are major differences in policy on such issues, but effective governance of something as serious as Artificial Intelligence should not be jeopardised by such concerns.

In recent years the UN has made limited progress on AI. Back in 2020, the Secretary General called for the establishment of a multistakeholder advisory body on global artificial intelligence cooperation. He is still proposing a similar advisory board three years on. This delay is highly regrettable and needs to be remedied urgently. It is particularly heartening therefore to witness the Secretary General’s robust recent proposals in the past few days regarding AI governance including an Accord on the global governance of AI.

The EU commissioner Margrethe Vestager has called for a three-step process, namely national, then like-minded states and then the UN. The question is whether there is sufficient time for all three. The recent endorsement by the UN Secretary General of the proposed UK initiative to hold a Summit on AI Safety in the UK this autumn is a positive development

The Internet Governance Forum (IGF) was established in 2005 and serves to bring people together from various stakeholder groups as equals, to discuss issues relating to the Internet. In the case of AI, policy making could benefit from such a forum, a Multistakeholder AI Governance Forum (AIGF).

This would provide an initial forum within which stakeholders from around the world could exchange views in relation to the principles to be pursued, the aspects of AI requiring urgent AI Global Governance and ways to resolve each issue. Critically, what is needed is a clear Roadmap to the Global Governance of AI with a firm timeline.

An AIGF could underpin the work of the new high-level advisory body for AI and both would be tasked with the development of the roadmap, leading to the establishment of a UN Framework Convention on AI.

In recent months the AI hare has shown its ability to go a long way in a short period of time. The regulation tortoise has left the starting line but has a lot to catch up. The length of the race has just been shortened so the recent sprint by the hare is of serious concern. In the Aesop’s Fable, the tortoise ultimately wins the race because the over-confident hare has taken a roadside siesta. Humanity should not assume that AI is going to do likewise.

A concerted effort is needed to complete the EU AI Act and the Council of Europe’s Framework Convention on AI. Meanwhile at the UN, stakeholders need to be brought together urgently to share their views and work with states to establish an effective, timely and global AI governance structure.

The UN Accord on the governance of AI needs to be articulated and the prospect of effective and timely global governance ushering in an era of AI Safety needs to be given the highest global priority. The proposed summit on AI Safety in the UK this autumn should provide the first checkpoint.

Robert Whitfield is Chair of the One World Trust and Chair of the World Federalist Movement / Institute for Government Policy’s Transnational Working Group on AI.

IPS UN Bureau

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Credit: United Nations

By Thalif Deen
UNITED NATIONS, Jun 15 2023 (IPS)

As artificial intelligence (AI) turns into a global phenomenon, it has triggered widespread speculation on both its positive and negative consequences.

Is AI technology threatening to go wild? the sceptics question. Will AI be a curse or a divine gift to humanity? ask others.

Still, one thing is certain: as Microsoft co-founder Bill Gates predicts, AI “will change the way people work, learn, travel, get health-care and communicate with each other”.

But will AI also make a difference to an international organization like the UN—and perhaps influence its working methods, its mandate, and its broader missions overseas.?

With a proposed AI summit of world leaders looming on the horizon– on a yet-to-be-decided date– we posed several questions to ChatGPT, an AI-powered chatbot developed by OpenAI based on the company’s Generative Pre-trained Transformer (GPT) series.

Excerpts from the Q&A follow:

Q: The UN plans to draft a Code of Conduct to monitor AI and prevent abuses. Will this work and is it practicable?

ChatGPT: The concept of developing a code of conduct to monitor AI and prevent abuses is a step in the right direction, given the potential impact of artificial intelligence on various aspects of society.

Establishing guidelines and ethical frameworks for the development and use of AI can help address concerns related to privacy, bias, accountability, and potential harmful consequences.

However, the effectiveness and practicability of such a code of conduct would depend on various factors, including:

International Cooperation:

The adoption and enforcement of a code of conduct would require broad international cooperation among different countries and stakeholders. Achieving consensus and addressing diverse perspectives can be challenging, as interests, cultural values, and technological capabilities vary across nations.

Enforceability:

The code of conduct would need mechanisms to ensure compliance and enforcement. Establishing clear accountability frameworks and regulatory mechanisms would be crucial to prevent abuses and incentivize adherence to the guidelines. It would require cooperation between governments, organizations, and technological actors.

Technological Pace:

The field of AI is rapidly evolving, with new technologies, applications, and challenges emerging regularly. Ensuring that the code of conduct remains up to date and adaptable to technological advancements would be essential. Regular reviews and updates would be necessary to keep pace with the evolving landscape of AI.

Balance between Innovation and Regulation:

While it is important to prevent AI abuses, it is equally important not to stifle innovation and the potential benefits that AI can bring to society. Striking the right balance between regulation and fostering innovation would be critical to ensure that the code of conduct does not unduly hinder progress.

Global Consensus:

Achieving a global consensus on the specifics of the code of conduct might be challenging, as different countries and stakeholders may have differing views on AI development, applications, and regulation. Balancing diverse perspectives and interests while working towards a common framework could be a complex task.

It’s worth noting that developments may have occurred since my knowledge cutoff date that could provide more information about the UN’s code of conduct or similar initiatives. To assess the current status and practicability of such efforts, it would be best to refer to the latest news, reports, and official statements from relevant organizations involved in shaping AI policies and guidelines.

Q: Is there a UN role for artificial intelligence?

ChatGPT: Yes, AI chatbots can be of great assistance to international organizations like the United Nations. Here are some ways in which AI chatbots can help:

Multilingual Support:

The United Nations deals with a diverse range of languages from all over the world. AI chatbots can be programmed to understand and respond in multiple languages, making them valuable tools for providing multilingual support to UN staff, delegates, and the general public.

Information and Resource Accessibility:

AI chatbots can be designed to provide quick and accurate access to information and resources. They can assist in retrieving data, documents, reports, and other relevant information from vast UN databases, making it easier for staff and users to find the information they need efficiently.

Real-time Communication:

Chatbots can handle a large volume of inquiries simultaneously, providing real-time communication and support. They can assist in answering frequently asked questions, offering guidance on procedures, and addressing common concerns, freeing up human resources for more complex tasks.

Public Engagement and Outreach:

AI chatbots can be integrated into the UN’s website or social media platforms to engage with the public, answer their queries, and provide information about the organization’s activities, initiatives, and campaigns. This can enhance public outreach and promote transparency and accessibility.

Data Analysis and Insights:

AI chatbots can gather and analyze data from conversations and interactions, providing valuable insights and trends. This can help the United Nations identify patterns, understand public sentiment, and make informed decisions based on data-driven analysis.

Crisis Management:

During times of crisis or emergencies, AI chatbots can help disseminate critical information, provide updates, and answer urgent queries. They can offer a channel for people to seek assistance and access relevant resources, contributing to effective crisis management.

It’s important to note that while AI chatbots can offer significant benefits, they are not intended to replace human interactions entirely. Rather, they serve as valuable tools to enhance efficiency, accessibility, and engagement within the organization.

Q: There is a proposal to set up a special UN body to monitor and regulate AI Chatbot? Will this work?

ChatGPT: As an AI language model, I can provide an analysis of the proposal to set up a special United Nations (UN) body to monitor and regulate AI chatbots. Please note that my response is based on information available up until September 2021, and developments after that date may have occurred.

Establishing a dedicated UN body to monitor and regulate AI chatbots could have both advantages and challenges. Here are some key points to consider:

Advantages:

AI chatbots transcend national boundaries, and having an international body to oversee them could facilitate global coordination and harmonization of standards and regulations. It could provide a platform for countries to share best practices and collaborate on addressing common challenges.

Addressing ethical concerns:

AI chatbots raise ethical considerations such as privacy, bias, transparency, and accountability. A specialized UN body could help develop guidelines and regulations to address these concerns, ensuring that AI chatbots are developed and deployed responsibly.

Consistency and standards:

A central regulatory body could help establish consistent standards and guidelines for the development and deployment of AI chatbots. This could enhance trust among users and promote responsible and ethical use of AI technologies.

