WTO is hoping for an end to fishing subsidy negotiations which have been ongoing for more than 20 years. Fishmonger in Bulawayo, Zimbabwe, displays his catch for sale. Credit: Ignatius Banda/IPS

By Ignatius Banda
Bulawayo, ZIMBABWE , Nov 11 2021 (IPS)

With subsidies of global fisheries back on the World Trade Organisation’s agenda, experts are calling for African governments to upscale the protection of the sector long plagued by activities that continue to threaten the continent’s blue economy.

The chair of the negotiations, Ambassador Santiago Wills of Colombia, earlier in November 2021 presented a revised draft text on fisheries subsidies. This will be used for discussions aimed at resolving remaining differences ahead of the 12th Ministerial Conference from November 20 to December 3.

The Director-General Ngozi Okonjo-Iweala called the subsidies “harmful” when the ministers met on July 15.
She said she was cautiously optimistic that there could be an agreement on how to cap subsidies that contribute to overfishing.

Now she is more emphatic and has been engaging political leaders at the highest level to get their support for a successful conclusion to the highest levels, to get their support for a successful conclusion to the 21-year-long negotiations.

“The eyes of the world are really on us,” she said. “Time is short and I believe that this text reflects a very important step toward a final outcome. I really see a significant rebalancing of the provisions, including those pertaining to special and differential treatment, while, at the same time, maintaining the level of ambition.”

Meanwhile, independent researchers say harmful practices ranging from overfishing and too much reliance on fisheries for livelihoods have to be addressed by African governments.

Researchers at the Africa Centre for Strategic Studies say unfair subsidies go towards inputs such as fuel and larger fishing vessels which often go beyond regulated permits while also pushing out smaller players.

Amid those challenges, African countries still have to compete in global fish markets with rich countries which heavily subsidise the sector. This creates sustainable development gaps that will slow the realisation of the UN’s Sustainable Development Goal (SGD) 14, which seeks the sustainable use of marine resources.

Guided by the SGDs, the WTO gave the trade ministers ahead of the July 15 meeting the “task of securing an agreement on disciplines to eliminate subsidies for illegal, unreported and unregulated fishing and to prohibit certain forms of fisheries subsidies and contribute to overcapacity and overfishing,”

Developing and least developed countries will take centre stage of these negotiations to ensure they get a fair deal, with the meeting at the end of November, according to remarks by Okonjo-Iweala.

According to FAO, Africa is home to thriving artisanal fishing communities, employing more than 12 million people, with global demand projected to increase 30 percent by 2030.

There are concerns that low-income coastal fishing communities face the harshest challenges of depleting stocks as they compete with more sophisticated illegal fishing syndicates.

Experts warn that African countries need to develop strategies that will ensure less reliance on fisheries, ensuring the sector’s long-term sustainability.

Rashid Sumaila of the Fisheries Economics Research Unit at the University of British Columbia, Canada, says African governments have to do more to see fewer nets cast in the continental waters.

“Governments must remove the incentive to overfish,” Sumaila told IPS.

“They must also improve national fisheries management and push for regional cooperative management of the sector and make illegal fishing unprofitable,” he said.

How African governments achieve that on a continent plagued by low incomes and a thriving informal sector could prove difficult, researchers from the Africa Centre for Strategic Studies contend.

By WTO estimates, global fisheries subsidies stand at around USD35 billion per year.

Citing data from the Food and Agriculture Organisation(FAO), the WTO says fish stocks are at risk of collapsing in many parts of the world due to overexploitation. It estimates that 34 percent of global stocks are overfished, “meaning they are being exploited at a pace where the fish population cannot replenish itself.”

While the WTO has cited what it calls “lack of political impetus” in the past two decades to resolve the contentious fisheries subsidies and protect smaller global players, Alice Tipping, a researcher at the International Institute for Sustainable Development’s Sustainable Trade and Fisheries, says despite the challenges of the past 20 years, collective action among both high- and low-income countries is the only way forward.

“The WTO negotiations are both technically and legally challenging because they require collective action from governments, but there is a clear benefit in having rules applied at the multilateral level so that everyone has to contribute to the solution,” Tipping told IPS.

Experts say the two-decade deadlock highlights the weak negotiating clout of African and other low-income countries, with some rich countries insisting on an exemption from the harmful subsidies ban while simultaneously allowing their fishing fleets to operate illegally on African shores.

As DG Okonjo-Iweala put it, “the fisheries subsidies negotiations are a test both of the WTO’s credibility as a multinational negotiating forum.”

“If we wait another 20 years, there may be no marine fisheries left to subsidise – or artisanal fishing communities to support,” Okonjo-Iweala warned.

The African continent finds itself in a bind as the African Union’s Agenda 2063 describes the fisheries as “Africa’s Future,” recognising the sector’s key role as a “catalyst for socio-economic transformation.”

This, however, highlights the continent’s reliance on fisheries when researchers are pushing for the decongestion and up-scaled regulation of artisanal fishers.

“A lot of artisanal fisheries is unreported and unregulated mainly because authorities do not affect enough means to document and manage those fisheries,” said Beatrice Gomez, Coordinator of the Coalition for Fair Fisheries Agreements (CFFA).

The CFFA is a platform of European and African groups raising awareness on the impact of EU-Africa agreements on African artisanal fishing communities.

“It would be better to have the activities of artisanal fishers documented properly to show their real importance for jobs and food security to ensure sustainability and long-term future,” Gomez told IPS by email.

“Ideally, for this work, artisanal fisheries have to be co-managed in collaboration with fishing communities, but it takes money, time and human resources which (African) governments do not have or do not want to devote to this.”

The World Bank says fisheries contribute USD24 billion to the African economy, making it a huge attraction for the poor.

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By Roberto Savio
ROME, Jan 27 2016 (IPS)

The rich and the powerful, who meet every year at the World Economic Forum (WEF), were in a gloomy mood this time. Not only because the day they met close to eight trillion dollars has been wiped off global equity markets by a “correction”. But because no leader could be in a buoyant mood.

Roberto Savio

German Chancellor Angela Merkel is losing ground because of the way she handled the refugee crisis. French President Francois Hollande is facing decline in the polls that are favoring Marine Le Pen. Spanish president Mariano Rajoy practically lost the elections. Italian President Matteo Renzi is facing a very serious crisis in the Italian banking system, which could shatter the third economy of Europe. And the leaders from China, Brazil, India, Nigeria and other economies from the emerging countries (as they are called in economic jargon), are all going through a serious economic slowdown, which is affecting also the economies of the North. The absence of the presidents of Brazil and China was a telling sign.

However the last Davos (20-23 January) will remain in the history of the WEF, as the best example of the growing disconnection between the elites and the citizens. The theme of the Forum was “how to master the fourth revolution,” a thesis that Klaus Schwab the founder and CEO of Davos exposed in a book published few weeks before. The theory is that we are now facing a fusion of all technologies, that will completely change the system of production and work.

The First Industrial Revolution was to replace, at beginning of the 19th century, human power with machines. Then at the end of that century came the Second Industrial Revolution, which was to combine science with industry, with a total change of the system of production. Then came the era of computers, at the middle of last century, making the Third Industrial Revolution, the digital one. And now, according Schwab, we are entering the fourth revolution, where workers will be substituted by robots and mechanization.

The Swiss Bank UBS released in the conference a study in which it reports that the Fourth Revolution will “benefit those holding more.” In other words, the rich will become richer…it is important for the uninitiated to know that the money that goes to the superrich, is not printed for them. In other words, it is money that is sucked from the pockets of people.

Davos created two notable reactions: the first came with the creation of the World Social Forum (WSF), in 1991, where 40,000 social activists convened to denounce as illegitimate the gathering of the rich and powerful in Davos. They said it gave the elite a platform for decision making, without anything being mandated by citizens, and directed mainly to interests of the rich.

The WSF declared that “another world is possible,” in opposition to the Washington Consensus, formulated by the International Monetary Fund (IMF), the World Bank, and the Treasury of the United States. The consensus declared that since capitalism triumphed over Communism, the path to follow was to dismantle the state as much as possible, privatize, slash social costs which are by definition unproductive, and eliminate any barrier to the free markets. The problem was that, to avoid political contagion, the WSF established rules which reduced the Forums to internal debating and sharing among the participants, without the ability to act on the political institutions. In 2001, Davos did consider Porto Alegre a dangerous alternative; soon it went out of its radar.

At the last Davos, the WSF was not any point of reference. But it was the other actor, the international aid organization Oxfam, which has been presenting at every WEF a report on Global Wealth.

Those reports have been documenting how fast the concentration of wealth at an obscene level is creating a world of inequality not known since the First Industrial Revolution. In 2010, 388 individuals owned the same wealth as 3.6 billion people, half of humankind. In 2014, just 80 people owned as much as 3.8 billion people. And in 2015, the number came down to 62 individuals. And the concentration of wealth is accelerating. In its report of 2015, Oxfam predicted that the wealth of the top 1 per cent would overtake the rest of the population by 2016: in fact, that was reached within ten months. Twenty years ago, the superrich 1 per cent had the equivalent of 62 per cent of the world population.

It would have been logical to expect that those who run the world, looking at the unprecedented phenomena of a fast growing inequality, would have connected Oxfam report with that of UBS, and consider the new and immense challenge that the present economic and political system is facing. Also because the Fourth Revolution foresees the phasing out of workers from whatever function can be taken by machines. According to Schwab, the use of robots in production will go from the present 12 per cent to 55 per cent in 2050. This will cause obviously a dramatic unemployment, in a society where the social safety net is already in a steep decline.

Instead, the WEF largely ignored the issue of inequality, echoing the present level of lack of interest in the political institutions. We are well ahead in the American presidential campaign, and if it were not for one candidate, Bernie Sanders, the issue would have been ignored or sidestepped by the other 14 candidates. There is no reference to inequality in the European political debate either, apart from ritual declarations: refugees are now a much more pressing issue. It is a sign of the times that the financial institutions, like IMF and the World Bank, are way ahead of political institutions, releasing a number of studies on how inequality is a drag on economic development, and how its social impact has a very negative impact on the central issue of democracy and participation. The United Nations has done of inequality a central issue. Alicia Barcena, the Executive secretary of CEPAL, the Regional Center for Latin America, has also published in time for Davos a very worrying report on the stagnation in which the region is entering, and indicating the issue of inequality as an urgent problem.

But beside inequality, also the very central issue of climate change was largely ignored. All this despite the participants in the Paris Conference on Climate, recognized that the engagements taken by all countries will bring down the temperature of no more than 3.7 degrees, when a safe target would be 1.5 degrees. In spite of this very dangerous failure, the leaders in Paris gave lot of hopeful declarations, stating that the solution will come from the technological development, driven by the markets. It would have been logical to think, that in a large gathering of technological titans, with political leaders, the issue of climate change would have been a clear priority.

So, let us agree on the lesson from Davos. The rich and powerful had all the necessary data for focusing on existential issues for the planet and its inhabitants. Yet they failed to do so. This is a powerful example of the disconnection between the concern of citizens and their elite. The political and financial system is more and more self reverent: but is also fast losing legitimacy in the eyes of many people. Alternative candidates like Donald Trump or Matteo Salvini in Italy, or governments like those of Hungary and Poland, would have never been possible without a massive discontent. What is increasingly at stage is democracy itself? Are we entering in a Weimar stage of the world?

(End)

Excerpt:

By Jomo Kwame Sundaram
ROME, Dec 8 2015 (IPS)

The world today faces a crisis of climate and a crisis of development. Both are consequences of the nature of growth of the world economy over the last two centuries, especially during the recent period.

Jomo Kwame Sundaram. Credit: FAO

It has, however, been a failure in two other respects. First, it often widened inequality, both among and within nations, leaving much of the world’s population with crumbs. Second, it worsened the relationship between humanity and nature, rendering human existence, including economic growth itself, unsustainable.

The problems of climate and development must be addressed together. Protection of the Earth’s climate requires the cooperation of all; it cannot be imposed on an unequal world by an affluent minority.

Meanwhile, development has to acknowledge and progress in a climate-constrained environment, mitigating global warming with low-carbon economic growth while adapting to the irreversible consequences of climate change.

These interrelated challenges should frame the economic agenda for our times. Yet, they have received far too little attention from economists as inter-connected phenomena.

Climate economics, in particular, frequently ignores questions of international equity, assuming little or no change in the relative positions of rich and poor nations. Economic models which presume “inequality as usual” cannot address the related problems of climate and development, let alone propose viable and acceptable solutions.

Analysis and solutions must integrate and address climate and development concerns; its “optimal” policy scenarios provide climate protection while rapidly reducing global inequality. Indeed, inclusive and rapid development is supportive of and essential to the best sustainable climate solutions.

Global warming is threatening people and development in many countries. The vicious circles generating climate change are becoming stronger, with the emergence of new threats and the intensification of existing threats, such as the water challenge.

Hence, solutions to the climate threat are not acceptable if they fail to address these challenges, or worse still, widen existing gaps between rich and poor. A good deal of the current policy discussion sees the problem in incremental terms and ignores the different challenges faced by rich and poor countries.

The climate problem cannot simply be addressed by across-the-board uniform greenhouse gas (GHG) emission cuts by all countries from their present levels. The required response needs to be tailored, with a better sense of the size and nature of economic adjustments involved in moving to low-GHG emission development pathways. Such pathways will have to be combined with the goals of full employment and energy security in the North as well as catch-up growth and improved energy access in the South.

Long-term management of economic and natural resources in a more inclusive and sustainable manner is key. We cannot rely purely on markets, especially when changes are expected to be large-scale, returns are uncertain and complementarities are significant.

We need a vital public policy and public investment agenda, with strong multilateral support built around a global investment programme to fight climate change. Many investments will have to be front-loaded (i.e., scaled up now, rather than by 2030 or so) and undertaken by the public sector.

More integrated policy responses, at both domestic and multilateral levels, to tackle the interrelated threats will be needed. A range of possible multilateral measures in support of a global investment programme will be necessary, including a global clean energy fund, a global feed-in tariff regime in support of renewable energy sources, a climate technology programme and a more balanced intellectual property regime to facilitate the transfer of clean technologies. A global green New Deal will have to be built around a global investment programme and more integrated policy responses.

(End)

Excerpt:

By N Chandra Mohan
NEW DELHI, Nov 24 2015 (IPS)

With Goldman Sachs folding up its haemorrhaging BRIC fund, is it curtains for the acronym that defined the investment bankers’ fancy for emerging markets? It certainly appears so after China’s stock market crash and a fast slowing economy triggered fears that the dragon will set off the next global recession.

N Chandra Mohan

Brazil’s economy is experiencing its deepest recession in 25 years. Russia, too, is contracting due to the crash in oil prices and sanctions. India remains a haven of stability. South Africa’s growth is sluggish with very high unemployment. Against this dismal backdrop, what are the prospects of BRICs playing a vital role in the world economy?

Fourteen years ago, BRICs was very much an idea whose time had come. Goldman Sachs projected them as the future growth engines of the world economy. This acronym soon became a self-fulfilling buzz word with a life of its own. A focus on these leading emerging economies, especially since 2006, provided handsome returns that peaked five years ago. Since 2010, however, BRIC Fund assets plunged from $842 million to $98 million in end-September 2015 according to Bloomberg. With no hope for “significant asset growth” in the near future, Goldman Sachs threw in the towel on October 23, the last trading day for this fund.

These financials clearly reflect the fast-deteriorating growth prospects of the BRIC economies. They were expected to overtake the US in size by 2015. But this isn’t likely to happen. A decelerating Chinese economy, in fact, threatens the first global recession in 50 years without help from the US, says a rival investment bank. Russia and Brazil are doing much worse as they are highly dependent on commodity exports to drive their growth. As China is the biggest importer of oil, iron ore and other raw materials, this is bad news for their commodity-driven prospects. Only India’s track record is creditable as the fastest growing economy in the world.

Such concerns can only make this grouping – which globally accounts for one-fifths of GDP, 42 per cent of population, 17.3 per cent of trade, 41 per cent of forex reserves and 45 per cent of agricultural production – less cohesive to have geo-economic significance in the world economy. Analysts consider the BRICs to represent an alliance of middle -sized economies that could lead to a serious attempt to counter-balance the US, the most powerful economy in the world. This is far from obvious except, perhaps for Russia, that has faced the full brunt of US-led sanctions due to its intervention in Ukraine. This is less true of India that is deepening its relations with the US.

But the BRICs are far from happy with the US-led global financial architecture. A striking feature of all the seven statements issued at BRIC summits from 2009 to 2015 is that this grouping aims to promote peace, security, prosperity and development in a multi-polar, equitable and democratic world order. The grouping seeks a greater voice and participation in institutions of global governance like the IMF, World Bank, WTO and UN. The Durban summit in 2013, for instance, indicated that the WTO required a new leader who demonstrated a commitment to multilateralism and that he or she should be a representative of a developing country.

The formation of a New Development Bank (NDB) is in fact a concrete expression of the desire of BRICs to set up its own alternative to the US-led World Bank and IMF. NDB President KV Kamath has indicated that the bank would blaze a different trail than the Bretton Woods twins who impose an unacceptable conditionality on their loan assistance. In sharp contrast, the NDB is expected to place a greater priority on borrowers’ interests instead of the lender’s interests; that it would better reflect the expectations and aspirations of developing countries. BRICs, however, are not keen to position the NDB as a rival to the World Bank or IMF.

At a BRICs meeting ahead of the recent G-20 summit in Turkey, India’s PM Narendra Modi stated that India will guide the NDB to finance inclusive and responsive needs of emerging economies. India will assume the chairmanship of BRICs in February 2016 and the theme of its chairmanship will be Building Responsive, Inclusive and Collective Solutions – the acronym lives on! PM Modi added for good measure that there was a time when the logic of BRICs and its lasting capacity were being questioned. But group members have provided ample proof of its relevance and value through action at a time of huge global challenges.

The good news is that the BRICs are cooperating and competing with one another for a place under the global sun. The seven summits from St Petersburg to Ufa testify to this. BRICs are the new growth drivers for low-income countries, especially in Africa, considering the growing importance of their trade and foreign direct investments in such economies. The BRICs may be passing through troubled times, but they do constitute a major consumer market. Incomes have grown as more and more people have joined the ranks of the middle class, resulting in greater demand for oil, cars and commodities in leading member countries like China and India.

But the grouping must seriously address the serious challenges of kick-starting its pace of expansion to power global growth as before. The BRICs may not be yielding returns to investment banks but they are in no immediate danger of fading into the sunset. Member countries after all take it seriously enough to set up a potential rival to the World Bank and IMF dominated by the US and Europe. Even if its creator has pulled the plug on the BRIC fund, the acronym will remain relevant in the future as well. Its resilience only exemplifies the profound truth of what the famous economist John Maynard Keynes stated long ago that the ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else!

(End)

Excerpt:

By Fernando J. Cardim de Carvalho
RIO DE JANEIRO, Aug 22 2015 (IPS)

As the political situation in Brazil appears to be reaching a state of unstable equilibrium, or more bluntly, as it is transformed from instability to impasse, the economy continues to deteriorate.

The sharpening of political conflicts that could lead to an outright collapse of the economy seems to have been attenuated by the shift on Apr. 7 of effective political power from President Dilma Rousseff to Vice-President Michel Temer.

Fernando Cardim de Carvalho

Temer was successful in bringing Renan Calheiros, the chairman of the Federal Senate, back to the government camp, in a power-sharing agreement meant to isolate the chairman of the House, Eduardo Cunha, who has assumed a much more radical stance. The arrangement has worked so far.

