Puerto Rico’s religious leaders have called for debt relief of the Caribbean U.S. territory in the face of the 72 billion dollar liability that represents 20,000 dollars of debt for every man, woman and child.

In a statement issued Aug. 31, the clergy called on the U.S. Federal Reserve to intervene if Congress fails to pass bankruptcy protection to the financially-strapped island.

“This debt crisis threatens to push more of our people into poverty and put people out of work,” said San Juan Archbishop Roberto González Nieves, leader of Puerto Rico’s mostly Catholic population.

“The religious community stands with vulnerable people and we call for the crisis to be resolved in a way that protects the poor and grows our economy,” he added.

At a press conference in San Juan, leaders of the major religious groups laid out six principles to resolve the crisis.

“Puerto Rico’s religious leaders are fighting for the lives of their people,” stated Eric LeCompte, executive director of the faith-based development coalition Jubilee USA Network.

Jubilee USA Network is an alliance of more than 75 U.S. organisations and 400 faith communities working with 50 Jubilee global partners. Jubilee’s mission is to build an economy that serves, protects and promotes the participation of the most vulnerable.

LeCompte visited Puerto Rico in mid-August to advise religious and political leaders on solutions to the crisis.  “We need to get Puerto Rico’s debt back to sustainable levels and ensure that the island has a path for economic growth,” he said

Some of the hedge funds, arguing for cuts in Puerto Rico’s economic growth, were or are currently involved in debt disputes in Greece, Argentina and Detroit, Michigan.

Two recent reports, one commissioned by a group of hedge funds which purchased the island’s distressed debt and the other authorised by Puerto Rico’s own government, suggest new austerity plans to pay off portions of the debt.

The reports note a range of “fiscal adjustments”, including reducing the minimum wage, education resources and healthcare costs. One of the principles promoted by the coalition of religious leaders is that any resolution to the financial crisis prevents further austerity plans.

The religious leaders raised concern over predatory hedge fund activity in their statement. Beyond the Catholic Church, other religious groups signing the statement include Methodists, Lutherans, Evangelicals, Pentecostals and the Disciples.

“As religious leaders, we see how desperate the situation is for Puerto Rico’s people,” said Reverend Heriberto Martínez Rivera, secretary-general of Puerto Rico’s Biblical Society and the leader of the religious coalition confronting the debt crisis.

“Too many of our people are already suffering from austerity policies and many brothers and sisters have left for the United States hungry for work and a better quality of life,” he added.

Beyond calling for debt relief and criticising austerity policies, the religious leaders’ statement asserts the need for greater Puerto Rican budget transparency and participation in future debt negotiations by people negatively affected by the crisis.

Edited by Phil Harris   

While lauding South Africa for impressive social progress over the past two decades, a new study has asked the country to build on the successes achieved and reduce inequality further.

The latest OECD Economic Survey of South Africa by the 34-nation Organisation for Economic Cooperation and Development (OECD) says: “South Africa has made impressive social progress over the past two decades, lifting millions of people out of poverty and broadening access to essential services like water, electricity and sanitation. Now is the time to build on these successes to reduce inequality further, create badly needed jobs and ensure stronger, sustainable and more inclusive growth for all.”

The survey, released in Pretoria, the capital of South Africa, by OECD Secretary-General Angel Gurría and South African Finance Minister Nhlanhla Nene, notes that prudent macroeconomic policies have secured the confidence of financial markets.

However, economic growth has been too slow and further measures are needed to overcome infrastructure bottlenecks, strengthen the business environment, improve labour markets and ensure future spending needs can be financed.

“The National Development Plan sets the direction for reforms needed for a strong and inclusive country. Our survey provides targeted recommendations to reach these objectives,” said Gurría.

“Millions of young South Africans are eager to work, and their potential must not be wasted. Their future is precious enough to justify tough reforms and hard spending choices,” he added.

According to the survey, improving infrastructure will be essential for boosting future growth and living standards while, given the large needs, prioritisation and cost effectiveness will be crucial.

The OECD noted out that the most immediate priority is to secure additional electricity generation capacity by opening the market to independent producers. Opening electricity and transport will require strong and independent regulators to protect households and firms.

