This G20 ministerial meeting, held in Rio de Janeiro on February 28 this year, discussed the global energy transition, with biofuels as a central issue. Credit: Paulo Pinto / Agência Brasil

By Mario Osava
RIO DE JANEIRO, Nov 5 2024 (IPS)

Holding this year’s presidency of the Group of 20 (G20) large industrial and emerging economies is allowing Brazil to push forward the dream of creating a global biofuels market without the current trade barriers.

Brazil is trying, at least since the beginning of this century, to free up global trade in ethanol, but so far without success. The scenario is more favourable now, with the worsening of the climate crisis and other countries joining the production and consumption of bioenergy.

Presiding the G20 this year, Brazil is in charge of the issues and projects to be discussed, creating working groups and promoting agreements, which will crystallise at the group’s annual summit to be held on 18-19 November in Rio de Janeiro.“There is a conflict of interests, of split personality. If Brazil wants to lead in biofuels, it must rule out new oil exploration”: Pedro de Camargo Neto.

Luiz Inácio Lula da Silva’s government has promoted social issues and included biofuels as a central aspect of the energy transition. Several of its proposals were approved in sectoral working groups or meetings of ministers, experts and civil society throughout 2024.

“The current context, driven by Brazil’s more active leadership in the G20 and regulatory progress on alternative fuels, offers a more optimistic outlook for the country’s success in expanding its biofuels market,” summarised Rafaela Guedes, senior fellow at the Brazilian Centre for International Relations (Cebri).

“The focus is no longer limited to ethanol,” she said in an interview with IPS in Rio de Janeiro. New products, such as sustainable aviation fuel (SAF) and bio-bunker for maritime transport, open up multiple markets and reduce the risk of dominant suppliers.

These are joined by biodiesel and green diesel, both derived from animal and vegetable inputs but different in their production process and properties, the latter being chemically identical to fossil diesel.

Then there is ethanol, already produced on a large scale, and biomethane, equivalent to natural gas and the product of refining biogas extracted from animal manure, and agricultural, urban and industrial waste.

All these products gained new regulations and incentives in Brazil through the so-called Future Fuels Law, passed by the legislative National Congress in September and effective from 8 October 2024.

The new legislation should attract investment and reduce trade barriers by defining rules and standards in a country that leads biofuel production and presents itself as “a supplier and also a strategic partner for innovation and energy security”, said Guedes, an economist specialising in energy transition.

The biogas and biomethane plant of Cocal, a company that produces ethanol and sugar from sugarcane and biogas, biomethane and other derivatives from waste, in Narandiba, in the southern Brazilian state of São Paulo. Credit: Mario Osava / IPS

Fear of dependence

Ethanol thrived as a free trade fuel partly out of fear of being held hostage by a few producers. Brazil and the US account for around 80% of its global production, with 35.4 billion litres and 58 billion litres respectively in 2023.

Brazil tried to encourage production in countries with high production or potential for increased sugar cane planting, such as India, Cuba and Mexico, in order to lower barriers to international ethanol trade.

In addition to the fear of dependency, environmental and food security concerns remain another stumbling block. It is argued, especially in Europe, that bioenergy takes land away from food production.

That was the claim of Cuba, which until the 1980s was the world’s largest exporter of sugar, but whose sugar cane production subsequently fell to the point where it is now practically limited to supplying the domestic market of 10 million inhabitants, who are suffering from a severe energy crisis.

But now India, previously reluctant, has joined ethanol production, as have other countries, since its consumption, blended with gasoline, has spread to more than 70 countries. Investment in biofuels has increased in order to reduce greenhouse gas emissions.

“This diversification of producers reduces the possibility of monopolies” and thus the fears of dependency, according to Guedes, who says growth in the production capacity of emerging countries and the consequent expansion of global supply are favourable factors for a freer global market for biofuels.

“India has invested heavily in biofuels in its energy security and emissions reduction strategy. Its policies of using agricultural waste to produce ethanol and biodiesel contribute to increasing its productive capacity, as a potential exporter in the medium term,” she cited as an example.

Other Asian and Latin American countries are using their abundant biomass and organic waste resources to produce bioenergy, biomethane and green diesel, in what represents another model.

Rafaela Guedes, an economist specialized in energy transition, believes conditions are favourable for the creation of an international biofuels market, as Brazil desires. Credit: Cebri

Inputs are waste, not food

Restrictions based on food security were also relaxed because biofuels are largely made from waste, whether agricultural, urban or industrial.

Second-generation (2G) ethanol, made from waste such as bagasse, is another solution. The United States and Brazil have plants producing it, which are set for rapid expansion.

In Brazil, Raizen, a large sugar and bioenergy producer with the participation of the British oil consortium Shell, has been operating its first 2G ethanol plants since 2015 and estimates that this technology can produce 50% more ethanol than a similar area planted with sugarcane.

Guedes also adds that the International Energy Agency has defined sustainable agricultural practices, such as crop-livestock-forest integration, which is expanding in Brazil, traceability in production chains and criteria for defining sustainable energy, which strengthen confidence in biofuels that benefit the climate.

These are policies that promote so-called low-carbon agriculture, preserve soil quality and ensure that Brazil’s agricultural frontiers can expand sustainably and without affecting food security, she said.

Ambiguity

But Brazil’s decision to promote biofuels, even internationally, causes bewilderment according to Pedro de Camargo Neto, a cattle rancher who leads a movement of agribusiness, that of large farmers, that seeks to reconcile his sector with environmentalism, after decades of stubborn antagonism.

President Luiz Inácio Lula da Silva (center) visited Raizen’s bioenergy park in Guariba, a sugarcane-producing municipality located 340 kilometers from São Paulo in southern Brazil, in May. Credit: Ricardo Stuckert / PR

“There is a conflict of interests, of split personality. If Brazil wants to lead in biofuels, it must rule out new oil exploration,” he told IPS by telephone from Bandeirantes, a municipality in the central-western state of Mato Grosso do Sul, where he has a farm.

He criticizes the intention of Petrobras, the national oil company, to drill near the mouth of the Amazon River in search of oil deposits.

Large oil deposits are believed to exist in the Equatorial Margin in northern Brazil, an extension of the sea basin that already produces oil in Guyana and Suriname.

New and abundant stocks would make oil and gas cheaper, to the detriment of biofuels, argued Camargo, who has previously chaired the Brazilian Rural Society, a key farmers’ group, and held top positions in the agriculture ministry.

“Brazil does not know what it wants,” he said.

This is because it promotes a free and global market for biofuels, for economic and environmental reasons, and at the same time wants to become an oil producer, to the detriment of the climate and its own strategy.

The country currently ranks eighth in the world in oil production, with 4.3 million barrels (each holding 159 litres) per day on average in 2023.

The country should advocate international measures to make fossil fuels more expensive. This would enable a biofuels boom everywhere, with increased investment in a market in which Brazil is already a leader. Europe has already taken steps in this direction, Camargo said.

Oil exploration near the mouth of the Amazon is blocked by demands from the Brazilian Institute of Environment and Renewable Natural Resources, which considered Petrobras’ evaluations and guarantees insufficient.

An authorisation or denial of exploratory drilling will be ‘technical’, based on local environmental impacts, according to Environment Minister Marina Silva.

This is a mistake, according to Camargo, who calls for a broader assessment, not because of the local consequences, but due to the global climatic effects, i.e. greenhouse gas emissions, and because of the economic strategy of prioritising biofuels, which also favours the country’s foreign policy.

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

By Humberto Márquez
CARACAS, Jun 27 2024 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

The very rich pay very little

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

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

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

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

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

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

How to do it?

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

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

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

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

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

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

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

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

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

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

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

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

Despite unprecedented challenges, 2022 also opened windows of opportunity to move the needle around critical anti-corruption issues, such as anti-money laundering, asset recovery, beneficial ownership, and renewable energy. Credit: Shutterstock.

By Sanjeeta Pant
Sanjeeta Pant, Jan 25 2023 (IPS)

The G20 India Presidency is marked by unprecedented geopolitical, environmental, and economic crises. Rising inflation threatens to erase decades of economic development and push more people into poverty. Violent extremism is also on the rise as a result of increasing global inequality, and the rule of law is in decline everywhere. All of these challenges impact the G20’s goal of realizing a faster and more equitable post-pandemic economic recovery.

But as India prioritizes its agenda for 2023, it is corruption that is at the heart of all of these other problems- and which poses the greatest threat to worldwide peace and prosperity.

An Idea Whose Time Has Come

Although the G20 has repeatedly committed to the Financial Action Task Force's (FATF) anti-money laundering standards, member countries have been slow to implement policy reforms

Despite unprecedented challenges, 2022 also opened windows of opportunity to move the needle around critical anti-corruption issues, such as anti-money laundering, asset recovery, beneficial ownership, and renewable energy. When global leaders meet during the G20 Indian Presidency , they must prioritize and build on this progress, rather than make new commitments around these issues that they then fail to implement.

According to the UN, an estimated 2-5% of global GDP, or up to $2 trillion, is laundered annually. Although the G20 has repeatedly committed to the Financial Action Task Force’s (FATF) anti-money laundering standards, member countries have been slow to implement policy reforms. In the wake of the Russian invasion of Ukraine and ineffective economic sanctions against Russian oligarchs, governments have started reexamining existing policy and institutional gaps, especially recognizing the role of Designated Non-Financial Businesses and Professions (DNFBPs), also known as “gatekeepers.”

G20 member countries are responding to concerns and criticisms from their national counterparts regarding failures to adopt FATF recommendations and clamp down on “dirty money.” Grappling with the need to be able to prosecute money-laundering cases and recover billions of dollars worth of frozen assets, they are also amending national laws to be able to do so.

Lack of beneficial ownership transparency is also aiding the flow of laundered money globally. The G20 recognizes beneficial ownership data as an effective instrument to fight financial crime and “protect the integrity and transparency of the global financial system.”

The Russian invasion helped drive home this message, especially among countries that are popular destinations for those buying luxury goods and assets. FATF’s amendment of its beneficial ownership recommendations in early 2022 was timely. Member countries are also introducing new reporting rules, and fast-tracking policies and processes to set up beneficial ownership registers. While there are still gaps in the proposed policies – as identified here– these are important first steps.

Similarly, the transition to renewable energy, initially raised as an environmental issue and then as a national security concern is increasingly gaining attention from a resource governance perspective. Given the scale of the potential investment, there is a need to tackle corruption in the energy sector to avoid potential pitfalls resulting from a lack of open and accountable systems as we transition to a net zero economy.

The cross-cutting nature of the industry means a wide range of issues– from procurement and conflict of interest in the public sector to beneficial ownership transparency- need to be considered. The global energy crisis and the Indonesian Presidency’s prioritization of the issue have helped build momentum around corruption in the renewable energy transition, and this focus must continue.

Calling on India

Corruption-related issues identified here are transnational in nature and have global implications, including for India. For instance, with money laundering cases rising in India, it cannot afford to regard it as a problem limited to safe havens like the UK or the US. The same is true for the lack of beneficial ownership transparency or corruption in the renewable energy transition, which fuels illicit financial networks in India and beyond, and which often transcend national borders.

Finally, corruption has a disproportionate impact on the global poor. Almost 10% of the global population lives in extreme poverty, many of whom live in countries such as India. The G20, under the Indian Presidency, provides a unique opportunity to ensure the voices of the most vulnerable are heard at the global level. By prioritizing the anti-corruption agenda and building on past priority issues and commitments, the Indian government can lead efforts to bridge the North-South divide.

Sanjeeta Pant is Programs and Learning Manager at Accountability Lab. Follow the Lab on Twitter @accountlab

Many of the global crises we face are caused or exacerbated by corruption. Credit: Ashwath Hedge/Wikimedia Commons

By Blair Glencorse and Sanjeeta Pant
WASHINGTON DC, Sep 27 2022 (IPS)

As global crises mount, the G20 is proving unable to find solutions. Political disagreements within the bloc- including most prominently with Russia over the ongoing war in Ukraine- have hamstrung collective efforts.

Economic challenges have inevitably led to a focus on domestic priorities. And significant political changes in key G20 countries over the past few months- such as the UK and Italy- have further undermined joint decision-making.

Equally, on corruption issues, the G20 has a long way go, although the body continues to reiterate its commitment fighting graft and leading by example on core issues such as the role of audit institutions, anti-corruption education, money laundering and graft in the renewable energy sector.

The G20 Anti-Corruption Working Group (ACWG) meets for the final time under the Indonesian Presidency this week- and while there remains plenty to do, there are also glimmers of hope for the future, as India takes on leadership of the G20 for 2023.

It is easy to get disheartened about the continued ubiquity of corruption- but beyond the headlines and if we pay attention to the small print, there is some important progress being made

To better understand the progress made, Accountability Lab, as one of the international Co-Chairs of the C20 Anti-Corruption Working Group (ACWG), has partnered with the Royal United Services Institute (RUSI) to distill complex and scattered information on anti-corruption within G20 countries (often buried in lengthy reports, as we’ve highlighted previously) into a set of easy-to-understand one-pagers. Each of these (see Australia here or South Africa here for example) outlines for each of the member countries the progress made against key priorities, with the goal of encouraging sharing of ideas and learning within the G20.

Here is what we found:

Enhancing the role of audit in tackling corruption

The G20 ACWG recognizes the important role of audit in preventing corruption in both the public and private sectors, and member countries have institutions and systems in place to deter corruption.

For instance, 17 out of the 19 G20 member countries (the 20th is the EU) score over a global average of 63 on the International Budget Partnership’s metric for oversight by supreme audit institutions. Brazil has received a great deal of scrutiny in recent years because of corruption, but Brazil’s Tribunal de Contas da Uniao (TCU) is cited as an example for its innovative use of data analytics and artificial intelligence including identifying indicators of corruption.

Member countries are also improving existing laws, with Japan proposing to reform its audit law to provide more enforcement power to the Japanese Institute of Certified Public Accountants and improve oversight of listed companies.

Promoting public participation and anti-corruption education

Most G20 member countries have policies guaranteeing the right to participation through specific laws such as the right to information, public information disclosure or public procurement, to name a few.

In India, the Pre-legislative Consultation Policy was passed recently to ensure public participation in policy-making processes, and government as well as civil society platforms are available to promote public education, including on corruption issues.

Similarly, South Korea’s Public-Private Consultative Council for Transparent Society under the Anti-Corruption and Civil Rights Commission provides a platform to inform and disseminate anti-corruption messages. South Korea also aims to strengthen civic space and public participation including through a national Participatory Budgeting Citizens’ Committee.

In Australia a public-private partnership (Bribery Prevention Network) launched in October 2020 bringing together the private sector, civil society, government and academia to provide free resources to help corporates implement anti-bribery programmes, and was runner up in the Anti Corruption Collective Action Awards 2022.

Professional enablers of money laundering

The G20 acknowledges gaps in member countries’ anti-money laundering efforts, particularly related to preventive measures targeting professional enablers, including accountants, lawyers, or real estate agents- and is aiming to pull together guidance on these issues through a Compendium for Professional Enablers of Money Laundering.

While most countries do not have a comprehensive definition of Designated Non-Financial Business Professionals (DNFBPs), Indonesia, Japan, Mexico, and Saudi Arabia comply with the 2012 Financial Action Task Force (FATF) standards on the definition. The 2021 follow-up review from FATF noted that the revisions to China’s anti-money laundering law will include general provisions and supervision of DNFPBs.

In the US, if the ENABLERS Act– which was approved by the House of Representatives in July 2022– is passed by the Senate, it could regulate professional enablers; and in the UK, lack of supervision of enablers is being acknowledged by the government as it looks at different models to strengthen the supervision of accountants and lawyers.

Promoting corruption in the renewable energy sector

The G20 is working on a background note on Promoting Anti-Corruption in Renewable Energy in order to raise awareness and increase collaboration to prevent corruption in the energy sector. In 2022, Argentina launched an open information system (SIACAM) which provides public access to data on mining activities in the country, including their environmental and socio-economic impacts.

The Resource Governance Index notes that Argentina is one of only 7 countries that has made this type of data available. Similarly in Mexico, progress has been made with the publication of all oil procurement contracts on the state-owned website oil company, Pemex.

Japan’s cooperation agreement with India and the European Union to share experiences and best practices on liquid natural gas is cited as an example to follow by the International Energy Agency.

It is easy to get disheartened about the continued ubiquity of corruption- but beyond the headlines and if we pay attention to the small print, there is some important progress being made.

With the G20, the key now- as India assumes leadership of group- is for member countries to double down on their commitments and follow-through on implementation of reforms. Many of the global crises we face are caused or exacerbated by corruption- now is the time for our leaders to get this right.

Blair Glencorse is Executive Director of Accountability Lab; Sanjeeta Pant is of Accountability Lab. This piece draws on research carried out with RUSI. Follow the Lab on Twitter @accountlab

More than 1.3 billion tons of edible food is wasted annually, according the Food and Agriculture Organization. Credit: Busani Bafana / IPS

By Busani Bafana
BULAWAYO, Zimbabwe, Jul 15 2021 (IPS)

With its political and economic clout, the G20 should lead in delivering sustainable food systems as the world grapples with rising hunger, malnutrition and inequality.

That was the consensus of leading food and development leaders at a virtual conference on Fixing Food 2021: An opportunity for G20 countries to lead the way, hosted this week by Barilla Center for Food and Nutrition Foundation (BCFN) and the Economic Intelligence Unit.

The conference coincided with the launch of a new Food Sustainability Index (FSI) related to G20 countries, a collective of powerful economies.

The 2021 FSI measures the sustainability of food systems in 78 countries across the pillars of food loss and waste, sustainable agriculture and nutrition. Food systems include the whole range of actors in the agriculture sector and their interlinked value-added activities, including production, processing, distribution, consumption and disposal of food products from agriculture, forestry or fisheries.

The G20 is a forum of 19 countries and the European Union bringing together leading economies whose members account for 80 percent of the global GDP and have 60 percent of the world’s population. They sit on 60 percent of agricultural land worldwide and are responsible for 75 percent of Green House Gas Emissions (GHG) that the Paris Agreement allocates to food production, thus risking the global climate agenda.

