By Roberto Azevêdo
GENEVA, May 2 2015 (IPS)

Up to 80 percent of global trade is supported by some form of financing or credit insurance. Yet in many countries there is a lack of capacity in the financial sector to support trade, and also a lack of access to the international financial system. Therefore the ability of these countries to use simple instruments such as letters of credit is limited.

The impact of these limitations on a country’s trading potential can be very, very significant.

WTO Director-General Roberto Azevêdo. Credit: WTO/CC BY SA-2.0

After the financial crisis, the supply of trade finance has largely returned to normal levels in the major markets, but not everywhere and not for everyone.

The structural difficulties of poor countries in accessing trade finance have not disappeared – indeed the situation may well have declined due to the effects of the crisis.

There are indications that markets are even more selective now. Under increased regulatory scrutiny, many institutions have lowered their risk-appetites and are focusing more on their established customers. Some are deliberately decreasing their number of clients in a so-called “flight to quality”.

In this environment, the lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most.

I was particularly struck by the fact that the financing gaps are the highest in the poorest countries, notably in Africa and Asia. And I was struck by the size of those gaps.

A survey by the African Development Bank of 300 banks operating in 45 African countries found that the market for trade finance was somewhere between 330 and 350 billion dollars.

It also found that this could be markedly higher if a significant share of the financing requested by traders had not been rejected.“The lower end of the market has been struggling to obtain affordable finance, with the smaller companies in the smaller, less-developed countries affected the most”

Based on such rejections, the estimate for the value of unmet demand for trade finance in Africa is between 110 and 120 billion dollars.

This gap represents one-third of the existing market.

The main reasons for the rejection of requests for financing were:

• the lack of creditworthiness or poor credit history
• the insufficient limits granted by endorsing banks to local African issuing banks
• the small size of the balance sheets of African banks, and
• insufficient U.S. dollar liquidity

Some of these constraints are structural, and can only be addressed in the medium to long term. The retreat of global banks from Africa, and from other poor countries, is one such issue.

The Asian Development Bank conducted a similar survey in Asia, looking at countries like Viet Nam, Cambodia, Bangladesh, Pakistan and India.

According to preliminary estimates, the unmet demand there is around 800 billion dollars.

Small and medium-sized enterprises are the most credit-constrained as 50 percent of their requests for trade finance are estimated to be rejected. This is compared with just seven percent for multinational corporations.

Moreover, two-thirds of the companies surveyed reported that they did not seek alternatives for rejected transactions.

Therefore, these gaps may be exacerbated by a lack of awareness and familiarity among companies – particularly smaller ones – about the many options which exist.

A large majority of firms stated that they would benefit from greater financial education.

These findings are particularly striking as Africa and developing Asia are two areas of the world in which trade has grown fastest in the past decade.

But the potential evolution of new production networks is faster than the ability of the local financial sectors to support them.

In this way the lack of development of the financial sector can be a significant barrier to trade.

It can prevent developing countries from integrating into the trading system and accessing further trade opportunities.

And it can therefore prevent them from leveraging trade as a powerful source of development.

So we need to respond to this problem.

The exchanges that we have here can form part of this response. We need to join together in order to advocate action in this area and to devise practical solutions.

Of course, there is no magic bullet. This is a complex issue. However, that should not discourage our efforts.

The trade finance facilitation programmes that I outlined earlier are one example of practical action that we can take.

Of course this only fills part of the gap, so our response needs to be more fundamental.

In July this year, the United Nations’ major ‘Financing for Development’ conference will take place in Addis Ababa. And I think it is essential that we put trade finance on the agenda there.

In this way we can ensure that this issue is given its proper prominence in the development debate, especially at a time when the all-important U.N. Sustainable Development Goals are being finalised.

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 Martin Khor
GENEVA, Mar 6 2014 (IPS)

Several developing countries are now being engulfed in new economic crises as their currency and stock markets are experiencing sharp falls, and the end is not yet in sight.

The “sell-off” in emerging economies has also spilled over to the American and European stock markets, thus causing global turmoil.

Countries whose currencies were affected in the second half of January  include Argentina, Turkey, South Africa, Russia, Brazil and Chile.

A hike in interest rates by Turkey and South Africa has so far failed to stem the depreciation of their currencies.

An America market analyst termed it an “emerging market flu” and several global media reports tend to focus on weaknesses in individual developing countries.

However, the broad sell-off is a general response to the “tapering” of purchase of bonds by the U.S. Federal Reserve, which marks the slowdown of its easy-money policy that has been pumping many hundreds of billions of dollars into the banking system.