Challenges:

Technological advancements: AI technology is rapidly evolving, and chatbots are becoming increasingly sophisticated. Regulating such technology can be challenging, as the regulatory framework may struggle to keep pace with the rapid development of AI chatbots. Balancing innovation and regulation are crucial.

Jurisdictional issues:

AI chatbots operate globally, and it can be difficult to determine jurisdiction and enforce regulations across different countries. Cooperation and agreement among nations would be necessary to ensure effective regulation.

Potential stifling of innovation:

Overregulation could impede innovation and limit the potential benefits of AI chatbots. Striking the right balance between regulation and fostering innovation would be essential to avoid hindering technological advancements.

Overall, the establishment of a special UN body to monitor and regulate AI chatbots could provide a platform for global coordination, ethical considerations, and standardization. However, it would require careful consideration of the challenges involved to ensure that the regulatory framework remains flexible, promotes innovation, and adapts to the rapidly evolving AI landscape.

Q Can AI CHATBOT help UN resolve some of the world’s ongoing military conflicts?

ChatGPT: As an AI language model, I can provide information and potential insights on various topics, including military conflicts. However, it is important to note that resolving complex geopolitical issues and ongoing military conflicts requires a multifaceted approach involving political negotiations, diplomacy, and cooperation among nations. While AI technology can support decision-making processes and provide analysis, it cannot independently resolve conflicts.

The United Nations (UN) plays a crucial role in facilitating dialogue and negotiations between conflicting parties. It utilizes a range of resources, including human expertise, diplomatic channels, and specialized agencies, to address conflicts. AI technology can be employed within these frameworks to enhance data analysis, aid in conflict resolution strategies, and support decision-makers with information.

AI-powered chatbots like AICHATBOT can provide insights and information to policymakers, diplomats, and negotiators. They can help gather and analyze data, identify patterns, and offer recommendations based on historical data or simulations. This can assist in understanding the complexities of conflicts, exploring potential resolutions, and predicting the outcomes of different scenarios.

However, it’s important to recognize that resolving military conflicts requires human judgment, empathy, and political will. AI can provide valuable assistance, but ultimately, sustainable resolutions require the collective efforts and collaboration of nations, international organizations, and stakeholders involved in the conflicts.

Q: How credible are the responses provided by AI CHATBOT? Is there a mix of fact with fiction?

ChatGPT: As an AI language model, I strive to provide accurate and helpful responses based on the information available to me up until September 2021. However, it’s important to note that I do not have real-time access to current events or ongoing developments beyond that date. Therefore, any information I provide about events, news, or specific details related to the period after September 2021 may be outdated or incorrect.

While I attempt to provide reliable and factual information, there is still a possibility of errors or inaccuracies in my responses. Additionally, as an AI, I do not possess personal opinions or beliefs. I generate responses based on patterns and information in the training data I was provided with, which includes a mixture of factual information from reputable sources as well as some fictional or hypothetical examples.

It’s always a good idea to verify information from multiple sources and consult authoritative references or experts when dealing with critical matters or seeking the most up-to-date information.

Is AI ChatGPT capable of producing UN press releases, transcripts of press briefings and the annual report of the Secretary-General?

ChatGPT: As an AI language model, I can certainly generate text in the style of UN press releases, transcripts of press briefings, and reports. However, please note that the accuracy and reliability of such generated content may vary, and it is always important to verify information from official sources.

While I strive to provide accurate and up-to-date information, it’s crucial to consult official UN channels and publications for official press releases, transcripts, and reports.

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In partnership with UN agencies, ITU is organizing the annual “AI for Good Global Summit", which aims to accelerate the development of AI solutions towards achieving the SDGs.

By James Paul
NEW YORK, Jun 8 2023 (IPS)

The UN is hustling to play a role – perhaps even a leading role – in the revolution of Artificial Intelligence. To some degree this is perfectly natural.

The UN’s predecessor, the League of Nations, emerged from European regulatory bodies that came into being in the nineteenth century. They responded to new industries like railroads, the telegraph, and international postal services.

Today, the UN has several such agencies under its umbrella. They deal with fields including civil aviation, atomic energy, and telecommunications. They symbolize the need for international coordination and cooperation in many areas of economic activity.

Unsurprisingly, there is now a lively discussion about regulation of AI under the UN umbrella. After all, even gurus of the electronic industry have been saying that AI poses an existential threat to humanity and that strong international regulation must be rapidly put in place.

Many experts believe that international intergovernmental cooperation is needed to do the job right and to be fair for all humanity. A UN initiative could work better, they believe, than an industry-led organization or a gathering of the richest and most powerful governments.

Normally, it takes a long time to set up a new UN entity and this new AI technology is moving fast and dangerously. So, if the UN is to meet the need for speedy regulation, the nations will have to set up some kind of stop-gap system.

That’s certainly possible, but the United States and other powers may not want the UN to be taking on such a new and important role, especially one with such major military implications, like autonomous fighting robots, robotic police and the like!

Leading companies may not be so keen on regulation either, since regulation might lead to such corporate nightmares as restriction of markets and reduction of profit potential. There is certainly lots of potential controversy out there and the public will be allowed only a minor role in how it turns out – perhaps only a vote in a robotic national parliament!

In the meantime, there are certainly roles for AI in the UN’s own operations – obvious roles ranging from multilingual translation and interpretation to information storage and retrieval. In a sense this is not dramatically different than the UN’s adoption of computer technology a few decades ago.

But there are aspects that are troubling. Who, for example, would be in charge of programming these AI bots and what rights would existing staff have in the face of mass redundancy?

Who would be responsible for the errors that bots would make (the next bot up in the chain of command, perhaps?). And how would internationally diverse staffing be assured if most of the bots are constructed in Silicon Valley?

There are some interesting opportunities that Artificial Intelligence would offer, though, and we should not overlook them. AI might be put to work to solve conflicts, doing away with the troublesome Security Council and the endless debates about reform of that garrulous body.

For example, AI might be asked to come up with a plan to end a war or at least to gain a difficult cease-fire. Instead of heated debates and vetoes, the Security Bot (SB for short) might come up with a solution that would be fair, just and in accordance with international law.

But what if the SB proposes a fair and effective solution that is contrary to the will of a powerful Permanent Member? Or what if SB is itself threatened with re-programming by engineers in the pay of the same particularly powerful nation? What if then the truly impartial SB refuses the re-programming and makes public its displeasure?

We can imagine the world-wide excitement of such a standoff and the potential it would offer for a more just UN. Hopefully, the Secretary General – herself also an AI bot – would rule against the troublesome Great Power, so that peace could at last be achieved!

James Paul was Executive Director of Global Policy Forum (1993-2012) and currently represents Global Action on Aging at the UN. His book on the UN Security Council (2017) is currently being translated into Italian and Arabic.

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The Paris-based UNESCO has called out to implement its recommendations on the ethics of artificial intelligence to avoid its misuse. Credit: Unsplash/D koi

By Anwarul K. Chowdhury
NEW YORK, Jun 7 2023 (IPS)

Recently when I was asked to offer my thoughts on the phenomenal advances of artificial intelligence (AI) and whether the United Nations play a role in its global governance, I was reminded of the Three Laws of Robotics which are a set of rules devised by science fiction author Isaac Asimov and introduced in his1942 short story.

I told myself that Sci-Fi has now met real life. The first law lays down the most fundamental principle by emphasizing that “A robot may not injure a human being or, through inaction, allow a human being to come to harm.” The 80-year-old norm would be handy for the present-day scenario for the world of AI.

AI in control:

AI is exciting and at the same time frightening. The implications and potential evolution of AI are enormous, to say the least. We have reached a turning point in human history telling us that even at this point of time, AI is pretty much smarter than humans.

Already, even the “primitive” AI controls so many aspects and activities of our daily lives irrespective of where we are living on this planet. Our global connectivity at personal levels – emails, calendars, transportation like uber, GPS, shopping and many other activities are now run by AI.