The organisation pointed out that improving the regulatory environment would promote entrepreneurship and growth opportunities for small and medium enterprises (SMEs), which offer the greatest potential for creating jobs and future growth. Reducing barriers to entry, cutting red tape and promoting competition, will be essential.

According to the survey, labour market reforms can raise employment and incomes. Establishing a public employment service as a one-stop shop for job seekers would make it easier for people to find jobs, and for employers to find the right workers.

Costly industrial actions have held back the economy without delivering major gains to workers. The OECD suggests an increased role for mediation and arbitration in order to reduce conflict and provide better outcomes for workers and employers.

The survey pleads for “a high degree of public sector efficiency, prioritisation of spending and a strong revenue base” with a view to meeting public spending needs for infrastructure and the social safety net.

It argues that the South African tax system “is well designed and well administered, but there is scope to broaden key tax bases by reducing deductions, credits and exemptions.  Such tax reform would solidify public finances and make the tax system fairer.”

Edited by Phil Harris   

The OPEC Fund for International Development (OFID) has agreed to give the United Nations Industrial Development Organization (UNIDO) a grant in support of a project aimed at improving the productivity and competitiveness of the shrimp value chain in the Latin America and Caribbean (LAC) region.

OFID is the development finance institution established by the member states of the Organisation of Petroleum Exporting Countries (OPEC) in 1976 as a collective channel of aid to the developing countries.

The grant, which amounts to 300,000 dollars, aims at co-financing a project worth close to 900,000 dollars. OFID Director-General, Suleiman J. Al-Herbish and UNIDO Director General Li Yong, signed the agreement in Austria’s capital, where the two organisations are based.

UNIDO Director General Li Yong (left) and OFID Director-General Suleiman J. Al-Herbish (right). Credit: Courtesy of OFID

Al-Herbish said that the project “will support the sustainable development of the fisheries sector in the LAC region through the promotion of more resource efficient, environment friendly and socially equitable fish farming and processing practices.”

It will also contribute to poverty reduction efforts through the creation of direct and indirect employment and income generation opportunities, as well as improved food and nutrition security, he added.

UNIDO Director General Li pointed out that the shrimp farming sector represented an important source of income in countries such as Colombia, Cuba, Dominican Republic, Ecuador, Mexico and Nicaragua.

“However, in most of these countries there is a need to enhance the productivity and competitiveness of the sector and its compliance with international quality and environmental standards.”

Aquaculture, especially shrimp farming, has been a vital source of economic growth in developing countries. Shrimp farming represents 15 percent of the total value of the fishery products internationally traded in 2011. Ecuador and Mexico are currently among the largest producers in the sector at regional level.

The agreement was signed on Aug. 25, within four weeks of OFID and the Inter-American Development Bank (IDB) signing a co-financing agreement to jointly promote development and economic growth in the LAC region through the expansion of trade financing to banks in the region.

According to the agreement, OFID and IDB will build on the existing Trade Finance Facilitation Programme (TFFP) to provide lines of credit to commercial banks in the LAC region to broaden the sources of trade finance available for LAC importing and exporting companies and support their internationalisation.

In support of global and intraregional integration through trade, this agreement will further strengthen OFID’s long-standing partnership with the IDB and widen OFID’s presence in the trade finance market in the LAC region, OFID said in a press release.

OFID works in cooperation with developing country partners and the international donor community to stimulate economic growth and alleviate poverty in all disadvantaged regions of the world.

It does this by providing financing to build essential infrastructure, strengthen social services delivery and promote productivity, competitiveness and trade.

According to OFID, its work is “people-centred, focusing on projects that meet basic needs – such as food, energy, clean water and sanitation, healthcare and education – with the aim of encouraging self-reliance and inspiring hope for the future.”

Edited by Phil Harris   

A geothermal drilling rig at the Menengai site in Kenya's Rift Valley to exploit energy which is more sustainable than that produced from fossil fuels. A Climate Change Bill now before the Kenyan parliament seeks to provide the legal and institutional framework for mitigation and adaption to the effects of climate change. Credit: Isaiah Esipisu/IPS

By Isaiah Esipisu
NAIROBI, Jul 27 2015 (IPS)

Alexander Muyekhi, a construction worker from Ebubayi village in the heart of Vihiga County in Western Kenya, and his school-going children can now enjoy a tiny solar kit supplied by the British-based Azuri Technologies to light their house and play their small FM radio.