On Jan. 29, the Federal Reserve reduced its monthly asset purchase by another 10 billion dollars to 65 billion dollars, following the 10 billion reduction in December. It gave a new boost to the weakening of emerging market currencies.

A lot of the Federal Reserve money pumping had earlier been taken up by American investors and placed in emerging economies as they searched for higher yield.

With the tapering expected to raise yields in the U.S., money is flowing out from bonds and stocks in the emerging economies, putting pressure on their currencies. The capital flows have reversed direction.

The current “emerging markets sell-off” thus cannot be explained by ad hoc events. It is a predictable and even inevitable part of a boom-bust cycle in capital flows to and from the developing countries, which originates from the monetary policies of developed countries and the behaviour of their investment funds.

This cycle, which has been very destabilising to the developing economies, has been facilitated by the deregulation of financial markets and the liberalisation of capital flows which in the past had been carefully regulated.

This prompted massive and increasing bouts of speculative international flows by Western investment funds, motivated by the search for higher yields. Emerging economies, having higher economic growth and interest rates, attracted the investors.

Yilmaz Akyuz, chief economist at South Centre, analysed the most recent boom-bust cycles in his paper Waving or Drowning?

A boom of private capital flows to developing countries began in the early years of the 2000s  but came to an end with the flight to safety triggered by the Lehman collapse in September 2008. However, the flows recovered quickly. By 2010-12, net flows to Asia and Latin America exceeded the peaks reached before the crisis.

This recovery was largely caused by the easy-money policies and near zero interest rates in the U.S. and Europe.

In the U.S., the Federal Reserve pumped 85 billion dollars a month into the banking system by buying bonds. It was hoped the banks would lend this to businesses to generate recovery, but in fact investors placed much of the funds in the Western stock markets and in bonds and shares in developing countries.

The surge in capital inflows led to a strong recovery in currency, equity and bond markets of major developing countries. Some of these countries welcomed the new capital inflows and the boom in asset prices.

But others were upset that the inflows caused their currencies to appreciate (thus making their exports less competitive) and that the ultra-easy monetary policies of developed countries were part of a “currency war” to make the latter more competitive.

In 2013, the capital inflows into developing countries weakened due to the European crisis and the prospect of the Federal Reserve “tapering”.

This weakening took place at a bad time – just as many of the emerging economies saw their current account deficits widen. Thus, their need for foreign capital increased just as inflows became weaker and unstable.

In May-June 2013 there was a preview of the current sell-off when the Federal Reserve announced it could soon start “tapering”. This led to sudden sharp currency falls including in India and Indonesia.

However, the Federal Reserve  postponed the taper, but in December it finally announced  a reduction of its monthly bond purchase from 85 to 75 billion dollars, with more to come.

There was then no sudden sell off in emerging economies, as the markets had already anticipated it and the Federal Reserve also announced that interest rates would be kept at current low levels until the end of 2015.

By now, however, the investment mood had already turned against the emerging economies. Many of them were now termed “fragile”, especially those with current account deficits and dependent on capital inflows.

Many of the so-called fragile countries are in fact members of the BRICS (Brazil, Russia, India, China and South Africa) that had been viewed just a few years before as the most powerful emerging economies driving global growth.

In this atmosphere of deepening concerns, it just required a “trigger” to cause a simultaneous sell-off in currencies and markets of developing countries.

Several factors were to emerge which together constituted a trigger. These were a “flash” report indicating contraction of manufacturing in China; the sudden fall in the Argentinian peso; and expectations of further tapering by the Federal Reserve.

For two days (Jan. 23 and 24) the currencies and stock markets of several developing countries were in turmoil, which spilled over to the U.S. and European stock markets.

The turmoil continued into the following week, seeming to confirm investor disenchantment with emerging economies, and a reversal of capital flows.

The depreciation in currency and the capital outflows could put strains on the affected countries’ foreign reserves and weaken their balance of payments.

The accompanying fall in currency would have positive effects on export competitiveness, but negative impacts in accelerating inflation (as import prices go up) and debt servicing (as more local currency is needed to repay the same amount of debt denominated in foreign currencies).

Excerpt:

By Supachai Panitchpakdi
GENEVA, May 9 2013 (IPS)

The global repercussions of the 2007-2008 financial crisis are a stark reminder of the economic interdependence in our globalising world. No country was spared from the shock waves that originated in the financial systems of developed economies.