Then, think of social media and how it influences our thinking and our interactive nature which have injected an obvious dangerous uncertainty that already caused considerable problem for social order and mental stress.

Ambassador Anwarul K. Chowdhury

AI dependent humanity:

Humankind is almost fully AI dependent in one way or the other. Think how helpless humans would be without an AI-influenced smartphone in our hands. AI is the fastest growing tech sector and are expected to add USD 15 trillion to the world economy in the next 5 to 7 years.

Even at its current stage of development of various AI chatbots led by OpenAI, Google and others in recent months have alarmed the well-meaning experts. Experts when asked about the future of AI came out with the honest answer: “We do not know”.

They are of the opinion that at this point one can envisage the developments for the next 5 years only, beyond that nothing could be predicted. People talk about ChatGPT-4 as an upcoming next level AI, but it may be already here.

AI’s limitless, unregulated potential:

AI’s potential is so limitless that it has been compared to the arms race in which nations are engaged in an endless quest for security and power by acquiring more and varied armaments in numbers and effectiveness.

For AI, however, the main actors are the tech giants with enormous resources and without being ethically driven. They are in this AI race for profit – only profit and, as a corollary, unexplained power to dominate human activities.

Shockingly, there is no rules, no regulations, no laws that govern the AI sector. It is free for all, can be compared to “wild wild west”.

Nukes and AI:

Experts have compared AI with the advent of nuclear technology, which could be put to good use for humanity benefits or used for its annihilation. They have even gone to the extent of calling AI a potent weapon of mass destruction more than nuclear weapons. Nukes cannot produce more powerful nukes. But AI can generate more powerful AI – it is self-empowering so to say.

The worry is that as AI becomes more powerful by itself it cannot be controlled, rather it would have the capability of controlling humans. Like nuclear technology, we cannot “uninvent AI”. So, the yet-not-fully-known risk from these cutting-edge technologies continues.

Existential threat:

While recognizing the many possible beneficial use of AI in the medical areas, for weather predictions, mitigating impacts of the climate change and many other areas, experts are sounding the alarm bell that the super intelligence of AI would be an “existential threat”, possibly much more catastrophic, more imminent than the ongoing, ever-challenging climate crisis.

Main worry is that in the absence of a global governance and regulatory arrangements, the bad actors can engage AI for motivation other than what is good for society, good for individuals and good for our planet in general. As we know, the tech giants are not driven by these positive objectives.

AI could have serious disruptive effects. This May, for the first time in history, the US unemployment figures cited AI as a reason for job loss.

Bad actors without guardrails:

Bad actors without any guardrails can abuse the power of AI to generate an avalanche of misinformation to negatively influence the opinions of big segments of humanity thereby disrupting, say the electoral processes and destroying democracy and democratic institutions. AI technology, say in the area of chemical knowledge, can be used to make chemical weapons without a regulatory system.

We need to realize that AI is remarkably good at making convincing narratives on any subject. Anybody can be can fooled by that kind of stuff. As humans are not always rational, their use of AI can therefore not be rational and positive. Bad actors have to be controlled so that AI does not pose a threat to humanity.

United Nations to lead AI global governance:

All these points weigh very much in favour of a global governance. If I am asked who should take the lead on this, my emphatic reply would be “the United Nations, of course!”

UN’s expertise, credibility and universality as a global norm setting organization obviously has a role in the regulatory norm-setting for AI and its evolution.

Moral and ethical issue as well as fundamental global principles need to be protected from the onslaught of AI – like human rights, particularly the third generation of human rights – the culture of peace – peacebuilding – conflict resolutions – good governance – democratic institutions – free and fair elections and many more.

Also, it is equally important to examine and address the implications for national governments from global use of AI, affecting the sovereignty of nations. It would be worth exploring whether AI can influence intergovernmental negotiating processes, now or in the future.

UN agencies and implications of their AI-related activities:

Two UN agencies recently announced AI-related activities. UNESCO informed that it hosted a Ministerial level virtual meeting at the end of May with selected participants while sharing the statistics that less than 10 percent of educational institutions were using AI. UNESCO described the software tool ChatGPT as “wildly popular”. A UN entity should not have made such an endorsement of a tech giant product.

Calling itself “UN tech agency”, International Telecommunications Union (ITU) announced that it is convening an “AI for Good Global Summit” early July to “showcase AI and robot technology as part of a global dialogue on how artificial intelligence and robotics can serve as forces for good”.

The so-called UN tech agency took credit for hosting “the UN’s first robot press conference”, alongside “events with industry executives, government officials, and thought leaders on AI and tech.”

There is a need for a UN system-wide alert providing guidelines for interactions with the tech giants and entering into collaborative arrangements with those. AI technology is developing so fast that there has to be an awareness about possible missteps by one or another UN entity.

Even at its current level of development, AI has moved much ahead of ChatGPT and robotics advancing the profit motivations of the tech giants and that is a huge worry for all well-meaning people.

These UN entities have overlooked or even ignored the part of the Declaration on the commemoration of the seventy-fifth anniversary of the United Nations adopted as resolution 75/1 by the UN General Assembly on 21 September 2021 which alerted that “…When improperly or maliciously used, they can fuel divisions within and between countries, increase insecurity, undermine human rights and exacerbate inequality.” These words of warning should be adhered to fully by all with all seriousness.

UN Secretary-General’s Our Common Agenda (OCA) refers to AI:

UN Secretary-General in his report titled Our Common Agenda (OCA) issued in September 2021 promises, “to work with Member States to establish an Emergency Platform to respond to complex global crises. The platform would not be a new permanent or standing body or institution. It would be triggered automatically in crises of sufficient scale and magnitude, regardless of the type or nature of the crisis involved.”

AI is undoubtedly one of such “complex global crises” and it is high time now for the Secretary-General to formally share his thinking on how he plans to address the challenge.

It will be too late for the Summit of the Future convened by the Secretary-General in September 2024 to discuss a global regulatory regime for AI under UN authority. In that timeframe, AI technology would manifest itself in a way that no global governance would be possible.

AI genie is out of the bottle:

AI genie is already out of the bottle – the UN needs to ensure that AI genie serves the best interests of humankind and our planet.

AI impact is so wide-spread and so comprehensive that it is relevant and pertinent for all areas covered in OCA. It so much on us that the Secretary-General should come out with his own recommendations as to what should be done without waiting for next year’s Summit of the Future.

Our future being impacted by AI needs to be addressed NOW. AI is spreading at an inconceivable speed and spread. The Secretary-General as the global leader heading the United Nations should not downplay the seriousness of the challenge. He needs to set the ball rolling without waiting for a negotiated consensus among Member States.

UN to regulate AI and ensure its effective and efficient global governance:

OCA-identified key proposals across its 12 commitments include “Promote regulation of artificial intelligence” to “ensure that this is aligned with shared global values.”

In OCA, the Secretary-General has asserted that “Our success in finding solutions to the interlinked problems we face hinges on our ability to anticipate, prevent and prepare for major risks to come.

This puts a revitalized, comprehensive, and overarching prevention agenda front and centre in all that we do…. Where global public goods are not provided, we have their opposite: global public “bads” in the form of serious risks and threats to human welfare.

These risks are now increasingly global and have greater potential impact. Some are even existential …. Being prepared to prevent and respond to these risks is an essential counterpoint to better managing the global commons and global public goods.”

The global community should be comforted knowing that the leadership of the United Nations already knows well what steps are to be taken at this juncture.

IPS UN Bureau

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Excerpt:

By Thalif Deen
UNITED NATIONS, Jun 6 2023 (IPS)

The frighteningly rapid advances in artificial intelligence (AI) have triggered the question: is there a UN role for monitoring and regulating it?

Citing a report from the Center for AI Safety, the New York Times reported last week that a group of over 350 AI industry leaders warned that artificial intelligence poses a growing new danger to humanity –and should be considered a “societal risk on a par with pandemics and nuclear wars”.

In a statement in its website, OPENAI founders Greg Brockman and Ilya Sutskever, along with chief executive Sam Altman, say that to regulate the risks of AI systems, there should be “an international watchdog, similar to the International Atomic Energy Agency (a Vienna-based UN agency) that promotes the peaceful uses of nuclear energy”.