This has saved the family from use of kerosene tin-lamps, which are dim and produce unfriendly smoke, but many other residents in the village – and elsewhere in the country – are not so lucky because they cannot afford the 1000 shillings (10 dollars) deposit for the kit, and 80 weekly instalments of 120 shillings (1.2 dollars).

“Such climate-friendly kits are very important, particularly for the rural poor,” said Philip Kilonzo, Technical Advisor for Natural Resources & Livelihoods at ActionAid International Kenya. “But for families who survive on less than a dollar per day, it becomes a tall order for them to pay the required deposit, as well as the weekly instalments.”“Once it [Climate Change Bill] becomes law, we will deliberately use it as a legal instrument to reduce or exempt taxes on such climate-friendly gadgets and on projects that are geared towards low carbon growth” - Dr Wilbur Ottichilo, Kenyan MP

It was due to such bottlenecks that Dr Wilbur Ottichilo, a member of parliament for Emuhaya constituency in Western Kenya, and chair of the Parliamentary Network on Renewable Energy and Climate Change, moved a motion in parliament to enact a Climate Change Bill, which has already been discussed, and is now being subjected to public scrutiny before becoming law.

“Once it becomes law, we will deliberately use it as a legal instrument to reduce or exempt taxes on such climate-friendly gadgets and on projects that are geared towards low carbon growth,” said Ottichilo.

While Kenya makes a low net contribution to global greenhouse gas (GHG) emissions, the country’s Draft National Climate Change Framework Policy notes that a significant number of priority development initiatives will impact on the country’s levels of emissions.

In collaboration with development partners, the country is already investing in increased geothermal electricity in the energy sector to counter this situation, switching movement of freight from road to rail in the transport sector, reforestation in the forestry sector, and agroforestry in the agricultural sector.

“With a legal framework in place, it will be possible to increase such projects that are geared towards mitigating and adapting to the impacts of climate change,” said Ottichilo.

The Climate Change Bill seeks to provide the legal and institutional framework for mitigation and adaption to the effects of climate change, to facilitate and enhance response to climate change and to provide guidance and measures for achieving low carbon climate-resilient development.

“We received the Bill from the National Assembly towards the end of March, we studied it for possible amendments, and we subjected it to public scrutiny as required by the constitution before it was read in the senate for the second time on Jul. 22, 2015,” Ekwee Ethuro, Speaker of the Senate, told IPS.

“After this, we are going to return it to the National Assembly so that it can be forwarded to the president for signing it into law.”

The same bill was first rejected by former President Mwai Kibaki on the grounds that there had been a lack of public involvement in its creation. “We are very careful this time not to repeat the same mistake,” said Ethuro.

Under the law, a National Climate Change Council is to be set up which, among others, will coordinate the formulation of national and county climate change action plans, strategies and policies, and make them available to the public.

“This law is a very important tool for civil society and all other players because it will give us an opportunity to manage and even fund-raise for climate change adaptation and mitigation projects,” said, John Kioli, chair of the Kenya Climate Change Working Group (KCCWG).

Evidence of climate change in Kenya is based on statistical analysis of trends in historical records of temperature, rainfall, sea level rise, mountain glacier coverage, and climate extremes.

Temperature and rainfall records from the Kenya Meteorological Department over the last 50 years provide clear evidence of climate change in Kenya, with temperatures generally showing increasing trends in many parts of the country starting from the early 1960s. This has also been confirmed by data in the State of the Environment reports published by the National Environment Management Authority (NEMA).

As a result, the country now experiences prolonged droughts, unreliable rainfall patterns, floods, landslides and many more effects of climate change, which experts say will worsen with time.

Furthermore, 83 percent of Kenya’s landmass is either arid or semi-arid, making the country even more vulnerable to climate change, whose impacts cut across diverse aspects of society, economy, health and the environment.

“We seek to embrace climate-friendly food production systems such as use of greenhouses, we need to minimise post-harvest losses and food wastages, and we need to adapt to new climate friendly technologies,” said Ottichilo. “All these will work very well for us once we have a supporting legal environment.”

Edited by Phil Harris

Renewable energy is at the forefront of the changes sweeping Africa, and a “triple win” is within the region’s grasp to increase agricultural productivity, improve resilience to climate change, and contribute to long-term reductions in dangerous carbon emissions.