The pressure on the President to resign or on the appropriate bodies to give cause to initiate impeachment processes seems to have reached its limit. Popular opposition to the federal administration, which has its stronghold in Sao Paulo – as shown in mass demonstrations in March and April and most recently on Aug. 16 – has not seen the snowball growth its leaders expected.

In sum, positions seem to have been hardened as a measure of political accommodation has been reached, with the Brazilian Democratic Movement Party (PMDB) taking the lead on the side of government, and the formal opposition to government, including the nominally leading opposition party, the Brazilian Social Democracy Party (PSDB), rallying to the side of Eduardo Cunha, still their best hope on the way to an impeachment procedure.

Street demonstrations at this point seem to be unable to change this picture. Still, it should be noted that only the opposition has been able to organise large demonstrations. Attempts by pro-government groups to do the same in favour of the government have been few and largely unsuccessful.

In this context, as expected, the Brazilian economy continues to deteriorate. The contractionary impact of fiscal retrenchment has been greater than anticipated because not many people can foresee what will come next. In fact, no one can, even if announced measures will in fact be implemented while current difficulties, including fiscal difficulties, grow further.

The federal government was not able to pass the contractionary measures it argued to be essential, thus creating a ‘Catch 22’ situation in which one expects the success of the government to be very bad for the country but its failure to be even worse. Many economists are predicting a fall in 2015 GDP close to two percent, postponing chances of recovery until at least 2017.

“[Brazil] finds itself at an impasse. No political force seems to be strong enough, or even interested in finding a better and more promising alternative policy strategy”
If this contraction actually happens, it will be one the most serious recessions in recent history, much worse than what happened in 2008 and 2009.

The reasons for this are complex and the government is partly correct to point to the worsening of the external scenario. China can no longer carry Brazil forward. The recovery of the U.S. economy is weak and volatile. Europe is unable to overcome its own fossilised views on the virtues of austerity, causing the whole area to limp around.

Of course, this excuse only goes so far. Many analysts had called the attention of government authorities to the fact that growth during President Lula da Silva’s two terms in office (2003-2011) would vanish in the event that China lost its breath, as has actually happened.

The country lost the opportunity to make the investments, particularly in infrastructure, which could have increased its productive capacity. Efficient industrial policies should have been consistently implemented to that end, public investment should have been expanded, and consistent exchange rate policies should have been sought to change the picture of overvaluation that has been killing local manufacturing, on and off, since the Real Plan was implemented in 1994.

Practically nothing of this was effectively done. Investment plans were announced that had no consequence, local manufacturers became importers on an increasing scale, and roads, ports and energy production fell behind needs, while the government presented policies to increase household indebtedness to expand consumption as a successful combination of economic and social policies.

In the last two years of Rousseff’s first term (2011-2014), these policies were not even successful in increasing growth rates and GDP stalled as the government appealed more and more to tricks, particularly accounting tricks, and the distribution of favours to politically-connected sectors to try to revive the economy.

To a large extent, the turn to austerity was motivated by the failure to revive the economy, which doubled the bet on mistaken policies. Austerity measures in a shrinking economy can only accelerate the fall. But the dissolution of the political power of the president tripled the bet.

No one can believe that the president has the power to effectively pursue an alternative policy path. In fact, if the alternative to austerity is going back to what she did in her first term, the president will not find any supporters, except, perhaps, in her fast-shrinking number of hard-core believers.

So the country finds itself at an impasse. No political force seems to be strong enough, or even interested in finding a better and more promising alternative policy strategy. The more radical opponents – the Workers’ Party (PT) and the PSDB – got lost in a ‘blame game’, trying to pin down which of two presidents, Fernando Henrique Cardoso or Lula, had been worse.

None of them seems to have anything to offer. PMDB does not deal in wholesale strategies, it is more interested in retailing. Given the steep loss of trust in the PT or its leaders, including Lula, the party seems to be excluded from any power arrangement to be designed in the near future (its perspectives for the long-term future are at a minimum very uncertain).

The situation of the PSDB is not much better, because all it has in its favour is the receding memory of the Cardoso period, in which much the same problems were as serious as they are now and the party was as incompetent in pointing to solutions as the PT is now.

In this situation, the PMDB stepped in. It reached some measure of political stability but it has no vision of where to take the economy. Given its structure as a federation of state leaderships, the PMDB deals better with favours than with strategies.

As happened under President José Sarney in the late 1980s, this may be enough – in the best of circumstances – to put the brakes on economic deterioration but not to guide its revival.

The country will survive, of course, as it has done in the past.  The problem is that Brazil has experience of unfortunately all too frequent low-quality political leadership, so even the optimistic analysts can only see hardship ahead. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Roberto Azevêdo
GENEVA, Jun 29 2015 (IPS)

The latest report by the World Trade Organisation (WTO) on G20 trade measures shows a slight deceleration in the application of new trade-restrictive measures by G20 economies, with the average number of such measures applied per month lower than at any time since 2013.

According to the thirteenth such WTO report, issued on Jun. 15, G20 economies had applied 119 new trade-restrictive measures since mid-October 2014, an average of 17 new measures per month over the period.

Roberto Azevêdo

A slight decrease in the number of trade remedy investigations by G20 economies has also contributed to this overall figure.

But it is not yet clear that this deceleration will continue and the WTO calls on G20 leaders to show continued vigilance and reinforced determination towards eliminating existing trade restrictions.

The longer term trend remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise.

Of the 1,360 restrictions recorded by this exercise since 2008, less than one-quarter have been eliminated, leaving the total number of restrictive measures still in place at 1,031. Therefore, despite the G20 pledge to roll back any new protectionist measures, the stock of these measures has risen by over seven percent since the last report.

The broader international economic context also supports the need for continuing vigilance and action. According to the WTO’s most recent forecast (14 April 2015), growth in the volume of world merchandise trade should increase from 2.8 percent in 2014 to 3.3% percent 2015 and further to four percent in 2016, but remaining below historical averages.“The longer term trend [vis-à-vis protectionism] remains one of concern, with the overall stock of trade-restrictive measures introduced by G20 economies since 2008 continuing to rise”

The overall response to the 2008 financial crisis has been more muted than expected when compared with previous crises. The multilateral trading system has proved an effective backstop against protectionism.

During this period, G20 economies also continued to adopt measures aimed at facilitating trade, both temporary and permanent in nature.

These developments confirm that G20 economies overall have shown a degree of restraint in introducing new trade restrictions. However, it is not yet clear that the deceleration in the number of measures introduced will continue in future reporting periods. It is also relevant that the slow pace of removal of previous restrictions means that the overall stock of restrictive measures is continuing to increase.

The broader international economic context also supports the need for continuing vigilance and action.

Trends in world trade and output have remained mixed since the last monitoring report, as merchandise trade volumes and GDP growth picked up in the second half of 2014 but appear to have slowed in the first quarter of 2015.

Economic activity remained uneven across countries as the United States and China slowed in the first quarter, while growth in the Euro area and Japan picked up.

Plunging oil prices and strong exchange rate fluctuations, including an appreciation of the U.S. dollar and a depreciation of the Euro contributed uncertainty to the economic outlook.

Lower prices for oil and other primary commodities were expected to provide a boost to importing economies, but reduced export revenues weighed heavily on commodity exporters.

In light of these developments, our most recent forecast (14 April 2015) predicted a continued moderate expansion of trade in 2015 and 2016, although the pace of recovery was expected to remain below historical averages.

In the area of government procurement, work from the Organisation for Economic Cooperation and Development (OECD), identifying 65 measures implemented since the financial crisis, suggests that discriminatory government procurement policies have become increasingly popular and potentially affect 423 billion dollars of government procurement in the implementing economies.

This report shows that G20 economies implemented 48 new general economic support measures during the period under review, with the majority targeting the manufacturing and agricultural sectors through various incentive schemes, often, but not exclusively, in the context of exports.

The overall assessment of this thirteenth report on G20 trade measures is that the continuing
increase in the stock of new trade-restrictive measures recorded since 2008 remains of concern in the context of an uncertain global economic outlook.

Individually and collectively, the G20 must show leadership and deliver on the pledge to refrain from implementing new measures taken for protectionist purposes and to remove existing ones. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Roberto Savio
ROME, Jun 9 2015 (IPS)

Only 50 years of Cold War (and the fact that German Chancellor Angela Merkel grew up in East Germany) can possibly explain the strange political power of the United States over Europe.

After a bilateral meeting between Merkel and U.S. President Barack Obama (so much for transparency and participation), the Jun. 7-8 G7 summit opened in Germany and we found out that there had been a trade-off.

Roberto Savio

Merkel agreed that Europe should continue the sanctions against Russia – and so the other members of the G7 duly agreed – and Obama toned down the U.S. position on Greece.

That position had been forcefully expressed by U.S. Treasury Secretary Jacob Lew a few days earlier to European leaders: solve the Greek problem, or this will have a global impact that we cannot afford. This had suddenly accelerated negotiations, with the hope then that everything would be solved before the G7 summit.

But Greece did not accept the plan of the President of the European Commission, Jean-Claude Juncker, which was suspiciously close to International Monetary Fund (IMF) positions.

At the G7 summit, Obama softened the U.S. position on Greece, and even said that “Athens must implement the necessary reforms.”

Obstinacy on sanctions against Russia ignores the fact that, in a very delicate economic moment, Europe has lost a considerable part of its exports because of Russia’s retaliatory block on European imports. It is also difficult to see what advantage there is for Europe in pushing Russia into the arms of China. We will soon be seeing joint naval exercise between the two countries, which will only escalate tensions.

But let us look at Greece given that its tug of war with Europe has now been going on for five years.

Let us recall briefly. Greece had been spending much more than it could by distributing public jobs under any government, by giving easy pensions to everyone, and so on. Then, in 2009, the centre-left Panhellenic Socialist Movement (PASOK) won the elections and we found out that the figures Athens had been giving Brussels were false.

The real deficit stood at almost 12.5 percent of gross domestic product (GDP), confirmation of what the European Union and its bodies had long suspected but which it had done nothing about.“Europe is now led by Germany and the Germans are convinced that what they did at home is valid everywhere. Together with the countries of northern Europe, they look on the people of southern Europe as unethical, people who want to enjoy life beyond their means”

To avoid going into the agonising details of the continuous negotiations between Greece and the European Union, I jump to the January elections this year which the left-wing Syriza party won and its leader Alexis Tsipras was named Prime Minister on a clear programme: stop the austerity programme imposed by the “Troika” – IMF, EU and the European Central Bank (ECB) – on behalf of the European countries, led by Germany, Netherlands, Austria and Finland.

Greece is on its knees. Officially, unemployment has gone from 11.9 percent in 2010 to 25.5 percent today, but it is widely considered to be around 30 percent. Among young people, it is close to 60 percent. GDP has gone into a 25 percent decline, Greek citizens have lost about 30 percent of their revenues and public spending has been slashed to the point that hospitals have great difficulty in functioning.

Yet, the request (order) of the “Troika” is simple – cut everything the deficit has been eliminated.

So, for example, cut pensions, which have been already been cut twice. In any case, this would reap a paltry 100 million euros but would cripple people who are living on less than 685 euro a month. Or, raise VAT on tourism, from the present 6.5 percent to 13.6 percent, which would be a deadly blow to Greece’s only important source of income.

This is the plan presented by Juncker, whose arrival as head of the European Commission was accompanied by a grandiose Marshall Plan for Europe, a plan which has since disappeared totally from the scene.

In an article a few days ago titled ‘Europe’s Last Act?”, Joseph E. Stiglitz, Nobel laureate in economics, argues that the idea of austerity as a uniform recipe for Europe is missing reality.

“The troika badly misjudged the macroeconomic effects of the program that they imposed. According to their published forecasts, they believed that, by cutting wages and accepting other austerity measures, Greek exports would increase and the economy would quickly return to growth. They also believed that the first debt restructuring would lead to debt sustainability.

“The troika’s forecasts have been wrong, and repeatedly so. And not by a little, but by an enormous amount. Greece’s voters were right to demand a change in course, and their government is right to refuse to sign on to a deeply flawed program.”

It is on austerity that the paths of the United States and the European Union divide.

The United States has embarked on investing for growth, despite pressure from the Republican party for austerity, and the U.S. economy is picking up again.

But Europe is now led by Germany and the Germans are convinced that what they did at home is valid everywhere. Together with the countries of northern Europe, they look on the people of southern Europe as unethical, people who want to enjoy life beyond their means. As The Economist put it in an article on the Greek crisis: “In German eyes this crisis is all about profligacy”.

It did not help that another very minor crisis – that of Cyprus between 2012 and 2013 – confirmed Germany’s view about the profligacy of the south of Europe. In the case of Cyprus, the “Troika” settled the crisis at a cost of 10 billion euros.

There is widespread agreement that the crisis of Greece, which represents just two percent of the total European budget, could have been settled at the beginning with a 50-60 billion euro loan. But only since Tsipras became prime minister, and with popular support started to refuse to accept the creditors’ plan, has Greece has become a very important issue.

There is now talk of a “Grexit”, or Greece’s exit from the European Union. This would have a cascade effect, and it would mean the end of Europe as a common dream, of a Europe based on solidarity and communality.

In the G7, Obama has insisted on investments and demand as a way out of the crisis. Merkel has again repeated that Europe does not need stimulus financed by debt, but stimulus coming from the reform of inefficient economies. At this point, perhaps “everything is always about something else”, as the late award-winning Sri Lankan journalist Tarzie Vittachi once told me.

An enlightening comment on the Greek situation has come from Hugo Dixon writing in The New York Times of Jun. 7. The Greek prime minister “will have to choose between saving his country and sticking to a bankrupt far-left ideology. If he is smart, he can secure a few more concessions from creditors and a goodish deal for Greece. If not, he will drag the country into the abyss.”

And then, it is interesting to note that one of the main reasons for being so hard with Syriza is that the citizens of Spain, Portugal and Ireland, who were the first to swallow the bitter pill of austerity, would revolt if they saw a different path for Greece, and it just happens that those countries have conservative governments.

The entire European political system reeled with shock at the victory of Syriza, and again a few days ago at the victories of the left-wing anti-establishment Podemos party in municipal elections in Spain.

For some reason, the very authoritarian and conservative government of Viktor Orbán in Hungary, the victory of the very conservative Andrzej Duda as president in Poland, as well as the rise of Matteo Salvini’s anti-European and anti-immigration Lega Nord party in Italy create no panic, not even if Salvini looks to Russian President Vladimir Putin and Marine Le Pen, leader of France’s right-wing Front National, as figures of reference.

So, the real issue now in the case of Greece is to punish an anti-establishment figure like Tsipras and show that the radical left cannot run a country.

Who really believes that there will masses of citizens in Madrid, Lisbon or Dublin taking to the streets to protest if Europe does a somersault of solidarity and idealism, and lowers its requests or dilutes them over more time? (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

Demonstrators protesting at the Business & Climate Summit in Paris, May 20. Credit: A.D. McKenzie/IPS

By A. D. McKenzie
PARIS, May 21 2015 (IPS)

When it comes to climate change, business as usual is simply “not an option”.

That was the view of Eldar Saetre, CEO of Norwegian multinational Statoil, as international industry leaders met in Paris for a two-day Business & Climate Summit, six months ahead of the next United Nations Climate Change Conference (COP 21 ) that will also be held in the French capital.

Subtitled “Working together to build a better economy”, the May 20-21 summit brought together some 2,000 representatives of some of the world’s largest retail and energy concerns, including  companies that NGOs have criticized as being among the worst environmental offenders.

At the end, business leaders proclaimed that they wanted “a global climate deal that achieves net zero emissions” and that they wanted to see this happen at COP 21.

Throughout the conference, participants stressed that businesses will have to change, not only to protect the environment, but for their own survival. “Taking climate action simply makes good business sense. However, business solutions on climate are not being scaled up fast enough,” declared the summit organizers.

They pledged to lead the “global transition to a low-carbon, climate resilient economy.”

Saetre, for example, said his company wanted to achieve “low-carbon oil and gas production” and that it had embarked on renewables in the form of offshore wind energy. But he said that fossil fuels would still be needed in the future, alongside the various forms of renewable energy.

Acknowledging the widespread scepticism about multinational companies’ commitment, business leaders said that they could not “go it alone”, and called for support from governments as well as consumers.

Mike Barry, Director of Sustainable Business at British retailer Marks & Spencer, told IPS in an interview that global commitment was important in the drive to transform industry to have more environmentally friendly practices.

“Collective action can bring about real change,” he said. “We’re here today because we believe that climate change is happening and it’s going to have a significant impact on our business in the future and our success.

“Our customers would expect us to take the lead on this, and we want governments to take this seriously as well in the run-up to COP 21 [the 21st session of the Conference of the Parties to the United Nations Framework Convention on Climate Change to be held in Paris from Nov. 30 to Dec. 11].”

He said that Marks & Spencer and other companies in a network called the Consumer Goods Forum wanted to “stand shoulder to shoulder with government to say ‘this matters and we’re here to help’.”

But government consensus on how to address climate change has proved difficult, and even French President Francois Hollande, who opened the summit, conceded that it would require a miracle for a real agreement to be reached at COP 21.

“We must have a consensus. It’s already not easy in our own countries, so with 196 countries, a miracle is needed,” he said at the Business & Climate Summit, expressing the conviction, however, that agreement will be reached through negotiation and “responsibility”.

Hollande and other officials said the involvement of businesses was essential, and France, with its huge oil and electricity companies, evidently has a big role to play.

However, demonstrators outside the summit, held at the headquarters of the United Nations Educational, Scientific and Cultural Organisation (UNESCO), slammed big business.

“These multinationals (and the banks that finance their activities) are in fact directly at the origin of climate change,” read a statement from organisations including Les Amis de la Terre (Friends of the Earth, France) and the civil disobedience group J.E.D.I. for Climate.

Saying that it was ironic to have fossil-fuel companies represented at the summit, the groups asked: “Can one imagine for a second that the tobacco industry would be associated with policies to combat smoking aimed at ending the production of cigarettes? No, that would be the best way to ensure that the world continued to chain-smoke.”

The protesters added that if Hollande and his ministers wanted to show a real commitment to the environment, they should make it clear that “the climate is not a business”.

“The fight against climate change is not the business of fossil-fuel multinationals: they belong to our past,” the groups said in a joint release, handed out on the street.

At the summit, Christiana Figueres, Executive Secretary of the U.N. Framework Convention on Climate Change (UNFCCC), said that businesses should not be “demonised” and she called for collaboration rather than confrontation.

“We all start with a carbon footprint,” she said. “It is not a question of demonising anyone but realizing that we’re all here … This is not about confrontation. This is about collaboration. If you’re thinking about confrontation, forget it. Because we’re not going to get there.”

The summit – co-hosted by Entreprises Pour l’Environnement, an association of some 40 French and large international companies, and UN Global Compact France, a policy initiative for businesses – also addressed the vulnerability of island states in the face of climate change.

Tony de Brum, the Marshall Islands’ Minister of Foreign Affairs, said that island states in the Pacific and elsewhere had an interest in keeping pressure on carbon emitters because their populations’ survival was at stake.

Angel Gurría, Secretary General of the Paris-based Organisation for Economic Cooperation and Development (OECD), also highlighted the threat to vulnerable countries, saying that for them, climate change is not about protecting the environment for future generations, but “it’s about how long the water will take to overcome the land.”

Gurría said that greater reductions in carbon emissions were required than has so far been proposed by states, and he stressed that countries over time needed to “develop a pathway to net zero emissions globally” by the second half of the century.

“Governments at COP 21 need to send a clear directional signal that will drive action for decades to come,” he said. “We are on a collision course with nature, and unless we seize this opportunity, we face an increasing risk of severe, pervasive and irreversible climate impact.”