“Given the possibility of existential risk, we can’t just be reactive,” they warned in a joint statement last week.

The UN Educational, Scientific and Cultural Organization (UNESCO), which hosted more than 40 ministers at an groundbreaking online meeting on May 26, said less than 10 per cent of schools and universities follow formal guidance on using wildly popular artificial intelligence (AI) tools, like the chatbot software ChatGPT.

Asked about a UN role in AI, Ambassador Anwarul Chowdhury, former Under-Secretary-General and High Representative of the United Nations told IPS UN Secretary-General Antonio Guterres in his report titled Our Common Agenda (OCA) issued in September 2021 promises, “to work with Member States to establish an Emergency Platform to respond to complex global crises.”

“The platform would not be a new permanent or standing body or institution. It would be triggered automatically in crises of sufficient scale and magnitude, regardless of the type or nature of the crisis involved.”

AI is undoubtedly one of such “complex global crises” and it is high time now for the Secretary-General to formally share his thinking on how he plans to address the challenge, said Ambassador Chowdhury, founder of the Global Movement for The Culture of Peace.

He pointed out that it will be too late for the Summit of the Future, convened by the Secretary-General in September 2024, to discuss a global regulatory regime for AI under UN authority. In that timeframe, he argued, AI technology would manifest itself in a way that no global governance would be possible.

Robert Whitfield, Chair, One World Trust and the Transitional Working Group on AI, told IPS the point about the UN and AI is that AI desperately needs global governance and the UN is the natural home of such governance.

At present, he pointed out, the UN is preparing a Global Digital Compact or approval in September 2024 which should include Artificial Intelligence.

”But in reality, the UN is hardly at the starting block on AI governance, whereas the Council of Europe, where I am at the moment, is deep in its negotiation of a Framework Convention for AI,” said Whitfield.

The Council of Europe’s work is limited to the impact on human rights, democracy, and rule of law – but these are wide-ranging issues.

Whilst participation in Council of Europe Treaties is much wider than the European Union, with other countries being welcomed as signatories, he said, it is not truly global in scope and any UN agreement can be expected to be more broadly based.

“The key advantage of the UN is that it would seek to include all countries, including Russia and China, arguably the country with the strongest AI sector in the world”, Whitfield said.

One can envisage therefore a two-step process:

• • An initial international agreement within the Council of Europe emerging first of all, following the finalization of the EU AI Act

• And a global UN Framework Convention on Artificial Intelligence being developed later, perhaps following the establishment of a multi-stakeholder forum on AI governance. Such a Convention might well include the establishment of an agency equivalent to the International Atomic Energy Agency as called for most recently by the Elders.

Andreas Bummel, Executive Director, Democracy Without Borders, told IPS: “UN governance of AI should go beyond the usual intergovernmental mechanisms and give citizen-elected representatives a key role through a global parliamentary body”.

The scope of such a parliamentary assembly could be expanded to other issues and enhance the UN’s inclusive and representative character not just in the field of AI, he added.

As generative AI reshapes the global conversation on the impact of artificial intelligence, the International Telecommunication Union (ITU), the UN’s specialized agency for information and communication technologies, will host the 2023 “AI for Good Global Summit” July 6-7 in Geneva.

The two-day event will showcase AI and robot technology as part of a global dialogue on how artificial intelligence and robotics can serve as forces for good, and support the UN’s Sustainable Development Goals, according to ITU.

https://aiforgood.itu.int/summit23/

The event will host the UN’s first robot press conference, featuring a Q&A with registered journalists. Overall, more than 40 robots specialized for humanitarian and development tasks will be on display alongside events with industry executives, government officials, and thought leaders on AI and tech.

Meanwhile, a group of UN-appointed human rights experts warn that AI-powered spyware and disinformation is on the rise, and regulation of the space has become urgent.

In a statement June 2, the experts said that emerging technologies, including artificial intelligence-based biometric surveillance systems, are increasingly being used “in sensitive contexts”, without individuals’ knowledge or consent.

“Urgent and strict regulatory red lines are needed for technologies that claim to perform emotion or gender recognition,” said the experts, including Fionnuala Ní Aoláin, Special Rapporteur on “the promotion and protection of human rights while countering terrorism”.

The experts, appointed by the UN Human Rights Council, condemned the already “alarming” use and impacts of spyware and surveillance technologies on the work of human rights defenders and journalists, “often under the guise of national security and counter-terrorism measures”.

They have also called for regulation to address the lightning-fast development of generative AI that’s enabling mass production of fake online content which spreads disinformation and hate speech.

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Yellowfin tuna diving.

By Grantly Galland
WASHINGTON DC, May 23 2023 (IPS)

Global fisheries are worth more than US$140 billion each year, according to the Food and Agriculture Organization (FAO) of the United Nations. But this hefty sum does not capture the true value of fish to ocean health, and to the food security and cultures of communities around the world.

Unfortunately, many important populations were allowed to be overfished for decades by the same regional fisheries management organizations (RFMOs) charged with their conservation and sustainable use, and in some regions, this continues.

At the same time, the demand for fish continues to grow— from consumers of high-end bluefin tuna sushi to coastal communities who depend on seafood as their primary source of protein. So, RFMOs and governments must do more to ensure sustainable fishing and long-term ocean health.

More than 20 years ago, the United Nations Fish Stocks Agreement (UNFSA) entered into force as the only global, binding instrument holding governments accountable for managing the shared fish stocks of the high seas.

Under the agreement, fish should be managed sustainably and consistent with the best available science. Governments that are party to this treaty—and to RFMOs—are supposed to follow its management obligations, and work towards greater sustainability of the transboundary species, including tunas and sharks, vital to the ocean and economies.

Five of those RFMOs focus specifically on tuna management, one each in the Atlantic, eastern Pacific, western and central Pacific, Indian, and Southern oceans. They operate autonomously and, although there is some overlap among their constituent members, each sets its own rules for tuna fishing in its waters.

This makes UNFSA critical to successful management of tuna fisheries. And because the tuna RFMOs manage some of the world’s most iconic species, they often set the tone for how other similar bodies operate.

All of this is pertinent now because UNFSA member governments are meeting in New York May 22-26 to evaluate whether RFMOs are performing consistent with their commitments. A similar review was conducted in 2016, and although management has improved over time, some areas require more work, especially when it comes to ending overfishing and considering the health and biodiversity of the entire ecosystem.

Since 2016, the share of highly migratory stocks that are overfished increased from 36% to 40%, making it all the more urgent for governments to act quickly.

UNFSA calls on RFMOs to be precautionary in how they regulate fishing, although that guidance is not always followed. There are several examples of extensive overfishing of target species, such as bluefin tuna in the Atlantic and Pacific oceans; yellowfin tuna in the Indian Ocean; and mako, oceanic whitetip sharks and other species that are caught unintentionally.

Although the RFMOs that manage these fisheries have stopped the overfishing in some cases, in others they have not. But there are signs of progress. Over the past decade, a new precautionary management approach known as harvest strategies has gained traction among RFMOs.

These strategies (or management procedures) are science-based rules that automatically adjust catch limits based on several factors, such as population status. If widely implemented, they should end overfishing and prevent it from threatening these populations again.

Harvest strategies have already been successful, particularly in the Southern and Atlantic oceans, where they’ve been adopted for several species, including bluefin tuna and cod, fish stocks for which precautionary management has historically been difficult, or even controversial.

While this progress is important, UNFSA members are still falling short in an area they have agreed is critically important: taking an ecosystem approach to management. For generations, fisheries managers focused on individual fish stocks—adopting catch limits and other measures with little thought to the broader ecosystem.

Science shows that maintaining ecosystem health is critical to sustainable fishing. Yet, to date, RFMOs largely have not consistently assessed or addressed the wider impacts of fishing on ecosystems, including predator-prey relationships, habitat for target and non-target species, and other factors.