This is the message of a new report by former U.N. Secretary-General Kofi Annan’s Africa Progress Panel, titled Power, People, Planet: Seizing Africa’s Energy and Climate Opportunities.

The report calls for a ten-fold increase in power generation to provide all Africans with access to electricity by 2030, saying that this would reduce poverty and inequality, boost growth and provide the climate leadership that is sorely missing at the international level.

It also urges African governments, investors, and international financial institutions to scale up investment in energy significantly in order to unlock Africa’s potential as a global low-carbon superpower. “We categorically reject the idea that Africa has to choose between growth and low-carbon development. Africa needs to utilise all of its energy assets in the short term, while building the foundations for a competitive, low-carbon energy infrastructure” – Kofi Annan

“We categorically reject the idea that Africa has to choose between growth and low-carbon development,” said Annan. “Africa needs to utilise all of its energy assets in the short term, while building the foundations for a competitive, low-carbon energy infrastructure.”

Over 62 million people in sub-Saharan Africa lack access to electricity – and this number is rising.

The report notes that, excluding South Africa, which generates half the region’s electricity, sub-Saharan Africa uses less electricity than Spain. It would take the average Tanzanian eight years to use as much electricity as an average American consumes in a single month. And over the course of one year someone boiling a kettle twice a day in the United Kingdom uses five times more electricity than an Ethiopian consumes over the same year.

Power shortages are estimated to diminish the region’s growth by 2-4 percent a year, holding back efforts to create jobs and reduce poverty.

Despite a decade of growth, the power generation gap between Africa and other regions is widening. Nigeria, for example, is a petroleum exporting superpower, but 95 million of the country’s citizens rely on wood, charcoal and straw for energy.

The report reveals that households living on less than 2.50 dollars a day collectively spend 10 billion dollars every year on energy-related products, such as charcoal, kerosene, candles and torches.

Measured on a per unit basis, Africa’s poorest households are spending around 10 dollars/kWh on lighting – 20 times more than Africa’s richest households. By comparison, the national average cost for electricity in the United States is 0.12 dollars/kWh and in the United Kingdom 0.15 dollars/kWh.

The report says Africa’s leaders must start an energy revolution that connects the unconnected, and meets the demands of consumers, businesses and investors for affordable and reliable electricity.

It urges African governments to:

• Use the region’s natural gas to provide domestic energy as well as exports, while harnessing Africa’s vast untapped renewable energy potential.

• Cut corruption, make utility governance more transparent, strengthen regulations and increase public spending on energy infrastructure.

• Redirect the 21 billion dollars spent on subsidies for loss-making utilities and electricity consumption – which benefit mainly the rich – towards connection subsidies and renewable energy investments that deliver energy to the poor.

The report also calls for strengthened international cooperation to close Africa’s energy sector financing gap, estimated to be 55 billion dollars annually to 2030, which includes 35 billion dollars for investments in plant, transmission and distribution, and 20 billion dollars for the costs of universal access.

A global connectivity fund with a target of reaching an additional 600 million Africans by 2030 is said to be needed to drive investment in on- and off-grid energy provision, with aid donors and financial institutions doing more to unlock private investment through risk guarantees and mitigation finance.

Time to end ‘climate negotiating poker’

The report also challenges African governments and their international partners to raise the level of ambition for the crucial climate summit in Paris in December, and calls for wholesale reform of the fragmented, under-resourced and ineffective climate financing system.

G20 countries are called on set a timetable for phasing out fossil fuel subsidies, with a ban on exploration and production subsidies by 2018.  “Many rich country governments tell us they want a climate deal. But at the same time billions of dollars of taxpayers’ money are subsidising the discovery of new coal, oil and gas reserves,” said Annan. “They should be pricing carbon out of the market through taxation, not subsiding a climate catastrophe.”

While recognising recent improvements in the negotiating positions of the European Union, the United States and China, the report says that current proposals still fall far short of a credible deal for limiting global warming to no more than 2˚C above pre-industrial levels.

The former U.N. Secretary-General said that “by hedging their bets and waiting for others to move first, some governments are playing poker with the planet and future generations’ lives. This is not a moment for prevarication, short-term self-interest and constrained ambition, but for bold global leadership and decisive action.”