Edited by Phil Harris    

By Roberto Savio
ROME, May 19 2015 (IPS)

The victory of the Conservative Party and the debacle of the Labour Party in the recent British general elections is yet another sign of the crisis facing left-wing forces today, leaving aside the question of how, under the British electoral system, the Labour Party actually increased the number of votes it won but saw a reduction in the number of seats it now holds in Parliament (24 seats less than the previous 256).

Roberto Savio

If the proportional rather than uninominal system had been used, the Conservative Party with its 11 million votes would have won 256 and not 331 seats in Parliament (far short of the absolute majority of 326 needed to govern), while at the other extreme the United Kingdom Independence Party with nearly four million votes would have landed 83 and not just the one seat it ended up with – results that would be hard to imagine anywhere else and a good example of insularity.

To an extent, the recent British general elections mirrored the U.S. presidential elections in 2000 when Democratic candidate Al Gore won around half a million more popular votes than Republican candidate George W. Bush but failed to win the majority of electoral college votes on which the U.S. system is based. The outcome was eight years of George W.  Bush administration, the war in Iraq, the crisis of multilateralism, and all the paraphernalia of “America’s exceptional destiny”.

Let us venture now into an analysis that will have the politologues among us cringing.“The left has tried to mimic the winners, instead of trying to be an alternative to the process of neoliberal globalisation and, since the beginning of the world financial crisis in 2008 … it has had no real answer to the crisis”

It is now generally recognised that the end of the Soviet Union has given free way to a kind of capitalism without control, marked by an unprecedented supremacy of finance which, in terms of volume of investments, overwhelmingly exceeds the real or productive economy.

In its wake, neoliberal thinking has found the left totally unprepared, because part of its function had been to provide a democratic alternative to Communism, which was suddenly no longer a threat.

The left therefore has tried to mimic the winners, instead of trying to be an alternative to the process of neoliberal globalisation and, since the beginning of the world financial crisis in 2008 (with its bail-out cost so far of over four trillion dollars), it has had no real answer to the crisis.

Ever since the industrial revolution, the identity of the left had been to press for social justice, equality of opportunities and redistribution, while the right placed the emphasis on individual efforts, less role for the state and success as motivation.

Continuing with this brutal simplification, we have to add that the left, from Marx to Keynes, always studied how to create economic growth and redistribution – Marx by abolishing private property, social democrats through just taxation.

But it never studied the creation of a progressive agenda in the event case of an economic crisis such as the one we are now facing, with structural unemployment, young people obliged  to accept any kind of contract, new technologies which are making the concept of classes disappear, and rendering trade unions – erstwhile powerful actors for social justice – irrelevant.

It is unprecedented that the top 25 hedge fund managers received a reward in 2014 of 11.62 billion dollars, yet neither U.S. President Barack Obama nor Ed Miliband, then still leader of the Labour Party at the recent British general elections (until he resigned after election defeat), saw it fit to denounce this obscene level of greed.

Meanwhile, Europe as a political project is clearly in disarray, and now faces a “Grexit” on its southern flank and a “Brexit” on its northern flank.

In the case of a “Grexit” (the possible abandonment of the European Union by Greece), Greece faces the prospects of having to make substantial concessions to Europe, thus reneging on the promises of Alexis Tsipras who was voted in as prime minister in rebellion against years of dismantlement of public and social structures imposed in the name of austerity.

What is at stake here is the very neoliberal model itself and not only is ordoliberal Germany supported by allies like Austria, Finland and the Netherlands erecting a wall against any form of leniency, but countries which accepted painful cuts and where conservatives are now in power, like Spain, Portugal and Ireland, see leniency as giving in to the left.

A “Brexit” (the possible abandonment of the European Union by Britain) is a different affair. It is a game being played by British Prime Minister David Cameron to negotiate a more favourable agreement for Britain with the European Union.

A referendum will be held before the end of 2017 and the four million people who voted for the UKIP in the recent elections, plus the country’s “Euro-sceptics”, threaten to push Britain out of the European Union, especially if Cameron does not manage to obtain some substantial concessions from Brussels.

Meanwhile, if Europe is in disarray, the United States has a serious problem of governance. Analyst Moisés Naím, who served as editor-in-chief of Foreign Policy magazine from 1996 to 2010, has pinpointed a few examples of how this has translated into self-inflicted damage.

One concerns China which, after waiting five years trying to get the Republican-dominated Congress to authorise and increase in its stake in the International Monetary Fund (IMF) from a ridiculous 3.8 percent to 6 percent (compared with the 16.5 percent of the United States), got fed up and established an alternative fund, the Asian Infrastructure Investment Bank (AIIB).

Washington tried unsuccessfully to kill the initiative by putting pressure on its allies but first the United Kingdom, then Italy, Germany and France announced their participation in the new bank, which now has 50 member countries and the United States is not one of them.

Another example was the attempt by the Republican-dominated Congress to kill the Export-Import Bank of the United States (Ex-Im Bank) which has provided support for U.S exporters to the tune of 570 billion dollars since it was set up by President Franklin D. Roosevelt in 1934.  In just the last two years, China has provided 670 billion dollars in support for its exporters. Moral of the story: U.S. companies will be at a clear disadvantage.

As Larry Summers, a great proponent of U.S. hegemony, put it, “the US will not be in a position to shape the global economic system”.

The latest snub to the U.S. role of world leader came from four Arab heads of state who snubbed a U.S.-Gulf States summit at Camp David on May 14. The summit had been called by Obama to reassure the Gulf states that the ongoing negotiations with Iran over a nuclear agreement would not diminish their relevance, but the rulers of Saudi Arabia, United Arab Emirates, Oman and Bahrain deserted the summit.

However, there is no more striking example of mistake-making than the joint effort by the United States and Europe to push Russian President Vladimir against the wall over his engagement in Ukraine by imposing heavy sanctions.

There was no apparent reflection on the wisdom of encircling a paranoid and autocratic leader, albeit one with strong popular support, by progressively also bringing in all Eastern and Central European countries. The result of this encirclement of Russia is that China has now come to the rescue of Russia, by injecting money into the country’s asphyxiated economy.

China will invest around six billion dollars in the construction of a high speed railway between Moscow and Kazan, is financing a 2,700 kilometre pipeline for the supply of 30 billion cubic metres of Russian gas over a period of 30 years, plus several other projects, including the establishment of a two billion dollar common fund for investments and a loan of 860 million dollars to the Russian Sberbank bank.

So, the net result is that Russia has been pushed out of Europe and into the arms of China, and the two are now starting joint naval and military manoeuvres.  Is this in the interest of Europe?

At the end of the day, the decline of Europe and the United States perhaps comes down to a decline of political vision, with democracy being substituted by partocracy, and the statesman of yesteryear being substituted by very much more modest and self-referential political leaders.

This is all taking place amid a growing disaffection with politics, which is now aimed basically at administrative choices, making corruption easy. At least this is what around one-third of electors now appear to believe when they are asked if they think that they can make a difference at elections … and this is why a rapidly growing number of people are deserting the ballot box. (END/COLUMNIST SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

By Fernando J. Cardim de Carvalho
RIO DE JANEIRO, Apr 1 2015 (IPS)

Even moderately well-informed analysts knew that the Brazilian economy was in dire straits as President Dilma Rousseff initiated her second term in office in January.

Unlike her predecessor, Luiz Inácio Lula da Silva (2003-2011), Rousseff had not the same luck with the situation of the international economy. But also, unlike Lula, Rousseff showed herself a poor saleswoman for Brazilian goods and an even poorer manager of domestic economic policy.

Fernando Cardim de Carvalho

There was a strong suspicion that economic policy, especially in the last two years of her first term, had been conducted in ad hoc ways and that serious adjustments would be needed to steer the economy back to working condition anyway. Still, the situation seemed to be even worse than most analysts feared.

More surprising, however, is to find out that Brazilian politics is also in dire straits. Caught off guard by the Petrobras corruption scandal, federal authorities, beginning with Rousseff herself, seemed to become paralysed by the rapid fall in public support, completely losing the power of initiative and creating a dangerous political vacuum in the country.

It is a vacuum rather than a political threat because the opposition seems to be as lost as the president. The political right, never very fond of democratic institutions any way, seemed to be more interested in making the president “bleed” – as stated by Senator (and former vice-presidential candidate) Aloysio Nunes Ferreira, of the Brazilian Social Democracy Party – than with fighting for political hegemony.

Economic problems were certainly fostered by the quality of economic policy-making in the second half of Rousseff’s first term. The realisation that tailwinds created by the Chinese demand for raw materials were no longer blowing led the government to implement a series of measures to stimulate the economy that turned out to be largely useless.

It was not “heterodoxy” that characterised the policy, it was uninformed wishful thinking. A plethora of measures were taken in isolation, without any apparent unifying strategy behind them, distributed mostly as “gifts” from the federal government (which later contributed to the public perception that corruption became a system of government). “Brazil is living through a very dangerous period right now. Neither the government, nor the parliamentary opposition are led by leaders the population trusts”

Plagued by semi-structural exchange rate problems, whereby Brazilian producers lose competitiveness in the face of imported goods in domestic markets and of other sellers in international markets, the federal administration tried to deal with them piecemeal, mostly through instruments like tax reductions or changes in tax rates.

Obsessed with car production, the government burned resources trying to stimulate production (only to meet increasing resistance of other countries to import them, most notably Argentina), again without any strategy thinking about how these newly-produced automobiles would be used in polluted and traffic-jammed Brazilian cities.

The federal government was not deficient only in terms of strategic thinking but also in terms of home caretaking: all available evidence points to the high probability that tax reductions and other similar measures were decided without any calculation of costs, lost fiscal revenues, and so on.

Anti-cyclical macroeconomic policy in late 2008 relied to a large extent on the expansion of consumption expenditures fuelled by increasing household indebtedness. The increase in non-performing loans and income stagnation made this option more and more unsustainable. Investment, in contrast, public and private, repeatedly frustrated expectations.

Unable to finance badly needed infrastructure investments, the government showed itself to be extraordinarily slow in devising appropriate strategies to attract private investors to implement them. Apparently lost in their own inability to define a way out of the mess, the government “muddled through” situations where more forceful definitions were required, as was the case of electric power.

The list of failures or of situations where the government showed inability to lead is long and well known. What was surprising to some extent was to find out that all evidence suggests that the government itself was unaware of what was going on.

Winning re-election by a narrow margin, President Rousseff, characteristically after a long period of hesitation, decided to take a 180-degree turn, asking a known orthodox and fiscal conservative economist to head an empowered Ministry of Finance, surprising even her supporters who seemed to be perplexed by the need to defend policies that they hotly denounced when presented by opposition politicians.

This picture would be difficult enough to manage without the Petrobras scandal. But Petrobras is not only the largest company in the country, it is practically a symbol of the nationality. Besides, energy was supposed to be Rousseff’s area of expertise and she was in fact responsible for the company’s policies for a while, as Minister of Mines and Power.

An increasingly loud murmur of a possible impeachment of the president led her to equivocal political decisions, beginning with the definition of her cabinet, widely considered to be particularly low quality, and alienating not only her major party in government, the Brazilian Democratic Movement Party, but even the majority of her own Workers’ Party.

The result of such initiatives was illustrated by the twin public demonstrations of Mar. 13 and 15.

On Mar. 13, nominal supporters of Rousseff marched through the streets of most of the largest cities in the country. Speaking to the press, most of the leaders of the march (Lula did not participate) declared conditional support for Rousseff – that is, conditional on the firing of the Minister of Finance and change of newly announced austerity policies.

On Mar. 15, an even larger crowd marched in the same cities declaring unconditional opposition to the president.

Brazil is living through a very dangerous period right now. Neither the government, nor the parliamentary opposition are led by leaders the population trusts. The president is slow and generally equivocal when making fateful decisions. The right-wing opposition seemed to be more interested in enjoying the possibility of enacting a “third” ballot to obtain at least a moral condemnation of the president.

This would be bad enough for a country that has just celebrated thirty years of civilian government. When the economy adds its own heavy problems to the political vacuum, it is impossible not to fear the future. (END/IPS COLUMNIST  SERVICE)

Edited by Phil Harris   

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

A crowd gathers to watch an intoxicated youth as a police officer comes to his rescue in Nyeri town, Central Kenya. Credit: Miriam Gathigah/IPS

By Miriam Gathigah
NAIROBI, Mar 27 2015 (IPS)

Despite legislative attempts to curb drinking, Kenya is still facing its greatest threat from alcohol abuse. Calamities associated with excessive intoxication – dementia, seizures, liver disease and early death – have done little to deter users.

Not even confirmed reports by the Ministry of Health and government agencies such as the National Authority for Campaign against Alcohol and Drug Abuse (NACADA) that illicit brewers have been turning to lethal embalming fluid used in mortuaries have cut the rate of abuse.

“Patrons want to spend as little as possible but drink as much as they can, so they opt for cheap illicit brews, especially spirits,” says Nduta Kamau, who brews home-made alcohol in the sprawling Mathare slums in Nairobi.The [Kenyan] Alcoholic Drinks Control Act was substantially weakened in 2013 with the introduction of “devolved government”. This system of ‘home rule’ means that each county government must ratify the act – an uphill battle because some county leaders are also the owners of bars.

According to Kamau, those who brew illicit alcohol also spend as little as possible “in time and money but produce as much alcohol as they can”, while chemicals used in the mortuary speed up the production process, “so we are able to produce a lot of alcohol in a very short time.”

Kamau adds that illicit brews from dens in the slums are bottled, labelled and sold in pubs across the country. A series of police raids in these dens have found women’s underwear and dead rats in the brew.

The Alcoholic Drinks Control Act of 2010 restricts the sale of alcohol to between 5 pm and 11 pm, but drinkers are finding their way around the curfew.

Data collected by Euromonitor International, a market research firm, revealed that alcohol bought in shops or off trade beer sale during the curfew in December 2012 rose by 4.35 percent to 26.4 million litres.

“They [patrons] lock themselves up in pubs and drink during curfews or they buy the alcohol and drink in their homes exposing their children to alcohol from a very young age,” says Dave Kinyanjui, a bar owner in Nairobi’s downtown area.

The Alcoholic Drinks Control Act was substantially weakened in 2013 with the introduction of “devolved government”. This system of ‘home rule’ means that each county government must ratify the act – an uphill battle because some county leaders are also the owners of bars.

Increased drinking has meant higher profits for commercial brewers. A report last month by the East African Breweries Limited (EABL) noted an average 11 percent increase in profit from beer sales.

According to EABL, the highest growth in sales – at 67 percent – was in spirits, mainly targeting the lower income earners, who are also the target for the many brands from informal sources.

Another report released by Euromonitor International confirmed the steady growth in alcohol consumption, which could rise as the economy improves further, saying that “the alcoholic drinks market is set to expand over the forecast period as the economy is expected to grow tremendously during this time due to bright prospects of oil in Kenya and political stability.”

With the availability of non-returnable bottles and cans, it has never been easier to carry alcohol to the house.

A 2012 national survey by NACADA showed that alcohol is now the most abused substance in the country and of the different types of alcoholic drink, traditional liquor is the most easily accessible, followed by wines and spirits and last but not least Chang’aa (which literally means ‘kill me quick’).

According to an “Alcohol Situation Analysis” for 2012 by the regional office of IOGT-NTO, a global temperance movement: “out of the number of people interviewed, 63 percent had used alcohol and 30 percent had more than five alcoholic beverages per sitting, which is heavy episodic use. Teenagers between 14-17 years of age are having two alcoholic beverages per sitting.”

Government statistics also show that alcohol and drug abuse is highest among young adults aged 15 to 29 years and lowest among adults of 65 years and older.

Under-age and rural children have not been spared. According to NACADA, rural children are more likely to have consumed traditional liquor and Chang’aa than urban children.

David Ogot, national coordinator of Alcohol Awareness in Kenya and a recovered alcoholic, told IPS that “excessive drinking is often viewed as a passing problem until it really gets out of hand, at which point most families hide the issue due to shame.”

He said that there is now a great need to address “alcoholism and to stop justifying the behaviour of an alcoholic.”

Alcoholics wanting to end their addictions have little recourse, according to Dr William Sinkele, Executive Director of Support for Addictions Prevention and Treatment in Africa (SAPTA). While Kenya has over 70 in-patient treatment centres, only three are government-run, he told IPS – Mathare Hospital (with an addiction unit), Coast General Hospital and Portreitz Hospital. The rest are privately owned.

“While is it is good that we have this many treatment centres, most are concentrated around the Nairobi area.  We do not have many centres outside Nairobi.  The average Kenyan with an alcohol or drug problem cannot afford treatment,” he said.

Meanwhile, many of those fighting alcohol abuse in Kenya point an accusing finger at the global alcohol industry which has a big foothold in Kenya and has undermined proper implementation of the Alcoholic Drinks Control Act with aggressive advertising and promotion through musical and artsy events.

A press release from financial advisors KPMG, titled “Incredible Growth of Kenya’s Beer Market“ noted: “Driven by strong population growth, a growing middle class and a dynamic private sector, the beer industry in Kenya has taken off in impressive ways, and is promising of even further developments in the coming decade.” Only inflation and tax increases could diminish this rise, it said.

“To expand its customer base, “the company has accordingly invested in marketing and sales capabilities in this area.”

Meanwhile, in a blog on the IOGT International temperance website,  Brenda Mkwesha wrote: “The odds seem to be against us, but we have heart-driven teams who aren’t willing to stand by while we flush our lives down the toilet. Here’s to a Life Set Free!”

Edited by Lisa Vives/Phil Harris   

By Roberto Savio
ROME, Mar 12 2015 (IPS)

The world is clearly splitting into two parallel worlds, with each going their own way, in what we could call the ‘Acapulco paradox’.

Take the official version of the image of Acapulco – a splendid Mexican resort, with horse riding on the beaches, a place blessed by nature and enriched by beautiful villas, gourmet restaurants, a place of bliss and relaxation.

Roberto Savio

Now take the version of the people living there – a place torn by criminal gangs with several deaths every day, where locals live in fear and total insecurity.

In the same way, there are now two ways to look at global reality.

One is the macroeconomic approach based on global data and, according to which, Greece has been doing better along with Italy, Portugal and Spain. In those countries, macroeconomic data are improving. Spain is even being touted as the example of how a country, which went through the bitter pill of austerity, now has growth at the same level as Germany.

Then, speak with young people, among whom unemployment is close to 40 percent, or with pensioners, or with those working in the hospital and education sectors, and you get a totally different picture. According to Caritas, the number of people living in misery has doubled in the last seven years.

The alternative model is the United States, which invested in growth and not in austerity like Europe. Its growth is running at 2.4 percent against an anaemic 0.1 percent for Europe. Again, the positive macro data do not coincide with the people’s data.

“Take the official version of the image of Acapulco, a place of bliss and relaxation. Now take the version of the people living there, a place torn by criminal gangs, where locals live in fear and total insecurity. In the same way, there are now two ways to look at global reality”
Let us take the latest example of economic recovery: the decision of the Walmart retail chain, one of the largest employers in the United States to increase the hourly wage from 8.9 to 10 dollars. This looks like very positive news, but the fact is that 60 percent of Walmart staff do not work sufficient hours to make a living – some work just two days a week, and with 640 dollars a month you are still into poverty.

Maybe it is just a coincidence, but the suicide rate rose from 11 per 100,000 people in 2005 to 13 seven years later. In the time it takes to read this article, six Americans will have tried to kill themselves and in another ten minutes one will have succeeded. More than 40,000 Americans took their own lives in 2012, more than died in car crashes, says the American Association of Suicidology.