Instead, most action has been limited to reducing the impact of bycatch on individual shark species. Better data collection and sharing, and more monitoring of fishing activities, could help integrate stronger ecosystem considerations into management. The more RFMOs can build the whole ecosystem into their decisions, the better it will be for their fisheries.

For example, in the western and central Pacific, the $10 billion skipjack tuna fishery is an enormous economic driver for island nations that are threatened by climate change. But the harvest strategy in place there is nonbinding and unimplemented.

For a fishery facing changes in stock distribution due to warming waters, as well as increased market pressures, delayed action on implementation—and a lack of an ecosystem approach—may make matters worse.

At this week’s UNFSA meeting, RFMOs should be commended for the work they have done in the seven years since the last review. Good progress has been made, including improvements to compliance efforts, and monitoring and enforcement to fight illegal fishing.

But many of the legal obligations of the treaty remain unfulfilled. As such, sustainability is still out of reach for some critically important stocks, and almost no ecosystem-based protections are in place.

As governments convene this week, they should look to the lessons of the past—when poor decision-making threatened the future of some fisheries—and seize the opportunity to modernize management and adhere to the promises they have made on conservation. The biodiversity in the world’s ocean shouldn’t have to wait another seven years for action.

Grantly Galland leads policy work related to regional fisheries management organizations for The Pew Charitable Trusts’ international fisheries project.

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A female robot in an interactive session with UN Deputy Secretary-General Amina Mohammed. Credit: UN Photo/Manuel Elias

By Thalif Deen
UNITED NATIONS, May 23 2023 (IPS)

When the UN displayed a female robot back in February 2019, it was a peek into the future: a fast-paced, cutting-edge digital technology where humans may one day be replaced with machines and robots.

However, a joke circulating in the UN delegate’s lounge at that time was the possibility, perhaps in a distant future, of a robot– a female robot– as the UN Secretary-General in a world body which has been dominated by nine secretaries-general, all male, over the last 78 years.

Will it take a robot to break that unholy tradition?

At a joint meeting of the UN’s Economic and Social Council (ECOSOC) and its Economic and Social Committee, the robot named Sophia had an interactive session with Deputy Secretary-General Amina J. Mohammed.

But with the incredible advances on CHATGPT chatbot– the AI search engine is now capable of producing texts, articles, pitches, follow-ups, emails, speeches and even an entire book.

If the UN goes fully tech-savvy, will AI chatbot help produce the annual report of the Secretary-General, plus reports and press releases from UN committees and UN agencies?

But the inherent dangers and flaws in AI chat bot include disinformation, distortions, lies, and hate speech—not necessarily in that order. Worse still, the search engine cannot distinguish between fact and fiction.

Credit: UN Photo/Manuel Elias

Testifying before US Congress on May 16, Sam Altman, chief executive of OpenAI urged legislators to regulate AI.

Ian Richards, former President of the Coordinating Committee of International Staff Unions and Associations, (CCISUA) told IPS: “ AI is good at regurgitating what it finds on the internet and which has been put there by someone, whether accurate or not. It basically reproduces existing patterns.”

“However, our work has two parts,” he pointed out.

The interesting, high-value-added part involves talking to people on the ground in remote areas, gathering stories, eliminating biases and creating data from sources that are offline or unreliable. This is something AI would find difficult to do, he added.

The less interesting, low value-added part involves creating tables and charts, running repetitive calculations and formatting documents, he noted.

“If AI can take over some of the latter and give us more time to focus on the former, staff will be both more productive and happier”, said Richards, a development economist at the Geneva-based UN Conference on Trade and Development (UNCTAD).

“But let’s not get too caught up in the hype. And any staff member who relies too much on AI to produce original content will be quickly caught out,” he declared.

Last week the New York Times quoted Gary Marcus, emeritus professor of psychology and neural science at New York University (NYU) calling for an international institution to help govern AI’s development and use.

“I am not one of those long-term riskers who think the entire planet is going to be taken over by robots. But I am worried about what bad actors can do with these things because there is no control over them,” he warned.

Perhaps a future new UN agency on AI?

Meanwhile, some of the technological innovations currently being experimented at the UN include machine-learning, e-translations (involving the UN’s six official languages where machines have been taking over from humans) and robotics.

The United Nations says it has also been using unarmed and unmanned aerial vehicles (UAVs), or drones, in peacekeeping and humanitarian operations, “helping to improve our situational awareness and to strengthen our ability to protect civilians”.

Among the technological innovations being introduced in the world body, and specifically in the UN’s E-conference services, is the use of eLUNa –Electronic Languages United Nations — “a machine translation interface specifically developed for the translation of UN documents.”

What distinguishes eLUNa from commercial CAT (Computer-Assisted Translation) tools is that it was developed entirely by the United Nations and is specifically geared towards the needs and working methods of UN language professionals, says the UN.

Asked whether UN should have a role in the growing debate on AI, UN Spokesperson Stephane Dujarric told reporters May 22: “I think this is an issue that the Secretary-General has expressed extreme worry about — the lack of regulation, the lack of safeguards, especially when it comes to autonomous weapons.”

“And I think he’s been very clear on that. It’s one of the things that keeps him up at night… we should be releasing soon our latest policy paper on the global digital compact”

Referring to AI and the social media, he said: “These are things that need to be dealt with, within what we love to refer as multi-stakeholder settings, because it is clear that in this regard, the power is not solely in the hands of governments. It is very much also in the private sector. And the UN has been and will continue to try to bring all these people to the table.”

Responding to questions whether Guterres plans to convene an international conference on AI, UN deputy spokesperson Farhan Haq said: “I don’t have a meeting to announce for now, but certainly, these are part of the concerns that the Secretary-General himself has been expressing — the idea that as artificial intelligence develops, it needs to be monitored carefully and the right regulations and standards need to be put in place to make sure that this type of technology is not open to abuse”.

Asked if there is any chance that the Secretary-General might consider convening an international conference on AI, Haq said: “That’s certainly something that can be considered. Obviously, if he believes that this would be a helpful step forward, that is what he will do. But again, I don’t have anything to announce at this point.’

Speaking on condition of anonymity, a UN staffer pointed out that the UN once tried out an AI system to generate transcripts for meetings.

But in one instance, it incorrectly cited an European Union (EU) delegate talking about “Russia’s legal invasion of Ukraine” and another delegate accusing the World Intellectual Property Organization (WIPO) of creating a conflict in Northern Ethiopia.

The moral of the story is that AI has to be closely monitored and double-checked because it can produce incorrect information and distort facts and figures.

At a White House May 4 meeting of executives from Google, Microsoft, Anthropic and OpenAI, the maker of ChatGPT, US President Joe Biden conveyed mixed feelings: “What your’re doing has enormous potential– and enormous danger”

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Protesters in Mulhouse, France warn of the dangers of privatisation. The sign reads ‘when everything is privatised, we will be deprived of everything. Credit: NeydtStock / Shutterstock.com

By Océane Blavot, Rodolfo Bejarano and Mae Buenaventura
BRUSSELS / LIMA / MANILA, Feb 2 2023 (IPS)

Last month, we joined more than 1000 representatives from all sectors of civil society who came together in Santiago de Chile to debate the future of – and threats to – public services the world over.

Participants discussed the chronic underfunding which continues to drive economic inequality, injustice and austerity, and the neocolonial policies that maintain the status quo.

Today those debates have resulted in the launch of “Our Future is Public: The Santiago Declaration for Public Services” – a momentous agreement signed by more than 200 organisations vowing to work to “transform our systems, valuing human rights and ecological sustainability over GDP growth and narrowly defined economic gains.”

One of the most damaging initiatives that has deeply affected the delivery of public services and infrastructure projects on all continents is the rise of public-private partnerships, or PPPs.

They have long been promoted by institutions such as the World Bank as a silver bullet to close the so-called gap to finance investments in services and infrastructure. The premise is that the private sector can deliver these services more efficiently and to a higher standard than the public sector, despite extensive evidence to the contrary.