“Countries like Ethiopia, Kenya, Rwanda and South Africa,” he added, “are emerging as front-runners in the global transition to low carbon energy. Africa is well positioned to expand the power generation needed to drive growth, deliver energy for all and play a leadership role in the crucial climate change negotiations.”

Edited by Phil Harris    

By Roberto Savio
ROME, Jun 9 2015 (IPS)

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

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

Roberto Savio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris   

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

Excerpt:

Gazan fishermen Ibrahim Al Quka and his brother Sami Al Quka, who had his hand shot off by the Israeli navy even though he was within Israel's restricted fishing zone. Credit: Mel Frykberg

By Mel Frykberg
RAMALLAH, West Bank, Jun 8 2015 (IPS)

Three Palestinian fishermen were injured last week after Israeli naval forces opened fire on fishing boats off the coast of al-Sudaniyya in the northern Gaza Strip, bringing to 15 the number of farmers and fishermen shot and injured by Israeli security forces recently as they attempted to earn a living.

The Israeli navy limits Gaza’s fishermen to a three nautical-mile zone off Gaza’s coast. However even fishermen within that zone have come under fire and been shot, injured and killed or had their boats destroyed or confiscated.“Gaza fishermen have come under fire and been shot, injured and killed or had their boats destroyed or confiscated … Gazan farmers trying to access their agricultural fields … are also regularly shot and injured, and sometimes killed”

As most of the shoals are further out to sea, Gaza’s fishing industry has been decimated and thousands of Gazans deprived of a living and unable to support their families.

Gazan farmers trying to access their agricultural fields within Israel’s 500 metre to 1 km buffer zone next to Israel’s border are also regularly shot and injured, and sometimes killed.

Gaza’s decimated economy has been further damaged by Israeli limits on Gazan exports to two of its biggest markets, the occupied West Bank and Israel.

Agricultural produce and manufactured goods used to underpin the coastal territory’s economy before Israel and Egypt enforced the Gaza blockade.

After last year’s war between Hamas and Israel, one of the conditions for a ceasefire was the easing of the blockade.

While Israel has allowed some goods to be exported from Gaza, this is insufficient to rejuvenate its economy.

Analysts and political commentators have repeatedly warned that Israel’s continued siege and restrictions on Gaza could destabilise the region further, leading to more violence and possibly a new war.

Destruction in Gaza following last year’s war between Hamas and Israel. Credit: Mel Frykberg

A report on the situation by the Ad-Hoc Liaison Committee of the Office of the Quartet Representative was released after a meeting in Brussels on May 27.

“Over a year on from the breakdown in talks between Israel and the Palestinians, there is still no tangible political horizon in sight,” stated the report.

“The last year has repeatedly presented us with reminders not just of where the flashpoints and difficulties persist, but also that in the absence of a political horizon, the vacuum quickly fills with animosity and violence.”

The report outlined how the removal or reduction of Israeli restrictions on Palestinian movement, trade and access remained essential to securing economic growth.

“Movement and access restrictions, both physical and regulatory, hinder economic development in the West Bank and the Gaza Strip and affect nearly all aspects of Palestinian life.”

Employment in Gaza and its economy would be boosted by Israel easing the blockade while the private sector would be strengthened. These in turn would reduce tensions and contribute to Israel’s security needs.

The failure of Hamas and Israel to reach any agreement is further aggravated by the stalemate within the Palestinian unity government due to the inability of Hamas and Fatah to reach consensus on jointly governing Gaza and the West Bank.

The rivalry between the two groups has delayed international aid, without which no reconstruction, redevelopment and economic growth in Gaza can take place.

The Office of the Quartet Representative pointed out five development areas that need to be focused on to improve the situation in the ground – an effective Palestinian government, movement and trade, reliable infrastructure, investment and sustainable land usage.

Meanwhile, Israel is continuing with new plans to relocate thousands of Bedouins in the West Bank and Israel after the move received the green light from Israel’s Supreme Court.

Some 7,000 Bedouins from the central West Bank, most of them situated east of Jerusalem, and 450 in southern Hebron will be “relocated” by force.

The forced removals have been accompanied by coercive measures such as the demolition of buildings and infrastructure on the grounds that they were built without permits, according to the U.N. Office for the Coordination of Humanitarian Affairs (OCHA).