While it has the financial and political muscle in influencing global policymaking, the G20 group needs to lead the way in making food systems more sustainable owing to its big environmental footprint, the FSI noted.

“On a per-head basis, people living in the G20 consume three to five times the maximum optimal intake of 28g of meat per day and wasted 2,166kg of food in 2019 —which is greater than the weight of the average large car,” the report found.

It cautioned that “if all non-G20 countries adopted the food habits of G20 members, there would be not just higher environmental costs, but higher health costs too.”

The G20 has prioritised food sustainability and recently committed to addressing food and nutrition security at the recently opted Matera Declaration.

Italy, which takes over the Presidency of the group at its Summit in October 2021, is focusing efforts on people, the planet, and prosperity when the world is grappling with increased hunger and malnourishment. The G20 has an enormous challenge to help transform food systems in achieving the SDGs, especially SDG 1 of ending poverty by 2030.

Marta Antonelli, Head of Research, BCFN, said G20 countries have a strong responsibility to create the conditions for more equitable and sustainable food systems.

“G20 members’ actions, both domestically and globally, are critical for promoting sustainable growth in food and agriculture, fostering better nutrition, and building the world back better and more equitably,” Antonelli told IPS.

“We need the G20 to lead, to set forth a coordinated action agenda that builds upon a common sense of purpose for food system transformation that paves the way and inspires to new policies and approaches at the regional, national and local level.”

“We are at a crossroads that requires immediate action,” said Antonelli highlighting that the G20 can provide collective and coordinated leadership to tackle current food crises, boost investments in the transition towards more sustainable food systems.

The countries that performed well on the three pillars of the Index include Canada, Japan, Australia and Germany and France because of their robust policy responses. For example, Canada has strong national policies on food loss and waste and sustainable agriculture. Furthermore, most of the countries in the group have targets on addressing food loss and waste the need to improve on measuring it.

“Measuring is hard though and more needs to be done by countries to report levels of food loss and waste,” commented Diana Hindle Fisher, a Senior Analyst at EIU, calling for countries to adopt a target-measure-act approach on food loss and waste.

Policymakers are strategic in helping assess data on food loss and waste and developing binding legislation to commit to set targets. At the same time, the business community could form new schemes to reduce food loss and waste.

Fisher said that civil society could promote positive behaviour and launch information campaigns on reducing food loss and waste.

Barbara Buchner, Global Managing Director at the Climate Policy Initiative, noted that while all the countries had made progress on the three pillars of the Index, there was room for improvement through investment in climate action awareness and plugging knowledge gaps that hinder governments from making efficient policy decisions.

“There is a tremendous opportunity for the G20 not only to lead by example but to learn from and listen to the experiences of farmers and food eaters from the global south,” said Danielle Nierenberg, President and Founder of the Food Tank who commended the FSI for including new indicators on food availability and gender equality.

“The role of women in agriculture is important,” Nierenberg observed. “It is no secret that women are agriculture leaders, making up more than 40 percent of the agriculture labour force, and in many countries, they are the majority of farmers, Nierenberg said.

“Unfortunately, women are discriminated against and do not have access to the same resources male farmers have, including access to land, banking and financial services.”

The State of Food Security and Nutrition in the World report of the UN Food and Agriculture Organisation (FAO) laments that the world is not on track to achieve targets for any of the nutrition indicators in the SDGs by 2030.

More than 800 million people in the world faced hunger in 2020, 161 million more than in 2019, while nearly 2.3 billion others did not have adequate food in the same period, according to the FAO.

“Against this backdrop, the G20 group has the resources, power and influence to unlock the necessary transformation in food systems by providing real leadership and inspire action not only domestically but internationally,” Antonelli said.
Painting a bleak picture of global hunger exacerbated by the COVID 19 pandemic, the report said the pandemic had exposed the fragility of global food systems, but there was an opportunity to build forward better and get on track towards achieving SDG 2 of ending hunger.

“We are aware that transforming food systems so that they provide nutritious and affordable food for all and become more efficient, resilient, inclusive and sustainable has several entry points and can contribute to progress across the SDGs,” Qu Dongyu, FAO Director-General, Gilbert F Houngbo, IFAD President, Henrietta H Fore, UNICEF Executive Director, David Beasley WFP Executive Director and Tedros Adhanom Ghebreyesus WHO Director-General, said a joint foreword to the report.

“Future food systems need to provide decent livelihoods for the people who work within them, in particular for small-scale producers in developing countries – the people who harvest, process, package, transport and market our food,” said the report.

It concluded that transformed food systems could become a powerful driving force towards ending hunger, food insecurity and malnutrition.

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Oil pump jack pumping crude out of the ground in Neuquen, Argentina (Image Alamy/Diálogo Chino)

By Fermín Koop
BUENOS AIRES, Nov 26 2020 (IPS)

As the world’s leading economies direct trillions of dollars towards Covid-19 recovery packages, a significant proportion is going to fossil fuel industries without climate stipulations, according to the 2020 edition of the Climate Transparency Report – which has assessed the climate performance of G20 countries.

Up until the middle of October, the G20 spent US$393 billion on support to the energy sector, with 53.5% going to fossil fuels ($175 billion to oil and gas, and $16.2 billion to coal). Of this, 86% has been provided without conditions for improved environmental action or performance.

The report shows that at least 19 of the G20 countries have provided financial support to their domestic oil, coal and gas sectors, including Argentina, Brazil and Mexico. If they continue along this path, governments risk reversing, instead of locking in, positive pre-Covid trends such as a stable expansion of renewable energy.

At least 19 of the G20 countries have provided financial support to their domestic oil, coal and gas sectors, including Argentina, Brazil and Mexico

“The recovery packages can solve the climate crisis or make it worse,” says Charlene Watson of the Overseas Development Institute. “Some G20 members like the EU, France, or Germany are setting mostly a good example. Others direct too much support to fossil fuels, putting at risk positive recent developments.”

G20 economies represent more than 80% of global GDP and three-quarters of global trade. The group is also responsible for 75% of global emissions and therefore has a major role in fulfilling the goal of the Paris Agreement to avoid a temperature increase of more than 2C, or ideally 1.5C, above the pre-industrial norm.

However, existing G20 commitments are insufficient to accomplish that goal, and would lead the world to a temperature 2.7C higher by the end of the century, according to the report. Countries are expected to update their climate pledges in 2020 and 2021 ahead of the COP26 climate summit.

Challenging previous progress

Before the Covid-19 pandemic, the results of climate action in G20 countries were becoming visible in key areas. Energy-related CO2 emissions decreased by 0.1% in 2019 – a remarkable departure from the 1.9% increase in 2018 and a longer-term annual average growth rate of 1.4% between 2005 and 2017.

This was largely due to the expansion of renewable energy. The share of renewables in power generation increased in 19 of the G20 countries last year, accounting for 27% of power generation in the group. It’s projected to continue increasing in all G20 countries and to make up almost 28% of the power generation this year.

“Before the pandemic hit, results of climate action were coming to fruition in some energy-related sectors and the crisis consolidated those trends in the majority of the G20 countries,” said Jorge Villarreal of Iniciativa Climática de México. “But without further climate action, these effects will be temporary.”

Looking back on 2019, the report notes that despite a decrease in coal consumption, fossil fuels still accounted for 81.5% of primary energy supply, because of increases in oil (+1%) and gas (+3%) consumption. Also in 2019, countries provided US$130 billion in subsidies to fossil fuels, up from US$117 billion in 2018, despite their goal to eliminate them.

Progress in the transport, building and industrial sectors is also lagging and many G20 members are still losing tree cover, diminishing critical carbon sinks. CO2 emissions from the transport sector grew by 1.5%, followed by a 1.2% increase in the industry sector and a 0.9% growth in the building sector.

No G20 countries have targets for reaching zero deforestation in the 2020s, which would be needed to meet the Paris Agreement 1.5C goal. Although China, the EU and Mexico have targets for net-zero deforestation for further down the line. This is especially worrying in Latin America, considering the forest fires and illegal logging in Argentina and Brazil.

The scenario for Latin America

G20 members Brazil, Argentina and Mexico were found to be off-track to meet the 1.5C goal. Argentina is the only one of the three to emit more than the G20 average, having increased its emissions 35% since 1990.

Amid the pandemic, Brazil has provided economic support to the industrial and transport sectors without attaching any environmental conditions. Meanwhile, deregulation in land use in the Amazon is likely to increase logging, mining, agriculture and forestry activities, leading to further deforestation.

The Bolsonaro administration cut the budget for key forest protection monitoring and enforcement and has rolled back numerous environmental protection policies. Rates of illegal deforestation are continuing to rise, with over a third of deforestation in 2019 taking place on public lands.

“From 2012 to 2019 the level of deforestation in Brazil grew by 122%. If deforestation gets out of control, NDC goals won’t be met. The country should urgently reinstate and strengthen policies on monitoring and preventing illegal deforestation,” said William Willis, from CentroClima NGO in Brazil.

In Mexico, a large proportion of the stimulus package has been directed towards infrastructure investments, including a flagship oil refinery and airport expansion, plus tax breaks for Pemex, Mexico’s state-owned oil company. Furthermore, barriers were placed to the wind and solar energy dispatch, prioritising oil-fired power plants.

The country called oil a strategic resource and seeks to increase its use for electricity generation, increasing investment in fossil fuel exploration and extraction. Instead it should reopen further renewable energy auctioning rounds, the report argued.

There is a similar scenario in Argentina. During the pandemic, the Fernández administration introduced measures to increase commodity exports and fossil fuels. The government artificially fixed the domestic oil barrel price to offset the sharp fall in international oil prices.

Fossil fuels still make up 86% of Argentina’s energy mix. Despite the increase in renewable energy over the last two decades, the carbon intensity of the energy mix has barely changed. The share of fossil fuels in the global primary 1.5C energy mix needs to fall to 67% by 2030 and to 33% by 2050.

“The government didn’t introduce any ‘green’ measures in its recovery stimulus plans. On the contrary, it continues to strongly subsidise fossil fuels, such as gas. In order to ensure a sustainable recovery, the focus needs to be put on green energy infrastructure,” said Enrique Maurtua Konstantinidis, senior adviser on climate change at FARN, an Argentine NGO.

Looking ahead

There is growing recognition that a fundamental, structural shift is required among G20 countries, the report argued. As such, in 2019 and 2020 many countries have started to set net-zero emissions goals to decarbonize their economies by mid-century, with likely more to come over the next few months.

In June 2019, France and the UK set net-zero targets for 2050, and by the end of the year, the EU and Germany had made similar announcements. In 2020, Canada, China, South Africa, South Korea, and Japan joined in, with China aiming to be carbon-neutral before 2060. Cities and companies in G20 countries have announced similar goals.

Representatives from G20 countries met virtually on Friday and Saturday, November 20-21 for the bloc’s annual summit under the presidency of Saudi Arabia. It will be largely focused on addressing the implications of the coronavirus pandemic, future health care plans and steps for reviving the global economy.

“We urgently need more ambition and leadership from the world’s biggest economies – and emitters – at the upcoming G20 Summit and next year’s UN Climate Conference” said Catrina Godinho from the Humboldt-Viadrina Governance Platform. “The US election result offers some hope for international climate politics.”

This article was originally published by Dialogo Chino

The G20 leaders meeting in Hamburg, Germany, on 7-8 July comes almost a decade after the grouping’s elevation to meeting at the heads of state/government level. Previously, the G20 had been an informal forum of finance ministers and central bank governors from advanced and emerging economies created in 1999 following the 1997-1998 Asian financial crisis.

Anis Chowdhury

The new grouping’s record in steering the global economy since the first summit in Washington, DC in November 2008 after the global financial crisis (GFC) was acknowledged by financial markets to have begun a couple of months before.

London Summit’s high point
At the following April 2009 London Summit, hosted by Gordon Brown, the G20 leaders demonstrated unprecedented solidarity in confronting the global meltdown with financial packages for the IMF, World Bank and others worth USD1.1 trillion. The London financial package included USD250 billion to help developing countries secure trade finance in the face of financial uncertainty.

These measures succeeded in turning the tide, with world economic growth recovering robustly from minus 2.1% in 2009 to plus 4.1% in 2010, exceeding the pre-crisis 2007 level of 3.8%. G20 boosters are inclined to claim that the London Summit pulled the global economy from the cusp of the first post-Second World War “great depression”.

However, there has been little evidence of how the funds may have saved the world economy. There has been modest trade growth since 2008 — after earlier sustained trade expansion — as most G20 member countries introduced essentially ‘protectionist’ trade measures despite their declared commitment to the contrary. The leaders also agreed to develop new financial regulations and improve financial supervision, but the patchwork which emerged has had limited and mixed consequences.

Toronto U turn
G20 leadership, evident at the April 2009 London summit, was abdicated with its U turn at the June 2010 Toronto summit while claiming success for its earlier collective efforts. The Canadian hosts trumpeted its own strong recovery from around -3% in 2009 to +3% in 2010 as the G20 exaggerated hints of recovery to pave the way for ‘fiscal consolidation’ instead.

Jomo Kwame Sundaram. Credit: FAO

Canada received strong support from Germany and Japan which also claimed strong recoveries. Further support came from the International Monetary Fund (IMF) and the European Central Bank (ECB) which invoked the ‘expansionary fiscal consolidation hypothesis’ to claim that urgent U turns would boost investor confidence to sustain economic recovery.

The U turn from Keynesian-style debt-financed fiscal stimulus measures deprived the modest recovery of the means for sustaining renewed expansion, thus ensuring the GFC’s ‘Great Recession’, which has dragged on in much of the North for almost a decade since, dragging down world and developing country growth in recent years.

Recession self-inflicted
Despite warnings from the United Nations and a few others against premature fiscal consolidation, G20 leaders at the Toronto Summit agreed to cut budget deficits in half by 2013, and to eliminate deficits altogether by 2016! The decision triggered a double dip recession in Japan and some Eurozone countries.

Canada and Germany, which pushed for rapid fiscal consolidation, have since experienced significantly slower growth averaging 1.8% and 1.2% respectively. The global economy thus began a prolonged period of anaemic growth averaging around 2.5% per annum.

Clearly, G20 economic growth continues to be modest. They are still unable to attain the 2010 growth rate, giving the lie to the ‘expansionary fiscal consolidation’ claim. The IMF has since acknowledged that its initial recommendation of rapid fiscal consolidation was based on “back of the envelope” calculations!

Research also shows that fiscal consolidation has exacerbated income inequality while fiscal consolidation basically began once financial sectors had been rescued from the consequences of their own greedy operations.

Ersatz substitute
Lack of accountability to the rest of the world has also meant that the G20 continues to undermine multilateralism. Inclusive multilateralism is now being threatened on many other fronts as well, not least by the Trumpian turn in the White House and the growing tendency for the Europeans to act as a bloc.

The G20’s broader membership has made negotiations and consultations more difficult than those involving the G7 grouping of major developed economies. But its greater inclusion and diversity has also ensured its superior record compared to the G7, which continues to decline in relevance.

As the Toronto U turn and its devastating legacy remind us, the G20’s finest moment after its London summit in 2009 was easily reversed through host country efforts although the US and China were acting quite differently in practice.

Expectations of the Hamburg G20 summit are now quite modest, and there is greater media and public interest in the bilateral meetings around the event. It is a sad reminder that needed reforms to improve the world economy and the welfare of its people are unlikely to come from the G20, and tragically, from any other quarter for some time to come.

The Finance Ministers and Central Bank Governors of the G20. Credit: TCMB/cc by 2.0

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

Finance ministers and central bank governors of the world’s 20 major economies, accounting for 66 percent of world population, have pledged to “promote an enabling global economic environment for developing countries as they pursue their sustainable development agendas”.

In this context, they are looking forward to “a successful outcome” of the U.N. Summit in New York for the adoption of the 2030 Agenda for Sustainable Development. The summit will be held from Sep. 25 to 27 in New York as a high-level plenary meeting of the General Assembly of the world body.

The G20, meeting in Turkey’s capital Ankara on Sep. 4-5, reviewed ongoing economic developments, their respective growth prospects, and recent volatility in financial markets and its underlying economic conditions. They welcomed “the strengthening economic activity in some economies” but said that global growth was falling short of their expectations.

To remedy the situation, they vowed to take decisive action to keep the economic recovery on track and expressed confidence that the global economic recovery would gain speed. With this in view, they would continue to monitor developments, assess spillovers and address emerging risks as needed to foster confidence and financial stability.

The G20 welcomed “the positive outcomes of the Addis Ababa Conference on Financing for Development (FFD)”. In support of these, they aim to scale up their technical assistance efforts to help developing countries build necessary institutional capacity, particularly in the areas specified in the Addis Ababa Action Agenda.

The agreement was reached by the 193 U.N. Member States attending the Conference, following negotiations under the leadership of Ethiopian Foreign Minister Tedros Adhanom Ghebreyesus.

U.N. Secretary-General Ban Ki-moon said: “This agreement is a critical step forward in building a sustainable future for all. It provides a global framework for financing sustainable development.”

He added, “The results here in Addis Ababa give us the foundation of a revitalized global partnership for sustainable development that will leave no one behind.”

The G20 includes 19 individual countries – Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, South Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom and the United States – along with the European Union (EU). The EU is represented by the European Commission and by the European Central Bank.

The Group was founded in 1999 with the aim of studying, reviewing, and promoting high-level discussion of policy issues pertaining to the promotion of international financial stability.

It seeks to address issues that go beyond the responsibilities of any one organisation. Collectively, the G20 economies account for around 85 percent of the gross world product (GWP), 80 percent of world trade (or, if excluding EU intra-trade, 75 percent), and two-thirds of the world population. The G20 heads of government or heads of state have periodically conferred at summits since their initial meeting in 2008.