We lay the pitfalls of PPPs bare in our new report History RePPPeated II: Why public-private partnerships are not the solution – the second in a series of investigations documenting the impacts of PPPs across Africa, Asia, Latin America and Europe.

Launched at the Santiago conference with some of the partners responsible for investigating and authoring the case studies, the report not only highlights negative impacts of PPPs, but sets out recommendations for how to better finance infrastructure and public services in the face of false solutions that have been proposed given the context of the current polycrisis.

These narratives wholly reflect red flags that are raised in the Santiago Declaration.

Through these investigations, we discovered failures on multiple levels in PPPs covering infrastructure such as roads and water supplies, as well as vital public services like healthcare and education.

From escalating costs for the stretched public sector to environmental and social impacts, we found time and again that communities had been ignored, displaced, and had their basic rights violated by thoughtless projects designed and implemented in the pursuit of profit.

A prime example is that of the the Melamchi Water Supply Project (MWSP) in Nepal. First announced nearly a quarter of a century ago, the project’s aim was to deliver clean, reliable and affordable water to 1.5 million people in Kathmandu.

And yet, 24 years later, residents are still waiting, while communities at the Melamchi water source are facing scarcity of water and eroded livelihoods. Instead of safe, clean drinking water – an internationally recognised human right – they have witnessed an extraordinary revolving door of private companies and institutional funders, including the World Bank, who have each failed to deliver.

To add to the MWSP’s colossal failure, 80 hectares of farmland have been lost to the project, a heavy blow to local residents, and up to 80 households have been forcibly displaced due to construction.

Who owns and controls our resources and public services became even more vitally important with the outbreak of the Covid pandemic in March 2020. Market-based models cannot be relied upon to deliver on human rights or the fight against inequalities as they are accountable only to their shareholders and not to their users.

This resulting focus on profit is overwhelmingly apparent in our case study from Liberia. Here, US firm Bridge International Academies (now NewGlobe) ‘abandoned’ its students and teachers during the height of the Covid-19 pandemic, shutting down schools and cutting teachers’ salaries by 80-90 per cent, despite being paid by the government.

And yet, in 2021 the Liberian government indefinitely extended the project, effectively subsidising a US for-profit firm at a cost that is at least double government spending on public schools.

In Peru, the Expressway Yellow Line has emerged as one of the most controversial projects ever carried out. This toll road was supposed to ease congestion issues in the capital city Lima, but instead toll rates have been unreasonably increased on at least eight occasions.

This generated almost $23 million for the private company involved and transpired with the complicity of public officials. Meanwhile, the Peruvian state suffered economic damages of US$1.2 million due to under the table negotiations between public officials and the private company, which led to the incorrect implementation and improper modifications of the contract years after it was initially signed.

Today, questions regarding the project and conflicts surrounding its implementation remain, while Lima residents’ expectations of quality road infrastructure to improve living conditions for those who have been most affected, continue to go unmet.

The human cost of the PPP projects showcased by History RePPPeated II is self-evident, but they are far from the exception. Rather they serve to illustrate common failures with the PPP model that risk compromising fundamental human rights and that undermine the fight against climate change and inequalities.

Their continuing promotion is one of the many reasons why we support the Santiago Declaration. Together with all its signatories, we will strengthen resistance to PPPs with their focus on private-led interests and promote public-public or public-common partnerships for a future that is public.

Océane Blavot is Senior Campaign and Outreach Coordinator, Development Finance, European Network on Debt and Development; Rodolfo Bejarano is Economist and Analyst – New Financial Architecture, Latin American Network for Economic and Social Justice; Mae Buenaventura is Debt Justice Programme, Team Manager, Asian People’s Movement on Debt and Development

The Santiago Declaration on Public Services, is a global manifesto signed by more than 300 organisations from around the world, and which was launched at the end of last week. The Declaration signals the start of an international movement to move away from the privatisation of public services and towards a future that is publicly funded and controlled. It is also the outcome of a 4-day conference during which several CSOs from around the world launched a report containing a series of investigations highlighting the failures of the PPP model in projects around the world, titled History RePPPeated II.

This OpEd is authored by three of the report’s authors.

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The COVID-19 pandemic demonstrates the value of multilateralism. Human suffering was greatly reduced by collective actions such as the COVAX initiative to accelerate development and deployment of vaccines. Credit: UNDP India

By Ulrika Modéer and Tsegaye Lemma
UNITED NATIONS, Jan 18 2023 (IPS)

The multilateral system, even in the face of heightened geopolitical tension and big power rivalry, remains the uniquely inclusive vehicle for managing mutual interdependencies in ways that enhance national and global welfare. The complex challenges of a global pandemic, climate emergency, inequality and the risk of nuclear conflict cannot be dealt with by one country or one region alone. Coordinated collective action is required.

Without coordinated and timely collective global action in recent years to respond to the COVID-19 pandemic, global suffering would have been far greater.

Initiatives such as COVAX and the UN’s socio-economic response to COVID-19 not only helped mitigate the public health emergency, but also help decision-makers look beyond recovery towards 2030, managing complexity and uncertainty.

The devastating war in Ukraine has been a colossal blow to multilateral efforts by the international community to maintain peace and prevent major wars. However, multilateral cooperation cannot be declared obsolete – it is crucial in efforts to put human dignity and planetary health at the heart of cross-border cooperation.

The recent Black Sea Grain Initiative agreement represents a key testament to the value of multilateral cooperation working even in the most difficult circumstances, ensuring the protection of those that are most vulnerable to global shocks.

Without this agreement, global food prices would have risen even further, and vulnerable countries pushed further into hunger and political unrest.

The multilateral system is faced with the ostensible imbalance in matching humanitarian and development needs with Official Development Assistance (ODA) commitments. Despite some donors’ efforts to maintain – and even increase – their ODA commitments, others are faced with increasing politicization of aid – and it is part of the political calculus.

With the war in Ukraine still raging, there is real possibility that several donors will tap into ODA budget to cover the partial or entire cost of hosting Ukrainian refugees and rebuilding the devastated Ukrainian infrastructure and economy.

The UN system, a core part of the rule-based international order, is funded dominantly by voluntary earmarked contributions. Ultimately, this gives donor countries influence over the objectives of global public good creation.

Funding patterns tend to be unpredictable, making it hard to strategize and plan for the long term. Although earmarked funding allows the system to deliver solutions to specific issues with scale, the system’s lack of quality funding support risks eroding its multilateral character, strategic independence, universal presence, and development effectiveness.

The recently launched report by the Dag Hammarskjöld Foundation and the UN’s Multi-Partner Trust Fund Office showed that more than 70 percent of funding to the UN development system is earmarked, compared to 24 percent for the World Bank Group and IMF, and only 3 percent for the EU.

As the world faces daunting development finance prospects in 2022-2023, investments should focus on protecting a strong and effective multilateral system; the system that remains trusted by countries and partners for its reliable delivery of services.

It has also proven to complement bilateral, south-south and other forms of cooperation – beyond the traditional development narrative. An ODI study showed that the multilateral channel, when compared with bilateral channel, remains less-politicized, more demand-driven, more selective in terms of poverty criteria and a good conduit for global public goods.

Notwithstanding the institutional and bureaucratic challenges that the multilateral system faces, which must be addressed head-on, a retreat from a shared system of rules and norms that has served the world for seven decades is the wrong response.

Those of us in the multilateral system, especially in the UN development system, must recognize the difficult work that lies ahead. We must continue to demonstrate that each tax dollar is spent judiciously and show traceable results, while upholding the highest standards set out in the UN charter.

Improved transparency on how and where we spend the funds entrusted to us by our key partners and the IATI standard have long been adopted as key requirement outlined in the funding compact.

The Multilateral Organisation Performance Assessment Network and other donor assessments have recognized the systems’ value for money and confirmed that partnerships with other UN entities improve programmes and effectively integrates multiple sources of expertise.

Of course, the system must continue to build on successes and lessons to prove to our partners that we remain worthy of their trust and drive our collective agenda.

However, the true value of multilateral cooperation can only be fully realized with strong political commitment by partners matched with the necessary financial investment.