However, in area C of the West Bank, which comprises 60 percent of the territory, very few permits are issued by Israel’s Civil Administration, which controls the West Bank, because most of the land has been appropriated for Israeli settlement expansion.

“The Bedouins and herders are at risk of forcible transfer, a grave breach of the Fourth Geneva Convention, as well as multiple human rights violations,” said U.N. Secretary-General Ban Ki-Moon.

Bedouins in Israel’s Negev settlement within the ‘Green Line’ can also be forcibly relocated after the Israeli court rejected their appeal to be allowed to stay.

“This court is not the address for creating chaos,” stated Justice Elyakim Rubinstein recently in rejecting the appeal of Bedouin residents of the unrecognised Negev settlement of Umm al-Hiran, reported the Israeli daily Haaretz.

In the ruling, Rubinstein noted that the residents – who are slated to be evicted, and whose houses are to be demolished to make way for the construction of the Jewish town of Hiran – have been living in this place for 60 years, after moving to the Nahal Yatir area in 1956 at the orders of the military governor, and that the eviction and demolition of the 50 or so structures they built will affect the lives of hundreds of people.

Despite this, the judge said he believed that the eviction was reasonable and proportional due to the fact that the land in question was owned by the state and that buildings were erected without permits.

However, the Umm al-Hiran residents argued that they were the victims of discrimination and that their property rights were being infringed.

Jews were able to obtain property rights to land on which they had settled but the Bedouins’ right to land on which they had settled was never formalised.

Edited by Phil Harris

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 Suleiman Al-Herbish
VIENNA, May 14 2015 (IPS)

When, in 2003, Professor Richard Smalley, winner of the Nobel Prize for Chemistry, listed the top 10 problems facing humanity for the next 50 years in order of priority, energy was at the top of his list, followed by water, then food.

Suleiman Al-Herbish, Director-General of the OPEC Fund for International Development (OFID)

Years later, this energy-water-food nexus is central to the work of the OPEC Fund for International Development (OFID) and a core element of our corporate plan.

It is hard to imagine a better life when you are in darkness and the ‘heart of darkness’ is the widespread lack of access to reliable and affordable sources of modern energy. This darkness continues to impede socio-economic development worldwide.

Nothing is worse than seeing such darkness in the 21^st century first hand. In Armenia, I visited the home of Ms Anahid, one of OFID’s many beneficiaries, whose house had recently been connected to a gas grid.

In her home, I saw a picture of her young son who had been tragically killed by a falling tree while collecting firewood. His young widowed wife sat in the corner and I had overwhelming mixed feelings: immense sadness for a life lost, yet relief that it would never happen again in that region.

It is a brutal moment when one realises the terrible human loss caused by energy poverty, and recognises how easily such tragedies can be avoided.

When one works in development, a single aim is in mind: putting people first. When we put people first, the facts are painful and implausible to ignore. The numbers are absolutely staggering: 18 percent of the world’s population still lives without electricity and 38 percent without clean cooking facilities.

If all of us think of these facts each time we switch on a light, use our phone or eat a meal, the darkness that 1.3 billion people live in becomes painful to imagine and hard to ignore.“It is hard to imagine a better life when you are in darkness and the ‘heart of darkness’ is the widespread lack of access to reliable and affordable sources of modern energy. This darkness continues to impede socio-economic development worldwide”

Despite the work of so many valuable institutions, organisations and pledges, people are often forgotten, and the political will never materialises. Yet, when the will is there, things do actually happen, and believe me, for the past ten years, I have personally seen them transpire.

In 2007, through the Riyadh Declaration, at the third summit of the Organisation of the Petroleum Exporting Countries (OPEC), member countries charged OFID with spearheading the fight against the greatest constraint to development – energy poverty – and long before it became a mainstream topic, OFID pioneered its fight against it.

OFID recognised that universal access to energy was a vital element to achieving the Millennium Development Goals (MDGs) and dubbed it the “Missing 9^th MDG”.

So, in September 2011, when U.N. Secretary-General Ban Ki-moon stated: “Energy is the golden thread that connects economic growth, social equity and environmental stability”, OFID roared.