Supachai Panitchpakdi, secretary-general of the United Nations Conference on Trade and Development (UNCTAD). Credit: UNCTAD.

Transmitted through both trade and financial channels, they led to an economic slowdown in most countries, and even outright recessions in others.

These recent events call for a thorough examination of the different kinds of possible shocks to the external economic environment and the channels through which they spread. We also need to better understand the factors that determine countries’ vulnerability to such shocks, and how we can strengthen the resilience of different economies.

Perhaps the most obvious case of an external shock is that of a financial crisis, such as the Asian Financial Crisis initiated in the early summer of 1997, or the most recent global financial crisis.

These shocks have demonstrated that countries need to build resilience against the shortcomings of our international monetary and financial system. The most pertinent shortcoming is the failure to avoid a disorderly expansion of short-term capital movements, which have been a major factor in creating economic instability.

Partly as a result of the experiences of the Asian Financial Crisis, many developing countries have built up their resilience and are in a stronger position today to withstand shocks originating in international capital markets than in previous decades.

Lower debt-to-GDP ratios and improved debt management have been contributing factors in this resilience. But the most important factor in shielding these countries from the volatility of capital flows has likely been their accumulation of foreign exchange reserves.

However, reserve accumulation as an insurance against the instability of capital markets is a costly policy measure, and one that is always second best to multilateral measures to better regulate these markets.

Furthermore, not all countries have been able to build up such a “war chest”. Indeed, some countries are now left with little reserves to cope with future needs that may arise in international financial markets, making them more vulnerable to external shocks.

A second external shock that has recently affected many developing countries is the sharp slowdown in demand for their exports in the developed markets after the recent financial crisis.

In the decade preceding the crisis, many developing countries were able to benefit from a trade-led expansion, allowing them to achieve growth rates that were sometimes four or five percentage points higher than those of the developed world.

This resulted in a significant shift in the balance of the world economy, with developing countries accounting for a growing share of trade and growth, and led some pundits to argue that we were about to witness a “de-coupling”, which would see developing countries continue to grow despite the unsatisfactory performance of developed countries.

However, prospects in the developing world remain heavily influenced by the growth dynamism in the developed countries. To the extent that developing countries continue to rely on exports to developed countries as their key growth driver and have to cope with unfettered capital flows generating boom and bust cycles, their economies will remain vulnerable to shocks to their external economic environment.

Most forecasts predict that the current difficult external environment is likely to remain for the near future, with only a slow recovery towards a weak growth path in advanced economies.

This suggests that developing and transition economies will need to reduce their export orientation to developed economies if they want to continue to grow and increase their resilience to external economic shocks. Instead, they will need to rely more on domestic, regional and South-South trade. Thus they will need to adapt their development strategy in order to strengthen resilience.

On the other hand, coordinated measures at the multilateral level to expand global demand would be preferable. For example, increasing domestic demand in advanced countries with a current account surplus would stimulate global demand while helping to reduce global imbalances. This would be more appropriate than the current process of global rebalancing, which is being led by demand compression in deficit countries, accentuating the risks of a global economic downturn.

These are only two examples of significant external shocks that developing countries are vulnerable to. Identifying external shocks and mitigating their impact on trade and development requires the availability of statistical tools that capture the growing interdependence of national economies.

Among the many measures that are available, the terms of trade is a key indicator of the impact of external shocks, especially in countries with a high share of external trade relative to gross domestic product.

The United Nations Conference on Trade and Development (UNCTAD) has been particularly active in this area, pursuing the development of more disaggregated terms of trade figures by estimating the contribution of different product groups to changes in the terms of trade.

All these issues require the attention of policymakers, as a better understanding of the problems will help in finding solutions.

(END/COPYRIGHT IPS)

Excerpt:

Bulgarian prime minister Boiko Borisov of the ruling centre-right Citizens for the European Development of Bulgaria (GERB), announced his resignation Wednesday, following two weeks of sustained protests across the country which were sparked by rising electricity and heating costs.

Borisov, a populist politician whose party has been in power since 2009, announced his resignation to the parliament with the words, “It is the people who put us in power and we give it back to them today.”

“Most people see Borisov’s resignation as a way to desert the sinking ship of the Bulgarian state amidst the crisis previous cabinets started and he deepened,” writes Mariya Ivancheva, a Bulgarian sociologist from the Central European University.

The prime minister’s resignation could well be meant to prevent the further downfall of GERB, whose public support eroded during the years in government and which was expected to lose the upcoming July elections. Following the resignation, it is likely Bulgaria will see early elections, no sooner than mid-April.