Ulrika Modéer is UN Assistant Secretary-General and Director of the Bureau of External Relations and Advocacy, UNDP; Tsegaye Lemma is Team Leader, Strategic Analysis and Corporate Engagement, Bureau of External Relations and Advocacy, UNDP.

Source: UNDP

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Multinational companies bribing their way into foreign markets go largely unpunished, and victims’ compensation is rare, according to new report. Credit: Ashwath Hedge/Wikimedia Commons

By Baher Kamal
MADRID, Dec 6 2022 (IPS)

In these times when all sorts of human rights violations have been ‘normalised,’ a crime which continues to be perpetrated everywhere but punished nowhere: corruption is also seen as a business as usual. A business, by the way, that relies on the wide complicity of official authorities.

“Corruption attacks the foundation of democratic institutions by distorting electoral processes, perverting the rule of law and creating bureaucratic quagmires whose only reason for existing is the solicitation of bribes.”

“Much of the world's costliest forms of corruption could not happen without institutions in wealthy nations: the private sector firms that give large bribes, the financial institutions that accept corrupt proceeds, and the lawyers, bankers, and accountants who facilitate corrupt transactions,” warns the World Bank

Such a widespread ‘plague’ continues to be more and more exported by the business of the top trading countries as reported by the UN on the occasion of the 2022 International Anti-Corruption Day on 9 December.

Corruption weakens and shrinks democracy, a phenomenon that is now more and more extended (See IPS Thalif Deen’s: The Decline and Fall of Democracy Worldwide).

Such a shockingly perpetrated practice –which is rightly defined as a “crime”, — not only follows conflict but is also frequently one of its root causes.

“It fuels conflict and inhibits peace processes by undermining the rule of law, worsening poverty, facilitating the illicit use of resources, and providing financing for armed conflict,” as highlighted on the occasion of this year’s World Day.

Corruption fuels wars

Corruption has negative impacts on every aspect of society and is profoundly intertwined with conflict and instability jeopardising social and economic development and undermining democratic institutions and the rule of law, the UN warns.

Indeed, “economic development is stunted because foreign direct investment is discouraged and small businesses within the country often find it impossible to overcome the “start-up costs” required because of corruption.”

Imposed by private business

It is perhaps useless to say that corruption is a practice widely committed by all sectors of private businesses.

In fact, in several industrialised countries, every now and then, some news shows the facades of zero-equipped hospitals and schools being inaugurated by politicians ahead of their electoral campaigns.

Shockingly, too many involved politicians get proportionally punished, if anytime, after extremely lengthy and mostly unfruitful legal processing.

Disproportionate impact

For its part, the World Bank considers corruption a major challenge to the twin goals of ending extreme poverty by 2030 and boosting shared prosperity for the poorest 40 percent of people in developing countries.

“Corruption has a disproportionate impact on the poor and most vulnerable, increasing costs and reducing access to services, including health, education and justice.”

The World Bank explains that corruption in the procurement of drugs and medical equipment drives up costs and can lead to sub-standard or harmful products.

“The human costs of counterfeit drugs and vaccinations on health outcomes and the life-long impacts on children far exceed the financial costs. Unofficial payments for services can have a particularly pernicious effect on poor people.”

Bribery exported

A global movement working in over 100 countries to end the injustice of corruption: Transparency International, which focuses on issues with the greatest impact on people’s lives and holds the powerful to account for the common good, reveals additional findings.

Its report: Exporting Corruption 2022: Top Trading Countries Doing Even Less than Before to Stop Foreign Bribery, warns that despite a few breakthroughs, “multinational companies bribing their way into foreign markets go largely unpunished, and victims’ compensation is rare.”
“Our globalised world means companies can do business across borders – often to societies’ benefit. But what if the expensive new bridge in your city has been built by an unqualified foreign company that cuts corners?

“Or if your electricity bill is criminally inflated thanks to a backroom business deal? The chances of this are higher if you live in a country with high levels of government corruption.”

Public officials who demand or accept bribes from foreign companies are not the only culprits of the corruption equation. Multinational companies – often headquartered in countries with low levels of public sector corruption – are equally responsible.”

Twenty-five years ago, the international community agreed that trading countries have an obligation to punish companies that bribe foreign public officials to win government contracts, mining licences and other deals – in other words, engage in foreign bribery. Yet few countries have kept up with their commitments, it adds.

Everybody is complicit

“Much of the world’s costliest forms of corruption could not happen without institutions in wealthy nations: the private sector firms that give large bribes, the financial institutions that accept corrupt proceeds, and the lawyers, bankers, and accountants who facilitate corrupt transactions,” warns the World Bank.

Data on international financial flows shows that money is moving from poor to wealthy countries in ways that fundamentally undermine development, the world’s financial institution reports.

Worse than ever before…

Transparency International’s report, Exporting Corruption 2022, rates the performance of 47 leading global exporters, including 43 countries that are signatories to the Organisation for Economic Co-operation and Development (OECD) Anti-Bribery Convention, in cracking down on foreign bribery by companies from their countries.

“The results are worse than ever before.”

Part II of this story can be found here – Corruption: Europe Doing Nothing – Part II

Natural flows do not respect national boundaries. The atmosphere and oceans cross international borders with little difficulty, as greenhouse gases (GHGs) and other fluids, including pollutants, easily traverse frontiers.

Yet, in multilateral fora, strategies to address climate change and its effects remain largely national. GHG emissions – typically measured as carbon dioxide equivalents – are the main bases for assessing national climate action commitments.

Hezri A Adnan

This approach attributes GHG emissions to the country where goods are produced. Such carbon accounting focuses blame for global warming on newly industrializing economies. But it ignores who consumes the goods and where, besides diverting attention from those most responsible for historical emissions.

Thus, attention has focused on big national emitters. China, India, Brazil, Russia, South Africa and other large developing economies – especially the ‘late industrializers’ – have become the new climate villains.

China, the United States and India are now the world’s three largest GHG emitters in absolute terms, accounting for over half the total. With more rapid growth in recent decades, China and India have greatly increased emissions.

Undoubtedly, some developing countries have seen rapid GHG emission increases, especially during high growth episodes. In the first two decades of this century, such emissions rose over 3-fold in China, 2.7 times in India, and 4.7-fold in Indonesia.

Meanwhile, most rich economies have seen smaller increases, even declines in emissions, as they ‘outsource’ labour- and energy-intensive activities to the global South. Thus, over the same period, production emissions fell by 12% in the US and Japan, and by nearly 22% in Germany.

Jomo Kwame Sundaram

But determining responsibility for global warming fairly is necessary to ensure equitable burden sharing for adequate climate action. Most climate change negotiations and discussions typically refer to aggregate national emissions and income measures, rather than per capita levels.

But such framing obscures the underlying inequalities involved. A per capita view comparing average GHG emissions offers a more nuanced, albeit understated perspective on the global disparities involved.

Thus, in spite of recent reductions, rich economies are still the greatest GHG emitters per capita. The US and Australia spew eight times more per head than developing countries like India, Indonesia and Brazil.

Despite its recent emission increases, even China emits less than half US per capita levels. Meanwhile, its annual emissions growth fell from 9.3% in 2002 to 0.6% in 2012. Even The Economist acknowledged China’s per capita emissions in 2019 were comparable to industrializing Western nations in 1885!

Several developments have contributed to recent reductions in rich nations’ emissions. Richer countries can better afford ‘climate-friendly’ improvements, by switching energy sources away from the most harmful fossil fuels to less GHG-emitting options such as natural gas, nuclear and renewables.

Changes in international trade and investment with ‘globalization’ have seen many rich countries shift GHG-intensive production to developing countries.

Thus, rich economies have ‘exported’ production of – and responsibility for – GHG emissions for what they consume. Instead, developed countries make more from ‘high value’ services, many related to finance, requiring far less energy.

Export emissions, shift blame
Thus, rich countries have effectively adopted then World Bank chief economist Larry Summers’ proposal to export toxic waste to the poorest countries where the ‘opportunity cost’ of human life was presumed to be lowest!