The G20 are responsible for 84 percent fossil fuel emissions worldwide. To support the climate change agenda of 2015, they welcomed the Climate Finance Study Group (CFSG) report, took note of the inventory on climate funds developed by the OECD (Organisation for Economic Cooperation and Development), and the toolkit developed by the OECD and the GEF (Global Environment Facility) to enhance access to adaptation finance by the low income and developing countries, especially those that are particularly vulnerable to the adverse effects of climate change.

While recognising developed countries’ ongoing efforts, they called on them to continue to scale up climate finance in line with their commitments.

“We are working together to reach a positive and balanced outcome at the 21st Conference of Parties of the UNFCCC (COP 21). Based on the outcomes and towards the objectives of the COP21, CFSG will continue its work in 2016 by following the principles, provisions and objectives of the UNFCCC,” they added.

UNFCC is the United Nations Framework Convention on Climate Change that emerged from the Earth Summit in June 1992 in Rio, Brazil, which is currently the only international climate policy treaty with broad legitimacy, due in part to its virtually universal membership.

The CFSG was established by Finance Ministers, in April 2012, and was welcomed by leaders in the Los Cabos Summit, in Jun 2012, with a view “to consider ways to effectively mobilize resources taking into account the objectives, provisions and  principles of the UNFCCC”.

In November 2012, Finance Ministers agreed to “continue working towards building a better understanding of the underlying issues among G20 members taking into account the objectives, provisions and principles of the UNFCCC”, and also recognised that the “UNFCCC is the forum for climate change negotiations and decision making at the international level”.

Following the mandate of the group, and building on the CFSG 2013 Report, the Group identified four areas to be studied in 2014, namely: (a) Financing for adaptation; (b) Alternative sources and approaches to enhance climate finance and its effectiveness; (c) Enabling environments, in developing and developed countries, to facilitate the mobilization and effective deployment of climate finance; (d) Examining the role of relevant financial institutions and MDBs in mobilizing climate finance.

This report aims to present to the G20 Finance Ministers and Leaders a range of non-exhaustive policy options (“toolbox”) for voluntary consideration, related to these four areas, and to suggest further work on other important issues on climate finance.

The G20 said they were “deeply disappointed” with the continued delay in progressing the 2010 International Monetary Fund (IMF) Quota and Governance Reforms. In their view, their earliest implementation is essential for the credibility, legitimacy and effectiveness of the Fund and “remains our highest priority”.

As part of continuing efforts to promote market confidence and business integrity, G20 Finance Ministers also endorsed a new set of G20/OECD corporate governance principles.

The G20/OECD Principles of Corporate Governance provide recommendations for national policymakers on shareholder rights, executive remuneration, financial disclosure, the behaviour of institutional investors and how stock markets should function.

Sound corporate governance is seen as an essential element for promoting capital-market based financing and unlocking investment, which are keys to boosting long-term economic growth.

“In today’s global and highly interconnected world of business and finance, creating trust is something that we need to do together,” OECD Secretary-General Angel Gurría said during a presentation of the new Principles with Turkish Deputy Prime Minister Cevdet Yilmaz,‎ who chaired the G20 finance ministers meeting.

Edited by Kitty Stapp

The Organisation for Economic Cooperation and Development (OECD), once a domain of the rich countries, is keen to extend its global membership and has set out a clear path for Costa Rica’s membership, within months of launching accession discussions with Colombia and Latvia.

As part of this strategy, the 34-nation OECD has in fact been strengthening cooperation with Brazil, India, Indonesia, the People’s Republic of China and South Africa through ‘Enhanced Engagement’ programmes.

According to OECD official sources, over time the organisation’s focus “has broadened to include extensive contacts with non-members and it now maintains cooperative relations with a large number of them.”

Li Keqiang, Premier of the State Council of the People’s Republic of China, paid a historic visit to the OECD on Jul 1, 2015, to sign cooperation agreements in a move that will bolster ongoing collaboration.

The visit to the OECD, the first by a Chinese state leader, coincided with the 20th anniversary of OECD-China relations, as well as China’s upcoming Presidency of the G20 in 2016.

Premier Li Keqiang delivered a keynote address in the context of the OECD Leaders Programme. He was accompanied by a number of ministers and high-ranking officials from the Chinese government.

OECD’s Global Relations Secretariat (GRS) develops and oversees the strategic orientations of OECD’s global relations with non-members. More than 15 Global Fora have been established to address trans-boundary issues where the relevance of OECD work is dependent on policy dialogue with non-members.

Regional initiatives cover Europe, the Caucasus and Central Asia; Asia; Latin America; and the Middle East and North Africa (MENA). The Sahel and West Africa Club creates, promotes and facilitates links between OECD members and West Africa.

Helping improve public governance and management in European Union candidate countries, potential candidates and European Neighbourhood Policy partners is the mission of a joint OECD-EU initiative, the Support for Improvement in Governance and Management (SIGMA) programme.

The OECD’s current members are Austria, Australia, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

On Jul. 8, 2015, OECD members adopted the Roadmap for the Accession of Costa Rica to the OECD Convention setting out the terms, conditions and process for its accession.

OECD Secretary-General Angel Gurría said: “Launching the accession process of Costa Rica underlines the organisation’s commitment to broaden its global outreach. Our joint objective is to work together to bring Costa Rica’s policies and practices closer to OECD best policies and practices.”

Gurría, who hails from Mexico, added: “This process, through which standards and best practices are adopted, is as important as membership itself and will help improve the lives of all Costa Ricans. It will be mutually enriching, as it will also allow the OECD to learn from Costa Rica’s experience in various policy areas.”

The first step in the process will see Costa Rica submit an initial memorandum setting out its position on approximately 260 OECD legal instruments. This will in turn lead to a series of technical reviews by OECD experts, who will collect further information from Costa Rica through questionnaires and fact-finding missions.

As part of the accession process, the OECD will evaluate Costa Rica’s implementation of the organisation’s policies, practices and legal instruments. Its committees may make recommendations for adjustments to legislation, policy or practice to bring Costa Rica closer to OECD instruments or best practices, serving as a catalyst for reform.

There is no deadline for completion of the accession processes, said an OECD official. Final accession will depend on the candidate country’s capacity to adapt and adjust to meet the organisation’s standards. Once all the committees have given their opinion, a final decision will be taken by all OECD member countries in the Governing Council.

Created in 1961 as the successor to the Organisation for European Economic Cooperation, which administered the Marshall Plan at the end of the Second World War, OECD serves as an economic, environmental and social policy forum for its 34 member countries, as well as partners worldwide, on the world’s most important global challenges.

Edited by Phil Harris   

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:

Ambassador Selim Yenel. Credit: Permanent Delegation of Turkey to the EU

By Selim Yenel
BRUSSELS, Jun 7 2015 (IPS)

Turkey assumed the Presidency of the Group of 20 (G20) on Dec. 1, 2014. It will culminate in the Antalya Summit on Nov. 15-16. Our priorities build upon the G20 multi-year agenda, but also reflect particular themes we see as important for 2015.

(The G20 comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade. They include Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the United Kingdom, the United States and the European Union.)We have a moral obligation to address inequality, which also hinders economic growth.

We want to channel the influence of the G20 also for the benefit of the global community. Spain, Azerbaijan, Singapore and the Chairs of ASEAN (Malaysia), African Union (Zimbabwe) and NEPAD-New Partnership for Africa’s Development (Senegal) are invited to G20 meetings.

We have an ambitious agenda, a clear focus and an intense work plan. We frame our priorities as ‘3 Is’. – Implementation, Inclusiveness, Investment.

Implementation:

– Turning words into actions. Implementing our collective G-20 commitments.

– G20 members committed themselves to policy measures over 1,000 in total, estimated to lift collective G20 growth by an additional 2.1 percent over the next five years. (the so-called “2 in 5” target)

– The IMF and OECD calculate that implementing G20 growth strategies can generate additional two trillion dollars to the world economy, an output equivalent to the size of the Indian economy.

– The first accountability report on how much progress we have collectively made towards our growth target will be presented to the G20 Summit in Antalya.

Inclusiveness:

– The G20’s overarching aim has been to foster strong, sustainable and balanced growth. One of our primary goals is to add “inclusive” growth to this, both at the national and international level.

– We have a moral obligation to address inequality, which also hinders economic growth. It has been worsened by the effects of the global financial crisis. (Among OECD countries, inequality is at its highest level in 30 years)

– Last year, the G20 made a commitment to reduce the gender gap in labour force participation by 25 percent until 2025 (our 25 by 25 target). Its implementation will bring additional 100 million women into the workforce.

– We will strive to achieve a collective G20 target for youth unemployment.

– SMEs (small and medium enterprises) are another important element. They are the powerhouse of employment, innovation and entrepreneurial spirit.

– We launched the World SME Forum (WSF) on May 23. Turkey’s Deputy Prime Minister Ali Babacan announced the official launch of this forum, a major new initiative to drive the contributions of SMEs to global economic growth and employment. For the first time, there will now be a united and global voice of SMEs.

– Low Income Developing Countries (LIDCs) are an important focal point. Our message: the G20 is not only concerned about its own interests but its policies should also benefit the entire community, resulting in a better global dialogue.

Investment:

– Investment is key to unlocking growth and generating new jobs.

– The public sector cannot meet the global investment gap alone. Effective public and private sector partnership is a must. Nine out of 10 new jobs are created as a result of private investment.

– We proposed that G20 countries prepare national investment strategies to support their national growth strategies adopted last year. We have started to work on our national investment strategies and plan to have them submitted for the approval of at the Antalya Summit.

2015 is a critical year for shaping the global sustainable development agenda for the future.

We have the Sustainable Development Goals (SDG) Summit in New York in September. It is important that the G20’s decisions and actions strengthen the work of the U.N. (SDGs will follow and expand on the Millennium Development Goals agreed in 2000, due to expire at the end of 2015)

We aim to support the universal nature of the post 2015-development agenda. Our work on food security and nutrition, access to affordable and reliable energy to all, efforts to reduce the gender gap in female labour force participation, skills development and infrastructure are directly relevant to many of the proposed goals and targets.

The main topics of the G20 Agriculture Ministers Meeting on May 8, the second in G20 history (first was in 2011), were developing sustainable food systems and the challenges of food loss and waste.

Some 1.3 billion tonnes of food is lost or wasted each year. If we can reduce food losses and waste to zero, it would give us additional food to feed two billion people.

Our work on energy access in Sub Saharan Africa is another important element of our agenda. We are working in partnership with various African institutions.

Almost one-fifth of the global population still does not have access to electricity. Nearly 2.6 billion people lack access to modern cooking facilities. In Sub-Saharan Africa the problem is most acute. More than 620 million people, out of the region’s total population of 915 million, have no access to electricity.

A high-level conference with the participation of African leaders, investors, private sector and relevant international organisations back to back with the G20 Energy Ministers meeting is also planned. The G20 Energy Ministers Meeting on Oct. 2 will be a first in G20 history.

We are also working closely with the ILO and other international organisations on a range of employment and labour market outcomes.

Trade is an important part of our agenda. Representing 76 percent of world trade, G20 should lead by example in collective work to ensure an open and functioning multilateral trading system.

We are also working to strengthen outreach with engagement groups and non-members. Under our Presidency, G20 countries agreed to establish a new G20 engagement group: The Womens-20, to promote gender inclusive growth and enhance the role of women in business.

We also value direct outreach and dialogue with countries, regional groups and institutions. On Apr. 13, we convened in Washington the first Caribbean Region Dialogue with the G20 Development Working Group together with the Central Bank of Trinidad and Tobago. This was an opportunity to deepen the G20-Caribbean relationship.

Overall, Turkey believes it has a responsibility to use its Presidency of the G20 as a positive influence regarding growth, sustainability and development in all areas. Independent of the G20, Turkey in the last decade has been more and more involved with the African, Caribbean and Pacific (ACP) Group of States.

It has developed its relations in the political, economic, commercial and development fields. Turkey has opened a large number of embassies in all the ACP countries and will continue to increase its contacts in the years to come for a mutually beneficial relationship.

Edited by Ramesh Jaura / Kitty Stapp

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:

G7-based companies and investors cheated Africa out of an estimated six billion dollars in a year through just one form of tax dodging, according to a new Oxfam report ‘Money talks: Africa at the G7’, released Jun. 2.

This is equivalent to three times the amount needed to plug the healthcare funding gap in the Ebola-affected countries of Sierra Leone, Liberia, Guinea and at-risk Guinea Bissau.

According to an Oxfam briefing paper release in April this year, an estimated 1.7 billion dollars is required to close the healthcare funding gap to improve dangerously inadequate health systems in these countries. This figure is based on raising spending to the recommendation of the World Health Organisation (WHO) that 86 dollars per capita is required to achieve the minimum package of essential services.“Multinational companies, many with headquarters in the United Kingdom and other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare and send their children to school” – Nick Brye, Oxfam’s Head of U.K. Campaigns

The new Oxfam report comes as G7 leaders prepare to meet their African counterparts at the annual summit in Bavaria, Germany from Jun. 8 to 9. African leaders from Ethiopia (Prime Minister Hailemariam Desalegn), Liberia (President Ellen Johnson Sirleaf), Nigeria (President Muhammadu Buhari) and Senegal (President Macky Sall) are scheduled to join an outreach session on Jun. 8.

Oxfam is calling for the leaders of the G7 countries – Canada, France, Germany, Italy, Japan, United Kingdom and United States – to include action for ambitious tax reform in discussions about how the group can support economic growth and sustainable development on the continent.

In the United Kingdom, Oxfam is part of a coalition that has been calling on the recently elected new British government to show leadership by introducing a Tax Dodging Bill, which would make it harder for U.K. companies to avoid paying tax in the countries in which they operate – practices which currently cost some of the world’s poorest countries billions each year.

The coalition, which includes ActionAid and Christian Aid in addition to Oxfam, is currently running a Tax Dodging Bill campaign.

According to Oxfam, a well-crafted Tax Dodging Bill would also make it harder for big companies to avoid paying tax in the United Kingdom, and could bring in at least 3.6 billion pounds (5.4 billion dollars) a year to the U.K. Treasury, the equivalent of 600 pounds (910 dollars) for every household living below the poverty line.

“Multinational companies, many with headquarters in the United Kingdom and other G7 countries, are cheating African countries out of billions of dollars in vital tax revenues that could help vulnerable people get decent healthcare and send their children to school,” said Nick Brye, Oxfam’s Head of U.K. Campaigns.

“To fund the fight against poverty and to tackle worsening extreme inequality, we need action to ensure big companies pay their fair share, here and in the world’s poorest nations.”

Oxfam also notes that existing international efforts to tackle corporate tax dodging, such as the BEPS (Base Erosion and Profit Shifting) process, led by the Organisation for Economic Cooperation (OECD) for the G20 group of the world’s major economies, will leave gaping tax loopholes.

It warns that these loopholes can continue to be exploited by multinational companies across the developing world and that many African nations have been shut out of discussions on BEPS reform and will not benefit from them as a result.

Oxfam is also calling for British Chancellor of the Exchequer George Osbourne to attend July’s Financing for Development Conference in Ethiopia which will play host to heads of states and finance ministers from around the world.

The talks, which will focus on how the international community will fund development over the next two decades, are an opportunity for governments to work together to start shaping a more democratic and fairer global tax system.

In 2010, the last year for which data are available, Oxfam says that companies and investors based in G7 countries avoided paying tax on 20 billion dollars of income through a practice called trade mispricing – where a company artificially sets the prices for goods or services sold among its subsidiaries to avoid taxation.

With corporate tax rates in Africa averaging 28 percent, this equates to nearly six billion dollars in lost revenues. In addition, developing countries as a whole lose around 100 billion dollars a year through tax avoidance schemes involving tax havens, according to the U.N. Conference on Trade and Development (UNCTAD).

“Reforming global corporate tax rules so that African governments can claim the money owed to them is vital to tackle extreme poverty and inequality and boost economic growth, said Brye. “That’s why Oxfam has been calling for a U.K. Tax Dodging Bill that would ensure U.K. companies do their bit to help poor families at home and in developing countries.”

Edited by Phil Harris   

By Roberto Savio
ROME, Mar 16 2015 (IPS)

It is now clear that we are not going to reach the goal of controlling climate change.

It is worth recalling that the goal of not exceeding a 2 degree centigrade rise in global warming before 2020 was adopted at the U.N. Climate Change Conference in Copenhagen in 2009 as a formula for consensus. Many in the scientific community had been clamouring for immediate action – and at most for a 1 degree rise – but bowed to political realism, and accepted an easier target.

Roberto Savio

The agreement was to block the rise in global temperature before 2020, and start a process for gradually reverting the climate to safe levels, to be concluded before 2050.

Well, in the last four years, we have already witnessed an increase in temperature by 1 degree, and there is only another 1 degree left before 2020.

The European Environment Agency (EEA), which publishes a report every five years, states that Europe needs “much more ambitious goals” if it wants to reach its declared targets and for 2050, European Union leaders have endorsed the objective of reducing Europe’s greenhouse gas emissions by 80-95 percent compared with 1990 levels.

However, Germany increased its carbon emissions by 20 million tons in 2012-13, instead of reducing them. This means that, in order to reach its targets, Germany should now reduce emissions by 3.5 percent a year over the next six years, which is a difficult, if not impossible, target to achieve.

It will increase energy costs and probably lead to a reaction to block measures which can hurt the economy. By the way, this is the official position of the Republicans in the U.S. Congress, who will fight any climate proposal.Climate change dissenters are clearly unconcerned that the very future of our planet is at stake or, like the governmental system, have fallen prey to the ‘ostrich syndrome’

By now, the effects of climate change have become visible, and not just to the climatologists. Last year the total number of people displaced by climatic disasters (such as hurricanes, landslides, drought, floods and forest fires) reached the staggering figure of 11 million people.

Last month, The Energy and Resources Institute (TERI), a think-tank based in New Delhi, issued a study report citing data compiled by the Centre for Research on the Epidemiology of Disasters (CRED) at the Catholic University of Leuven in Belgium, which maintains a global database of natural disasters dating back over 100 years.