And when Kandeh Yumkella, U.N. Under-Secretary-General and the Special Representative of the Secretary-General for Sustainable Energy for All, said that “the fact that so many lives continue to be blighted by the absence of electricity or other clean fuels for cooking and heating is without a doubt a shameful indictment of modern society,” OFID found an ally.

We knew that they represented many like-minded individuals who had the will to make our shared fight against energy poverty recognisable to the world.

We were exultant when, in 2012, with the launch of the U.N. Sustainable Energy for All (SE4ALL) initiative, energy access was finally established as a global priority. Energy poverty had finally reached the global agenda and our work throughout the years has been instrumental in attaining energy access.

OFID has been a leading partner in SE4ALL since its inception and instrumental in shaping the proposed Sustainable Development Goals (SDGs) with the eradication of energy poverty as SDG7.

Our commitment to this mission has been practical as well as communicative. Our strategy for poverty eradication has been action-based with a revolving endowment of one billion dollars pledged by our supreme body, the Ministerial Council, in our 2012 Declaration on Energy Poverty.

Over the past few years, OFID has transformed its commitments into actions in the field. This has led the share of energy projects in OFID’s total operations to reach 27 percent in the past three years, compared with around 20 percent since inception. These resources have been distributed among 85 countries for projects ranging from infrastructure and equipment provision to research and capacity building.

As the United Nations marks its 70^th anniversary, we reflect on the historical development of humanity and our unity as an international community to achieve a better world. It is an important time for us to recognize all the efforts in building improved lives and providing dignity to all.

As idealistic as I would like to be, I know there is much more to be done, and the fight is far from over.

What drives our motivation is OFID’s incredible will to continue. Where there’s a will, there is always a way.

I always said, and will continue to say: the day an institution like OFID closes its doors because of the lack of need from its partner countries to alleviate humanity’s countless problems is a day for us all to celebrate.

In the meantime, we will continue our efforts to power lives … one by one, until no single soul living on this planet is in darkness and no mother loses her son as Ms Anahid did.

Edited by Phil Harris

Excerpt:

By Karine Jacquemart and Anuradha Mittal
PARIS/OAKLAND, California, May 11 2015 (IPS)

In our work at Greenpeace and the Oakland Institute around access and control over natural resources, we face constant accusations of being anti-development or “Northern NGOs who care more for the trees”, despite working with communities around the world, from Cameroon, to China, to the Czech Republic.

Karine Jacquemart

This name calling, aimed at discrediting struggles for land, water, and other natural resources in the Third World countries, hides an ugly truth.  The land rush unleashed around the world to own and exploit Earth’s natural bounty is not only fierce and unfair, but increasingly fatal.

Recent reports, including a Global Witness report titled ‘How many more?’ released in April 2015, document the increase in the assassinations of land and environmental activists globally – a shocking average of over two a week in 2014.

As individuals and groups in the frontline of struggles face intimidation, arrests, disappearances, and even death, it is an ethical imperative to support the struggles of the grassroots land defenders against corporations and governments. This is what unites organisations like Greenpeace and the Oakland Institute.

Over the last decade, an estimated 200 million hectares – an area five times bigger than California – has been leased or purchased throughout the world, through completely opaque deals in most cases.

Natural resources in Africa are some of the most sought after, hence the fact that Africa experiences more than 70 percent of the reported land deals.

Anuradha Mittal

Multinational companies with assistance from powerful partners – the World Bank Group and G8 “donor” countries – are moving in, chanting their “development” formula: facilitate foreign investment through large-scale land acquisitions and mega-projects to ensure economic growth which will trickle down to translate into development for all.

Our work reveals a very different and worrying reality on the ground. Local communities and indigenous peoples report lack of consultation; their lands, homes and forests bulldozed and cleared for foreign investors; their livelihoods shattered.

As one villager in the Democratic Republic of the Congo said, “I want to remain a farmer on my land, not a daily worker depending on a foreign company”, or in the words of a Bodi chief in Ethiopia, “I don’t want to leave my land. If they try and force us, there will be war. So I will be here in my village either alive on the land or dead below it.”

They, and countless more, are victims of the theft of natural resources, made invisible and voiceless by those who define what development looks like.“As individuals and groups in the frontline of struggles face intimidation, arrests, disappearances, and even death, it is an ethical imperative to support the struggles of the grassroots land defenders against corporations and governments”

As if destruction of lives and livelihoods were not enough, those who resist are harassed, even face violence, by governments and private companies.