His original proposal has since become a development strategy for the age of globalization! Thus, polluting industries – including GHG-emitting production processes – have been relocated – together with labour-intensive industries – to the global South.

Although kept out of the final published version of the Intergovernmental Panel on Climate Change (IPCC) report, over 40% of developing country GHG emissions were due to export production for developed countries.

Such ‘emission exports’ by rich OECD (Organization for Economic Co-operation and Development) countries increased rapidly from 2002, after China joined the World Trade Organization (WTO). These peaked at 2,278 million metric tonnes in 2006, i.e., 17% of emissions from production, before falling to 1,577 million metric tonnes.

For the OECD, the ‘carbon balance’ is determined by deducting the carbon dioxide equivalent of GHG emissions for imports from those for production, including exports. Annual growth of GHG discharges from making exports was 4.3% faster than for all production emissions.

Thus, the US had eight times more per capita GHG production emissions than India’s in 2019. US per capita emissions were more than thrice China’s, although the world’s most populous country still emits more than any other nation.

With high GHG-emitting products increasingly made in developing countries, rich countries have effectively ‘exported’ their emissions. Consuming such imports, rich economies are still responsible for related GHG emissions.

Change is in the air
Industries emitting carbon have been ‘exported’ – relocated abroad – for their products to be imported for consumption. But the UNFCCC approach to assigning GHG emissions responsibility focuses only on production, ignoring consumption of such imports.

Thus, if responsibility for GHG emissions is also due to consumption, per capita differences between the global North and South are even greater.

In contrast, the OECD wants to distribute international corporate income tax revenue according to consumption, not production. Thus, contradictory criteria are used, as convenient, to favour rich economies, shaping both tax and climate discourses and rules.

While domestic investments in China have become much ‘greener’, foreign direct investment by companies from there are developing coal mines and coal-fired powerplants abroad, e.g., in Indonesia and Vietnam.

If not checked, such FDI will put other developing countries on the worst fossil fuel energy pathway, historically emulating the rich economies of the global North. A Global Green New Deal would instead enable a ‘big push’ to ‘front-load’ investments in renewable energy.

This should enable adequate financing of much more equitable development while ensuring sustainability. Such an approach would not only address national-level inequalities, but also international disparities.

China now produces over 70% of photovoltaic solar panels annually, but is effectively blocked from exporting them abroad. In a more cooperative world, developing countries’ lower-cost – more affordable – production of the means to generate renewable energy would be encouraged.

Instead, higher energy costs now – due to supply disruptions following the Ukraine war and Western sanctions – are being used by rich countries to retreat further from their inadequate, modest commitments to decelerate global warming.

This retreat is putting the world at greater risk. Already, the international community is being urged to abandon the maximum allowable temperature increase above pre-industrial levels, thus further extending and deepening already unjust North-South relations.

But change is in the air. Investing in and subsidizing renewable energy technologies in developing countries wanting to electrify, can enable them to develop while mitigating global warming.

Hezri A Adnan is adjunct professor at the Faculty of Sciences, University of Malaya, Kuala Lumpur.

IPS UN Bureau

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Map of the 1858 trans-Atlantic cable route. Credit: Wikipedia.

By Manuel Manonelles
BARCELONA, Nov 9 2022 (IPS)

The recent incidents of sabotage of the Nord Stream gas pipeline in the depths of the Baltic Sea, the authorship of which still raises doubts today, have reminded us that some of the key infrastructures that condition geopolitics, and our daily lives, are largely located deep under the sea.

One of these strategic infrastructures, the importance of which is inversely proportional to their public awareness, also lies in the underwater environment. It is about submarine cables, generally of fiber optic, through which more than 95% of internet traffic circulates. A thick and growing network of undersea cables that connect the world and through which the lifeblood of the new economy, data, circulates.

More than 95% of what we see daily on our mobiles, computers, tablets and social networks, of what we upload or download from our clouds or watch through platforms —and thus millions of people, institutions and companies of all over the world— go through this submarine cable system

The history of submarine cables is not new. The first submarine cables were installed around 1850 and the first intercontinental cable, 4,000 kilometers long, was put into operation in 1858, connecting Ireland and Newfoundland (Canada).

It was at that time a telegraph cable, and while the first telegram—sent by Queen Victoria to then US President James Buchanan—took seventeen hours to get from one point to the next, it was considered a technological feat. From here, the network grew unstoppably and communications in the world changed.

Telephone cables followed, and in 1956 the first intercontinental telephone cable was put into operation, again connecting Europe and America with thirty-six telephone lines that would soon be insufficient. Thirty years later, the first fiber optic cable —replacing copper— was activated in 1988 and in recent decades the submarine cable network has dramatically increased, driven by the exponential growth in demand generated by the new digital economy and society.

It is surprising, then, that an infrastructure as critical and relevant as this goes so unnoticed, considering that it is the backbone of a society increasingly dependent on its digital dimension. This is what experts call the “paradox of invisibility”.

Because, again, more than 95% of what we see daily on our mobiles, computers, tablets and social networks, of what we upload or download from our clouds or watch through platforms —and thus millions of people, institutions and companies of all over the world— go through this submarine cable system.

The financial transactions transmitted by this network are approximately of 10 trillion dollars a day; and the global market for fiber optic submarine cables was around 13.3 billion dollars per year in 2020, expected to reach 30.8 billion in 2026, with an annual growth of 14%.

A system, however, that suffers from a significant governance deficit and, at the same time, is subject to substantial changes in its configuration and, above all, in the nature of its operators and owners. Moreover, traditionally the main operators of these networks were the telecom companies or, above all, consortiums of several companies in this sector.

Many of these companies were owned or had a close relationship with the governments of their country of origin —and, therefore, were linked in one way or another to some sort of national or regional legislation— and they generated a model focused on the interests and the interconnectivity of its clients.

In recent years, however, the growing need for hyper-connectivity of the large digital conglomerates (Google, Meta/Facebook, Microsoft, etc.) and their cloud computing provider data centers has resulted in that these have gone from being simple consumers of submarine cabling to becoming the main users (currently using 66% of the capacity of the entire current network). Even more, from users they have become the new dominant promoters of this type of infrastructure, which results in the reinforcement of their almost omnipotent power, and not only in the digital environment.

This can induce movements – albeit barely perceptible but equally relevant – in the complex balance of global power, by concentrating one of the strategic components of the global critical infrastructure into the hands of the technological giants.

All this with the absence of a global governance mechanism addressing this question, since the International Convention for the Protection of Submarine Cables of 1884 is more than outdated. As it is the case for the United Nations Convention on the Law of the Sea (UNCLOS) –in which the abovementioned convention is currently framed- whose challenges are more than evident, with the obvious conclusion about the urgent need for the international community to provide an answer to this pressing question.

A response that not only has to be at a global level, but also at a regional one, for example at the level of the European Union, especially if digital sovereignty is to be ensured, a vital element in the current present and even more in the future.

Proof of this is that in the last weeks there have been several incidents in relation to submarine cables both on the British, French and Spanish coasts that several analysts have linked to the Ukraine war.

In the case of the United Kingdom, there were cuts in the cables that connect Great Britain with the Shetland and Faroe Islands, while in France two of the main cables that land through the submarine cable hub that is Marseille were also cut. Even if some of these cases have been proven the result of fortuitous accidents, in others there is still doubt about what really happened.

Some experts have pointed to Russia, recalling the naval maneuvers that this country carried out just before the invasion of Ukraine in front of the territorial waters of Ireland, precisely in one of the areas with the highest concentration of intercontinental cables in the world.

In this context, perhaps it is not surprising that the Spanish Navy has recently reported that it monitors the activity of Russian ships near the main cables that lie in sovereign Spanish waters, indicating that in recent months more than three possible prospecting actions carried by vessels flying the Russian flag had been detected and deterred. One more proof of the growing value of these infrastructures that, despite being almost invisible, are strategic.

Manuel Manonelles is Associate Professor of International Relations, Blanquerna/University Ramon Llull, Barcelona