The study found a 10-fold increase to 525 natural disasters in 2002 from around 50 in 1975.

By 2011, the cost of natural disasters had ballooned to 350 billion dollars. In the 110 years between 1900 and 2009, hydro-meteorological disasters increased from 25 to 3,526. Together, extreme hydro-meteorological, geological and biological events increased from 72 to 11,571 during that same period.

There is no doubt that the activities of man are having a dramatic impact on the climate and the planet, affecting people’s lives, but – as usual – the world is moving on two levels, which are unrelated and opposed.

One of the main issues among countries at climate negotiations has been how much to invest in combating climate change but here the signs are very discouraging, to say the least. Take the Green Climate Fund, for example, which was intended to be the centrepiece of efforts to raise  100 billion dollars a year by 2020 but, as of December last year, only 10 billion dollars had been pledged to the fund.

This is the track for reducing fossil emissions. Let us now look to the other track: what the rich countries are spending to keep them.

According to a report from the Overseas Development Institute (ODI) and Oil Change International (OCI), G20 governments are actually subsidising fossil fuel exploration with 88 billion dollars every year.

The report notes that “with rising costs for hard-to-reach reserves, and falling coal and oil prices, generous public subsidies are propping up fossil fuel exploration which would otherwise be deemed uneconomic.” In fact, G20 governments spend more than twice what the top 20 private companies are spending on finding new reserves of oil, gas and coal, and are doing so with public money.

So, on one hand, the system makes the right declarations of principle and, on the other, does the very opposite.

Meanwhile, there are some signs that the campaign against the need for doing something about climate change is losing credibility.

It is known that some members of the Republican Party in the United States are financed by energy giants, and it goes without saying that they will do whatever they can to boycott any deal on climate change that U.S. President Barack Obama may try to agree to at the next climate conference in Paris in December.

It is also known that a number of scientists dissent from the thinking of the more than 2,000 scientists whose work has contributed to the Intergovernmental Panel on Climate Change (IPCC) in presenting the link between human activity and deterioration of the climate. Of course, the dissenting voices have received a disproportionate echo in conservative media.

However, last month, the Washington Post reported that one of the leading dissenters and guru of climate change deniers, Dr. Wei-Hock “Willie” Soon, had been receiving funds from the fossil fuel industry.

The report cited documents that Greenpeace obtained through the U.S. Freedom of Information Act showing that Soon had been receiving funding from Exxon Mobil, Southern Company and the American Petroleum Institute, among others.

Climate change dissenters are clearly unconcerned that the very future of our planet is at stake or, like the governmental system, have fallen prey to the ‘ostrich syndrome’. (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:

By Roberto Savio
ROME, Nov 26 2014 (IPS)

After the Italian sea search-and-rescue operation Mare Nostrum at a cost of nine million euros a month, through which the Italian Navy has rescued nearly 100,000 migrants – although perhaps up to 3,000 have died – from the Mediterranean since October 2013, Europe is now presenting its new face in the Mediterranean.

The European Union is launching Joint Operation Triton with a monthly budget of 2.9 million euros and funds secured until the end of the year. Its function is to enforce border controls – not to save “boat people” – and it will patrol just thirty nautical miles from the coast, which pales in comparison with Italy’s Mare Nostrum operation which saw patrols being sent close to the Libyan coast.

Roberto Savio

Even with this very limited operation, British Prime Minister David Cameron has said that the United Kingdom will not contribute because operations that save migrants make them more willing to try to cross the Mediterranean. Of course, there is a perverted logic in this: the more migrants that die, the greater will be the discouragement for others to try.

Following this logic through, the ideal situation therefore would be to reach a death rate that would stop illegal immigration once and for all!

In this context, it is worth noting that the U.K. government is considering withdrawal from the European Convention of Human Rights (something that even Russian President Vladimir Putin has never considered). The argument is that nobody can be above U.K. courts.

London is also refusing to pay its share of increased of contributions to the European Union and is considering how to put an annual cap on the number of Europeans who are entitled to work legally in the United Kingdom.“Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation”

And finally, the U.K. government received with great uproar the sentence of the European Court of Justice, which placed a European cap on banker bonuses, rejecting Britain’s claims that it was illegal. The British argument was that pay levels (also of discredited bankers) were part of social policy and thus under the authority of member states not of the European Union.

Meanwhile, the same Court has issued another sentence under which E.U. member states are not obliged to support European citizens who do not have economic activities in the E.U. countries to which they have migrated. And the German Parliament is now preparing a law to expel European immigrants who do not find a job within six months.

Of course, this will open the doors to all other countries to reduce the free movement of Europeans in Europe, a cornerstone of the original vision of a solidary Europe. Now Europeans will be obliged to take any job, and therefore the law of market will become the primary criterion for their movements in Europe.

Since 1986, the year of signing of the Single European Act, Europeans have never been able to agree on a minimum social basis, which would have given them rights as workers to act collectively as Europeans in the face of a market which is economically unified, but with no common social legislation.

In fact, the point has now been reached where social criteria are the last to be used to judge whether a country is recovering or not, well after economic and financial criteria.

A devastated Greece is now again being considered in financial markets because its economic indicators are on the up. And, at the last G20 meeting in Brisbane, Spain was touted as the example that austerity policies – those indicated by German Chancellor Angela Merkel as the example for laggards like Italy and France – are the correct way out of the crisis.

At the same time, a very different source, Caritas, has reported that only 34.3 percent of Spaniards live a normal life, while 40.6 percent are stuck in precariousness, 24.2 percent are already suffering moderate exclusion and 10.9 percent are living in severe exclusion.

To understand the trend, six years ago, 50.2 percent of Spaniards had a normal life. Now, one citizen in four is suffering exclusion, and of those 11 million excluded citizens, 77.1 percent have no job, 61.7 percent no house and 46 percent no health care support.

According to UNICEF’s recent report on children under recession, 76.5 million children in the rich countries live in poverty, and in Spain, 36.3 percent of the country’s children (2.7 million) are living in a state of precariousness.

What is now new is that some major financial institutions have started to draw attention to social issues.

Janet L. Yellen, chairwoman of the U.S. Federal Reserve, has declared that she is concerned about the growing inequality of wealth and income in the United States, and that chances for people to advance economically appear to be diminishing. And Mario Draghi, governor of the European Central Bank, is now constantly mentioning the issues of “unbearable unemployment “and “growing exclusion”.

In the background there is the proven fact that countries which took emergency measures to reduce public borrowing have mostly had weaker growth, like most European countries (with the exception of Germany, helped by a boom in machinery exports to Russia and China), while those which introduced a policy of stimulus, like the United States, Japan and Britain, have done much better, also in reducing unemployment.

But Merkel continues to ignore calls from the International Monetary Fund (IMF), the World Bank and other monetary institutions – she is only interested in pleasing her constituency, which is increasingly looking to its immediate interests and losing sight of European perspectives.

In all this, the banks continue to be uninterested in any social perspective. A few days ago, European and U.S. regulators imposed new fines worth 4.5 billion dollars on a number of major banks (we are now approaching the 200 billion dollar mark since the crisis started in 2008) for illegal activities.

Jamie Dimon, the CEO of the largest of them, JP Morgan, declared in an interview with Andrew Ross Sorkin of CNBC that it is important that United States creates a “safe harbour” where JPMorgan’s illegal practice of hiring the relatives of political leaders “is not punished”.

In Dimon’s country, between 2009 and 2010, 93 percent of economic growth ended up in the pockets of one percent of the population, according to Nobel economics laureate Joseph Stiglitz, and the 16,000 families with wealth of at least 111 million dollars have seen their share of national wealth double since 2012 to 11.2 percent.

The last U.S. presidential elections cost 3.4 billion dollars, and most of that came from this small minority. Democracy, where all votes are equal, is increasingly becoming a plutocracy where money elects.

Meeting leaders of social movements on Oct. 26, Pope Francis told them: “They call me a communist [for speaking of] land, work and housing … but love for the poor is at the centre of the Gospel.” Certainly, governments are doing otherwise …

(Edited by Phil Harris)

Excerpt:

By Roberto Savio
ROME, Nov 21 2014 (IPS)

Less than a week after everybody celebrated the historical agreement on Nov. 17 between the United States and China on reduction of CO₂ emissions, a very cold shower has come from India.

Indian Power Minister Piyush Goyal has declared: “India’s development imperatives cannot be sacrificed at the altar of potential climate change many years in the future. The West will have to recognise we have the needs of the poor”.

This is also a blow to the Asia policy of U.S. President Barack Obama, who came back home from signing the CO₂ emissions agreement in Beijing, touting his success on establishing U.S. policy in the region.

Roberto Savio

But, more importantly, will give plenty of ammunition to the Republican Congress, which has been fighting climate control on the grounds that the United States cannot engage on climate control unless other major polluters make similar commitments. This was always directed to China, which had refuse to make any such commitment until President Xi, to the surprise of everybody, did so by signing an agreement with Obama.

India is a major polluter, not at the level of China, which has now reached 9,900 metric tons of CO₂, against the 6,826 of the United States. But India is coming up fast. “The incestuous relations between energy corporations and governments are out of the public's eye. It is yet further proof that, even when nothing less than survival is at stake for islands and coastlines, agriculture and the poor, governments are unable – or unwilling – to see beyond their immediate existence”

Goyal has promised that India’s use of domestic coal will rise from 565 million tons last year to more than a billion tons by 2019, and he is selling licences for coal mining at a great speed. The country has increased its coal-fired plants by 73 percent in just the last five years. In addition, Indian coal is of poor quality, polluting twice as much as coal in the West.

Nevertheless, newly-elected Indian Prime Minister Narendra Modi has announced that he will embark on a major programme of renewable sources of energy, and there is an apparent paradox in the fact that many of the climate scientists who form the Intergovernmental Panel on Climate Control (IPCC) are from India. Its Director-General is an Indian, Dr. Rajendra K. Pachauri, who is also chief executive of the Energy Resources Institute in New Delhi.

The IPCC’s last report was much more dramatic than previous ones, stating conclusively that climate change is due to the action of man, and providing an extensive review of the damage that the agricultural sector is bound to face, especially in poor countries like India. At least 37 million people would be displaced by rising seas.

Indian towns are by far the most polluted in the world, surpassing several times each year the worst polluted day in China.

But what is more worrying is that governments are reacting too slowly. It would take a very major effort, which is not now on the cards, to keep temperature from rising by more than 2 degrees Centigrade, and therefore to start to reduce emissions by 2020. Emissions in 2014 are expected to be the highest ever, at 40 billion tonnes, compared with 32 billion in 2010.

The consensus is that to limit warming of the planet to no more 2 degrees Centigrade above pre-industrial levels, governments would have to restrict emissions from additional fossil fuel burning to about 1 trillion tons of carbon dioxide.

But, according to the IPCC report, energy companies have booked coal and petroleum reserves equal to several times that amount, and they are spending some 600 billion dollars a year to find more. In other words, governments are directly subsidising the consumption of fossil fuel.

By contrast, less than 400 billion dollars a year are spent to reduce emissions, a figure that is smaller than the revenue of one just one U.S. oil company, ExxonMobil.

The last meeting of the G20 in Brisbane earlier this month gave unexpected attention to climate, but the G20 alone is spending 88 billion dollars a year in subsidies for fossil fuel exploration, which is double that which the top 20 private companies are spending to look for new oil, gas and coal.

The G20 spends 101 billion dollars to support clean energy in a clear attempt to make everybody happy but, according to the International Energy Agency, if G20 governments directed half of their subsidies, or 49 billion dollars a year, to investment for redistributing energy from new sources, we could achieve universal energy access as soon as 2030.

Another good example of the total lack of coherence from Western governments is that they have pledged an amount of 10 billion dollars for a Green Climate Fund, whose task is to support developing countries in mitigating and adapting to climate change. That amount is two-thirds of what those countries have been asking for and, since its creation in 1999, the fund has still to become operational.

And it was only after the last G20 meeting that the United States pledged three billion dollars and Japan 1.5 billion, bringing the total so far to 7 billion dollars – one-third is still missing.

And now we have the upcoming Climate Conference in Lima, in December, where opinion is that governments will once again fail to reach a comprehensive agreement on climate change – and the amount of time left for the planet will reduce even further.

Besides the fight to be expected from the Republican Congress in the United States, there will be also be opposition from countries that depend on fossil fuels, such as Russia, Australia, India, Venezuela, Iran, Saudi Arabia and the Gulf countries.

So, governments show a total lack of consensus and responsibility. If a referendum could be held asking citizens if they would prefer to pay 800 billion dollars less in taxes to avoid subsidising pollution, there are few doubts what the result would be. And there would be same result if they were asked if they would prefer to invest those 800 billion dollars in clean energy or continue to pollute.

But the incestuous relations between energy corporations and governments are out of the public’s eye. It is yet further proof that, even when nothing less than survival is at stake for islands and coastlines, agriculture and the poor, governments are unable – or unwilling – to see beyond their immediate existence. We are direly in need of global governance for this kind of globalisation. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

An Ebola treatment centre in Kenema, Sierra Leone, on the day of a visit from Anthony Banbury, Special Representative of the Secretary-General and Head of the UN Mission for Ebola Emergency Response (UNMEER). Credit: UN Photo/Ari Gaitanis

By Carey L. Biron
WASHINGTON, Nov 13 2014 (IPS)

The United States proposed Tuesday that the international community write off 100 million dollars in debt owed by West African countries hit hardest by the current Ebola outbreak. The money would be re-invested in health and other public programming.

U.S. Treasury Secretary Jack Lew will be detailing the proposal later this week to a summit of finance ministers from the Group of 20 (G20) industrialised countries. If the idea gains traction among G20 states, that support should be enough to approve the measure through the International Monetary Fund (IMF), where the United States is the largest voting member."The plan is for that money to be re-invested in social infrastructure, including hospitals and schools … to deal with the short-term problem of Ebola but also the long-term failure of the health systems that allowed for this outbreak.” -- Jubilee USA’s executive director Eric LeCompte

“The International Monetary Fund has already played a critical role as a first responder, providing economic support to countries hardest hit by Ebola,” Lew said in a statement to IPS.

“Today we are asking the IMF to expand that support by providing debt relief for Sierra Leone, Liberia and Guinea. IMF debt relief will promote economic sustainability in the worst hit countries by freeing up resources for both immediate needs and longer-term recovery efforts.”

These three countries together owe the IMF some 370 million dollars, according to the U.S. Treasury, with 55 million dollars due in the coming two years. Yet there are already widespread fears over the devastating financial ramifications of Ebola on Guinea, Liberia and Sierra Leone, in addition to the epidemic’s horrendous social impact.

Last month, the World Health Organisation warned that the virus now threatens “potential state failure” in these countries. The World Bank, meanwhile, estimates that the virus, which has already killed more than 5,000 people and infected more than 14,000, could cost West African countries some 33 billion dollars in gross domestic product.

Of course, much of the multilateral machinery is often too cumbersome to respond to a fast-moving viral outbreak. Yet there is reason to believe that the U.S. plan could have both immediate and long-term impacts.

That’s because the plan would see the IMF tap a unique fund set up in the aftermath of the 2010 Haiti earthquake, which facilitated the cancellation of nearly 270 million dollars of Haitian debt to the IMF. Called the Post-Catastrophe Debt Relief (PCDR) Trust, it is aimed specifically at responding to major natural disasters in the world’s poorest countries.

Originally, the PCDR Trust was capitalised with more than 420 million dollars. Today, a U.S. Treasury spokesperson told IPS, the trust has some 150 million dollars in it – money that would be available almost immediately.

“Our proposal is for the IMF to provide debt relief for these Ebola-affected nations from this trust,” the spokesperson said. “The U.S. would like to see around 100 million dollars put toward this effort, however the precise amount will need to be determined in consultations with the IMF and its membership.”

The IMF, meanwhile, says it is preparing to consider the proposal. In September the Washington-based agency made available 130 million dollars in immediate support to Guinea, Liberia and Sierra Leone.

“We are very glad that some donors have expressed an interest in increasing support for the Ebola-affected countries. We are reaching out to all donors to see how we might be able to take this forward … using all the tools available to us,” an IMF spokesperson told IPS.

“[Debt relief] decisions are made according to the merits of the particular case and this would be approached in the same way. We would expect the Board to be briefed soon on this topic.”

Ebola’s “natural disaster”

For development and anti-poverty advocates, debt obligations on the part of poor countries constitute a key obstacle to a government’s ability to respond to critical social needs, both in the short and long term.

In the West African epicentre of the current Ebola outbreak, many analysts have held chronic low national health spending directly responsible for allowing the epidemic to spiral out of control. And when looking at feeble public sector spending, it is impossible not to take into account often crushing debt burdens.

For instance, Guinea spent a little more than 100 million dollars on public health in 2012 but paid nearly 150 million dollars that same year on internationally held debt, according to World Bank figures provided by Jubilee USA, an anti-debt advocacy network that has spearheaded the push for the United States to make the current proposal.

“As bad as Ebola has been, some of these countries have far greater challenges with deaths from malaria than from Ebola,” Eric LeCompte, Jubilee USA’s executive director, told IPS.

“The amount is incredibly important because it cancels a significant portion of the debt completely. And the plan is for that money to be re-invested in social infrastructure, including hospitals and schools … to deal with the short-term problem of Ebola but also the long-term failure of the health systems that allowed for this outbreak.”

LeCompte was also involved in the creation of the Post-Catastrophe Debt Relief Trust, in the aftermath of the Haitian earthquake. His office has advocated for the fund’s monies to be used since then – for instance, to react to flooding in Pakistan and Typhoon Haiyan in the Philippines.

But he says these and other proposals have been rejected by the IMF’s membership, on the rationale that these countries were developed enough to be able to mobilise financing in other ways. (The IMF says PCDR funds are for response to “the most catastrophic of natural disasters” in “low-income countries”, when a third of a country’s population has been affected and a quarter of its production capacity destroyed.)

Not only are Guinea, Liberia and Sierra Leone among the poorest countries in the world, but the Ebola outbreak there has a potentially direct impact on the rest of the globe.