If you start looking into the macro data, things become clearer. Profits from the financial sector are now over 20 percent of the total, double the level from the Second World War to the 1970s, and since 1970 productivity has grown by less than half. What this means is that the real economy has grown by half that of finance.

It is now clear that it is growth of the finance industry which is really holding back the rest of the economy, and far fewer people are employed in the financial sectors than in production and services.

These data come from nothing less than the Bank of International Settlements, the Gotha of the banking world, which also reports that brilliant people are trying to move into the financial sector, to the detriment of other sectors of the economy.

Looking into the figures opens up fascinating analyses. One of them from Hong Kong, published in the New York Times in the first week of March, deals with the personal wealth of lawmakers from China and the United States.

The NYT reported that according to the Shanghai-based Hurun Report, of the 1,271 richest people in China – a record 203 – nearly 16 percent are in the Parliament or its advisory body. Their combined net worth is 463.8 billion dollars, which is more than the annual economic output of Austria.

By comparison, American lawmakers are poorer. Eighteen of the Chinese lawmakers have a net worth greater than the 535 members of the U.S. Congress, the nine members of the U.S. Supreme Court and U.S. President Barack Obama’s cabinet.

We should pity the U.S. lawmakers, the 22 richest members of whom have only an average of 124 million dollars (70 percent of the senators are millionaires anyhow) and make up only four percent of the Senate, while four percent of the richest Chinese lawmakers are the country’s 203 billionaires.

Statistics in Europe also open the way to illuminating reflections. Take Spain, for example, where billionaires are in decline. In the Forbes list of the richest men in the world, Spain now has 21, five less than last year. Their combined wealth is 116,300 million dollars, and they increased their wealth in a year by only 500 million dollars, against the 3,200 million dollars of the richest man in the world, Bill Gates.

Yet, 500 million dollars is the equivalent of 35,714 average yearly  salaries, close to the population of the sunny town of Teruel in eastern Spain (around 36,000), and 116,300 million dollars is the equivalent of 8.3 million yearly salaries, equal to the combined population of Andalusia, the largest Spanish region, and the Balearic Islands.

The problem is that those two worlds are supposed to meet and relate through political institutions: Parliament, which represents everybody, and Government, which is supposed to regulate society for the good of every citizen.

Well, a good case study comes again from Spain, where it is possible to become a Spanish resident without going to Spain. It is sufficient to buy two millions euros’ worth of the country’s public debt, or buy one million euros’ worth of shares, or buy a house that costs at least 500,000 euros plus taxes, to become a Spanish resident. Since September 2013, 530 foreigners have obtained that right.

It is probable that the experience of obtaining a Spanish residence permit of the tens of thousands who crossed the Mediterranean at risk of their lives (it is estimated that over 20,000 have died up to now) looks very different. And many European countries have taken a similar path, including the United Kingdom, Cyprus and Portugal

In the United Kingdom, there is now a debate on a law from 1914 which excludes “non-domiciled” residents (‘non-doms’) from paying taxes on their foreign income or assets. It is enough to have a domicile abroad, usually by declaring permanent home in a tax haven. The number of ‘non-doms’ surged by 22 percent between 2000 and 2008 (year of the last available date), to reach 130,000 people.

This is part of an effort to reduce taxation on rich people, by creating loopholes and new regulations, to attract as many rich people as possible. President François Hollande in France has learnt at his expense what it means to speak of taxing the rich and had to make a quick turnaround. Obama is doing the same, and the only ‘leader’ who is speaking about taxing the rich is now Pope Francis.

However, one of the best examples of the ‘Acapulco paradox’ comes from the City in London.

After all the popular uprising about the disproportionate salaries of bankers, with public declarations from the U.K. government, the Church of England and the Bank of England, the announcement of an improvement in the U.K. economy by the European authorities has been taken at face value.

Barclays, for example, is increasing salaries by 40 percent, and an increase in salaries of 25 percent is expected all over the City this year. A young financial analyst, just out of university, at entrance salary could expect to take home the equivalent of 100,000 dollars per year.

While this will be good for statistics on average incomes, the yearly incomes of the 10 percent poorest British citizens will keep them at survival level. It is likely that their view of economic recovery will be different from those in the City. (END/IPS COLUMNIST SERVICE)

Edited by Phil Harris    

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

The Koreas on the globe. Credit: TUBS/ Licensed under CC BY-SA 3.0 via Wikimedia Commons

By Ahn Mi Young
SEOUL, Feb 18 2015 (IPS)

The two Koreas are an odd match – both are talking about possible dialogue but both have different ideas of the conditions, and that difference comes from the 62-year-old division following the 1950-53 Korean War.

During this time, North Korea has become a nuclear threat – estimated to possess up to ten nuclear weapons out of the 16,300 worldwide (compared with Russia’s 8,000 and the 7,300 in the United States) according to the Ploughshares Fund’s report on world nuclear stockpiles – and South Korea has become the world’s major economic success story.

In a national broadcast on Jan. 16, South Korean president Park Geun Hye presented her vision for reunification by using the Korean word ‘daebak‘ (meaning ‘great success’ or ‘jackpot’). “If the two Koreas are united, the reunited Korea will be a daebak not only for Korea but also for the whole world,” she said.North Korea has become a nuclear threat – estimated to possess up to ten nuclear weapons out of the 16,300 worldwide – and South Korea has become the world's major economic success story

Since she became leader of the South Korea’s conservative ruling party in 2013, Park has been referring to a new world that would come from a unified Korea. Her argument has been that if the two Koreas are reunited, the world could be politically less dangerous – free from the North Korea’s nuclear threat – and a united Korea could be economically more prosperous by combining the South’s economic and cultural power and the North’s natural resources and discipline.

Denuclearisation has been set as a key condition for daebak to come about. At a Feb. 9 forum with high-ranking South Korean officials, President Park said that “North Korea should show sincerity in denuclearisation efforts if it is to successfully lead its on-going economic projects. No matter how good are the programmes we may have in order to help North Korea, we cannot do so as long as North Korea does not give up its nuclear programme.”

However, observers have said North Korea has no reason to give up its nuclear weapons as long as it depends on its nuclear capability as a bargaining chip for political survival.  “Nuclear capabilities are the North’s only military leverage to maintain its regime as it confronts the South’s economic power,” said Moon Sung Muk of the Korea Research Institute of Strategies (KRIS).

In fact, there are few signs of changes. North Korea has conducted a series of rocket launches, as well as three nuclear tests – all in defiance of the U.S. sanctions that are partially drying up channels for North Korea’s weapons trade.

Amid recent escalating tension between Washington and Pyeongyang over additional sanctions, activities at the 5-megawatt Yongbyon reactor in North Korea which produces nuclear bomb fuel are being closely watched to monitor whether the North may restart the reactor.

In the meantime, South Korea has been denying the official supply of food and fertilisers to North Korea under the South Korean conservative regimes that started in 2008.

During the liberal regime of 2004-2007, South Korea was the biggest donor of food and fertilisers to North Korea.

Then there appeared to be a glimmer of hope when North Korea’s enigmatic young leader Kim Jong Un presented a rare gesture of reconciliation towards South Korea in his 2015 New Year’s speech broadcast on Korean Central Television on Jan. 1.

“North and South should no longer waste time and efforts in (trying to resolve) meaningless disputes and insignificant problems,” he said. “Instead, we both should write a new history of both Koreas … There should be dialogue between two Koreas so that we can re-bridge the bond that was cut off and bring about breakthrough changes.”

In his speech, the North Korean leader even went as far as suggesting a ‘highest-level meeting’ with the South Korean president. “If the South is in a position to improve inter-Korean relations through dialogue, we can resume high-level contacts. Also, depending on some circumstances and atmospheres, there is no reason we cannot have the highest-level meeting (with the South).”

In South Korea, hopes for possible inter-Korean talks have been subdued. “What North Korea wants from dialogue with the South is not to talk about nuclear or human rights, but to have the South resume economic aid,” said Lee Yun Gol, director of the state-run North Korea Strategic Information Centre (NKSIS).

The government in Seoul remains cautious about Pyongyang’s peace initiatives. “We are seeing little hope for any rosy future in inter-Korean relationships in the near future, although we are working on how to prepare for the vision of ‘daebak‘,” said Ryu Gil Jae, South Korean reunification minister, in a Feb. 4 press conference.

North Korean observers have said that economic difficulties have been pushing the North Korean government to relax its tight state control over farm private ownership. North Korean farmers can now sell some of their products in markets nationwide, in a gradual shift towards privatised markets.

Further, according to Chinese diplomatic academic publication ‘Segye Jisik’ (세계 지식), quoted by the South Korean news agency Yonhap News, the North Korean economy has improved since its new leader took office in 2012. From a 1.08 million ton deficit in stocks to feed the 20 million North Koreans in 2011, the deficit now stands at 340,000 tons.

According to observers, this report, if true, could send the signal that if North Korea is economically better off, it may be politically willing to reduce its dependence on the nuclear card in any bargaining process with South Korea.

U.S. sanctions have been used in the attempt to force North Korea to denuclearise, thus restricting North Korea’s trade, and the U.S. government levied new sanctions against North Korea on Jan. 2 this year in response to a cyberattack against Sony Pictures Entertainment. The FBI accused North Korea of the attack in apparent retaliation for the film, The Interview, a comedy about the assassination of North Korean leader Kim Jong Un.

But, while sanctions may work in troubling ordinary North Koreans concerned with meeting basic food needs, they have little impact on the North Korean government. “North Korea’s trade with China has become more prosperous and most of North Korea’s deals with foreign partners are behind-the-scene deals,” said Hong Hyun Ik, senior researcher at the Sejong Research Institute.

And, in response to the threat that it may be referred to the International Criminal Court (ICC), on the basis of U.N. findings on human rights, Kim Jong Un reiterated: “Our thought and regime will never be shaken.”

South Korea may now stand as the only hope for North Korea, as the United States and the United Nations gather to turn tough against the country over the human rights issue, and South Korea may find itself faced with a ‘two-track’ diplomacy between the hard-liner United States and its sympathy for the North Korean people.

In past decades, North Korea has usually played out a game with the United States and South Korea. “In recent year, the United States has been using ‘stick diplomacy’ against the North Korea, while South Korea may want to shift to ‘carrot diplomacy’,” said Moon Sung Muk of the Korea Research Institute of Strategies (KRIS).

“The Seoul government knows that the pace of getting closer to the North should be constrained by U.N. or U.S. moves,” Moon added.

Edited by Phil Harris    

Engineers working on a 512 km pipeline to scale up the amount of gas transported to Dar es Salaam plants for electricity generation and other industrial supplies. Allegations of corruption in Tanzania’s energy sector are holding up foreign aid disbursement. Credit: Juma Mtanda

By Kizito Makoye
DAR ES SALAAM, Jan 18 2015 (IPS)

As foreign donors drag their feet on injecting badly needed cash into the government’s coffers, local analysts are increasingly worried that this will affect implementation of key development projects that require donor funding.

Donors – including the United Kingdom, Germany and the World Bank – are withholding 449 million out of 558 million dollars pledged for the 2014/15 budget, pending a satisfactory outcome to investigations over corruption in the energy sector.

Senior government officials have been accused by the Parliament of authorising controversial payments of 122 million dollars to Pan Africa Power Solutions Tanzania Limited (PAP), which claims to have bought a 70 percent share of the Independent Power Tanzania Limited (IPTL) – a private energy company contracted by the government to produce electricity.The government’s inability to wipe out corruption in the energy sector is setting a bad precedent because the country is poised to prosper economically in the wake of massive discoveries of natural gas resources.

“Many infrastructure development projects that require donor funding will probably stall due to this problem,” Benson Bana, a political analyst at Dar es Salaam University, told IPS. “Donors are keen to see their money is spent on intended objectives and government must learn a lesson to ensure that public funds are managed well.”

East Africa’s second largest economy after Kenya  is currently implementing a myriad of projects that require donor funding in the energy and  infrastructure sectors, such as construction of ports, roads and power plants  under a  25.2 billion dollar five-year development plan.

But the government said last year that the impending delay in the disbursement of aid funds may prompt it to shelve some critical projects until the next financial year.

The international Monetary Fund (IMF) has added its voice to the ongoing standoff between Tanzania and foreign donors, saying that further delay in disbursement of aid would certainly affect the country’s economic performance.

“Performance … was satisfactory through June, but has deteriorated since and risks have risen, stemming from delays in disbursements of donor assistance and external non-concessional borrowing, and shortfalls in domestic revenues,” the IMF said in a statement posted on its website in January 2015.

Tanzania is one of the biggest aid recipients in sub-Saharan Africa, with an annual aid inflow in grants and concessional loans ranging from 20 to 30 percent of its budget.

The move by donors to freeze aid over corruption concerns, said the IMF, is a stunning blow to the country’s economy.

“It will be critical to the business environment to address the governance issues raised by the IPTL case, which would also unlock donor assistance,” the IMF said.

The Ministry of Finance has unveiled a 19.6 trillion shilling (11.6 billion dollar) budget with plans to borrow 2.96 trillion shillings from domestic sources and about 800 million dollars from external sources to finance key projects.

“Achieving our revenue target is a matter of life or death; we are very serious in our quest to reduce reliance on foreign aid and we are refining our business environment to attract investments that can yield revenues,” said Finance Minister Saada Mkuya.

Critics told IPS that it is not wise for Tanzania to cling to unpredictable foreign aid to finance its budget after more than 50 years of political independence.

“For a country like ours to keep depending on donors to finance our development is not healthy, there’s no doubt many project will fail to take off because of this standoff,” Humphrey Moshi, an economist and professor at the University of Dar es Salaam, told IPS.

Political observers say that the government’s inability to wipe out corruption in the energy sector is setting a bad precedent because the country is poised to prosper economically in the wake of massive discoveries of natural gas resources.

“Corruption in the energy sector can be reduced by introducing strong accountability systems in the sector,” Zitto Kabwe, the chairman of a parliamentary oversight committee on public accounts, told IPS, adding that “legislations that subject contracts to parliamentary vetting and transparency would really help.”

Latest data from the Tanzania Petroleum Development Corporation show that Tanzania has estimated reserves of 53.2 trillion cubic feet of natural gas off its southern coast.  According to local analysts, these resources are more than enough to put the country on a path of economic development while ending its dependence on aid.

As the government grappled to bridge gaps in its budget, donors last week said  that they would only release the rest of the aid money pledged after seeing appropriate action taken against officials implicated in the so-called “escrow scandal”.

“Budget support development partners in Tanzania take the emerging IPTL case with the utmost seriousness and are carefully monitoring its development  as the case involves  large amounts of public funds,” Sinikka Antila, Finland’s ambassador to Tanzania and chairperson of Tanzania’s donor group, was quoted as saying.

In November last year, parliament called on government to sack senior officials, including the country’s Attorney General and  energy minister who, it said, had played an instrumental role to facilitate the dubious IPTL-PAP deal. The Attorney General, Frederick Werema, has since resigned.

In December, in a desperate bid to win back donor confidence, President Jakaya Kikwete sacked Anna Tibaijuka – a senior cabinet minister holding the land and human settlement development portfolio – for allegedly having received a1.6 billion shilling gift from one of the IPTL’s shareholders contrary to the government’s public leadership code of ethics.

In what appears to be a show of strength, the United States, through its Millennium Challenge Corporation (MCC), has expressed serious concern about the country’s sluggish pace in controlling corruption and has urged the government to take firm concrete steps to combat corruption as a condition for the approval of future aid.

“Progress in combating corruption is essential to a new MCC compact, as well to an overall improved business climate in Tanzania,” Mark Childress, U.S. Ambassador to Tanzania said in December 2014.

“We are encouraged by the State House’s announcement of December 9 that it will soon address the parliamentary resolutions linked to IPTL, and we urge quick government action, given the impact on several key development issues.”

Tanzania was one of 10 countries discussed by the MCC Board, which met in December to determine the eligibility of countries to begin or continue the compact development process.

If finalised, this would be Tanzania’s second MCC compact. Between 2008 and 2013, the MCC funded a 698 million dollar compact for investment projects in water, roads and electric power throughout Tanzania.

Edited by Phil Harris    

Supporters (wearing red) of the opposition Movement for Democratic Change led by Morgan Tsvangirai after witnessing their party losing to President Robert Mugabe in last year's elections. They now face another disappointment as the fight to succeed Mugabe turns attention away from development. Credit : Jeffrey Moyo/IPS

By Jeffrey Moyo
HARARE, Nov 26 2014 (IPS)

With the ruling Zimbabwe Africa National Union Patriotic Front party in Zimbabwe seized with internal conflicts, attention to key development areas here have shifted despite the imminent end of December 2015 deadline for global attainment of the U.N. Millennium Development Goals (MDGs).

The eight MDGs targeted to be achieved by 31 December 2015 form a blueprint agreed to by all the world’s countries and the world’s leading development institutions.“Every development area is at a standstill here as ZANU-PF politicians are scrambling to succeed the aged Mugabe here and they have apparently forgotten about all the MDGs that the country also needs to attain before the 2015 deadline” – Agrippa Chiwawa, an independent development expert

But, caught up in the succession fight among ruling party politicians as the country’s 90-year old President Robert Mugabe – who has ruled this Southern African nation for the last 34 years – reportedly  battles ill health ahead of the party’s elective congress in December, development experts say the Zimbabwean government has apparently shifted attention from development to party politics.

“Every development area is at a standstill here as Zanu-PF politicians are scrambling to succeed the aged Mugabe here and they have apparently forgotten about all the MDGs that the country also needs to attain before the 2015 deadline,” independent development expert Agrippa Chiwawa told IPS.

The battle to succeed Mugabe pits Justice Minister Emerson Mnangagwa and the country’s Vice-President Joice Mujuru, who is currently receiving a battering from the former’s faction which has won sympathy from the country’s first family, with First Lady Grace Mugabe venomously calling for the immediate resignation of Mujuru before the ZANU-PF congress.

Chiwawa told IPS that despite the government having contained recent strikes by medical doctors here through appeasing them by reviewing their salaries, the public health sector is in a state of decay amid acute shortages of treatment drugs.

Elmond Bandauko, an independent political analyst, agrees with Chiwawa. “Internal fights within the ZANU-PF party are stumbling blocks to national, social and economic prosperity; the ZANU-PF government is concentrating on its party succession battles as the economy is on its knees and there is no projected solution to the economic woes the country faces at the moment,” he told IPS.

Fighting over who will succeed 90-year-old Robert Mugabe at the head of Zimbabwe’s ruling ZANU-PF party has relegated agriculture, like other development issues, to the side-lines if not outright neglect. Credit: Jeffrey Moyo/IPS

“Policy makers from the ZANU-PF government, who are supposed to be holding debates and parliamentary sessions and special meetings on how to move the country forward, are wasting time on political tiffs that do not save the interests of ordinary Zimbabweans,” Bandauko added.

Even the country’s education system has not been spared by the ruling party political milieu, according to educationists here.

“Nobody is talking about revamping the education system here as government officials responsible are busy consolidating their powers in the ruling party while national examinations are fast losing credibility amid leakages of exam papers before they are written, subsequently tarnishing the image of our country’s quality of education,” a top government official in the Ministry of Education told IPS on the condition of anonymity, fearing victimisation.

Even the country’s ordinary subsistence farmers, like Edson Ngulube from Masvingo Province in Mwenezi district, are feeling the pinch of the failure of politicians. “We can’t beat hunger and poverty without support from government with farming inputs,” Ngulube told IPS.

Yet for many Zimbabweans like Ngulube, reaching the MDGs offers the means to a better life – a life with access to adequate food and income.