Bulgarians were not appeased by the gesture: people continued taking to the streets after the announcement, and a big protest is scheduled to take place Sunday in Sofia.

Rising electricity and heating prices were what got the protests started: in this poorest of EU member states, salaries average 350 euros monthly and pensions 150 euros, while energy bills are around 100 euros and often higher.

In the weeks preceding these nation-wide street actions, isolated protests had occurred in various municipalities during which people gathered in front of the energy providers headquarters and burnt their monthly bills. Two men set themselves on fire in Varna and Veliko Tarnovo.

Unlike other Eastern European countries like Romania, Hungary or Latvia, Bulgaria started the economic crisis with a balanced budget and saw no pressure to contract a loan from the IMF and the EU; but poverty levels here are higher than in neighbouring countries, and people whose salaries and pensions were frozen by the Borisov government can hardly weather the rising costs brought by the economic crisis. Sudden increases in energy costs this winter worked as ‘the last straw’.

One of the main calls of the protesters has been for the re-nationalisation of the electricity distribution system, which was privatised in 2004, with three players currently controlling the market: Czechs from CEZ and Energo-Pro and Austrians from EVN. The three companies exercise regional monopolies over parts of the network.

In a series of interventions before resigning, Borisov promised to decrease electricity prices by 8 percent (without explaining how that would be possible) and to withdraw the licence of CEZ. He went on to fire several officials, including the finance minister.

The protesters did not respond positively to those announcements; instead, they gradually started taking issue with corruption and disrespect for the rule of law in the country, and ended up decrying the functioning of representative democracy in Bulgaria as a whole.

Coordinators of the demonstrations told Bulgarian media that demands of the protests include: the rewriting of the constitution with citizen involvement; reducing the number of parliamentarians and restricting their immunity; getting citizens involved in analysing how electricity and heating bills are calculated; and giving 50 percent of shares in the energy regulator to citizens so they can participate in the management of the electricity and heating companies.

“The main sentiment during all the protests has been a critique of representation and a call for direct democracy,” says Georgi Medarov from the New Left Perspectives magazine, who participated in some of the protests. “But a total unmediated direct democracy with 100 percent national unity against the foreign oppressors (represented by the foreign companies). There are voices calling for a reduction in the number of parliamentarians because they see the parliament as the main evil, as it is full of political parties which destroy national unity.”

While a nationalistic taint has been noted in the messages of the protesters, this comes more in the form of a strong desire for self-determination and a rally behind the notion of ‘Bulgarian people getting attacked from all sides’. Attempts by far-parties such as Ataka to appropriate the protests have failed, with participants rejecting association with any political faction.

The Bulgarian protests share many features with anti-austerity protests seen across Europe since the crisis began: they started from immediate economic woes (in Bulgaria, energy prices; in the case of very similar protests in Romania last year, the privatisation of the medical system; elsewhere, cuts in salaries and social benefits, or tax hikes); participation comes from all social categories, including a middle class that feels threatened by increasing economic instability; and one of the core messages is a deep criticism of the entire political class and a call for more citizen involvement in decision-making.

Like elsewhere, the heterogeneity of the protesters presents a challenge: with participants from the middle class to the very poor, including far right and far left groups, even seeing police trade unions joining the ranks – it is difficult for the movement to coalesce and present a series of targeted demands which could be pursued in a strategic manner.

Lack of experience with using protest as a democratic tool adds to that in Bulgaria: “Many of the protesters have a low level of political culture and they don’t have their own language in which to frame their problems,” Medarov tells IPS. In this, Bulgaria differs from places like Greece, Italy and Spain, in which an old protest tradition and repertoires can be resorted to.

“Broad frustrations are being expressed in these protests, and what makes things different this time around is that there is no light at the end of the tunnel,” says political scientist Ivelin Sardamov from the American University in Bulgaria. “My real worry is that not only the political class but also Bulgarian public institutions have been delegitimised beyond the point of no return.

“But Bulgarian protests may be a part of a bigger trend of anti-systemic protests worldwide,” Sardamov tells IPS. “The events and processes which have unfolded over the last few years are truly unprecedented, and I don’t think anyone knows where we are headed.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(END)

The economic recession in Spain is taking a toll on mental health. Credit: Photostock/IPS

By Inés Benítez
MÁLAGA, Spain, Aug 29 2012 (IPS)

Rising rates of depression and suicide are among the most obvious signs of the increase in mental illness resulting from the economic crisis in Spain.