“This is a very clear opportunity to point to the 150 million dollars left in that fund and to note that Ebola is every bit the same as the Haitian earthquake in terms of being a regional calamity,” LeCompte says.

“The difference is that this is also a long-term investment in the very problems that allow Ebola to spread. So we’d be not only addressing the current issue, but also the next disease outbreak in that region.”

It is unclear whether there is a mechanism in place to top up the PCDR Trust in the future. The IMF states that “Replenishment of the Trust will rely on donor contributions, as necessary.”

But for his part, LeCompte says the fund has the potential to fill a significant gap: offering a pot of money, immediately available, that could be quickly mobilised to deal with true crises afflicting the world’s poorest countries, from hurricanes to major financial defaults.

Edited by Kitty Stapp

The writer can be reached at cbiron@ips.org

By Manuel F. Montes
GENEVA, Nov 12 2014 (IPS)

As the international community wades into the political discussions regarding the alternatives to the Millennium Development Goals (MDGs) after 2015 and the design of the Sustainable Development Goals (SDGs) as mandated by the Rio+20 conference, it is timely to consider the question of whether development is a matter mostly of individual effort on the part of nation-states or whether there are elements in the international economic system that could serve as significant obstacles to national development efforts.

If there are obstacles in the international economic system, it is important that the post-2015 development agenda and the SDGs address the question of the elimination or the reduction of these obstacles.

Manuel F. Montes

The limited number of successfully developing countries since the 1950s has provoked a debate over whether the success of these countries required their success in eluding international obstacles to development.

The question is to evaluate features of the international system on the basis of how these features are conducive to enabling long-term investment toward economic diversification.

Terminologies of previous development orthodoxies litter the development literature – import substitution, industrialisation, basic needs, structural adjustment, Washington Consensus and Millennium Development Goals (MDGs).

Each of these orthodoxies tended to be a reaction to perceived weaknesses or missing elements from the immediately previous one. The most recent orthodoxy, as exemplified by the MDGs, is that development is about poverty eradication.

But poverty eradication is an overly narrow, possibly misleading, perspective on development.“Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment”

Poverty eradication is a desired outcome of development but its achievement is permanent only with the movement of a significant proportion of the population from traditional, subsistence jobs to productive, modern employment.

The association of development with poverty reduction created for the donor community the pride of place in economic policy in developing countries.

But this place can be at the cost of reducing the responsibility of donor countries in helping to maintain an enabling international environment for development in trade, finance, human resource development and technology.

In the MDGs, these issues are crammed into “MDG-8”, the so-called global partnership for development, with a very selective and poorly defined set of targets.

Development requires not just higher levels of income, nutrition, education, and health outcomes but in the first place involves higher levels of productivity and capabilities.

Higher levels of productivity and capabilities are possible only with structural transformation of the economy.

In turn, in most societies, according to a report by the Secretary-General of the U.N. Conference on Trade and Development (UNCTAD), such a structural transformation has been “associated with a shift of the population from rural to urban areas and a constant reallocation of labour within the urban economy to higher-productivity activities.”

Structural transformation is only possible with substantial and sustained investment over decades in new activities and products, not just in anti-poverty programmes.

Where the international economic system is hostile to investment in new, productivity enhancing economic activities is where its elements create obstacles to development.

One example of an externally based obstacle is aid volatility which has been shown to have highly negative impacts on macroeconomic performance and domestic investment.

Capital and technological investments are required to overcome the enormous productivity gap between developing and developed countries which characterises the world economy.

In 2008, a ratio of the average Gross National Income (GNI) per worker in the countries of the Organisation for Economic Cooperation and Development (OECD) versus those in the least developed countries (LDCs) was 22:1 in favour of the OECD countries.

This imbalance has worsened by a factor of five in comparison to the earliest days of capitalist development. In the nineteenth century, taking the Netherlands and the United Kingdom as the richest countries and Finland and Japan as the poorest, the productivity gap was only between 2 to 1 and 4 to 1.

The international economic system is lacking crucial mechanisms for delivering long-term, stable resources required by developing countries to upgrade their capabilities.

Dependence on commodity exports sustains the productivity gap between developed and developing countries.

Abundant global liquidity and growing trade imbalances fuelled a commodity boom in the 2000s which benefited many developing countries, including many LDCs.

All previous global liquidity booms had ended with serious economic crises in developing countries. The more recent commodity price boom did not introduce an enduring improvement in macroeconomic balances, especially for low-income countries (LICs).

While in the 2000s LDCs experienced the strongest growth rates since 1970s, according to UNCTAD, more than one-quarter of LDCs actually saw GDP per capita decline or grow slowly in the 2002-2007 global boom.

Even the middle income region of Latin America presents evidence of insignificant structural improvement in fiscal and current account balances.

Previous commodity boom periods had similarly not been an occasion for structural change in LDCs. UNCTAD suggests that between the 1970s and 1997, manufacturing as a proportion of GDP increased by less than two percentage points in LDCs as a group, a period which saw various episodes of commodity and global liquidity booms.

When considering LDCs from Africa alone and including Haiti, manufacturing fell from 11 to 8 percent during the same period.

Developing countries had extensively liberalised their trade regimes in the 1980s. In the aftermath, UNCTAD finds that some LDCs have more open trade regimes than other developing countries, and others are more open than even developed countries.

These policies had been intended to facilitate economic diversification. Instead of the expected outcome, greater trade liberalisation has been accompanied by greater concentration in the structure of exports.

The international economic system labours under the constraint that the highest decision-making bodies in key institutions, such as the International Monetary Fund (IMF), do not provide sufficient voting weight and policy influence to countries most affected by their operations.

One effort under way but under enormous political obstruction is to update voting weights in line with the changed economic structure. Even the G20, where important developing countries sit, has been unable to advance progress. (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. 

*  Click here for the Research Paper on which this column is based.

Excerpt:

Governments continue to subsidise exploration for fossil fuels despite pledges to support the transition to clean energy. Credit: Flickr/Leszek Kozlowski

By Shelagh Whitley
LONDON, Nov 11 2014 (IPS)

Just a week after the Intergovernmental Panel on Climate Change (IPCC) gave its starkest warning yet that the vast majority of existing oil, gas and coal reserves need to be kept in the ground, a new report reveals that governments are flagrantly ignoring these warnings and continuing to subsidise exploration for fossil fuels.

The report by the Overseas Development Institute (ODI) and Oil Change International (OCI) shows that G20 governments are propping up fossil fuel exploration to the tune of 88 billion dollars every year through national subsidies, investment by state owned enterprise and public finance.

Shelagh Whitley, Research Fellow at the Overseas Development Institute (ODI)

And this is only a small part of total government support to producing and consuming fossil fuels, which is estimated at 775 billion dollars a year.

The G20 continues to provide these subsidies – mostly hidden from public view – in spite of repeated pledges to phase out fossil fuel subsidies, address climate change, and support the transition to clean energy.

The subsidies provided to exploration by the G20 alone are almost equivalent to total global support for clean energy (101 billion dollars), tilting the playing field towards oil, gas and coal.

The report also shows that G20 governments spend more than double what the top 20 private companies are spending to look for new oil, gas and coal reserves. This suggests that companies depend on public support for their exploration activities.“Fossil fuel exploration subsidies are fuelling dangerous climate change; this support is increasingly uneconomic; and oil, gas and coal will not address the energy needs of the poorest and most vulnerable”

As finding fossil fuels gets more risky, expensive and energy intensive, and the prices of oil, gas and coal continue to fall, companies are only likely to become more dependent on tax payers’ money to continue exploration.  This was also demonstrated by the recent request by the United Kingdom’s oil and gas industry for further tax breaks to address rising operating costs in the North Sea.

Some will claim that although these subsidies are uneconomic, exceptions can be made. After all, the arguments go, we need fossil fuels to provide energy access – and we can keep burning oil, gas and coal if we just use carbon capture and storage.

This simply isn’t true. Doing so will drive dangerous climate change, with the impacts falling first on the most vulnerable people in the poorest countries and regions.

First, when it comes to energy access, it is actually through clean energy that we will be able to provide heat and electricity to the poorest.

According to the International Energy Agency, most new investment needs to be in distributed energy, including in mini-grid and off-grid options that most often rely on renewable energy sources. If G20 governments redirected 49 billion dollars a year – just over half of what they currently provide in support to fossil fuel exploration – we could achieve universal energy access as soon as 2030.

Second, there has only been very limited application of carbon capture technology so far.

The first and only full-scale ‘commercial’ carbon capture and storage project, launched this year in Canada, relies on government subsidies and sells the captured carbon to the oil industry, which uses it to extract even more fossil fuels. It is not a sustainable model.

In short: fossil fuel exploration subsidies are fuelling dangerous climate change; this support is increasingly uneconomic; and oil, gas and coal will not address the energy needs of the poorest and most vulnerable.

The G20 countries have the resources to support a transition to clean energy. They can set an example for the world by shifting national subsidies, investment by state-owned enterprise and public finance away from fossil fuels and toward renewables and efficiency.

G20 leaders meeting in Brisbane this week must recognise this and make good on their existing pledges. Immediately phasing out fossil fuel exploration subsidies would be the right place to start.

(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 Shyam Saran
NEW DELHI, Jul 23 2014 (IPS)

The sixth BRICS Summit which has just ended in Brazil marks the transition of a grouping based hitherto on shared concerns to one based on shared interests.

Since the inception of BRICS (bringing together Brazil, Russia, India, China and South Africa) in 2009, it has been seen as a mainly flag waving exercise by a group of influential emerging economies, with little in terms of convergent interest other than signalling their strong dissatisfaction over persistent Western dominance of the world economic, financial as well as security order, but unable to fashion credible alternative governance structures themselves.

However, with the Fortaleza Summit finally announcing the much awaited establishment of the New Development Bank (NDB) with a 50 billion dollar subscribed capital and a Contingency Reserve Arrangement (CRA) of 100 billion dollars, the monopoly status and role of the Bretton Woods institutions – the World Bank and the International Monetary Fund (IMF) – stand broken.

Shyam Saran

True, it may take the NDB and the CRA considerable time and experience to evolve into credible international financial institutions but that clearly is the intent.

BRICS leaders have kept the door open for other stakeholders, but will retain at least a 55 percent equity share. They have also been careful to declare that these new institutions will supplement the activities of the World Bank and the IMF, and this has also been the initial response from the latter.

Nevertheless, the emergence of an alternative source of financing with norms different from those followed by the established institutions will alter the global financial landscape irreversibly.

It may be noted for the future that the one component of the global financial infrastructure where Western companies still remain supreme is the insurance and reinsurance sector. Global trade flows, in particular energy flows are almost invariably insured by a handful of Western companies which also determine risk factors and premiums.

In Brazil, the BRICS countries have given notice that they will examine the prospect of pooling their capacities in this sector. A more competitive situation in this sector can only be a positive development for developing countries.“The emergence of an alternative source of financing [BRICS Bank] with norms different from those followed by the established institutions will alter the global financial landscape irreversibly”

The BRICS initiatives were born out of mounting frustration among emerging countries that even a modest restructuring of the governing structures of the Bretton Woods institutions, to reflect their growing economic profile, was being resisted. The commitment made in 2010 at the G20 to enlarge their stake in the IMF remains unfulfilled while the restructuring of the World Bank is yet to be taken up.

The longer the delay in such restructuring, the more rapid the consolidation of the new BRICS institutions is likely to be. It is this factor which played a role in helping resolve some of the differences among the BRICS countries over the structure and governance of these proposed institutions.

The setting up of the BRICS institutions owed a great deal to the energy and push displayed by China. It is doubtful that the proposals would have been actualised had China not put its full weight behind them and showed a readiness to accommodate other member countries, in particular India. Russia became more enthusiastic after being drummed out of the G8 and subjected to Western sanctions.

Chinese activism on this score must be seen in the context of other parallel developments in which China has also been the prime mover and sometimes the initiator. These are:

1. The proposal for setting up an Asian Infrastructure Investment Bank (AIIB) to fund infrastructure and connectivity projects in Asia, in particular, those which would help revive the maritime and land “Silk Routes” linking China with both its eastern and western flanks. The parallel with the NDB is hard to miss.

2. The consolidation of the Chiang Mai Initiative Multilateralisation (CMIM) and the associated Asian Multilateral Research Organisation (AMRO) among the Association of Southeast Asian Nations (ASEAN) + 3 (China, Japan and the Republic of Korea). The CMIM is now a 240 billion dollar financing facility to help member countries deal with balance of payments difficulties. This is similar to the 100 billion dollar CRA set up by BRICS.

AMRO has evolved into a mechanism for macro-economic surveillance of member countries and provides a benchmark for their economic health and performance. This would enable sound lending policies and may very well be linked in future to the AIIB. The CMIM and the AMRO thus provide building blocks which could serve as the template for the NDB, the CRA and the AIIB.

3. In addition to the CMIM and the AMRO, there are ongoing initiatives within ASEAN + 3 to develop a truly Asian Bond Market which could mobilise regional savings into regional investments through local currency bonds. To support this initiative, a regional Credit Guarantee and Investment Facility has been established. A Regional Settlement Intermediary is proposed to facilitate cross-border multi-currency transfers.

These developments are taking place just when there is a rapidly growing Chinese yuan-denominated bond market, the so-called dim-sum bonds, which have become an important source of corporate financing. This reduces the dependence on euro and U.S. dollar-denominated bonds. The NDB could tap into this market to build up its own finances.

It is important to keep in mind this broader picture in assessing the significance of the decisions taken at the Fortaleza Summit. In systematically pursuing a number of parallel initiatives, China is attempting to create an alternative financial infrastructure which would have it in the lead role. The dilemma for other emerging countries is that there appear to be no credible alternatives, especially since the Western countries are unwilling to cede any enhanced role to them.

The Fortaleza Summit marks the beginning of the end of the post-Second World War Western dominance of the global economic and financial order. The existing institutions will now have to share space with the new entrants and may be compelled to adjust their norms to compete with the latter.

The prime mover behind the establishment of a rival network of financial institutions is China, whose global profile and influence is likely to increase as the various building blocks it has put in place come together to shape a new global financial architecture. This is still in the future but the trend is unmistakable. (END/IPS COLUMNIST SERVICE)

Excerpt:

The “fragility” of the World Trade Organization’s ‘Bali package’ was brought into the open at the weekend meeting in Sydney, Australia, of trade ministers from the world’s 20 major economies (G20).

The Bali package is a trade agreement resulting from the 9th Ministerial Conference of the WTO in Bali, Indonesia, in December last year, and forms part of the Doha Development Round, which started in 2001.

The G20 group of countries includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, the United States, and the European Union.“… the Bali package is not just about trade facilitation and it also includes other issues ... That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing” – South African trade minister Rob Davies

During the Sydney meeting, India and South Africa challenged the industrialised countries present to come clean on implementation of the issues concerning the poor countries in agriculture and development, according to participants present at the two-day meeting.

Ahead of the G20 leaders meeting in Brisbane, Australia, in mid-November, Sydney hosted the trade ministerial meeting to discuss implementation of the Bali package, particularly the trade facilitation agreement (TFA). The TFA has been at the heart of the industrialised countries’ trade agenda since 1996.

More importantly, Australia, as host of the November meeting, has decided to prepare the ground for pursuing the new trade agenda based on global value chains in which trade facilitation and services related to finance, information, telecommunications, and logistics play a main role.

“I said the Bali package is not just about trade facilitation and it also includes other issues,” South Africa’s trade minister Rob Davies told IPS Monday. “That was the premise on which the developing countries agreed to trade facilitation and it has to be self-balancing.”

Davies said that “the issue is that while South Africa doesn’t need any assistance, many developing and poor countries have to make investments and implement new procedures [because of the TFA]. What was there in the [TF] agreement is a series of best endeavour provisions in terms of technical and financial support together with best endeavour undertakings in terms of issues pertaining to least developed countries in agriculture and so on.”

Over the last few months, several industrialised countries, including the United States, have said that they can address issues in the Bali package concerning the poor countries as part of the Doha Single Undertaking, which implies that nothing is agreed until everything is agreed.

The specific issues that concern the interests of the least-developed countries include elimination of cotton subsidies and unimpeded market access for cotton exported by the African countries, preferential rules of origin for the poorest countries to export industrial products to the rich countries, and preferential treatment to services and services suppliers of least developed countries, among others.

“Even if there is an early harvest there has to be an outcome on other issues in the Bali package,” the South African minister argued.

There is lot of concern at the G20 meeting that if the trade facilitation protocol is not implemented by the end of this month, the WTO would be undermined.

“What we said from South Africa is to commit on the delivery of the outcomes in the Bali package,” Davies told IPS. “And a number of developing countries present at the meeting agreed with our formulation that there has to be substantial delivery of the outcomes in the Bali package.”

At the Sydney meeting, the industrialised countries pushed hard for a common stand on the protocol for implementing the Trade Facilitation Agreement by July 31. The TF protocol is a prerequisite for implementing the trade facilitation agreement by the end of July 2015.

The United States also cautioned that if there is no outcome by the end of this month, the post-Bali package would face problems. “Talking about post-Bali agenda while failing to implement the TFA isn’t just putting the cart before the horse, it’s slaughtering the horse,” U.S. Trade Representative Ambassador Michael Froman tweeted from Sydney.

The industrialised countries offered assurances that they would address the other issues in the Bali package, including public distribution programmes for food security, raised by developing countries. But they were not prepared to wait for any delay in the implementation of the TF agreement.

Over the last four months, the developing and poorest countries have realised that their issues in the Bali package are being given short shrift while all the energies are singularly focused on implementing the trade facilitation agreement.

The African countries are the first to point out the glaring mismatch between implementation of the TFA on the one hand and lack of any concerted effort to address other issues in the Bali package on the other. The African Union has suggested implementing the TFA on a provisional basis until all other issues in the Doha Development Agenda are implemented.