Burdened with over half of its population starving, based on one of the U.N. MDGs, Zimbabwe nevertheless committed itself to eradicating hunger by 2015. But, with the Zanu-PF government deeply engrossed in tense power wrangles to succeed Mugabe, Zimbabwe may be way off the mark for reaching this target.

In addition, in September, the Food and Agriculture Organisation (FAO) sub-regional coordinator for Southern Africa, David Phiri went on record as saying that Zimbabwe could fail to meet the target to eradicating hunger by 2015 owing to conflict and natural disasters.

Zimbabwe’s 2012 National Census showed that more than two-thirds of Zimbabwe’s 13 million people live in rural areas and, according to the World Food Programme (WFP), this year about 25 percent of them need food aid or they will starve, and between now and 2015, 2.2 million Zimbabweans will need food support.

Zimbabwe’s Agriculture Minister Joseph Made is, however, confident the country is set to end hunger before the 2015 deadline. “We have land and we have hardworking people utilising land and for us there is no reason to doubt that by 2015 we would have eradicated hunger,” Made told IPS.

Claris Madhuku, director for the Platform for Youth Development (PYD), a democracy lobby group in Zimbabwe, perceive things rather differently.

“What actuates Zimbabwe’s failure to attaining MDGs is the on-going governance crisis, a result of the ruling ZANU-PF party’s internal wars to succeed the party’s nonagenarian President, which have not made development any easier,” Madhuku told IPS.

According to the PYD leader, in order for Zimbabwe to experience magnificent development, “the ruling party has to try and get its politics right.”

But with Zimbabwean President Mugabe apparently clinging to the helm of the country’s ruling party with renewed tenacity, it remains to be seen whether or not real development will ever touch the country’s soils.

(Edited by Phil Harris)

By Fernando J. Cardim de Carvalho
RIO DE JANEIRO, Oct 30 2014 (IPS)

The tight race between incumbent President Dilma Rousseff of Brazil’s Workers’ Party and her opponent, Aecio Neves from the centre-right Brazilian Social Democracy Party (PSDB) party, ended on Sunday, Oct. 26 with the re-election of Rousseff.

As happens in cases of re-election, the new government is, for all purposes, inaugurated immediately, because there is no need to wait until the legal date of January 1 to begin forming the new government and making necessary decisions.

Fernando Cardim de Carvalho

Neither is there a honeymoon in a re-election: voters expect work to begin and some results to show right away.

There is no doubt that Rousseff faces a difficult period ahead. The economy has ground to a halt during 2014 and the perspectives for 2015 are not much better. During practically the whole of the first semester, inflation remained near or above the ceiling of 6.5 percent that was set by the government itself, and the perspectives for next year are not good either.

Balance of payments positions are not comfortable, marked by very high deficits in current transactions and dependence on capital inflows. Social inclusion programmes that were very successful in the recent past may be near exhaustion and will need an upgrade.

Finally, a huge deal was made during the electoral campaign of corruption cases in the administration and in state enterprises, notably Petrobrás, the Brazilian oil company, raising issues that will have to be dealt with by the incoming administration.“There is no doubt that Rousseff faces a difficult period ahead. The economy has ground to a halt during 2014 and the perspectives for 2015 are not much better”

This does not address, of course, another set of difficulties related to the formation of governments in the Brazilian political system, requiring coalitions to be formed with political parties that look like being for rent rather than available for political debates around principles or programmes.

Let us be clear: the situation is uncomfortable on many fronts but is far from catastrophic, no matter how dramatic opposition speeches have tried to suggest.

Things are far better than in Western Europe, for example, where a second recession is very likely to happen in the near future in economies already devastated by the irrational adherence to austerity policies imposed by some governments led by Germany. But the problems the new government will have to face cannot be underestimated either.

Focusing only on the economic challenges, Rousseff’s first task is to try to escape the curse the Brazilian economy has been facing since it achieved control of inflation twenty years ago.

The Real Plan, named after the new currency that was introduced in 1994, was based on the access to cheap imports obtained by liberalising foreign trade and an overvalued currency. To maintain overvaluation it was necessary to attract foreign capital inflows, which required high interest rates (higher than that paid in other countries). High interest rates were also necessary to control domestic demand so that no significant pressure would be applied on domestic prices.

However, exchange rate overvaluation and high interest rates reduced the competitiveness of local producers, particularly in the manufacturing sector, which are very sensitive to exchange rate behaviour.

As a result, the Brazilian economy has lived on a see-saw in these twenty years, alternating periods where devalued exchange rates have allowed some industrial expansion at the cost of accelerating inflation with periods of controlled inflation at the cost of industrial stagnation.

Fernando H. Cardoso was imprisoned by this dilemma, as was Lula da Silva. So was Rousseff in her first term, when she, to her credit, realised that the country had to escape the trap but was unsuccessful in finding the way to do so.

With the international economy in a weak condition, and which is forecast to last, Rousseff has to find a way to promote growth without fuelling higher inflation and increasing external vulnerability, that is, without raising the volume of imports when exports are stagnating.

Bringing the inflation rate down is also needed. Societies tend to have long memories (see how the Germans still react to the hyperinflation they experienced a century ago). A large number of Brazilians still remember how unbearable life was when inflation was in the two-digit figures a month.

We are not anywhere close to repeating that experience, but it has made Brazilians alert and sensitive to any signs that government may be lax in fighting inflation. Besides, 6.5 percent a year for more than three years in a row does add to significant loss of purchasing power for fixed incomes and for those wages and salaries that are not compensated by more generous increases.

Even the greatest triumph of the Workers’ Party administration – social programmes – may be near exhaustion.

The Food and Agriculture Organization of the United Nations (FAO) has announced that hunger is no longer an issue for Brazil. Of course, this is great news but it also means that social policies will now have to be designed with higher aims, to improve the quality of life for the populations that were upgraded by past programmes.

Jobs, education and health are much more difficult to address than extreme poverty, the reduction of which could be dealt with cash transfers. Even if no other important problem was on the agenda, this is a tall order for any political leader, but it is even more so for a re-elected president.

Brazilian citizens are impatient to see how Rousseff will meet the challenge. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, IPS – Inter Press Service. 

Excerpt:

July 2014 floods in Russia but authorities turning blind eye to climate change. Credit: takemake.ru

By Mikhail Matveev
MOSCOW, Aug 30 2014 (IPS)

The recent call from Russian Prime Minister Dmitry Medvedev for “tightening belts” has convinced even optimists that something is deeply wrong with the Russian economy.

No doubt the planned tax increases (introduction of a sales tax and increases in VAT and income tax) will inflict severe damage on most businesses and their employees, if last year’s example of what happened when taxes were raised for individual entrepreneurs is anything to go by – 650,000 of them were forced to close their businesses.

Nevertheless, it looks like some lucky people are not only going to escape the “belt-tightening” but are also about to receive some dream tax vacations and the lucky few are not farmers, nor are they in technological, educational, scientific or professional fields – it is the Russian and international oil giants involved in oil and gas projects in the Arctic and in Eastern Siberia that stand to gain.

“In October [2013], Vladimir Putin signed a bill under which oil extraction at sea deposits will be exempt from severance tax. Moreover, VAT will not need to be paid for the sales, transportation and utilisation of the oil extracted from the sea shelf,” noted Russian newspaper Rossiiskie Nedra.“It looks like some lucky people are not only going to escape the ‘belt-tightening’ but are also about to receive some dream tax vacations and the lucky few are not farmers, nor are they in technological, educational, scientific or professional fields – it is the Russian and international oil giants involved in oil and gas projects in the Arctic and in Eastern Siberia that stand to gain”

Some continental oil projects were alsoblessedby the “Tsar’s generosity”: “For four Russian deposits with hard-to-recover oils [shale oil, etc.] – Bazhenovskaya [in Western Siberia] and Abalakskaya in Eastern Siberia, Khadumskaya in the Caucasus, and Domanikovaya in the Ural region – severance taxes do not need to be paid. Other deposits had their severance tax rates reduced by 20-80%.”

In fact, the line of thinking adopted by Russian officials responsible for tax policy is very simple. Faced with the predicament of an economy dependent on oil and gas (half of the state budget comes from oil and gas revenue, while two-thirds of exports come from the fossil fuel industry), they decided to act as usual – by stimulating more drilling and charging the rest of the economy with the additional tax burden.

There have been many warnings from well-known economists about the “resource curse” [the paradox that countries and regions with an abundance of natural resources tend to have less economic growth and worse development outcomes than countries with fewer natural resources] – and its potential consequences for the countries affected: from having weak industries and agriculture to being prone to dictatorships and corruption.

For a long time, however, economists have been keen on separating the economic and social impacts of fossil fuel dependency from the environmental and climate-related problems. But now, these problems are closely interconnected, and Russia might be the first to feel the strength of their combination in the near future.

Medvedev may not have read much about the “resource curse” but he should at least be familiar with the official position of the UN Framework Convention on Climate Change (UNFCC), whose Executive Secretary Christiana Figueres has said that three-quarters of known fossil fuel reserves need to stay in the ground in order to avoid the worst possible climate scenario.

One should at least expect this amount of knowledge from Russia as a member of the UN Security Council and it will be interesting to note whether the Russian delegation attending the UN Climate Summit in New York on September 23 will be ready to explain why, instead of limiting fossil fuel extraction, the whole country’s economic and tax policy is now aimed at encouraging as much drilling as possible.

However, it is not just the United Nations that has been warning against the burning of fossil fuels due to the related high climate risks. In 2005, Russia’s own meteorology service Roshydromet issued its prognosis of climate change and the consequences for Russia, stating that the rate of climate change in Russia is two times faster than the world’s average.

Roshydromet predicted a rapid increase in both the frequency and strength of extreme climate events – including floods, hurricanes, droughts, and wildfires. The number of such events has almost doubled during the last 15 years, and represent not only an economic threat but also a real threat to humans’ lives and their well-being,

Consider this summary of climate disasters in Russia during an ordinary July week (not including any of the large natural disasters such as the floods in Altai, Khabarovsk, and Krymsk, or the forest fires around Moscow in 2010):

“Following the weather incidents in the Sverdlovsk and Chelyabinsk District where snow fell last weekend, a natural anomaly occurred in Novosibirsk, resulting in human casualties … Two three-year-old twin sisters died after a tree fell on them during a strong wind storm in the town of Berdsk, Novosibirsk District.”

“The flood in Yakutia lasted a week and resulted in the submersion of Ozhulun village in Churapchinsky district last Saturday. Due to the rise of the Tatta River, 57 house went under.”

“Flooding in Tuapse [on the coast of the Black Sea] occurred on July 8, 2014 … [and] has left 236 citizens homeless.”

Cars swept away in July 2014 floods in Russia. Credit: takeme.ru

Is it not worrisome that so many climate disasters have to occur before Russian officials start to realise that climatologists are not lying? Or perhaps they are simply not inclined to take the climatologists’ warnings seriously.

Another significant problem could arise for Russia if oil consumers start taking U.N. climate warnings seriously – and there is evidence that this is happening.

The European Union (still the main consumer of Russian oil and gas) has announced an ambitious “20/20/20 programme” – increasing shares from renewables to 20 percent, improving energy efficiency by 20 percent, and decreasing carbon emissions by 20 percent. The United States has decided to decrease carbon emissions from power plants by 30 percent. These are only first steps – but even these steps can help decrease fossil fuel consumption.

Fossil fuel use has only very slowly been increasing in the United States and decreasing in Europe in the last five years. On the other hand, demand for oil has continued to rise in China and Southeast Asia, and it is perhaps this – rather than the recent “sanctions” against Russia over Ukraine – that inspired President Vladimir Putin’s recent “turn to the East”.

But there are serious doubts that Asia’s greed for oil will continue into the future. China recently admitted that it will soon be taking measures to limit carbon emissions – for the first time in its history. China has already turned to green energy andled the rest of the worldin renewable energy investment in 2013.

Will other Asian countries follow suit? Perhaps – because they certainly have a very strong incentive. According to Erin McCarthy writing in the Wall Street Journal, South and Southeast Asia’s losses due to global warming may be huge, and its GDP may be reduced by 6 percent by 2060, despite the measures taken to curb its emissions.

What does this mean for Russia?

Well, if the oil-consuming countries meet their carbon emission targets, we can expect a 10-20 percent decrease in oil demand in the next ten years, maybe more. Any decrease in demand usually induces a decrease in price – but not always proportionally. Sometimes, especially if the market is overheated, even a small decrease in demand can trigger a drastic falls in price. Economists call such a situation a “bursting bubble”.

Today, the situation in the oil (and, in general, fossil fuel) market is often called a “carbon bubble”. Because of high oil prices, investors are motivated to make investments in oil drilling in the hopes of earning a stable and long-term income.

But once the world starts taking climate issues seriously and realises that most of the oil needs to be left in the ground, oil assets will fall in value. Investors will try to withdraw their money from the fossil fuel sector, and, facing a crisis, oil companies will be forced to decrease both production and prices.

If the “carbon bubble” bursts, Russia will be left with sustainable businesses (that are being choked by the nation’s own tax politics) and with a perfect network of shelf platforms, oil rigs, and pipelines (which will be completely unprofitable and useless). Thus, by making fossil fuels the core of its economy, Russia is taking twice the number of risks.

First, it risks ruining the climate, and second, it risks ruining its own economy. It looks like Russia will lose at any rate: if the leading energy consumers are unable to decrease their oil consumption, the climate will be ruined everywhere, including Russia. If they manage to decrease their dependence on fossil fuel, the Russian economy will be ruined.

This certainly is not looking pleasant, especially if we add in the high probability of a major disaster like the Gulf of Mexico Oil spill happening in the Arctic, as well as countless minor leaks possibly occurring along the Russian pipelines.

But maybe Russia just has no other alternative to an economy dependent on fossil fuels?

In that case, perhaps it is worth mentioning a recent article by Russian financier Andrei Movchan in the Russian Forbes magazine. Movchan convincingly shows that the Achilles’ heel of the modern Russian economy is its extremely underdeveloped small and medium-sized businesses. And it looks like the current tax plans would literally exterminate them.

If Russia were able to reverse this tax policy and make small businesses play as big of a role in the economy as they do in the United States or Europe, there could be economic growth comparable to the growth expected from oil and gas – without all the frightful side effects of an economy driven by fossil fuels.

Sounds like a dream, but the first step to making it a reality can be simple: get rid of big oil lobbying in the government and try to reform the taxation system to suit the interests of Russian citizens instead of the interests of the big oil corporations.

(Edited by Phil Harris)

* Mikhail Matveev is 350.org Communications Coordinator for Eastern Europe, Caucasus, Central Asia and Russia

40-year-old Alima Asigri stands by a shea tree with logs ready to be transported for processing into charcoal. Credit: Albert Oppong-Ansah/IPS

By Albert Oppong-Ansah
TAMALE, Ghana, Jul 10 2014 (IPS)

The shea tree, a traditional African food plant, represents a major source of income for women in Ghana’s Northern, Upper West and Upper East regions, but they are helping to destroy the very resource that gives them money by cutting it down to produce charcoal.

An estimated 900,000 rural women are involved in the shea sector in northern Ghana, mostly collecting the tree’s fruit to transform it into butter. Shea butter production contributes about 18 million dollars annually to the country’s economy.

One such woman is 40-year-old Alima Asigri from Bagrugu, a community in the Karaka district of the northern region of Ghana, who, together with her four children, is fully engaged in the harvesting of shea fruit which she turns into butter for eating and cooking because it is rich in vitamins A, E and F. The butter is also used as a body cream.

On average, the family produces more than 20 kg of butter every two weeks during the peak season from April to August, earning 1,100 cedi (394 dollars) which go towards the family’s upkeep and the children’s educational needs.“Sometimes I think about how fast the resource [shea] is depleting but I have no income-generating venture other than that. It’s my livelihood, especially during the off-farming season” – Alima Asigri

Today, the shea tree is increasingly being used for its wood and not its fruit. “We also cut shea trees and process its wood into charcoal. The charcoal business is booming because of buyer demand for charcoal from shea trees rather than ordinary trees. They believe it is robust, lasts longer and is cheaper than liquefied petroleum gas (LPG),” Asigri explained.

A United Nations Food and Agricultural Organisation (FAO) report on ‘Woodfuel Use in Ghana: An Outlook for the Future’, indicated that about 69 percent of all urban households in Ghana use charcoal for cooking and heating, and the annual per capita consumption is around 180 kg.

According to the report, total annual consumption is about 700,000 tonnes, 30 percent of which is consumed in the country’s capital Accra. Fuel wood accounts for about 71 percent of total primary energy supply and about 60 percent of final energy demand. An estimated 2.2 million families depend on charcoal for household chores and some 600,000 small-scale enterprises depend on fuel wood or charcoal as their main sources of energy.

However, this is taking its toll on the country’s trees. In an interview with IPS, Iddi Zakaria, Coordinator of Shea Network Ghana (SNG) recalled that some 40 years ago in the Salaga district of the Northern Region, shea trees covered the entire area but now, due to constant usage and no conscious attempt  to replant, the natural resource has been depleted.

“It used to be a taboo to cut shea and other economic trees. One needed to seek permission from the chief’s palace before, but it’s different now”, he said.

He noted that a recent study by the Savanna Alliance research company had revealed that Act 571, which established the Forestry Commission of Ghana as a corporate body and mandated the commission to protect and regulate the utilisation of forest and timber resources, failed to include shea, dawadawa and baobab trees.

“The policy and institutional shortfall in the management and conservation of the sector has led to continued harvesting of shea trees indiscriminately for fuel wood and charcoal,” Zakaria told IPS, adding that even though laudable efforts are being made by stakeholders to reap the benefits from the shea sector, the future sustainability of the raw material is questionable.

“What players are asking of government are legal reforms to protect resources,” he said.

Ebenezer Djaney Djagletey, Northern Regional Director of the Forestry Commission confirmed that shea trees are not among the protected tree species listed in the forestry regulations.

Djagletey said that he was concerned about the depletion of resources due to activities such as infrastructure development, sand weaning, bush burning and farming, all of which involve the clearing of vegetation.

“Some 80 out of 100 sacks of charcoal produced are from the shea tree, the other 20 come from the neem tree and the dawadawa tree, the fruit of which is used as a cooking spice”, he said.

To discourage people from using charcoal and other fuel wood, the Ghanaian government has announced plans to distribute 50,000 six-kilogramme gas cylinders and cooking stoves to some rural areas under its Rural Liquefied Petroleum Gas (LPG) Promotion programme. According to

Ghana’s Minister of Energy and Petroleum Armah Kofi Buah, 1,500 cylinders have already been delivered.

However, Collins Kyei Boafoh, an outreach specialist with ACDI/VOCA (Agricultural Cooperative Development International and Volunteers in Overseas Cooperative Assistance) described the government policy as a “bad” policy and expressed scepticism about the initiative because of periodic increases in the price of LPG.

“The question is who refills the gas cylinder when it is finished. It cost about 10 cedi (3.59 dollars) to buy gas and relatively few rural folk have enough money and will opt for charcoal or fuel wood instead of gas,” he said.

He advises the government and development partners to support women with alternative livelihood skills, such as soap-making, and build more shea processing centres with guaranteed prices for shea butter to reduce the charcoal business.

Alima Asigri in Bagrugu could be one of the women to benefit if such support were to materialise and she is already aware of the harm her activity is causing to the environment.

“Sometimes I think about how fast the resource is depleting but I have no income-generating venture other than that. It’s my livelihood, especially during the off-farming season,” she told IPS. “Besides, thanks to the shea business, I have been able to educate my first son through university education and he’s now doing his further studies in Belgium.”