“Between December 2011 and March or April 2012, the number of suicides presumably linked to economic problems has increased significantly,” a forensic investigator in the southern Spanish city of Málaga, who asked to remain anonymous, told Tierramérica*.

During the first months of 2012, two well-known businessmen were found burned to death in their own cars in seaside towns in the province of Málaga, and all of the evidence seems to suggest that they took their own lives after their businesses went bankrupt, said the investigator, who did not offer any further details.

Suicide is already the leading cause of violent death in Spain, ahead of motor vehicle accidents. The number of suicides did not grow significantly between 2007, prior to the crisis, and 2010, the last year for which official statistics are available.

In 2007, deaths by suicide numbered 3,263, divided between 2,463 men and 800 women, according to a report on fatalities by cause of death released by the National Statistics Institute (INE). In the following years, slight fluctuations were observed: 3,457 in 2008, 3,429 in 2009 and 3,158 in 2010.

Statistics on suicide are not generally made public, and emergency services do not report them to the media, although deaths from other causes do receive news coverage.

“In 95 percent of cases, journalists do not go to the scenes of suicides, but they do show up at the scenes of homicides or accidents,” the forensic specialist reported.

Journalist Gema Martínez, who works for a local daily newspaper, told Tierramérica that suicides are generally not treated as “news” in order to avoid the potential for “copycats”.

“A great deal of care is taken when it comes to information on suicides and, in fact, when it is known that a death is the result of self-harm, this is not reported. It is almost as if it were part of an unwritten code of ethics,” she said.

But the scope of the health problem represented by an increase in suicides for social and economic reasons should be addressed by the media, said Martínez.

As psychiatrist Concha López told Tierramérica, suicide is generally the end result of a combination of factors. “The crisis and economic problems are one more reason that has been added, but not the only one,” she stressed.

Nevertheless, the crisis is undoubtedly becoming an increasingly powerful factor.

Unemployment currently affects 24.6 percent of the country’s economically active population, and there are 1.5 million households in which every member of the family is out of work, according to the INE. Spain has a population of over 47 million.

In addition, Spaniards have endured successive cuts in basic health care and education services, undertaken by the government to reduce the public deficit to 6.3 percent of GDP by the end of the year, so as to meet its commitment to the European Commission.

López said her psychiatric practice is receiving increasingly more men and women suffering from the symptoms of depression after losing their jobs, as well as others who are still employed but are facing a deterioration in work conditions and enduring considerable hardships to keep their jobs at any cost.

These patients suffer from “sadness, insomnia, anxiety, panic attacks, feelings of guilt and suicidal thoughts,” reported López, who said there has been a sizeable increase in the number of unemployed people who are “seeking answers” in the offices of psychiatrists and psychologists.

“In Málaga, the hospital emergency wards admit two or three people who have attempted to kill themselves every day,” said López, who has worked for eight years at the Community Mental Health Unit in Fuengirola, a town in the province of Málaga.

More than 50 percent of young people in Spain are unemployed and, according to the United Nations Children’s Fund (UNICEF), one in every four children is poor.

The income gap between the rich and poor has grown more in Spain than in any other of the 27 countries of the European Union, according to the report “Exclusión y desarrollo social – Análisis y perspectivas 2012” (Exclusion and social development: Analysis and outlook 2012), published by the Catholic organisation Caritas in February. The report places the poverty rate in Spain at 21.8 percent.

Gaspar Llamazares, a medical doctor and deputy from the opposition Izquierda Unida (United Left) party, spoke in Congress in February about the “upsurge” in suicides and stated that “the only factor that can explain it is the crisis.” Those who take their own lives are “workers made desperate by the lack of social security coverage,” he added.

After visiting a number of pharmacies in Málaga, Tierramérica confirmed that the demand for anti-depressant medications is on the rise.

“Sales of anti-depressants have increased by around 10 percent,” said a pharmacy manager with more than a decade of experience in the field. “It has been very noticeable. More people are coming in with doctors’ prescriptions to purchase psychoactive drugs,” concurred a young pharmacist at another drugstore, where she has worked for a year and a half.

Spain is not alone in this epidemic of despair.

In Italy, the financial and economic crisis has contributed to higher rates of suicide and attempted suicide, according to the article “Excess Suicides and Attempted Suicides in Italy Attributable to the Great Recession”, published in August in the Journal of Epidemiology & Community Health.

The article reports on a grassroots protest movement of “widows of the crisis” in the northern Italian city of Bologna, the wives of businessmen, craftsmen and workers who have been driven to suicide by bankruptcy and overwhelming debts.