The industrialised countries mounted unprecedented pressure and issued dire threats to the African countries to back off from their stand on the provisional agreement. At the AU leaders meeting in Malibu, Equatorial Guinea, last month, African countries were forces to retract from their position on the provisional agreement.

However, South Africa, Tanzania, Zimbabwe and Uganda insisted on a clear linkage between the TFA and the Doha agenda.

India is fighting hard, along with other developing countries in the G33 coalition of developing countries on trade and economic issues, for a permanent solution to exempt public distribution programmes for food security from WTO rules in agriculture.

New Delhi has found out over the last six months that the industrialised countries are not only creating hurdles for finding a simple and effective solution for public distribution programmes but continue to raise extraneous issues that are well outside the purview of the mandate to arrive at an agreement on food security.

India announced on July 2 that it will not join consensus unless all issues concerning agriculture and development are addressed along with the TF protocol.

India’s new trade minister Nirmala Sitaraman, along with South Africa, made it clear in Sydney that they could only join consensus on the protocol once they have complete confidence that the remaining issues in the Bali package are fully addressed.

Against this backdrop, the G20 trade ministers on Saturday failed to bridge their differences arising from their colliding trade agendas.

The developing countries, particularly India, want firm commitment that there is a permanent solution on public distribution programmes for food security along with all other issues concerning development, an Indian official told IPS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Thalif Deen
UNITED NATIONS, Apr 1 2014 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Group of 20 (G20) industrialised and emerging economies on Sunday formally expressed frustration with the ongoing inability of the United States to approve a major reform package that would see governance at the International Monetary Fund (IMF) shift more towards developing countries.

The reforms were approved by the IMF in 2010 and have since been ratified by more than three-quarters of the fund’s member governments. Yet while the administration of President Barack Obama has been a key proponent of the reforms, the U.S. Congress has thus far been unwilling to approve the changes."The BRICS are wondering why they put up their money when nothing is happening." -- Jo Marie Griesgraber

Because the United States, with around 17 percent of voting rights (or “quota” shares) has an effective veto within the IMF, the reforms cannot go forward without the U.S. vote. The process has now missed a January deadline, while a second deadline for a subsequent round of changes is looming.

“Given that the U.S. is a big part of the G20, it is no small victory that emerging market and developing countries were able to get IMF reform so formally prioritised,” Kevin P. Gallagher, co-director of the Global Economic Governance Initiative at Boston University, told IPS. “Such pressure is basically the US administration and the rest of the world against the U.S. Congress.”

On Sunday, the G20, which has been a key organiser of the international financial response in recent years, strongly criticised the deadlocked reforms process. It also offered a new deadline for U.S. action.

“We deeply regret that the IMF quota and governance reforms agreed to in 2010 have not yet become effective,” the G20 stated in a communiqué on Sunday, following a ministerial meeting in Australia, which is hosting the grouping this year.

IMF chief Christine Lagarde. The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. Credit: World Economic Forum/cc by 2.0

“Our highest priority remains ratifying the 2010 reforms, and we urge the US to do so before our next meeting in April. In April, we will take stock of progress towards meeting this priority.”

IMF Managing Director Christine Lagarde echoed this concern, saying Sunday that the fund “share[s] this view and urge[s] rapid progress on implementation.” The Washington-based institution is considered the world’s “lender of last resort”.

The quota changes would significantly increase the currently underweighted influence of fast-rising economies such as Brazil, China, India and Turkey. It would do so largely by decreasing the cumulative share of European members, considered outsized in terms of gross domestic product.

The Netherlands and Spain, for instance, both have voting shares similar in size to Brazil’s, despite the fact that the Spanish economy is less than two-thirds the size of the Brazilian. Given the problems in the eurozone, the European countries have also been prime beneficiaries of IMF support in recent years.

Under the quota reforms, the so-called BRICS countries – middle-income countries including Brazil, India and China – would see their vote shares expand the most significantly. The 2010 reforms would shift around nine percent of these shares towards developing countries, while also doubling the size of the fund’s overall lending capacity.

“The Europeans love it – they’re gloating. They have excessive power, are significantly overrepresented, and they love that [the United States] is not moving the reforms process forward,” Jo Marie Griesgraber, the executive director of the New Rules for Global Finance Coalition, a Washington-based international network, told IPS.

“On the other hand, the BRICS are wondering why they put up their money when nothing is happening. They’re most unhappy. In the long term, the BRICS countries could say this doesn’t work for them and move more seriously away from the IMF.”

On Sunday, a top Indian finance official warned that the failure to move forward on quota reform was threatening to undermine both IMF and G20 legitimacy.

“This is perhaps the first visible failure of G20. This has reduced the credibility of G20,” India’s economic affairs secretary, Arvind Mayaram, said in Sydney, calling implementation of the 2010 reforms “vital for the credibility, legitimacy and effectiveness of the IMF”.

Alternative institutions

Although an esoteric topic, the IMF governance reforms have received widespread approval from important constituencies in the United States, including major business and financial lobby groups as well as a long list of Republican luminaries.

In fact, President Obama bears some blame for the current situation, having decided in 2012 for political reasons not to request approval from the U.S. Congress. Yet since then, his administration has tried to do so repeatedly.

Each time, however, the Republican-controlled House of Representatives has rebuffed these requests, though apparently less for ideological than for political reasons. The last such attempt took place last month, when Republicans agreed to include the IMF reforms proposal in a major appropriations bill – but only if the Democrats would agree to stop the U.S. Treasury from imposing proposed restrictions on political “dark money”.

President Obama reportedly refused the trade, and there are few legislative options left for moving related legislation through Congress in coming months, particularly as national elections loom at the end of the year. (On Sunday, U.S. Treasury Secretary Jacob Lew told the G20 his office “will continue to work with Congress to pass legislation as soon as possible to secure the 2010 reforms, which are vital to our economic and national security interests.”)

Some observers say that such a situation should only strengthen an ongoing process under which developing countries are building multilateral structures outside the IMF.

“Upcoming Congressional elections may lead to further entrenchment by the U.S. on this issue. Thus it is imperative that the developing world continue to build alternative institutions such as the BRICS bank and the BRICS exchange reserve pool,” BostonUniversity’s Gallagher says.

“Just as important is for these bodies to have more equitable and transparent processes, so they can be held up as models against the arcane structures in the international financial institutions.”

The BRICS countries announced their intention to create a new multilateral development bank last year. Yet since then, progress has reportedly been slow, particularly as ongoing economic roiling is being felt particularly strongly in emerging economies.

“There is good talk about these projects, but most countries remain very reluctant to walk away from the [IMF]. Nonetheless, we are already seeing a gradual erosion in the use of the institution,” New Rules’s Griesgraber says.

“From our perspective, we need to get through this current reform process so we can move on to the larger governance issues that need to be addressed at the fund. Let’s equalise the power, introduce greater transparency around the board, and ensure that likely consequences for poor people are assessed before the IMF acts.”

A major grouping of rich countries has unveiled a new model for the automatic exchange of certain individual financial information between countries, aimed at significantly cutting down on offshore tax evasion.

Advocates of stronger financial transparency measures are lauding the move, announced Thursday by the Organisation for Economic Cooperation and Development (OECD). But anti-poverty campaigners are warning that developing economies were not included in discussions around the new common reporting standard.“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream.” -- Heather Lowe

Indeed, the new standard has yet to offer clarity on how it would include poor countries, despite the fact that developing economies are among the hardest-hit by global tax evasion.

“This is a real game changer. Globalisation of the world’s financial system has made it increasingly simple for people to make, hold and manage investments outside their country of residence,” OECD Secretary-General Angel Gurria said Thursday.

“This new standard on automatic exchange of information will ramp up international tax cooperation, putting governments back on a more even footing as they seek to protect the integrity of their tax systems and fight tax evasion.”

The new proposal comes in the context of rising public frustration around the world, particularly in the aftermath of the global financial crisis, with reports of rich companies and individuals stashing as much as 20 trillion dollars overseas in order to escape national taxation. That public sentiment coincides with increasingly strapped government coffers, new enforcement of painful austerity measures, and officials looking for ways to strengthen national revenue streams.

The OECD developed the new standard after being requested to do so last fall by the Group of 20 (G20) of developed and emerging economies. It will now be formally presented to a G20 ministerial meeting in Australia later this month, and potentially adopted at a G20 summit in September.

If adopted, the changes would mark a sea change in global financial transparency, and one that advocates say came about with astounding speed.

“Just five years ago you couldn’t get anyone to talk about this issue – most people called it a pipedream,” Heather Lowe, director of government affairs for Global Financial Integrity (GFI), a Washington watchdog group, told IPS.

“So it’s fantastic and amazing that we’ve gotten to the point where everybody recognises that the automatic exchange of tax information is necessary in order to fill those holes in the international financial system that allow illicit money to hide out.”

Truly global

The OECD common reporting standard would see participating countries automatically share information on foreign bank accounts, capital gains and other interest earned. Previously, such information would have needed to be formally requested by governments, an often cumbersome process that could be easily stonewalled.

Significant parts of the new standard reflect landmark U.S. legislation, known as the Foreign Account Tax Compliance Act (FATCA), which the OECD says played a “catalytic role” in the creation of the new model. Since its enactment in 2010, FATCA has been roiling international discussions by requiring overseas financial institutions to turn over information about U.S. customers.

“Today’s announcement underscores that promoting tax transparency is a global priority and we are proud to lead the charge on this pressing issue by implementing FATCA and collaborating closely with our G20 partners,” the U.S. Treasury told IPS in a statement.

“We expect the G20’s endorsement of the common reporting standard to add further momentum to our network of intergovernmental agreements, as countries see the extent to which our model agreements reflect this new international standard.”

Already, the OECD says more than 40 countries have agreed to adopt the new standard. Yet poor countries have thus far been largely left outside of the process, despite a high-level summit last year declaring that a prime motivation for any strengthened exchange of tax information would be to assist developing countries collect the taxes due to them.

“This model is being billed as a global standard, but it won’t be global unless all countries can sign up to it, and that includes developing countries,” GFI’s Lowe says. “Otherwise, we could easily create a system in which rich countries get richer and poor countries get poorer, because their wealthy officials and businesspeople continue putting money abroad where tax authorities can’t reach it.”

Other groups are decrying the fact that developing countries were excluded from the negotiating process surrounding the new OECD model.

“Up to nine trillion dollars is thought to be hidden offshore from the tax authorities in developing countries. Those governments need information just as much as [developed countries], but they are being told they will have to wait,” Joseph Stead, a senior economic justice adviser for Christian Aid, a British charity, said Thursday.

“We want to see the U.K., OECD and G20 commit to a process which enables developing countries to be part of the new system and to start benefiting from it before they are burdened with costs.”

Reciprocity and reluctance

The OECD plan outlines two G20-directed processes mandated to figure out how to bring developing countries in under the tax information-sharing umbrella. The first of these blueprints are to be released in September, and will show “how developing countries can overcome obstacles to participation in the automatic exchange standard and to assist them in meeting the standard”.

While necessary, there will likely be at least two obstacles in the attempt to begin regular exchange of tax information with developing countries.

First and foremost, while the OECD model calls for information-sharing “reciprocity”, many developing countries currently lack the basic technical capacity to make such information available. While programmes to offer both financial and training assistance are already going forward, GFI and other groups are calling on multilateral institutions and G20 donors to prioritise such work as the model goes forward.

A second obstacle could be reluctance on the part of certain governments or individual officials in developing countries to open their systems up to greater scrutiny, over concerns of past or future corruption.

“This is clearly a very tricky issue, but in certain cases it won’t be a question of what a government wants but, rather, what’s right for the people in developing countries,” GFI’s Lowe says.

“Fortunately, I think there’s a growing movement among populations around the world about illicit money and tracing it and returning it to developing countries. So as that continues to grow, the pressure will be on developing country governments to take part, and it will be up to others to support those grassroots movements.”

Residents of Bangalore, India, who live in extreme poverty. Credit: bandarji/ CC by 2.0

By Jim Lobe
WASHINGTON, Oct 26 2013 (IPS)

Key multilateral institutions charged with improving regulation of the international financial system are failing to democratise their governance and adequately consider the impact of their actions on the world’s poor, says a new report by anti-poverty groups.

The 68-page study, entitled “Global Financial Governance & Impact Report”, gave higher marks on both counts to the International Monetary Fund (IMF) and the World Bank than to other institutions, notably various rule-making bodies on international taxation, the Group of 20 (G20), and the Basel-based Financial Stability Board (FSB).

Overall, however, the study, which was released by the ten-year-old Washington-based New Rules for Global Finance Coalition, found all agencies’ governance and impact on poor countries “very disappointing”.

“Too much of the governance of global finance remains ad hoc, with non-transparent, non-inclusive, largely unaccountable and un-responsible institutions wielding great power,” according to the coalition, which includes ActionAid, the South African Institute of International Affairs, and the Jubilee USA Network."Those who are often most affected by the rules aren't there when these rules are being made."
-- Jo Marie Griesgraber

Despite increased integration of poverty reduction into the work of the IMF and the Bank, in particular, “there are huge gaps between declarations and actions,” according to New Rules, which also includes the Institute for Agriculture and Trade Policy, the Tax Justice Network, the South African Institute of International Affairs, Germany-based World Economy, Ecology & Development (WEED), and the Heinrich Boell Foundation of North America.

“All have a very long way to go before they can confidently declare that they are having a strong positive impact on equitable and sustainable development,” the report said.

“The problem is that all of the wealthy countries have a seat at the table in these institutions, while those who are often most affected by the rules aren’t there when these rules are being made,” New Rules executive director Jo Marie Griesgraber told IPS.

“What we’re trying to do is make room at the decision-making table for excluded peoples and thereby ensure that their decisions and processes benefit everyone,” she added. “This is an initial attempt to assess how these institutions are performing in that regard.”

Most experts believe that the 2008 financial meltdown was caused primarily by key national and international institutions’ failure to adequately regulate increasingly sophisticated transactions in an ever-more globalised financial marketplace – a product of the neo-liberal orthodoxy that guided many of the world’s economic policy-makers, including in the IMF and the World Bank, in the 1980s.

In the wake of the crisis, however, world leaders decided that greater regulation was required to keep the global economy from falling into a 1930s-like depression and to impose greater discipline on financial markets.

So they replaced the G8 with the G20 as the key forum for global financial policy-making; boosted lending resources and modified strategies of the IMF and the Bank; and created the Financial Stability Board (FSB) to develop and coordinate global financial regulatory policies to promote stability.

The new report marks the first effort to assess how well these rule-making agencies have performed with respect to their own internal governance, including their “transparency” in internal processes; accountability to all governments and to civil society; involvement of the poor in decision-making; and responsibility to promote “more just and economically sustainable global development, especially for people in low income countries.”

The institutions were given scores ranging from 1 (poor) to 4 (excellent) on each of the four criteria, as well as an overall score.

For the aggregate scores, the IMF, the World Bank, and the FSB all rated a 2 (moderate), while the G20 and the new tax authorities were given 1.5. On transparency, the IMF and the World Bank scored highest at close to 3 (good), while the G20 was the lowest at 1.5.

The IMF also scored highest (2.5) on inclusiveness, higher than the World Bank (2), despite the latter’s long-standing commitments to consult closely with civil society. But with respect to responsibility, the IMF and tax-related agencies received the lowest possible score.

Regarding the impact of these institutions on the world’s poorest, New Rules said it was not possible to use a common framework such as the one it applied in assessing governance. Instead, it used independent specialists and experts from within the coalition’s member organisations to evaluate each institution.

The IMF gained the highest score on impact at 2.6, followed closely by the World Bank (2.4) and the G20 (2.1), which was praised for its coordinated stimulus package devised at its 2009 London Summit, its establishment of the FSB, and its efforts at reducing transfer costs of remittances by migrants from poor countries.

The FSB received a 1.4 score, while the tax authorities received the lowest possible score in large part because none addressed the problem of “offshore” tax havens, or secrecy jurisdictions that are estimated to hold 21 to 32 trillion dollars of the world’s private wealth.

That failure, according to the report, is due primarily to the fact that the status quo powers continue to control the OECD and that the IMF and have deliberately weakened the U.N. Tax Committee.

The World Bank strongly criticised the study. “This report is deeply flawed, and it misses the mark on the World Bank’s increased push for results, our huge strides in openness, and our strong focus on accountability,” David Theis, a Bank spokesman, told IPS by email.

He noted that the “2012 Aid Transparency Index: Publish What You Fund” rated the Bank, along with the British aid agency DFID, first among all donors at the country level on transparency.

Requests to the IMF for reaction to the report went unanswered.

Griesgraber said the new report was “an initial attempt, and we know there’s a lot of room for improvement.…Our report is a challenge to the institutions. If you don’t like our data and conclusions, show us where we’re wrong.”

But, she suggested, the report’s focus on the inclusion of the poor in the governance of institutions that oversee the global financial system and the poverty-reduction impact of these same institutions offered important insights that call for greater study.

“The fact that the voices of low-income countries and the world’s poor citizens are rarely heard in the forums governing global finance almost certainly explains why they have disappointingly low impact on improving their lives,” said the report.

Some analysts suggest that Obama’s failure to line up support from more G20 leaders suggests that the U.S.-created global order is no longer sustainable. Credit: Official White House Photo by Pete Souza

By Jim Lobe
WASHINGTON, Sep 6 2013 (IPS)

With a week of intense lobbying behind him, U.S. President Barack Obama looks increasingly beleaguered – both at home and abroad – in his effort to rally support for a military strike against Syria to punish its government for its alleged Aug. 21 chemical-weapons attack outside Damascus.

At home, most political observers say Obama faces a particularly difficult task in bringing a majority of the Republican-led House of Representatives, which begins debating his proposed Authorisation for the Use of Military Force (AUMF) next week on return from its August recess, over to his side.“The lack of consensus within G20 is confirmation of what we already knew, which is that there is limited support for military action in Syria within the international community." -- Charles Kupchan of the Council on Foreign Relations

Congressional offices, even those whose bosses favour Obama’s position, are reporting overwhelming opposition in telephone calls and emails from their constituents, while public meetings held by lawmakers in their home districts have been dominated by anti-intervention forces from both the right and the left.