President Mugabe’s policies have been a major blow to agriculture, which was the bedrock of the economy. Credit: Jeffrey Moyo/IPS.

By Jeffrey Moyo
HARARE, Aug 28 2013 (IPS)

For President Robert Mugabe to defeat the opposition in the Jul. 31 election by hook or by crook may have been a walk in the park, but beating the economic crisis will be another matter. The stock market fell 11 percent the day he was sworn in, the biggest fall in a day since 2009.

Fears are rising that the policies of the ruling Zimbabwe African National Union-Patriotic Front (ZANU-PF) will further scare away foreign investors.

“Zanu-PF’s current policy mix is in conflict with the needs of investors, and at present Zimbabwe is the least attractive investment destination worldwide,” John Robertson, director of the Robertson Economic Information Services told IPS.“Any proposition that an economic turnaround can be launched by the new government will depend upon the speed at which improvements can be brought about in the population’s purchasing-power, depending upon a recovery in employment.”

“Any proposition that an economic turnaround can be launched by the new government will depend upon the speed at which improvements can be brought about in the population’s purchasing-power, depending upon a recovery in employment.”

According to Zimbabwe’s Indigenisation Act of 2007, foreign-owned companies are forced to cede 51 percent of their shares to local people. But economists warn that the indigenisation policy is driving investors away.

“Foreign investors are obliged to bring in 100 percent of the capital, bear 100 percent of the risk, provide 100 percent of the technology, and in turn settle for 49 percent of the equity and pay taxes,” independent economist Kingston Nyakurukwa told IPS.

Mugabe’s policies have been a particular blow to agriculture. Agriculture provided employment for 60-70 percent of the population before the 2000 land reform programme that enforced greater local ownership of farms.

Agriculture used to contribute 15-19 percent to the country’s annual Gross Domestic Product before the reforms. “President Mugabe presided over the seizure of productive commercial farms, rendering a blow to agricultural production. And when agriculture performs poorly, the rest of the economy suffers,” independent economist Agrippa Ndlovu told IPS.

Zimbabwe is now a net importer of agricultural products.

“Industrial and agricultural exports fell drastically between 2000 and 2008 owing to unfortunate political developments, particularly the 2000 commercial farm seizures, followed by a series of disputed elections between 2002 and 2008,” economist Tony Lewis told IPS.

Zimbabwe has had no grain reserves for more than a decade following the eviction of white farmers, despite promises by Mugabe of a return to food self-sufficiency in 2010.

Zimbabwe’s economy shrank significantly after 2000, resulting in widespread poverty and 80 percent unemployment.

Zimbabwe currently exports precious metals like gold, platinum and ferroalloys, and also cotton, textiles and clothing, and tobacco, but to limited trade partners due to sanctions imposed by western countries.

Presenting the 2013 mid-term fiscal policy review on Jul.10, Zimbabwe’s finance minister in the former government Tendai Biti said the earlier expectation of 5.6 percent growth by this year end would not now be possible. The estimate has been reduced to 3.4 percent.

Investment in this Southern African nation rose after the formation of the coalition government in 2008, resulting in foreign direct investment rising from around 50 million dollars to nearly 400 million dollars between 2008 and 2011. But now there are new uncertainties.

“I am really not sure what to do now because President Mugabe may go ahead with his moves to indigenise the remaining foreign-owned companies; I am really scared of his economic policies,” 53-year-old Jamah Fakuh from India who trades in glass told IPS.

“With indigenisation, Zanu-PF aims to transfer the majority share of any business operations to black Zimbabweans without financial compensation, which favours Mugabe loyalists,” economist Admire Dziva told IPS.

Godfrey Kanyenze, director of the Labour and Economic Development Research Institute of Zimbabwe, a non-governmental economic consultancy organisation, said huge challenges lie ahead for Mugabe’s government.

“With the time for empty promises and electioneering now over, there is a crisis of expectation; promises were made to the people and it is now payback time. Poverty is endemic and there are massive debts of over 10 billion dollars that need to be addressed,” Kanyenze told IPS.

Hyperinflation had made the country’s currency almost worthless in 2008. The economy stabilised in 2009 after conversion to the dollar as currency, and the formation of a coalition government between Zanu-PF and two opposition formations of the Movement for Democratic Change.

Under the four-year coalition government Zimbabwe’s economy grew nine percent in 2010 and 2011, and five percent in 2012. Not everyone is convinced that Mugabe’s government can bring an upswing back after the further decline expected this year.
“Economic growth may wane if there is no political resolution which identifies a legitimate regime,” economist Christopher Mugaga told IPS.

After the drought, the flood: extreme weather changes are hitting the Sri Lankan economy. Credit: Amantha Perera/IPS.

By Amantha Perera
COLOMBO, Mar 12 2013 (IPS)

Sri Lanka has paused for breath after the extreme weather conditions last year that many associate with climate change.

The reservoirs had hit new lows after a dry spell. That has now changed. “Thank god the weather has helped, all the reservoirs are at spill level,” finance secretary P. B. Jayasundera announced last month. “It is a kind of a bonus.”

During the first ten months of the year, regions ranging from the north through the east to the south and south-west suffered a serious drought. When the drought was finally broken in November, the weather hit the other end of the spectrum.

Since November 2012, the same regions have suffered major floods on at least three occasions. The drought had affected at least 1.2 million people, according to the Sri Lanka Red Cross and Red Crescent Society. The ensuing floods left at least a million stranded.

It was the dry weather that proved challenging for Jayasundera and other decision makers tasked with keeping the economic engine in top gear. The falling reservoir levels placed a heavy burden on thermal power generation. Usually, around 40 percent of the country’s power demand is met through hydro-generation. In some years when the rains have been exceptionally good, like in early 2011, it has gone up to 55 percent.

By August 2012, at the worst of the drought, hydro generation capacity was 17 percent. The bulk of the demand was met by thermal power generation using furnace oil imports.

The drought meant the country paid high oil prices for its power needs. Around a fifth of the island’s imports last year were fuel, according to the Central Bank.

Jayasundera admitted there were other effects as well. The Department of Agriculture warned that 23 percent of the staple rice harvest could be lost due to the drought. Rice prices were up 12 percent by the beginning of 2013.

Finance officials have been publicly acknowledging the impact of extreme weather events. The trail of destruction they leave can be long-term, and they are hard to predict, at least for a nation with poor technological resources.

“Dealing with climate change is a costly business,” W. L. Sumathipala, senior technical advisor to the Ministry of Environment and former head of the national climate change unit at the ministry told IPS.

Sri Lanka’s carbon footprint is small but that does not insulate it from changing weather patterns, he said. He said the country’s dry zone, especially the eastern region, is becoming drier. The region is home to some of the largest rice production areas of the country.

“There was a rhythm for the monsoon that the country was used to in the past; it has been broken in the past few years and every aspect of our lives is getting affected,” Sumathipala said.

The 233-million dollar Metro Colombo Urban Development Project, which began last year and is due to be completed by the end of 2017 aims to flood-proof the capital. Colombo and its suburbs are the economic heart of the country, accounting for at least 50 percent of the national GDP.

The capital is also home to 2.3 million people, more than a tenth of the island’s population of 20 million. The population density here is 3,330 persons per sq km, ten  times the national average.

Sumathipala said rising sea levels were another cause for concern. According to the Coast Conservation Department, some parts of the island’s 1,500 km coastline have recorded annual erosion rates of more than five metres. Some of the most vulnerable coasts are located just north of the capital.

“What if sea level rise becomes really bad and we have to move people and businesses away from the coast, imagine the cost then,” Sumathipala said.

For the time being Jayasundera is hoping that the quirks of nature can work in the country’s favour, at least occasionally. “We feel we can get a premium on potential growth because of favourable weather conditions,” he said.

If more power generation can be moved over to hydro, the effect will be felt immediately. It costs less than a third to generate a unit using hydropower compared to thermal generation.

After two decades of crisis more and more Japanese want to do business for society, not just for money. Credit: Daan Bauwens/IPS.

By Daan Bauwens
TOKYO, Mar 2 2013 (IPS)

After two decades of economic stagnation and serial natural disasters, a growing number of young Japanese believe social entrepreneurship is the best way to rebuild their society.

Masami Komatsu (37) is one of them. He founded his investment company Music Securities in 2001, a few years after the Japanese banking crisis of 1998. ‘There was no more investment in vulnerable sectors as music, traditional crafts or sake brewing,” he tells IPS. “We made it possible for people to start investing in what they personally think is important and should be kept alive.”

However, Music Securities does not work by way of donors and donations. It is an investment fund with returns that currently ranks among the best performing in Japan, managing over 33 billion yen (27 million euro) worth of investments held by over 50,000 shareholders including some of the nation’s most wealthy companies. In 2009 Komatsu set up the first retail microfinance fund in Japan, allowing individuals to invest in microfinance projects in Cambodia.

At this moment Music Securities is the largest private financier in the reconstruction of companies that suffered losses from the tsunami. “A month after the catastrophe had happened we visited the area and suggested our plan to the local business leaders,” Komatsu tells IPS. “We had the feeling we had to do something. Not volunteer, but use our existing business to resolve the problems of the stricken areas.”

At this moment more than 25,000 individuals have invested a total of more than 100 billion yen (810 million euro) in the tsunami fund.

In 2001 Music Securities was ahead of its time. It took until 2005 before the concept of social entrepreneurship – a revenue-generating business whose objective is not personal gain but the pursuit of a social goal – was thought of at Japan’s oldest university Keio in Tokyo.

But in recent years, the phenomenon seems to be gaining momentum rapidly. In 2011, Fukuoka on the Japanese Island of Kyushu was the second city in the world to be named a ‘social business city’ for spreading the concept of social business across the Asian continent. Nobel Laureate Muhammad Yunus, who developed the idea of social business, opened the world’s first social business research centre on the grounds of Kyushu University.

According to Japan’s Ministry of Economy, the number of social businesses went up from virtually none in 2,000 to a total of more than 8,000 in 2008, employing over 320,000 people. There is no data on the current number, but everything points to the fact that the phenomenon has been even more on the rise since then. For instance, at the NEC-ETIC Social Entrepreneurship School in Tokyo, numbers of applicants have risen five-fold since 2010.

Since the start, Nana Watanabe has been one of the driving forces behind social entrepreneurship in Japan. Through her work as freelance journalist and photographer, she introduced more than 100 social entrepreneurs to the Japanese public between 2000 and 2005 through several publications.

“Japan was left without role models after the bursting of the bubble economy,” she tells IPS. “It led to a general state of depression, the country didn’t know what to do. In 1999 I discovered the new wave of social entrepreneurship, coming up among elite students in the states. I immediately thought: this is what we need.”

In 2011 Watanabe founded the Japanese branch of Ashoka, an international NGO supporting the work of over 2,000 social entrepreneurs in 60 countries around the globe.

“Social business is definitely an emerging phenomenon,” she tells IPS, “and the reason behind it is simple: people are getting increasingly disappointed in Japan’s large companies. Today’s young have seen their parents sacrifice their lives in exchange for the promise of lifetime employment, only to be have been laid off in recent years. More and more young people prefer to start on their own.”

“The myth of Japanese government efficiency has collapsed,” says Toshi Nakamura, leader of Kopernik, an on-line market place offering technological solutions to problems in rural communities in developing nations.

“Up until the middle of the nineties people had faith in the government’s technocrats to drive the economy and provide social services,” he tells IPS. “This is no longer the case and people realised that a number of social issues had to, and can be tackled by ordinary citizens.”

It is not just disappointment in Japan’s companies or government that inspires the Japanese to get involved in social business. “After the financial crisis we have seen a return to traditional values,” says Japan’s leading business analyst Kumi Fujisawa. “People aren’t looking for short term gain but concentrating on long-term perspectives. There’s a return to idealism, people want to contribute to society again.”

According to polls organised by the Japanese government, the value of work is being reconsidered in Japan since the start of the financial crisis. The number of people that answered that they wanted to work ‘to contribute to society’ rose sharply after the burst of the asset bubble, from 46 to 64 percent in 1991. That number is above 65 percent at present.

“It is the result of a new inward-looking attitude,” says Hirofumi Yokoi, president of the Akira Foundation, one of Japan’s most influential organisations fostering social entrepreneurship that was founded in 2009.

“Growing uncertainty and anxiety about the future have lead to a change in behaviour. For lots of young Japanese, social business is not just a way to solve economic, social and environmental issues. It is also a way to tackle personal challenges. They will have to work as a part of a community and develop self-confidence, friendship, mindfulness, self-actualisation and social inclusion.”

“It is true that people start to reconsider the value of work,” Nana Watanabe tells IPS, “but most still lack the courage to act upon it. Social business is definitely taking off but we need to be cautious not to overestimate its success.

“First of all, it requires people to be very creative and imaginative. Next, at the moment it is very fashionable to say you will start a social business. But in the end, the majority are still looking for security and money.”

Local food for local people. That’s the idea behind Sharaka (‘partnership’, in Arabic), an entirely volunteer-run, Palestinian organisation that aims to bring locally grown products directly to Palestinian dinner tables.

“Our vision is a food sovereign Palestine where we’re economically independent, we use our local resources and we support each other. That leads to human development. It’s local economy. Through a local economy and a local food system, that’s how you build community,” said volunteer and Sharaka co-founder Aisha Mansour.

Mansour said that while it has often been a struggle to convince both Palestinian farmers and consumers to participate, Sharaka has organised several successful farmers’ markets in Ramallah, and continues to raise awareness about the benefits of eating locally.

The group has also refused to take any international aid to support its work.

“It’s a broken system. Everybody knows that,” Mansour told IPS, about the international aid and development model currently in place. “Local people who know their community, who want to develop and support, they do things. That’s how they develop. That’s how development happens; it’s not an externally imposed thing.”

Palestinians are among the largest per capita recipients of international aid in the world. From 1994 – when the first international aid packages streamed into the occupied Palestinian territories – until the present day, billions of dollars have been spent.

The first donor conference to provide financial support to Palestinians was convened in October 1993 in Washington, shortly after the signing of the Oslo Accords peace agreement between Israel and the Palestinian Liberation Organisation (PLO).

“The Oslo agreement between the PLO and Israel would not succeed, not work even, not last, without donor support,” said Dr. Samir Abdullah, director general of the Palestine Economic Policy Research Institute (MAS) in Ramallah.

Dr. Abdullah told IPS that restrictions placed on Palestinians under the Oslo agreement, including receiving only 80 percent of Palestinian tax revenues, and having access to only 40 percent of West Bank land, limited growth and development.

As a result, the Palestinian Authority (PA) – the Palestinian government created as a result of the Oslo Accords – was quickly forced to rely on international donors to fill gaps in its budget.

“Now, the PA has 3 billion dollars of debt,” Dr. Abdullah said. “If this continues, the Authority will collapse. If (donors) are not paying the burden, the debt will be unaffordable for the Authority.”

In its National Development Plan for 2011-2013, the PA stated: “Tax and clearance revenues, driven upwards by private sector-led economic growth and improved revenue administration, will progressively reduce our reliance on external aid.”

But efforts to wean the PA off its dependence on foreign aid have proven unsuccessful.

International donors pledged 1 billion dollars to the PA in both 2011 and 2012 to keep the organisation afloat. After this sum was never fully transferred, the PA faced the largest funding crisis in its history.

It is now regularly unable to pay the salaries of its public sector employees, and President Mahmoud Abbas often launches emergency appeals to Arab states to support his Ramallah-based government.

International aid to Palestinians is also very much dependent on the local political situation, and mainly, on so-called peace process negotiations with Israel.

After the PA secured the upgraded status of Palestine at the United Nations last November, Israel said it would withhold 100 million dollars in Palestinian tax revenues each month, and the United States froze 500 million dollars in aid as punishment.

Nora Lester Murad is a volunteer and co-founder of Dalia, a Palestinian organisation that advocates better use of local resources, and development that meets Palestinian goals. She said that while international aid has brought some positives to Palestinian society – including jobs and basic institution-building – it has largely been destructive.

“It has not helped in the claiming of rights. It has not helped in resolving the Israeli-Palestinian conflict and I’d go further and say that it has undermined rights and has delayed or prevented and made more difficult, the resolution of the conflict,” Lester Murad told IPS.

“But things are changing. There is a lot of discontent, and that’s the first step. There is also discussion, and that’s the second step.”

In 2012, the overall unemployment rate in the occupied Palestinian territories hovered just below 23 percent. In the West Bank, youth unemployment reached 30 percent in mid-2012, and 52 percent in the Gaza Strip.

Itiraf Remawi, acting director general of the Ramallah-based Bisan Centre for Research and Development, told IPS that Palestinians must return to the more sustainable system of development, similar to the one that characterised the First Intifada in the late 1980s.

“The development has to take an approach that facilitates and reinforces the Palestinian existence (and) the Palestinian resistance against the occupation,” Remawi said.

“The model (in the First Intifada) was much, much better. There was voluntary work, collective work. There was a very close relationship between the people. They struggled against the occupation without differentiating between this one or that one, between political factions or others. There was a common agenda.”

According to Aisha Mansour, that is exactly the type of community that Sharaka aims to build.

“How can you move into an independent country when people are at the level where they’re just struggling to put bread on the table?” she said. “That tipping point has to come for people to really say, ‘Ok. There’s no more money. We have to really think about a way to keep our community going, whether we’re under occupation or not, and develop.’” (END)

Renato Grbic is a simple Belgrade fisherman, who grew up on the shores of the Danube River in Belgrade, but he performs an additional job that he is not paid for.

In the last 14 years, 50-year-old Grbic has saved the lives of 25 people who were attempting to commit suicide by jumping into the river from Belgrade’s Pancevo Bridge.

“When I ask them why (they wanted to end their lives), they either say they were ‘depressed’ or they ‘could not take it any more’,” he told IPS. “Times are really hard for people today.”

Serbian Health Minister Slavica Djukic Dejanovic echoed Grbic’s words when she said, “By 2020, depression will be the second leading cause of absence from work.

“The current number of psychotherapists and psychiatrists is not enough to deal with the issue and we are making an effort to improve the situation soon,” she added in her opening address at a congress of mental health experts in Belgrade.

According to statistics from the ministry of health, this Eastern European nation of 7.2 million people has only 350 certified psychotherapists and 900 psychiatrists.

The Association of Psychotherapy Societies of Serbia puts the need for psychotherapists at between 6,000 and 8,000. Some 1,500 specialists are currently undergoing training and will be qualified to enter the system soon.

“Roughly a third of the population has experienced mental disorder due to the current economic crisis that has taken its toll in the form of unemployment and growing poverty,” Nadja Maric Bojovic, head of the Belgrade Psychiatry Clinic, told reporters.

Lingering trauma from the wars that ripped through the region in the 1990s, coupled with memories of the NATO bombing of Serbia in 1999, as well as enduring hardships from economic stagnation during a period of international sanctions 1992-2000 have all compounded the issue.

“European statistics put the rate of mental disorders at 27 percent in 27 European Union member countries, with issues such as anxiety, insomnia and depression at the top of the list,” she added.

Concurring with largely accepted data by other experts in the field, she said that one in ten people with mental health issues has sought professional help.

“A large number of people have mental problems, but do not know how to solve them,” Zoran Milivojevic, head of the Association of Psychotherapy Societies of Serbia told IPS. In the absence of adequate professional services, “they take to tranquillisers instead, (leading to) large abuse of these substances.”

Ministry of health statistics suggest that the tranquilliser bromazepam (known in Serbia as ‘Bensedine’) was the most frequently prescribed drug in the country in 2011. Doctors prescribed 4.3 million packs of the product, with three million sold under the counter that same year, despite a prohibition law since 2002.