In Greece, where the suicide rate has always been low compared to the average in Europe, there has also been an upsurge in cases of people who have taken their own lives for reasons related to the crisis.

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

A crackdown on irregular migration has entered its fourth week in Greece. The government is shutting the Greek-Turkish northeastern border across river Evros, and removing massive numbers of undocumented migrants from big urban centres into makeshift detention camps.

On Aug. 2 police deployed 1,881 new police officers along the river Evros in an attempt to seal the border. Greek Police spokesman Christos Manouras told IPS that the deployment “has effectively stopped new arrivals…When we become aware through our infrared cameras or our patrols that someone attempts a crossing, police officers form a human shield against them and prevent them from entering.”

Meanwhile in Athens alone the police have apprehended 12,900 migrants and arrested 2,100 who resided in the country illegally. About 400 are kept in a new detention camp in Amugdaleza on the outskirts of Athens. The rest have been sent to two police academies turned into makeshift camps in Xanthi (500) and Komotini (800) in northern Greece.

Doctors Without Borders (MSF) members visited both these camps last week and described conditions as substandard. “Our team registered serious deficits regarding the infrastructure and conditions of detention, despite the obvious efforts of authorities to improve the situation,” director general of MSF Reveka Papadopoulou told IPS.

“We will monitor the situation further but we will not get involved in a way that will prevent the government from dealing with responsibilities that occur from a political choice of implementing a policy of large-scale detentions.”

Authorities do not allow journalists to visit detention camps, and access to the border is limited in coordination with the Greek Border Guard.

The European Commission has not ruled out financing for such measures. The Commission “organises regularly technical missions on the ground to discuss with the Greek authorities eligibility of actions under the EU co-financed programmes,” the Commission told IPS by email, referring to a Commission mission to the border.

Last week authorities opened a makeshift camp at the site of old military barracks in Korinthos, 75 km south of Athens, that can host another 2,000 detainees. Currently 400 people are detained there.

“Detentions will last for up to one year” as authorities try to send people back to their countries of origin, Manouras said. “Many of them could opt to return through the programme we implement together with the International Organisation for Migration (IOM).”

Co-financed by Greece and the European Union Returns Fund, the programme has already sent 5,000 people back. At the end of July IOM and Greece signed a 10 million euro 12-month agreement that will offer assisted voluntary return to countries of origin for some 7,000 irregular migrants.

Since 2005 Greece has become the main influx point for undocumented migrants, with more than 80 percent entering Europe coming from Turkey through the Aegean Sea or the Northeast mainland boundary of the river Evros.

The vast majority of these migrants hope to move towards Northern Europe. However, the distance to other European countries as well as clauses in the Dublin II regulation that dictates the return of asylum seekers to the European country they first entered, have effectively condemned scores of immigrants to remain stuck in limbo in Greece.

This has transformed the country, and Athens in particular, into a depot of hundreds of thousands of irregular immigrants and asylum seekers, who survive on below-subsistence incomes in a vast black market.

The new migration policy of the coalition government of the right-wing New Democracy, the technocrat PASOK and moderate leftist DEMAR is being implemented at a time when many international organisations are expressing concern about the failure of authorities to protect the human rights of migrants and asylum seekers, and to offer them protection from a rising tide of racist attacks.

The policy is being implemented in the midst of an economic crisis. Since 2009 debt insolvency has translated into a full-blown economic crisis for Greece, and driven the country into borrowing heavily in order to avoid disorderly default. The country is undergoing a fourth consecutive year of recession, with unemployment climbing to 29 percent.

In the economic collapse, xenophobic sentiment has swept through society. Racist attacks have increased on the streets of Athens and are spreading fast throughout the country.

On Jul. 23 the rape and attempted murder of a 15-year-old girl on the island Paros by an irregular Pakistani worker outraged the public. In a wave of attacks against foreigners that followed the event, an Iraqi migrant was beaten and stabbed to death by five hooded youngsters Aug. 12.

“You know this might happen to you every time you go out of the house,” asylum seeker Ramadan Sah who fled the Taliban in Afghanistan tells IPS in fluent Greek. “One might stop you and ask you where are you from. And then many more appear and attack you. It is really dangerous out there.”

Sah has been stuck in the asylum system for more than a decade. A couple of months ago the appeals committee reviewed his application. He is about to finish a degree in political science, but he faces renewed fears.

“It’s like when we hid in houses to escape the Taliban. Then they called us leftist, now we are the foreigners.”