And polls released over the past week suggest that the administration has made little headway in moving public opinion its way.

A new Gallup poll taken at mid-week and released Friday found that support for U.S. military action “to reduce Syria’s ability to use chemical weapons” – 36 percent – was the lowest on the eve of any military intervention Washington has undertaken in the last 20 years. Fifty-one percent of respondents opposed a strike.

In a reflection of White House concern over opposition to military action, Obama himself announced Friday that he will address the nation about his intentions Tuesday. At a press conference at the Group of 20 (G20) meeting in St. Petersburg, Russia, he acknowledged that getting both house of Congress to approve an authorisation was “going to be a heavy lift”.

He spoke just after his deputy national security adviser, Tony Blinken, told National Public Radio (NPR) that, even though Obama retained the constitutional authority to strike Syria without Congressional authorisation, “it’s neither his desire nor intention to use that authority absent Congress backing him.”

Meanwhile, on the international front, Obama also appeared to be faring poorly in his bid to gain support for military action.

In St. Petersburg, The White House released a “joint statement” signed by the leaders of only 10 members, including the U.S., of the G20 plus Spain voicing “support efforts undertaken by the United States and other countries to reinforce the prohibition on the use of chemical weapons” and calling for “those who perpetrated these crimes (to be) held accountable.” The statement stopped short, however, of endorsing military action.

The signatories included the leaders of Australia, Britain, Canada, France, Italy, Japan, South Korea, Saudi Arabia, Turkey, as well as the U.S. Absent from the list, however, were all members of the BRICS bloc – Brazil, Russia, India, China, and South Africa – as well as Argentina, Indonesia, Mexico, and Germany.

The European Union (EU), a G20 member in its own right, also did not sign due to a lack of consensus among its membership.

Independent observers described the statement as a serious setback not only to Washington’s efforts to rally international support.

“It seems to have been a remarkable investment of American diplomatic energy not to have achieved the support of even a majority of the G20, and they tried to give the appearance of half plus one through sleight of hand,” noted Daniel Levy, the director of the Middle East and North Africa Programme at the London-based European Council on Foreign Relations (ECFR), who pointed to larger problems caused by the way the administration has acted over the Syria issue.

“Look at the institutions they’ve weakened in this process: the U.N. Security Council itself; the European Union by implicitly underlining its failure to gain consensus; the Arab League where the three most populous Arab states – Egypt, Iraq and Algeria – have all come out against military action; and even the G20 – all in order to achieve a statement that is far from an unequivocal endorsement of American military action,” he told IPS.

Charles Kupchan, a senior fellow at the Council on Foreign Relations (CFR), also suggested that the administration’s latest diplomatic move underscored its weakness on the issue.

“The lack of consensus within G20 is confirmation of what we already knew, which is that there is limited support for military action in Syria within the international community,” he said.

Back at home, advocates of military action, the most vocal of whom are pro-Israel activists and organisations worried that Congress’ failure to back up Obama’s threats against Syria will embolden Iran and its regional allies, are increasingly making the argument that both the president’s and Washington’s international credibility is at stake.

“This is not longer just about the conflict in Syria or even the Middle East,” wrote former Sens. Joe Lieberman and Jon Kyl, co-chairmen of the American Internationalism Project of the American Enterprise Institute (AEI), a neo-conservative think tank that played a leading role in championing the 2003 invasion of Iraq.

“It is about American credibility. Are we a country that our friends can trust and our enemies fear? Or are we perceived as a divided and dysfunctional superpower in retreat, whose words and warnings are no longer meaningful?” they asked in an op-ed entitled “Inaction on Syria Threatens U.S. Security” published by the Wall Street Journal Friday.

Failure to authorise a strike will be a “green light” for Iran to “speed toward nuclear weapons” and “confirm the worst fears of our ally, Israel, and moderate Arab states like Jordan that the U.S. cannot be relied upon to stand by its commitments. This will dramatically raise the risks of a regional war that could upend the global economy,” they stressed.

But others have argued that the credibility argument is overdrawn in this case.

“We heard this argument many, many times before, and always when the objective case for war was weak,” according to Stephen Walt, a prominent international relations expert at Harvard University. “To refrain from using force when vital interests are not at stake and when bombing could make things worse is not weakness; it is good sense.

“The United States has fought five wars since the Cold War ended and is using drones and special forces in several countries already,” he told IPS. “Nobody is going to question U.S. credibility when its interests are genuinely engaged and it has a clear objective in mind.”

Some liberal interventionists, notably Secretary of State John Kerry in his various public remarks, have also stressed the credibility argument, arguing that Washington’s failure to act could have profound implications for world order.

“For better or worse…” William Galston of the Brookings Institution argued in the Journal earlier this week, “the United States is the guarantor of the global order, which we took the lead in creating.

“Mr. Obama will need to convey this idea to the American people …from the Oval office,” he wrote.  “He must be prepared to go all-in to win what is shaping up as a tough fight on Capitol Hill. One thing is clear: A loss would shatter his presidency, and a lot more.”

But Kupchan said Obama’s failure to line up support from more G20 leaders suggested that the U.S.-created global order was no longer sustainable in any case.

“It’s clear confirmation of the degree to which there is a fundamental difference in geopolitical perspective between developed and emerging powers,” he told IPS.

“That the BRICS countries voted as a bloc is a sign of how difficult it’s going to be to fashion international consensus as global power continues to diffuse.”

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

The global economy weakened significantly towards the end of 2011 and further downward pressure emerged in the course of 2012. The growth rate of global output, which had already decelerated from 4.1 percent in 2010 to 2.7 percent in 2011, is expected to slow down even more in 2012 to around 2.3 per cent. Developed economies as a whole are likely to grow by only slightly more than one per cent in 2012, owing mainly to the recession currently gripping the European Union (EU).

Supachai Panichpakdi

This contrasts with a much stronger performance in developing and transition economies, where growth should remain relatively high, at around five and four percent respectively. However, even in these economies growth is losing steam, showing that they cannot avoid the impacts of economic troubles in the developed countries.

On top of already weak private demand, fiscal tightening has been adopted in several developed countries with a view to reducing public debt and restoring the confidence of financial markets. However, these policies have further weakened domestic demand and growth, which is detrimental to the goals of fiscal consolidation and improved confidence.

Some governments are trying to stimulate growth through increasing exports, and are working to improve their competitiveness by reducing nominal wages and other costs. For several European countries within the monetary union, this would be the way to achieve a real devaluation. The danger with this policy is that it will severely damage domestic demand before it can help to regain competitiveness, thus putting into question the adjustment process.

Developed economies should therefore change the focus of their policies from fiscal consolidation and internal devaluation to restoring growth, because this is the only way in which they can avoid a recurrence of a financial and fiscal crisis. Countries with larger fiscal space and current account surpluses should take the lead by expanding their domestic demand. This would be in line with their commitments at the last G-20 Summit, and contribute to a growth-friendly global rebalancing.

Most developing and transition economies have actually supported their growth by encouraging domestic demand and pursuing countercyclical policies, including the provision of fiscal stimulus and expansionary credit. They have also succeeded in preventing a significant rise in unemployment, and have enabled the continued growth of real wages. All this, together with public transfers in several countries, has promoted private consumption, and consequently, productive investment, even though this has not always been sufficient to avoid growth deceleration.

Indeed, the developing and transition economies are being affected by slow growth or economic contraction in the developed countries. This is reflected in stagnating export volumes to those markets and a declining trend in commodity prices since the second quarter of 2011.

Moreover, financial instability and excessive reliance on monetary policies in developed countries is affecting financial flows to emerging market economies and adding to the inherent volatility of commodity prices.

Therefore, the risk of a new major shock in global financial markets cannot be excluded, with a potentially large impact on international trade volumes, asset and commodity prices, risk spreads, capital flows and exchange rates, all of which would affect developing and transition economies.

Some governments are looking to implement structural reforms to overcome the crisis. The United Nations Conference on Trade and Development (UNCTAD) has always supported the need for structural reforms, since no development process can happen without changes in economic and social structures. However, today, structural reforms are often focused on attempts to introduce greater labour market flexibility.

Yet, such reforms would undermine the incentives for investment and innovation. Indeed, if less efficient firms can compensate for their lower profits by cutting wages, they are not forced to increase their productivity to survive and expand. Such reforms also threaten to further undermine domestic demand. In order to revitalise sustained growth, governments must take measures to reduce income inequality, by assuring the participation of all social groups in productivity gains stemming from economic and technological advancement.

Labor market reforms are not a way out of the crisis, because the crisis did not originate in the labor market. Additionally, structural policies cannot be a substitute for pro-growth macroeconomic polices. Structural reforms have to address the very roots of the present crisis, namely the fragility of the financial system and the trend towards increasing income inequality.

In contrast, the structural reforms being adopted by a number of developing countries have tended to create or reinforce social safety nets and to expand the role of public policies for supporting investment and structural change. Most of these measures are countercyclical, as they aim to safeguard employment and support economic activity in troubled times.

The renewed fragility of the world economy, and the growing downside risks, including for developing countries, have brought us to the brink of a second recession. The developing countries cannot bear the burden of supporting global growth alone. Urgent action is therefore needed to restore growth, particularly in the developed world, and to take measures to prevent a recurrence of the financial and economic crisis. (END/COPYRIGHT IPS)

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

Despite a sudden increase in July this year, prices of cereals on world markets remained fairly stable. But there are no grounds for complacency, as cereals markets remain vulnerable to supply shocks and disruptive policy measures. In this context, the good harvests that are expected in the Southern Hemisphere are important.

José Graziano da Silva, director-general of the Food and Agriculture Organisation of the United Nations (FAO). Credit: FAO News

In the last ten years we have seen major changes in the behaviour of food prices. Up until around 2002 real food prices were falling but they have now been above trend for longer than at any other time in the previous forty years.

Food prices have also been volatile and the combination of high and volatile food prices will continue to challenge the ability of consumers, producers and governments to cope with the consequences.

All this makes it timely to reflect on recent price events and the reactions of the international community, especially since price volatility is likely to continue for the foreseeable future.

Set against this backdrop, the Ministerial Meeting on Food Price Volatility held on World Food Day on Oct. 16 was particularly relevant.

Twenty-five ministers and 13 deputy ministers met to discuss the issues and exchange views on how to strengthen measures to contain food price volatility and to reduce its impact on the most vulnerable populations.

The meeting recognised that a lot was learned from the 2007-8 and 2010-11 price hikes about appropriate responses at international, regional and national levels. They also agreed that much more could be done based on the Action Plan on Food Price Volatility and Agriculture that was adopted by the G20 leaders in November 2011.

This action plan launched major international initiatives, in particular the Agricultural Market Information System (AMIS), hosted at the headquarters of the Food and Agriculture Organisation (FAO). AMIS monitors developments based on the latest available information, analysing the global supply/demand situation and providing objective assessments.

Born just one year ago, AMIS is already a fully functioning mechanism and played a key role this summer in calming markets and preventing the deterioration of a vulnerable food market situation into the potential crisis that countless commentators were so quick to predict.

AMIS is providing an objective assessment of the market situation and risks, while calling on G20 member states to refrain from adopting policy measures that might further destablise markets.

This experience shows that coordinated international action and enhanced transparency and information on agricultural markets can make a difference in limiting food price spikes and excessive volatility.

Even when they are affected by adverse weather conditions that reduce production and export capacity, it is important that governments of exporting countries act transparently and dialogue with commercial actors to assure local availability of cereals without creating uncertainty in international markets.

This coordination is crucial because it can stop a drought or a flood from becoming a crisis.

Other actions to limit price spikes and excessive volatility ­ adjustments to trade rules, the creation of emergency food reserves, reform of biofuel policies and control of speculation ­ are all still works in progress. ‘Excessive’ is the keyword, because some degree of volatility is a characteristic of agricultural markets.

Action also needs to be taken to build resilience to that volatility in the medium-term.

This requires substantially increased investment in agricultural production with a particular emphasis on support to smallholder farmers.

Financing will need to come primarily from the private sector including smallholders themselves and major companies. This is a controversial area and concerns, especially over large-scale land investments, are well founded.

It is vital that any investment is made responsibly and for the benefit of all stakeholders. This is where the Principles for Responsible Investment in Agriculture, which will be discussed by the Committee on World Food Security (CFS), and the Voluntary Guidelines on Land Tenure previously endorsed by the CFS, have an important role to play.

FAO is prepared to assist governments in implementation of these safety measures. AMIS, Voluntary Guidelines and the Principles for Responsible Investments are all elements of the new global governance on food security that we are building, and that has the CFS as its cornerstone. We are making up for lost time, as food security governance was neglected until a few years ago. Fortunately we are learning that, in a globalised world, it is impossible to ensure food security in a single country or region. (END/COPYRIGHT IPS)

*Jose Graziano da Silva is the director-general of the United Nations Food and Agriculture Organization (FAO).

Multilateralism is at a crossroads. This is a crucial matter for environmental and sustainability issues, as we have seen in the Rio+20 Summit, and for trade and other economic matters. The G20 Summit in Los Cabos, Mexico, focused precisely on improving our collective response to the current economic turbulence, which is at the heart of developments in the European Union (EU) as well.

More than three years have passed since the beginning of the 2008-09 crisis and the world economy remains very fragile. World Trade Organisation (WTO) projections indicate that trade growth will further decelerate this year to 3.7 per cent, down from 5 percent in 2011. Moreover, WTO economists believe that downside risks of an even sharper slowdown in trade growth remain high. Many of the achievements in poverty reduction over the past decade could be threatened with unravelling.

The impact of the crisis is being felt not just in developed countries but also in the developing world. China’s dynamic economy is expected to grow more slowly in 2012. India’s growth is decelerating. Many poor countries are seeing their exports to major markets such as the EU and the U.S. slow down.

Pascal Lamy. Credit: Courtesy of WTO.

While the crisis continues to loom, the world has not remained static. New economic players and new patterns of trade have emerged, dramatically changing the nature of trade and resulting in greater economic interdependence.

In the past decade, developing and emerging economies’ share of global gross domestic product (GDP) has risen from one-third to half. Developing countries’ share of global exports has jumped from 33 to 43 percent over the last decade.

Global trade patterns are also changing rapidly. Not too long ago, goods were referred to as “made in China” or “made in Germany”. Today, the expansion of global value chains means that most products are assembled with inputs from many countries. In other words, today’s goods are “made in the world”. At a growth rate of six percent a year, trade in intermediate goods now comprises close to 60 percent of total trade in goods and has become the most dynamic sector in international trade.

The map of global greenhouse gas emissions has also changed. Emissions of the developing world are rising fast, and China’s emissions are said to be either equal to, or to have actually overtaken, those of the U.S.

The same can be said of macroeconomic cooperation. As subsequent G20 summits have demonstrated, whether monetary policies, fiscal policies, currencies, the fight against tax havens or regulation of financial activities, a virtuous path requires global cooperation.

However, the rules governing multilateral cooperation have not kept pace with these changes. We are to a large extent living by the global rules created in the 90s.

The last couple of years have seen the emergence of a worrying attitude towards multilateralism. In stark contrast to the calls for greater and improved international regulatory coherence that dominated the headlines during the outbreak of the global financial crisis in 2008, international cooperation has slumped into an ever more precarious state.

Cynical observers would say that over the past decade international efforts to forge legally binding agreements have continued to set the threshold of expectations so low that even an agreement to continue to talk is considered a successful outcome.

Such cynicism ignores the fundamental lessons about international cooperation that we have learned over the past century. Most of all, it disregards the fact that for most countries more multilateralism and more international cooperation remain the only sustainable way forward.

Certainly, the changes of the past few years demand a re-configuration, rethinking and adjustment of traditional multilateral cooperation, including in the WTO. The proliferation of different informal coalitions and groups of countries and civil society ­the G8+, G8+5, G20, B20 and L20, to name but a few­ are symptomatic of the constantly evolving nature of international relations.

However, their effectiveness will depend on whether they are representative enough to address the increasingly complex challenges on our agenda. A stable global economy cannot be built without including all key stakeholders in the decision-making process.

More fundamentally, I believe that while the crisis continues to hit national systems hard, it will be very difficult to achieve high-standard multilateralism.

Contrary to conventional wisdom, international agreements necessitate a high quantum of political energy at home. They require strong political leadership because they are about bringing domestic constituencies on board.

This situation is a dangerous one and risks turning into a vicious circle: exiting the crisis sooner rather than later implies strong leadership to craft the necessary international cooperation agreements. But governments’ legitimacy is weakened by popular discontent generated by economic and social hardships. This erodes the ability to act together, which in turn further prolongs the crisis, leading to the syndrome of “too little, too late”.

For these reasons, I believe that multilateralism is at a crossroads. Either it advances in the spirit of shared values and enhanced cooperation, or is allowed to falter, at our own peril. Without global cooperation on finance, security, trade, the environment, and poverty reduction, the risks of division, strife and war will remain dangerously real. Waiting for better times will simply not suffice. A consensus on inaction would simply mean a consensus on more pain for all. We must, together, be bolder if we are to cope with the growing risks of today’s world. (END/COPYRIGHT IPS)

* Pascal Lamy is the director-general of the World Trade Organisation (WTO).

This column is available for visitors to the IPS website only for reading. Reproduction in print or electronic media is prohibited. Media interested in republishing may contact romacol@ips.org

The head of the International Monetary Fund (IMF), Christine Lagarde, on Wednesday urged countries to act on a suite of reform measures that would significantly increase the voices of developing countries within the agency.

“I call on the remaining member countries to complete the necessary legislative steps and other legal measures quickly to implement these important reforms within the agreed timeframe,” Lagarde said following a review of progress towards implementation of the reforms, agreed upon in 2010 and set to be implemented by this fall.

According to the board’s progress report, 107 countries have given their consent so far, while 80 have yet to do so. “Time is running out,” it warns.