The tranquilliser lorazepam was the fifth most common prescription drug in 2011, with 1.6 million legally issued packs.

“They think it’s simply easier to take a drug than to try to solve problems with visits to therapists,” psychologist Nebojsa Jovanovic told IPS. “That calls for (increased) personal involvement.”

Serbian institutions have insufficient data on mental health issues, with the exception of precise statistics on suicides. There Serbia ranks 13th in the world, with 14 suicides per 100,000 people, according to statistics from the World Health Organisation (WHO).

Translated into annual statistics, this means that there were 1,400 suicides in Serbia in 2011, almost four per day.

But the only specialised centre for prevention of suicides – an emergency phone line in Belgrade  – ceased to exist in September due to a lack of finances.

“We had more than 2,300 calls from February 2011 until September this year,” Branka Kordic, the psychologist who was in charge of the project told IPS.

“We had no statistics on how many suicides we prevented, but most of the callers were men over 50 who had lost jobs, whom I’d call the biggest casualties of transition, who lost self-esteem, family support and the basic means of existence.”

Since 2000 Serbia has made a painful transition into the market economy, which accompanied by the last global crisis, led to a record unemployment rate of 25.5 percent.

The economic hardships and personal struggles have “been too long and too much for many,” Nebojsa Jovanovic told IPS.

The Bristol pound. Credit: Mark Simmons.

By Claudia Ciobanu
VENICE, Oct 17 2012 (IPS)

Bristol, the eighth most populous town in the UK, has launched a local currency – the Bristol Pound. That makes it one of the largest localities to embrace a complementary currency among more than 2,500 worldwide.

In all, 125,000 Bristol Pounds were put in circulation at the launch, to be purchased by Bristol inhabitants at a parity of 1:1 with the national currency, the pound sterling. They can be spent in one of the 300 local, independent businesses that have committed to accepting the new currency.

The new pounds have denominations of 1, 5, 10, and 20 units, and have been designed by inhabitants of the town, which has a population of about 400,000.

Local currencies are one of the alternative exchange mechanisms through which communities try to complement – not replace – the use of national currencies when they are thought not to meet people’s needs. Other popular mechanisms are local exchange trading systems (LETS), usually online systems of exchanging goods and services valued in virtual currency, and time banks in which exchanges are made according to the number of working hours spent on each good or service.

Such alternative exchange systems have existed for over a century but have boomed in the past decade.

“By incentivising spending in independent businesses, the Bristol Pound will help wealth created in Bristol stay here,” says the new currency’s website. Its creators, a group of volunteers, some activists, others entrepreneurs and including a representative of the Bristol Credit Union, will hold sterling reserves to back up the Bristol Pound operations as well as facilitate making payments via mobile text messages.

“With sterling much of the wealth spent in the city is lost to big international business, related management structures, remote shareholders and the boom-bust of the financial banking system,” say the local currency promoters.

The key motivation for issuing local currency is to ensure the survival of local businesses by getting consumers to purchase goods and services produced in the community. Local currencies often report higher circulation rates than national ones – especially when they are designed to expire or devaluate after a set period of non-use – arguably leading to increased demand.

Some of the advocates of local currencies claim that such increased economic activity can lead to reduced unemployment levels locally.

Whether local currencies have a significant economic impact is disputed. What is less controversial is that they guarantee some demand for the local businesses – at least for an initial period – and they create a sense of empowerment in communities.

The multiplication of such currencies over the past years as well as their potential positive impact on local economies has led some commentators to argue that local currencies are a way to help communities weather economic hard times.

One of the favourite examples in this direction is the use of a LETS scheme in the Greek city Volos (population 150,000). Since mid-2010, more than 1,000 inhabitants of Volos (and increasing) have been using the system, which according to Greek media has helped unemployed people get access to products they could otherwise not afford.

In Spain too, time banks have nearly doubled over the past two years to reach almost 300, according to the website Living Without Work that tracks such iniatives. In Italy, time banks have been popular for over a decade, partly because of favourable national legislation. About 250 schemes were already in place in 2002; there are over 320 working now.

“It is true that people turn more to local or complementary currencies during economic crises,” Leander Bindewald, who coordinates complementary currency work for the UK think tank the New Economics Foundation tells IPS.

“In a financially induced economic depression, you have needy people and unemployed people, but what is missing is the currency connecting the two. In Argentina after the crisis of 2001, thousands of people were surviving and thriving on grassroot currencies. In Greece today we are seeing similar problems and similar solutions.

“But I am not sure that what some people today see as the global renaissance of complementary currencies should be attributed to the global crisis,” Bidewald says. “Other factors like lower transaction costs through technological advancements and a more networked society contribute too.”

A plus of local currencies is thought to be their contribution to the reduction of global transport carbon emissions by discouraging imports. But economist Tim Harford counters: “The environmental cost of driving to the shops or growing food on inappropriate local land is far greater than the cost of the carbon emissions of long-range shipping.” To ensure emissions reductions do happen, some local currency schemes only accept for registration businesses which commercialise organic local food whose production processes are sustainable and low-carbon.

For both critics and advocates of local currencies, a key question is the transformative potential of local currencies. According to geographer Peter North from Liverpool University, local currencies need to start “moving from being a means of circulation between existing local businesses to tools for building greater local resilience by stimulating new local production.”

In order to have an impact on the relocalisation of production, the creators of the Bristol Pound are offering incentives to producers located within 50 miles of Bristol to sign up for the scheme, thus ensuring local businesses can purchase local supplies with the Bristol Pound.

Regardless of their wider impact, local currencies seem to constitute at least a learning experience. “The main tangible benefits of a local currency are building a local economy and enabling high levels of community interaction,” Mary Mellor, a social scientist at Northumbria University tells IPS. “But a less tangible yet very important benefit is that it helps us understand how a whole money system works.

“Local money systems make it clear that money does not come out from nowhere, instead it has to be set up and administered,” Mellor adds. “How much money is created and circulated has to be decided.

“What is very important is that no local money system is created on the basis of debt to the issuer even though it certainly represents a pattern of debts and entitlements between people as it circulates. Modern money, on the other hand, is created nearly all as debt. Local currencies show that it doesn’t have to be this way.”

By Jinty Jackson
Sep 20 2012 (IPS)

Carolina Poalo strikes the dry earth over and over with her hoe, her frail body bent almost double. She is determined to begin planting. During the long, dry season in Mozambique, she and her two young grandchildren have eaten little but cassava leaves.

In a country where the average life expectancy is 50, the 65-year-old is considered very old, but her golden years are far from restful.

Instead, life is a constant battle for the many elderly living in the semi-rural outskirts of the capital, Maputo.

Violence and abuse against the elderly – ranging from rape to psychological abuse and neglect – are on the rise, say authorities. Often this is linked to witchcraft accusations, although no official statistics exist about the phenomenon. Perpetrators are often family members.

Carolina Paolo’s sister, Amelia Paolo, fled her home when her sons accused her of witchcraft. “They threw me out, calling me a witch,” she tells IPS. “I only survived thanks to my plot of land.”

It was a bit unclear how she got access to land where she lives now, but she has a plot of land next door to her sister’s in Bilalwane, on the outskirts of Maputo.

“I don’t get any help from my children. Sometimes they dump their kids here when they get pregnant,” Carolina Paolo tells IPS of her two daughters.

The women survive by earning extra cash when they can, working in nearby fields. The five dollars a month state elderly grant, the lowest in Southern Africa, is enough to buy them a one-kilogramme bag of salt. With no access to running water, the money also comes in handy when filling up at a nearby tap – one barrel of water costs them three cents.

Mozambique’s social welfare office is notoriously corrupt and inefficient. Only one in three people interviewed by IPS said they received the grant despite all three having applied for it.

Her body shrunken and her eyes grown over with cataracts, Maria Chambale (70) admits she is frightened of what might happen when she can no longer work, “I must go on fighting,” she says and shrugs. “What else can I do?”

She, like the other elderly in Mozambique, works on her own small plot of land to grow vegetables to feed herself. She also accepts “piece jobs” or day jobs in nearby fields owned by richer neighbours who have land but do not have the time to farm it.

Despite the heady pace of Mozambique’s economic growth – the World Bank expects the economy to expand by 7.5 percent in 2012 – little benefit is trickling down to the poor, many of whom are elderly people.

“Sixty-eight percent of the elderly live below the poverty line in Mozambique,” says Janet Duffield, the director of the aid agency HelpAge International in this country.

For the elderly in the city who cannot grow food to feed themselves, conditions are even worse.

Sixty-year-old Armando Mattheus is amongst the many elderly people who now find themselves begging on the streets of the capital, unable to cope with the high cost of living. “Before I could buy something with the little I have but today I can’t buy anything,” says Mattheus, who spends his days outside a popular Maputo restaurant, begging tourists for handouts.

It is a situation experts say Mozambique’s government needs to address urgently. Eighty percent of people work well into old age in Mozambique – one of the highest rates in the world.

“The population in Mozambique works until they die because there aren’t alternatives,” says the director of Mozambique’s Institute of Social and Economic Studies, António Francisco.

With half its population of 23 million under 18 years old, Mozambique is often referred to as a country of young people. Those who can remember the devastating civil war that ended two decades ago are now in the minority.

Newly discovered natural gas and coal deposits promise untold riches for a lucky few and will soon fuel what is already one of the world’s fastest growing economies.

The aged make up a tiny fraction of the population – just five percent.  However, by the time a child born today reaches 60, that number will be nearly three times as high, according to Francisco’s research. This represents, he says, “an unprecedented demographic transformation in the history of Mozambique.”

Nearby countries – South Africa, Swaziland, Botswana, Namibia and Lesotho – all spend between 0.3 and two percent of GDP on grants for the elderly. Like Mozambique, they have a young population structure but such an approach can pay dividends.

Japan, which in 2010 registered 38 percent of its population over the age of 65 – the world’s largest proportion – spends over 10 percent of GDP on pensions, according to the International Monetary Fund. And the United Kingdom spends five percent of GDP on pensions, according to the Organisation for Economic Cooperation and Development.

Studies show that providing state pensions can reduce hunger and poverty because elderly people share resources with the family.

A 2003 study by HelpAge International found that “social pensions increase the income of the poorest five percent of the population by 100 percent in Brazil and 50 percent in South Africa.” And a 2005 study by the University of Manchester in the U.K. found that people living in households receiving a pension were 18 percent less likely to be poor in Brazil and 12.5 percent less likely in South Africa.

One fifth of all families in Mozambique include an elderly person. This is one reason why aid agencies are pushing the government to fall into step with other countries in the region. Another is that 43 percent of orphans are cared for by grandparents in Mozambique. The country has an HIV prevalence rate of 16.2 percent, one of the highest rates in the world.

“Of the 10 African countries with the highest HIV prevalence, eight have introduced some form of social pension or cash transfer directed at older people,” says Duffield.

The government would need to provide citizens over 60 with a minimum of 26 dollars a month to have an impact, estimates Francisco. The figure represents three percent of the country’s 12.8-billion-dollar GDP.

But universal social pensions would be too costly, argues Felix Matusse, who heads the government’s Department for the Elderly. “We still depend on external aid,” he explains, pointing out that foreign donors contribute over 30 percent of the entire state budget.

But the government cannot go on pleading poverty for long. By some estimates, Mozambique stands to collect over five billion dollars a year in the long term from its natural gas alone.

Bolivia, South America’s poorest country, financed its universal pension scheme or “Dignity Pension” in 2007 through a direct hydrocarbon tax. Could Mozambique do the same?

“Improved revenue collection from new-found mineral resources could free up fiscal space more than adequate to provide a cash transfer for all older people,” suggests Duffield.

Others argue that caring for the elderly should not have to depend on hydrocarbon windfalls. “What kind of state do we have that cannot look after five percent of its population?” asks Francisco, adding that nearby Lesotho finances a pension scheme but has no natural resources to speak of.

Few expect a major shift in government policy on pensions before the next national elections in 2014. But in the run-up, the government is showing greater willingness to tackle its elderly problem.

A draft bill, due to go to parliament before the end of the year, aims to protect the aged from abuse, meting out specific tough penalties for violence related to witchcraft accusations. However, there is no mention of universal old age pensions.

Matusse points out that Mozambique will not begin to reap the benefits of hydrocarbons for at least another five years. “Then we will see what is going to happen in terms of social security,” he says.

What was once Rizk Al-Madhoun's clothing factory. Credit: Eva Bartlett/IPS.

By Eva Bartlett
JABALIYA, Gaza, Sep 8 2012 (IPS)

“Gaza’s economy is expected to grow modestly and people will likely still be worse off in 2015 compared to the mid-1990s,” reads a press release announcing the United Nations’ August 2012 report, ‘Gaza in 2020 – A Liveable Place?’

In the no-frills office of his stalled Jabaliya clothing factory, Rizik Al-Madhoun, 41, explains how his clothing factory began shutting down six years ago.

“We started in 1993 with seven sewing machines. By 2005 we had 250 machines and as many tailors,” he says. “In 2006, after Hamas was elected and Israel sealed the borders, we had to close down half of the factory. We stopped all production in 2007, when Israel tightened the siege.”

Madhoun’s is one of the 97 percent of industrial establishments in the Gaza Strip which by 2008 had stopped production as a result of the Israeli-led, internationally-complicit closure of Gaza’s borders that limited imports and virtually halted all exports. By December 2007, the UN had already reported that only one percent of Gaza’s 960 garment factories remained open.

Today, a reported 80 percent of factories in Gaza are still closed or operating at minimum capability.

“Until 2005, our work was good,” says Madhoun. “We made shirts, pants, jeans, dresses, skirts, school clothes…we’d make whatever was in demand. Since our clothes were high quality, 80 percent were exported to Israeli markets, and some of these were then exported to European markets.

His workers were, Madhoun says, among 40,000 who worked as tailors in Gaza.

“Before our factory closed, I employed 250 high-quality tailors, as well as another 100 who worked from home. Another 50 families worked from home, doing the final touches and finishing work.”

A tour through the vast warehouse that was Madhoun’s factory reveals much now-unused space, with a few rooms devoted to storing cheap imported clothing.

“Now we just have a large storage area. There’s no way we can run our factory, so instead we sell these imports in Gaza markets.”

Focusing on Gaza’s siege-devasted economy, the UN in June 2012 noted that “the continued ban on the transfer of goods from Gaza to its traditional markets in the West Bank and Israel, along with the severe restrictions on access to agricultural land and fishing waters, prevents sustainable growth and perpetuates the high levels of unemployment, food insecurity and aid dependency.”

Israeli-rights group Gisha notes that 85 percent of Gaza’s exports traditionally went to Israeli and Palestinian markets outside of Gaza. Gisha further notes that any claims of security precautions being the reason for prohibiting exports from Gaza hold no weight: “Recently a new scanner for screening goods was installed at the crossing,” wrote Gisha in June 2012. It said that Israeli military officials “have said that the choice to prevent sale of goods from Gaza in Israel and the West Bank was made at the political echelon and needs to be decided upon there.”

The Palestinian Centre for Human Rights reports that the amount of exports allowed to leave Gaza in March 2012 were “1.28 percent of pre-closure numbers,” with April exports at “0.85 percent of the preclosure numbers.”

Gaza’s unemployment rates continue to hover at between 35 percent to 65 percent (adults versus those in their early twenties), and food-aid dependency remains at 80 percent.

“An urban area cannot survive without being connected,” the UN’s Maxwell Gaylard stated on Aug. 27, reiterating the necessity to reopen Gaza’s closed borders to trade.

“The area has been essentially isolated since 2005,” reads the UN press release, “meaning that, in the longer term, its economy is fundamentally unviable under present circumstances. Gaza is currently kept alive through external funding and the illegal tunnel economy.”

The United Nations’ August report finishes by insisting that, among other things, the Palestinians of Gaza “must have ready access to the world beyond Gaza for religious, educational, medical, cultural, commercial and other purposes.”

Rizik Al-Madhoun simplifies the call: allow Gaza’s exports out.

“Since we have so few options for work, Gaza’s tailors have perfected their crafts,” Madhoun says. “We can make clothes as good and better quality than the Turkish imports we get, but without a market, there is no point in producing goods.”

Thousands of farmers are earning a living growing fruit and vegetables in the Niayes, a strip of fertile land running north along Senegal’s western coastline from the outskirts of the capital, Dakar. But land speculation threatens the future of this market gardening.

“This year, we shipped 100 tonnes of mangos to both domestic and overseas markets,” said Ibrahima Mbengue, president of Federation of Vegetable Growers in the Niayes (FPMN), keeping a watchful eye on young workers who are weighing dozens of baskets of mangoes.

The FPMN was established in 1994, and Mbengue says the federation now has 2,250 members who last year farmed a total of 6,000 hectares in the area, a string of lakes and seasonal wetlands – the “niayes” from which the region takes its name.

“The growers in the Niayes are making lots of money, billions (of CFA),” said Abdoulaye Barry, a Dakar-based journalist specialising in agriculture. “There are many foreigners, especially from Guinea, working in the fields there. People have built permanent houses with their income from vegetables.”

The region’s output has more than tripled in recent years, rising from 78,000 tonnes in 2009 to 261,000 tonnes in 2011, according to figures from the National Statistical Demographic Institute (ANSD) published in the state-owned newspaper “Le Soleil” in August.

The increase is one consequence of expanding the area under cultivation, which jumped 70 percent from around 5,000 hectares in 2009 to 8,700 ha in 2011, ANSD reported. The institute estimated the total income for vegetable growers at 430 million dollars. The 750,000 tonnes of fruit and vegetables produced here in 2011 accounted for more than 40 percent of the country’s total.

Onions, tomatoes and cabbage were the most important crops, together accounting for two-thirds of the volume of produce.

Despite this strong growth, Mbengue complained of a lack of technical support from the government. Year on year, he said, production increases but the farmers are not able to compete in the international market for fruit and vegetables.

“Market garden output greatly exceeds domestic demand, and the produce is perishable. Some producers sometimes sell at a loss, since they haven’t cracked the international market,” he told IPS.

Barry agreed. “Senegalese market gardeners are not in a position to compete in the international market. The value chains are not well-organised. The level of organisation of transport, packaging and marketing of produce is weak.”

“There’s often an oversupply in the domestic market, which hurts the price,” said Sidy Guèye, FPMN’s coordinator in the rural district of Sangalkam, home to many vegetable growers.

Onions, for example, are sometimes sold at knock-down prices, for 20 or 35 cents a kilo, while at other times the price can climb to as much as 80 cents a kilo on the local market, said Madiagne Dièye, a Dakar trader.

Producers harvest three or four crops each year, mostly working on family plots of up to five hectares in size, while some producers’ associations have operations covering several hundred hectares, according to Guèye.

“People are doing well here, financially. In other parts of the country, people are living precariously,” he told IPS, referring to the value of vegetable growing in Sangalkam.

“In the Niayes, 90-95 percent of growers inherited their land. Others acquired theirs thanks to the goodwill of the relevant land management authorities,” Guèye said.

Market gardening is so important to the Senegalese economy that the government has integrated it into its wider accelerated growth strategy for agriculture and agro-industries, a multi-year plan being implemented by the government and the private sector.

But lying so close to the Senegalese capital, the Niayes region has been the object of intense land speculation. “The big men are buying land from producers, without using it,” said Woré Gana Seck, from the NGO Green Senegal, which works on agriculture. Advocacy against this form of land-grabbing must be maintained, she told IPS.

Barry thinks that the government should reserve the Niayes exclusively for market gardeners, and designate other space in areas less suited to vegetable cultivation for residential development.