The topic is expected to constitute a key issue at the upcoming Group of 20 (G20) summit, taking place next week in Mexico. It was the G20 that first spearheaded the reforms process, and it is taking responsibility on seeing that the reforms are enacted on time.

“The resistance of the IMF’s major shareholders to even minor reforms of the institution’s governance has become a major item on the G20’s agenda,” Nancy Alexander, director of the Economic Governance programme at the Heinrich Boell Foundation here in Washington, told IPS.

“The problem is leading to more diverse monetary arrangements in geographical subregions and among the BRICS,” referring to the “middle income” countries of Brazil, Russia, India, China and South Africa.

Those countries could stand the most to gain from the reforms process, which will go some distance towards rebalancing voting rights within the IMF. Under the current package, for instance, China’s voting strength would become the third largest.

The reforms would also see a change in the make-up of the Fund’s board. Two of the European seats on the 24-member body would go to developing countries, with some advocating an additional seat be assigned to African countries specifically.

In addition, the Fund’s funding resources would double to about 730 billion dollars, in addition to the 430 billion dollars promised a few months ago aimed at faltering European economies. Such pots of money have become particularly important as the euro zone has continued to falter.

But with developing countries being called on to help bail out Europe, the BRICS have chosen to use the situation to their advantage and press the case for reform.

“The BRICS are saying, ‘We can go elsewhere – we don’t need the IMF. If you want the IMF to work, we’re willing to play with you, but we want our share and are tired of the promises,” Jo Marie Griesgraber, executive director of the New Rules for Global Finance Coalition, an international network based here, told IPS.

On Wednesday, Brazilian officials reportedly suggested that they are thinking of contributing less to the new IMF fund than the country had previously indicated. “We are frustrated because we see that countries that know they will lose influence are resisting” the reforms, Reuters quoted an anonymous Brazilian government official as saying this week.

Several other middle-income countries, including China, India and Russia, as well as G20 host Mexico, are said to support Brazil’s position. The BRICS will be meeting on the issue on Jun. 18.

“Emerging countries are right to hold out for a greater say in the running of the institution before they commit more money to it,” Oxfam International spokesperson Steve Price-Thomas told IPS.

“The old world needs to move over and let these growing economies take their rightful place at the table.”

The BRICS are particularly frustrated by the EU countries, Griesgraber says, which she suggests “by any stretch of the imagination are overrepresented” at the IMF.

“I am very encouraged that the BRICS are working together and considering the consequences for low-income countries,” she says.

“I am also encouraged by the newfound solidarity among the BRICS and the poorer countries that any benefits to the dynamic emerging markets should not come at the cost of the low-income countries.”

Strong solidarity for the BRICS position is also reportedly coming from President Barack Obama’s administration. Although many media outlets have suggested that the United States is stymieing the reform efforts – as the Congress is required to vote on the issue, an unlikely scenario before the November elections – Griesgraber says that Washington is firmly on board.

“The U.S. is allied with the BRICS but doesn’t want a public fight with the Europeans,” she says. “The U.S. administration is not presenting this to Congress yet because they don’t want it turned down, but they’ve said they will act as soon as they can.”

Beyond governance

Even if passed, the reforms have been criticised as being too tentative. According to one widely cited set of criticisms by a Brazilian IMF executive, following the reforms the BRICS would have about a 14 percent voting share, less than half the EU’s, despite the two groupings having almost identical collective gross domestic products.

Still, most see the reforms as a small, important step forward. Others, however, point out that the moves do not deal with longstanding structural critiques of IMF policy.

“It isn’t just the voting structure that’s the problem – it’s an institutional problem,” Mark Weisbrot, co-director of the Center for Economic and Policy Research, here in Washington, told IPS.

“Developing countries need to fight for their interests, and in the IMF they can’t do that. These countries are being badly hit because of the mess in Europe, and the IMF is one of the three players making this mess.”

Agrees Heinrich Boell’s Nancy Alexander: “Whatever the outcome of these power struggles and realignments, the key is whether the approach to monetary policy changes. What must change is the privatisation of gains and socialisation of losses.”

While IMF governance reforms are important, Alexander suggests such talk is pointless without also discussing the future priorities of the institution.

“We don’t want to just play musical chairs on board the sinking Titanic,” she says.

Business will push for the freeing up of trade in green goods and services, at the upcoming summit of heads of state of the Group of 20 (G20) industrialised and emerging countries in Mexico.

“It’s an agenda for investors,” Diana Aguiar, representative of the Brazilian Network for the Integration of Peoples (REBRIP), told IPS. “The idea is that natural resources won’t be preserved if no monetary value is put on them. This is a very mistaken premise. They see it as a business.”

The activist is attending the alternative People’s Summit, which runs Tuesday Jun. 12 to Friday Jun. 15 in Mexico City before continuing in the northwestern city of La Paz until Tuesday Jun. 19.

The civil society forum has drawn hundreds of delegates of NGOs from Mexico and other G20 nations, whose presidents are meeting Jun. 18-19 in Los Cabos, a Pacific resort town at the southern tip of Mexico’s Baja California Peninsula, south of La Paz.

Fomenting free movement of green or sustainable products is one of the recommendations that Business 20 (B20) – which represents companies in the G20 bloc – set forth to the governments. The issue is to be discussed at the summit.

In a 102-page report on recommendations of the B20 task force, to which IPS had access, the business executives laid out suggestions on food security, green growth, employment, trade, investment, technology and innovation, and financing for growth and development.

The B20 argues that free movement of green-friendly goods and services will accelerate the adoption of green technology and foment competitiveness, innovation and job creation.

The document also recommends raising the price of carbon dioxide (CO2) in order to change investment patterns and decisions and help reduce greenhouse gases.

To that end, G20 leaders should guarantee that national goals and policies are ambitious enough to create international demand consistent with the units of CO2 and thus bolster green technologies, climate-smart agriculture, and energy efficiency, the report says.

Transnational corporations like Monsanto, Coca-Cola and Wal-Mart from the U.S.; the Anglo-Dutch Unilever; and Nestle from Switzerland are among the companies represented in the B20.

In addition to the G8 industrialised nations – Canada, France, Germany, Italy, Japan, Russia, the UK and the U.S. – the G20 is made up of Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Saudi Arabia, South Africa, South Korea and Turkey, as well as the European Union.

In Los Cabos, the presidents will discuss issues like policies against financial crises, food security, the green economy, the fight against climate change, transparency and corruption.

The non-member countries that have also been invited include Colombia, Chile, Peru and Spain.

The NGOs participating in the People’s Summit question the legitimacy of the G20, whose rotating presidency is currently held by Mexico, saying it represents the “one percent” of the world’s seven billion people.

They reject the summit’s agenda, which they say is more responsive to corporate and financial interests than to the needs and concerns of the world population.

“The G20 and B20 are very close, but that doesn’t happen with NGOs. That is worrisome,” Nancy Alexander, of the Heinrich Böll Foundation, told IPS.

Alexander, the director of the Economic Governance Programme in the Berlin-based Foundation’s North America office, also said the G20 has not focused on the priorities of infrastructure, green growth and food security.

Alexander and Aldo Caliari, director of the Rethinking Bretton Woods Project at the Center of Concern, a U.S. not-for-profit agency, stated in an article this month, “Selected Highlights of B20 Draft Recommendations to the G20”, that “If accepted by the G20, many of these recommendations would have far-reaching implications.”

Referring to the recommendation to place trade and investment on the G20’s permanent agenda, and to hold “periodic meetings of trade ministers” who would be in “ongoing dialogue” with the B20, they said this would exclude the 173 countries that are not members of the G20. “Therefore, if leaders accept this recommendation, it would institutionalise exclusionary trade negotiation practices,” they wrote.

The People’s Summit has scheduled seminars and workshops on questions like gender, energy, and alternatives to the G20, as well as street protests.

The NGOs are opposed to the austerity policies being implemented in the industrialised North, which have imposed drastic spending cuts in education, health and other essential social areas, and have driven up unemployment and stood in the way of developing a green economy.

“The G20 is in crisis,” Susana Sanz of Spain’s May 15 Movement (15M), which sprang up as nationwide protests against the government’s response to the economic crisis on that date last year, told IPS. “It doesn’t represent us. Public policies are adopted with a view to protecting private interests. We need participative democracy.”

The government of conservative Mexican President Felipe Calderón has outlined a five-point agenda for Los Cabos. The priorities include economic stability and structural reforms for growth and employment; consolidation of the international financial architecture; financial inclusion for economic growth; reduction of volatility in the commodities market; and promotion of sustainable development.

But what is expected to continue to monopolise the debate is the financial crisis that broke out in the U.S. in 2007, intensified in the EU last year, and has now thrown the future of the euro into doubt.

“They are seeking to use new spaces of accumulation of the financial system, to create commodities for speculation,” Aguiar said.

The G20 summit will announce the creation of a bloc that will include the multilateral financial institutions, private and development banks, companies, and private investors, to advance the B20 agenda over the next 36 months.

The B20 proposes an expansion of the public-private partnership model, especially in infrastructure construction, which is currently being tried in a number of the G20 countries.

“G20 promotes policies in low-income countries, but they are not represented nor have they been consulted properly,” Alexander said.

In their article, Alexander and Caliari argue that “formal engagement by the B20 in the assessment of trade and investment policies, as proposed, would also give the transnational business sector an unprecedented degree of access to decision-making, while excluding countervailing views from non-governmental actors”.

(END/IPS/WD LA G20 IF FM/TRASP-SW/EG/EGF/12)

In a renewed funding focus on large-scale infrastructure, the World Bank, Group of 20 (G20) countries and other multilateral groups are wilfully overlooking lessons learned decades ago, a new report by International Rivers warns.

Manza Village near Inga Dam on Congo River. Grassroots activists say such mega projects overlook the social, economic and environmental costs. Credit: International Rivers/CC BY 2.0

In recent months, the report notes, infrastructure has again become a “buzzword of the current development debate”.

The issue also looks set to figure large in upcoming discussions in Mexico among the G20 and in Rio de Janeiro for the United Nations Conference on Sustainable Development, but could spark a rethink following new World Bank President Jim Yong Kim’s assumption of leadership in June.

“Past energy, water and transport strategies have neglected the poorest population groups, and taken a heavy toll on affected people and the environment,” states the report, noting that new strategies that don’t specifically address the needs of the poor risk “entrench(ing) the power of privileged groups”.

Infrastructure has always been a key development concern. But while large-scale projects for decades constituted a funding priority for the World Bank, such lending took a backseat during the 1990s.

This policy move coincided with increasingly vocal criticism of the social, environmental and financial costs at stake with such mega projects. Such mobilising seemed to have an effect, as through the 1990s the World Bank scaled back its development of massive infrastructure.

Now, that appears to have come to an end. “Infrastructure lending has once again become the World Bank’s core business,” notes the report, titled “Infrastructure for Whom?”

Apparently motivated by the G20, in late 2011 a series of new policy papers charted a wholesale return to large-scale infrastructure as a development strategy by the multilaterals.

Large, privately funded, centralised projects, the argument suggests, will result in lower overall costs of primary services, such as electricity. But the evidence does not bear out the contention that investment in large projects has a resulting impact on the poor.

While the recent World Bank policy paper highlights the Inga dam in the Democratic Republic of Congo – the largest hydroelectric installation in the world – as exemplary of its newfound focus, the International Rivers researchers point out that billions of dollars in investment in the site over the past 50 years has left 94 percent of the country without access to electricity.

In the past, the Bank itself has admitted to overdependence on the idea that such mega investment would “trickle down” to local communities. But little in the new documents suggests that this lesson has informed current policymaking.

“Many communities want investments in infrastructure and other development, but top-down approaches are no longer being tolerated,” Andy White, a coordinator with the Rights and Resources Initiative here in Washington, told IPS. “Unfortunately, many projects already underway are being planned without due consideration of local peoples’ rights or the environmental consequences.”

Observers are likewise dubious at the prospect of increased dependency on private investment. While the Bank has set a goal of doubling current levels of public-private partnerships (PPPs), it admits that doing so is based on its own budgetary problems, as is the larger push towards consolidation into larger projects.

Yet private investment has traditionally tended to centre almost exclusively on urban and middle-class segments of a population, often further marginalising the impoverished communities in whose name development projects are typically undertaken.

“While we recognise the need for better infrastructure and private- sector investment in developing countries, market forces alone will not automatically make basic services affordable to those that need them the most,” Asif Saleh, with BRAC, a global development organisation based in Dhaka, told IPS.

“Market-based solutions will require some level of protection for the poor – at least for a certain period, until economic growth in the given region becomes more inclusive. If we want to ensure that inclusivity, it’s important also to focus on creating opportunity from the bottom up.”

Conflicts of interest

PPPs might well be increasingly important development tools in the current context of economic downturn and austerity. Andy White notes that “done correctly, this influx of investment provides an opportunity to clarify land rights and advance equitable development across developing countries’ landscapes.”

Yet many warn that such an approach would need to include a simultaneous priority on accountability. Large-scale projects, after all, are notoriously problematic in allowing for public oversight.

“In constructing PPPs, there are inherent conflicts of interest,” Michelle Chan, with Friends of the Earth U.S., told IPS. “Once you mix in a significant participation from the private sector, there is going to be a bias against the levels of transparency that you would expect from a publicly funded project.”

Chan says that while infrastructure is clearly critical for development, it is disheartening to see that the World Bank “continues to be biased towards new mega projects that often benefit industry over people”.

She points to a new 600-megawatt power plant in Kosovo that would burn lignite, the dirtiest form of coal. Despite clear environmental concerns, the Bank is currently considering funding the project.

“For the Bank, it is easier to fund a massive, polluting plant like this, rather than deal with the fact that Kosovo loses half of its energy due to simple inefficiencies,” Chan says. “The World Bank needs to get better at distributed energy, rather than continuing on this path of centralised infrastructure.”

International Rivers likewise points to a finding by the International Energy Agency that 70 percent of rural areas would be best served by electrification through distributed solutions.

“Such bottom-up solutions”, the report concludes, “offer a better way to address the basic needs of the rural poor than the large regional projects proposed by the G20 and the development banks.”

(END)

Brian Atwood Credit: Sanjay Suri/IPS

By Sanjay Suri and - -
LONDON, Nov 22 2011 (IPS)

For a start, stop calling it “aid”, Brian Atwood, chair of the Development Assistance Committee at the OECD, tells IPS.

Brian Atwood Credit: Sanjay Suri/IPS

Signs are that the Busan summit will take agreements on development cooperation forward substantially, Atwood says in an email interview. The Organisation for Economic Cooperation and Development (OECD), which is leading the fourth high-level forum on aid effectiveness taking place in Busan, South Korea, Nov. 29-Dec. 1, says that at a time of particular economic difficulties, agreements reached at Busan would be vital.

Following is the text of the interview:

Q: What is the best-case scenario that can realistically emerge at Busan? A: We will improve global cooperation and local coordination, reaffirm commitments made in Paris and Accra and rededicate the development community to achieving the MDGs. We will state that north-south and south-south cooperation are complementary and will commit to working together, including in triangular efforts.

Q: What might be the worst-case scenario, and what would be its implications? A: That Busan becomes a finger pointing exercise rather than an effort to overcome political obstacles to progress. Thus far, there is no indication of that.

Q: What does the Paris sherpas meet tell us? A: This represents a real negotiation over differences of interest and perspective, but it has been infected by a spirit of accommodation.

Q: Is language a problem: and so is the word ‘aid’ itself a problem, in that it suggests a giving that implies patronage and loss to the ‘donor’? A: We hope that Busan will eliminate words like “aid” and “donor” and “recipient.” However, the forum is called “aid effectiveness.” The word is used in the outcome text as a synonym for Overseas Development Assistance (ODA) at a time when developing partners are increasingly concerned that ODA levels might go down. So “aid” remains for now, but is hopefully to be replaced by “development cooperation.”

Q: The idea that aid is not a loss but is for the greater good, including one’s national own, is becoming a bit more current. Are there signs that governments are buying the argument? A: Never has the need for development been discussed at such high levels of government, including the G-20 and G-8. The attention being paid to Busan, versus Paris and Accra, is phenomenal. Attending will be the U.N. secretary-general, the U.S. secretary of state, 110 ministers, 30 foreign ministers and a half a dozen heads of state.

Q: Could such an idea be interpreted to take us back to the practice of heavily tied aid that some countries at least have been stepping away from? A: Around 80 percent of tied aid has been eliminated and I see no effort to turn the clock back on previous commitments. The last 20 percent is the most difficult because it involves popular programmes like food aid, scholarships, civil society organisations from donor countries and technical cooperation. However, I believe we will continue to make progress.

Q: Is there a distinction to be made between ‘evolved’ self-interest and narrow self-interest? Can politicians be persuaded to see that difference? A: We have a self-interest in bringing people out of poverty. That is a long-term endeavour and in that sense it is not ‘narrow,’ rather it requires an enlightened view. I believe that despite the economic pressures, we have acquired that view and I believe that Busan will demonstrate that.

Q: In the current economic squeeze, cutting aid might be more populist than sensible, and keeping up aid can potentially be unpopular. Are voters in Western Europe and North America showing any indication of resisting development aid? A: Some politicians are resisting and advocating budget cuts, but I believe they are in the minority. There is little to be gained in cutting these programmes which represent a small part of budgets, but much to be lost.

Q: If aid must be channelled in harmony with national priorities set by governments, where does civil society stand? Can we go back to old classic patterns of non-government organisations (NGOs) carrying out pockets of aided development? A: Civil society is a vital part of development and the development of a viable civil society is best carried out by NGOs with similar missions.

Q: In what way does the aid story change when it flows from south to south? Are those more instances of heavily tied aid? Is it more legitimate when the flow is south to south? A: We don’t know enough about the details of south-south cooperation. There is an important affinity among these nations and that is an important attribute.

Q: It may take a book and more to really answer this, but broadly, in what ways has the Paris Declaration worked, and where and how has it not? A: Yes, a book. Please take a look at our evaluation and survey. It is the evidence that demonstrates that ownership, alignment and mutual accountability produce results.

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