Orangutan survival is seriously threatened by palm oil plantations. Credit: Kafil Yamin/IPS

By Kafil Yamin
JAKARTA, Aug 10 2012 (IPS)

When four men were sentenced to eight months in jail in March for the ‘murder’ of orangutans, it was the first time that people associated with Indonesia’s booming palm oil industry were convicted for killing man’s close relations in the primate family.

Conservationists were not happy with the ‘light’ sentences handed down by the court in Kutai Kertanegara district, East Kalimantan, on Mar. 18, to Imam Muktarom, Mujianto, Widiantoro and Malaysian national Phuah Cuan Pun.

“As expected, the sentences were light, much lighter than what the prosecutors demanded. Such punishments will not bring any change to the situation of orangutans,” Fian Khairunnissa, an activist of the Centre for Orangutan Protection, told IPS.

Indonesia’s courts have generally looked the other way as the palm oil industry relentlessly decimated orangutans by destroying vast swathes of Southeast Asia’s rainforests to convert them into oil palm plantations.

In April, a court in Banda Aceh, Sumatra, dismissed a case filed by the Indonesia Environmental Forum (WALHI) against PT Kallista Alam, one of five palm oil firms operating in Tripa, and Irwandi Yusuf, former governor of Aceh province, for the conversion of 1,600 hectares (3,950 acres) of carbon-rich peat forests into palm oil plantations.

The court admonished WALHI saying it should have sought an out-of-court settlement with PT Kallista Alam –  which never paused clearing its  1,600-hectare concession, granted in August 2011.  

Mysteriously, just before the WALHI case was to be heard in court, numerous fires broke out in the Tripa peat swamps, including in the concession granted to PT Kallista Alam.

Community leaders in Tripa point out that the concessions fly in the face of a presidential  moratorium on new permits to clear primary forests, effective in Indonesia since last year as part of a billion dollar deal with Norway to cut greenhouse gas emissions.

 “The issuance of a license to Kallista is a crime, because it changes the Leuser ecosystem and peat land forests into business concessions,” Kamarudin, a Tripa community spokesman, told IPS.

The Leuser Ecosystem, in the provinces of Aceh and North Sumatra, covers more than 2.6 million hectares of prime tropical rain forest and is the last place on earth where Sumatran sub-species of elephants, rhinoceros, tigers and orangutans coexist.

The survival of orangutans,  a ‘keystone species’,  is critical for the wellbeing of other animals and plants with which they coexist in a habitat.   

A statement released in June by the Sumatran Orangutan Conservation Programme estimated that there are now only 200 of the red-harired great apes left in Tripa compared to  about 2,000 in 1990 and said their situation was now ‘desperate’ as result of the fires and clearing operations carried out by palm oil companies.

During the last five years, the oil palm business has emerged as a major force in the Indonesian economy, with an investment value of close five billion dollars on eight million hectares.

Indonesia plans to increase crude palm oil (CPO) production from the current 23.2 million tons this year to 28.4 million tons by 2014. This calls for an 18.7 percent increase in plantation area, according to Indonesia’s agriculture ministry.

But the price of the planned expansion would be further shrinkage of orangutan habitat by 1.6 million hectares because oil companies find it cheaper to burn forests and chase away or kill the orangutans. 

“If you find orangutans in palm oil plantations, they are not coming there from somewhere else… they are in their own homes that have been changed into plantations,” said Linda Yuliani, a researcher at the Centre for International Forestry Research.

“But plantation company people see the orangutans as the encroachers,” she said. “Confused orangutans can often be seen wandering in plantations, and with their habitat gone, they forage on young palm trees,” she said.

A joint survey by 19 organisations, including The Nature Conservancy, WWF and the Association of Primate Experts, found that some 750 orangutans died during 2008-2009, mostly because of conflict with human beings.

It has not mattered that Indonesia is one of the signatories to the Convention on Illegal Trade and Endangered Species, which classifies orangutans under Appendix I which lists species identified as currently endangered, or in danger of extinction.

“Clearing peat land also releases huge volumes of carbon dioxide, similar to amounts released during  volcanic eruptions,” Willie Smits, a Dutch conservationist who works on orangutan protection, tells IPS.

Reckless clearing of peat swamp forests has already turned Indonesia into the world’s largest emitter  of carbon dioxide, after the United States and China.

“The government may earn some money from oil palm investment, but there are far bigger losses from environmental destruction,” says Elfian Effendi, director of Greenomics Indonesia. “There is a multiplied effect on the local economy and loss of biodiversity.”

But, even to some conservationists, stopping the oil palm business in Indonesia – which feeds a vast range of industries from fast food and cosmetics to biodiesel – is impractical.

“What is needed is enforcement of schemes that allow the palm oil business and orangutans to co-exist,” Resit Rozer, a Dutch conservationist who runs a sanctuary for rescued orangutans, told IPS.

Palm oil companies that are members of the Roundtable on Sustainable Palm Oil (RSPO), a convention to encourage importers to buy only RSPO-certified CPO, see no advantage in the scheme that requires them to set aside a forest block for orangutans within plantations and provide safe corridors for the apes to move from one spot to another.

“U.S. and several European countries still buy non-certified CPO as the RSPO certificate does not gurantee purchase,” Rozer told IPS. “The West told us to practice environmentally-sound business, but they do not buy RSPO-certified CPO because implementation has been delayed till 2015,” Rozer said.

 “For companies that have invested in RSPO certification, the delay has been a heavy blow. They feel cheated,” said Rozer who helps palm oil companies in creating orangutan refuges and corridors.

All Chinese-run businesses outside Malawi’s four major cities have to close down after a new law barring foreigners from trading in outlying and rural areas. This store, in Lilongwe, will have to apply for a new licence to trade. Credit: Claire Ngozo/IPS

By Claire Ngozo
LILONGWE, Aug 4 2012 (IPS)

The move in Malawi to close down Chinese businesses outside of the four major cities has been condemned as xenophobic by rights organisations. A new law enforced Jul. 31 barred foreigners from carrying out trade in Malawi’s outlying and rural areas.

The Investment and Export Promotion Bill required traders to move to the southern African nation’s major cities Lilongwe, Blantyre, Mzuzu and Zomba. The law is an attempt to protect local small-scale businesses from competition from foreign traders.

Two prominent civil rights organisations, the Centre for Development of People and the Centre for Human Rights Rehabilitation (CHRR), have warned the Malawian government against encouraging the victimisation of foreign traders.

“We are worried about the increasing xenophobia sentiments and attacks on foreign nationals who are doing legal business across the country,” the executive director of CHRR, Undule Mwakasungula, told IPS. He argued that the way Chinese traders were being treated was in violation of their human rights.

“Malawi should not be perpetrating xenophobic attacks on foreign nationals under the pretext of protecting the interests of local businesses.”

The new legislation comes immediately after Malawian traders in some rural areas grouped together in May and convinced local government authorities to force out Chinese traders. The protests first began in Karonga, a bustling town in the north of Malawi, which borders Tanzania, and later spread to all 28 districts in the country.

While there are no official figures yet as to how many foreign traders have complied with the new law, IPS confirmed that in seven of the country’s 28 districts, Chinese traders closed down their businesses.

They now have to apply for new licences to trade in the specified four cities. But many may not qualify, as the new legislation requires investors to deposit a minimum of 250,000 dollars in Malawi’s central bank as start-up capital.

Malawi’s Minister of Trade John Bande said that the new legislation was intended to regulate foreign investment.

“The new law clearly outlines what kind of businesses foreign investors will be allowed to get involved in. We will not accept foreigners to come all the way from places like China and open small businesses and shops in the rural areas of this country and compete with local traders,” Bande told IPS.

But Mwakasungula said that the main challenge faced by local businesses was that they lacked the financial and technical muscle to compete favourably with the Chinese. He said that it was unreasonable for the government to resort to such a “drastic decision”.

“It is unrealistic for the government to think that stopping foreign traders from doing business will automatically boost businesses run by locals,” he said.

There are no official figures on the number of Chinese or foreign traders there are in Malawi. However, Chinese-run shops, restaurants and lodges have sprouted across the country since 2007, when Malawi established diplomatic relations with China. The country had just abandoned its 41-year-old ties with Taiwan in favour of the economic giant.

China has become Malawi’s major economic partner since then. According to statistics from Malawi’s Ministry of Trade, the country’s trade volumes jumped to a record high of 100 million dollars in 2011 – a 400 percent increase from 2010.

The two countries have a 2008 memorandum of understanding about issues of industry, trade and investment. It commits China to increasing Malawi’s productive capacity in tobacco, cotton, mining, forestry, and fertiliser production, among other things.

China has also given Malawi 260 million dollars in concessionary loans, grants and development support. This year, the country’s first five-star hotel opened. It includes 14 opulent presidential suites and a state-of-the-art conference centre, and was built by the Chinese government.

In April 2012, China’s direct investment in Africa surpassed 15.4 billion dollars, according to statistics from the Chinese embassy in Malawi.

But ordinary Malawians are not happy with the influence that the Chinese have on the country’s economy.

Ellen Mwagomba, who has been at the forefront of the protests against Chinese traders in Karonga, has had a grocery store there since 2003. She told IPS that sales in her shop plummeted in 2008 when the Chinese started trading in the area.

“This place is a hive of activity since it is a border area. Business used to be good until the Chinese invaded us, bringing cheap goods and taking away our customers,” Mwagomba said.

She said that her grocery store lost business to Chinese traders as they charged as little as a quarter of the price that local traders asked for their goods.

“The goods I stock are from the local industry and from South Africa and are of good quality, they are not very cheap. But people would rather go for the cheap Chinese goods, which are also of cheap quality,” said Mwagomba.

She said that consumers preferred to purchase Chinese goods, to maximise their spending power. Up to 74 percent of the population in Malawi lives on less than 1.25 dollars a day.

But Mwagomba and other like-minded locals convinced the local assembly to remove Chinese traders from their district.

“They started leaving in June and business is now picking up for us, even before the new law became effective. I am now making up to 500 dollars a day in sales. I could barely make 100 dollars a day when the Chinese traders were here in full force,” Mwagomba told IPS.

But many Chinese feel they have been treated unfairly. Fu-han Chao used to run a restaurant in Mzimba district, in northern Malawi. But he was forced to close it down on Jun. 30, before the new law came into effect, following an order by local government authorities after Malawian traders complained about the cheap goods sold at low prices by their Chinese counterparts.

“The local traders don’t work as hard as we do. We open our shops much earlier and close them much later. We even open on Sundays when most businesses are closed, and we are hated for that. We have been treated very unfairly and I feel really angry about this. I felt threatened most times, and scared,” Chao told IPS.

He added that business was meant to be about competition. He said that until he was forced to close his restaurant, he had a number of customers and was making up to 800 dollars a day.

“We are contributing a lot to the economy of this country. I am yet to decide on what to do next. Maybe I will go back to China, but it is also tough to run a business back there because the population is high and the competition is also high,” he said.

Meanwhile, the Chinese government has not supported its traders on this issue.

“It is up to the Malawi government to thoroughly screen the Chinese nationals willing to invest in the country. These are small vendors and why should the Malawi government allow them to do business? They are capitalising on government’s failure to screen foreign traders,” China’s Ambassador to Malawi Pan Hejun said at a press briefing on Jul. 23.

“Rules should be respected and we don’t encourage these traders to go into rural areas. We encourage real investors,” Hejun said.

As the Latino population in the United States rises, the demographic shift will affect future as well as current voting habits, and therefore election outcomes, in the United States, according to several experts.

In the highly competitive upcoming presidential elections, “a couple hundred of Latino voters can make a difference,” Roberto Suro, director of the Tomás Rivera Policy Institute at University of Southern California, said Monday. The impact is especially significant in battleground states like Florida, which holds 29 electoral votes, and where 22.9 percent of the populace is Latino.

The Hispanic and Latino population in the United States is projected to more than double by 2050 and will account for 24 percent of the future population – more than 102 million people – according to the U.S. Census Bureau.

American denizens have long been predominantly white and of European descent. However, 2012 marked the first time that minorities – such as Latinos and blacks – have outnumbered the majority – non-Hispanic whites – in the U.S.

According to the National Association of Latino Elected and Appointed Officials, the rising Latino voting populace “solidifies this emerging electorate as an important voting bloc among U.S. voters”. Every month, an estimated 50,000 Latinos in the United States turn 18 and thus are legally allowed to vote in the country.

A record number of Latinos voted in the 2008 presidential election, where 9.7 million Latino voters cast ballots in a marked increase from the 7.6 million who voted in 2004.

Yet the voting bloc represents only a small percentage of potential voters in the Latino demographic. According to a U.S. Census Bureau finding on voting patterns, 40 percent of Latinos did not register to vote and 50 percent did not vote in 2008.

Nevertheless, the Latino population might be the deciding factor in this year’s elections. Tamar Jacoby, president of ImmigrationWorks USA, an organisation focused on immigration reform, called the Latino influence in the election “the whisker that wags the dog”.

In 2010, three Latino candidates, all Republican, ran for and won political offices. In Nevada, Brian Sandoval became the state’s first Hispanic governor. In New Mexico, Susana Martinez became the first Latina governor in U.S. history, and in Florida, Marco Rubio won a U.S. Senate seat.

One of the most intriguing candidates in this elections cycle has been Rubio, who has been named as a potential – though unlikely – candidate for vice president on the Republican ticket with Mitt Romney, the party’s presumptive nominee.

“It brought light to his biggest plus, which is that he could bring some (Latinos) under his tent,” Manuel Roig-Franzia, author of “The Rise of Marco Rubio”, said of Republicans’ vetting of Rubio, at a panel discussion at the New America Foundation.

Despite the fact that all three of the winning Latino candidates for office were Republicans, Latino voters generally tend to vote for Democratic candidates. According to exit polls conducted by the Pew Hispanic Center in 2010, 60 percent of Latino voters supported Democratic candidates in House races, while 38 percent supported Republican candidates.

In the last presidential election in 2008, Latinos supported President Barack Obama by a margin of more than two to one – 67 percent to 31 percent – over his Republican challenger John McCain, according to the Roper Center for Public Opinion Research at the University of Connecticut.

The elections cycle, however, has brought about a different set of circumstances that do not guarantee Latinos will vote according to past practices. With the economy and unemployment paramount in this year’s election, naturally the Latino population is far from exempt from political plays.

According to the Bureau of Labor Statistics, the unemployment rate among Hispanics and Latinos is 11 percent, according to June statistics, which is noticeably higher than the national average of 8.2 percent.

Another prickly issue regarding the Latino population is the issue of deportation. President Obama addressed a less contentious part of the deportation issue earlier in 2012, a move that earned him a mixture of both praise for his efforts to push for along immigration reform as well as criticism for what some considered a political maneuver.

However, the Obama administration has deported more people than the Bush administration. According to the Immigration and Customs Enforcement bureau, the United States deported nearly 400,000 illegal immigrants in 2011 fiscal year – the highest total ever.

Mozambique’s Magermans, or “people from Germany” have been waiting 22 years for salaries they earned in Germany that the southern African nation was meant to pay them. Credit: Louise Sherwood/IPS

By Louise Sherwood
MAPUTO, Jul 11 2012 (IPS)

Every Wednesday at 11.00am José Alfredo Cossa unfurls his East German flag and leads a march of around 150 men and women down the main streets of Maputo, Mozambique’s capital. In a struggle for justice that has been going on for more than 20 years this group, known as the “Magermans”, represent the 16,000 to 20,000 Mozambicans who were sent to the former East Germany in the early 1980s to work and serve their country.

“We’ve been marching for 22 years to get the salary we earned in Germany. We keep coming because we are sure that one day they will pay,” explained Cossa. “In Europe we learnt about peaceful protest. Where else in Africa would you see a demonstration like this?” he asked. Magermans is a local name meaning those who came from Germany.

Passersby turn to stare as the procession passes. Blowing whistles, beating drums, singing and dancing the carnival atmosphere of this demonstration belies the ongoing struggle behind it.

When Mozambique gained independence in 1975 hundreds of thousands of skilled Portuguese workers left almost overnight, which had a devastating effect on the country’s economy. So in 1979 President Samora Machel’s new left-wing government made an agreement with socialist East Germany to send Mozambican men and a number of women there to study, train as apprentices and work in the former German Democratic Republic or GDR’s state-run enterprises, the Volkseigener Betriebe, with the aim to return with new skills to help build their country.

“I was sent to learn carpentry when I was 21 and then got a work contract for four years. Others were employed to cut trees, work in abattoirs or in the coal industry,” said Cossa.

Lázaro Magalhães a Escova is another Magerman, now working as an administrator for ICMA, the Mozambican-German Cultural Institute, in Maputo. “There were many different reasons why the men wanted to go. They came from different provinces, to escape war, hunger or forced recruitment into the armed forces. In my case I wanted to see Europe. Before I left I went for two days’ induction training and then I got on a plane.”

The workers received 40 percent of their salaries in cash while the other 60 percent was sent back to Mozambique. “We were told that on our return there would be a bank account waiting for each of us,” said Magalhães.

They worked until the end of the decade when tensions within East Germany increased culminating in the fall of the Berlin Wall in 1989. “We were happy when the barriers came down but were afraid of the skinheads and neo-Nazis who didn’t like foreigners and we worried what would happen if we no longer had government protection,” said Magalhães.

“After unification we heard that they were going to close the state factories and the Mozambican government gave us a choice ‘Either stay on your own account or we pay your flight back.’”

Many chose to go home but the decision was not an easy one. “Some of the wives and children came to the airport. The women were crying and begging their husbands not to go,” recalled Magalhães.

Yet those heading back believed it was the start of a prosperous new future. “We had great expectations. I was planning to start my own carpentry business making windows, doors and furniture and then bring my girlfriend from Germany. But when we got here the money was gone. The government had eaten it all and my hopes fell to the bottom of the sea,” said Cossa.

While the German government has records showing that the money was sent it appears the individual accounts were never set up by the government in Mozambique.

The Magermans also found it difficult to adjust to life back home.

“Our neighbours wore ragged clothes and we arrived dressed as gentleman. There were no televisions or videos in Mozambique. We brought them,” said Cossa.

Many also found their newly acquired skills were redundant. “A number of men had worked in car assembly plants, for Trabant, but when they arrived back in Mozambique there were hardly any cars and no car industry,” said Magalhães. With their ‘European ways’ they stood out from the crowd and it was then that they became known locally as the Magermans

Some of the workers did find jobs with one Magerman opening a string of successful bakeries across Maputo. Yet as the months passed the majority found themselves without work or money and within a year of their return they began to protest outside the Ministry of Labour.

“We were just asking for what was rightfully ours but the government sent armed police to deal with us,” recalled Magalhães. The protests have continued to this day with their case passing from one Ministry to another without resolution.

In 2002 official enquiries were made with the German authorities to see if there was a case to answer. A document, in possession of the Magermans, released by the German Federal Ministry of Finance, shows that 74.4-million dollars in salaries and 18.6-million dollars in social security were paid by the former GDR, figures which equate to approximately 5,000 dollars per worker. The Mozambican government accepted that a much smaller amount was owed and began to make payments of 10,000 t0 15,000 Meticais (or between 370 to 550 dollars) to some of the workers.

Over the years many of the men lost contact with the families they left behind. Now in their late twenties, some of the children have come to Mozambique looking for their fathers. ICMA is one of the places they contact first.

“We get emails from families almost every day. One girl came and found her father living in a hut made of mud bricks and palm leaves. She stayed there for a while and then took him back to Germany,” said Magalhães.

Cossa explained that the next step for the Magermans is a meeting with Prime Minister Aires Ali.

“We’ve made a formal request but nothing is scheduled. It may take a while to get it but we’ve already been waiting 22 years. What difference does a few months make? While we still have strength we will never give up.”