A planned palm oil plantation by the U.S.-based Herakles Farms in Cameroon threatens to evict thousands of people off their land and destroy part of the world’s second largest rain forest.

The company’s former CEO, responding to criticism of the project, said in an open letter: “My goal is to present HF for what it is – a modestly-sized commercial  oil  palm  project  designed  to  provide employment and  social  development and improve  the  level  of  food  security, while incorporating industry best practices.”

What he failed to mention is how a Cameroonian activist, Nasako Besingi, who heads a local NGO, The Struggle to Economize the Future Environment (SEFE), learnt first-hand the consequences of opposing the project. Arrested in 2012 for planning a peaceful demonstration in Mundemba, Nasako and two of his colleagues languished in a jail for several days.

Soon after his release, while touring the area with a French television crew, he was ambushed and assaulted by men he recognised as employees of Herakles Farms. Instead of protection from this violence, Nasako and SEFE face legal battles, including one of the favorite corporate tactics – a defamation lawsuit, intended to intimidate him and the others who oppose.

Privatisation of land and theft of natural resources will be irreversible and will put people, forest, ecosystems and the climate at risk, if it goes unchecked. The time is now to choose a development path that prioritises people and the planet over profits for the rich. (END/COLUMNIST SERVICE)

Edited by Phil Harris

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

Excerpt:

By Roberto Savio
ROME, Mar 12 2015 (IPS)

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

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

Roberto Savio

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Phil Harris    

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

Excerpt:

Inequality out in the open. Credit: A.D. McKenzie/IPS

By A. D. McKenzie
PARIS, Dec 12 2014 (IPS)

For years, many policy makers, including economists, have clung to the belief that if states do nothing to boost income equality, market forces will cause wealth to trickle down to the poorest citizens and contribute to overall growth.

That theory is now being increasingly debunked as experts affirm that the broadening gap in income is creating far-ranging problems for many societies.

In a new report  published on Dec. 9, researchers at the Paris-based Organisation for Economic Cooperation and Development (OECD) argue that “reducing income inequality would boost economic growth”.

Their research shows that countries where income inequality is decreasing actually “grow faster than those with rising inequality,” and the analysts would like to see governments take stronger action to reduce inequity.“Today, the richest 10 percent of the population in the OECD area earn 9.5 times the income of the poorest 10 percent; in the 1980s, this ratio stood at 7:1 and has been rising continuously ever since” – OECD

“The single biggest impact on growth is the widening gap between the lower middle class and poor households compared with the rest of society,” says the report titled ‘Trends in income inequality and its impact on economic growth’, and “education is the key: a lack of investment in education by the poor is the main factor behind inequality hurting growth.”

According to Michael Förster, a senior analyst in the OECD’s Social Policy division, one reason “the poor and lower middle classes are being left behind in unequal societies” is that they do not have the resources to spend on their own or their children’s education, compared with wealthier citizens,.

He said that governments needed to revise strategies that are based on outdated economic theories.

“The common assumption used to be that the more you did to enhance equality, the more you would hinder growth,” he argued. “So the idea was that if you take too much from the top earners, through taxes, you will have less growth. We haven’t found evidence for that. What we have found is that increasing inequality is bad for growth.”

For example, rising inequality is estimated “to have knocked more than 10 percentage points off growth in Mexico and New Zealand over the past two decades up to the Great Recession,” says the OECD.

Meanwhile, in the United Kingdom, Italy and the United States, the “cumulative growth rate would have been six to nine percentage points higher had income disparities not widened.”

OECD Secretary-General Angel Gurría said that this “compelling evidence” proves that addressing high and growing inequality is “critical to promote strong and sustained growth” and needs to be at the centre of global policy discussions.

“Countries that promote equal opportunity for all from an early age are those that will grow and prosper,” he added.

However, some scholars maintain that the consequences of inequality are hard to prove. American economist Jared Bernstein and others have pointed out that it is difficult to establish a firm connection between the inequities in education and economic growth.

These analysts acknowledge that wealthier parents do spend more overall on educational tools and “goods”, and that children from rich families often study at elite institutions in contrast to children from poor backgrounds who may attend lower-quality schools, but they have disagreed on the social or economic effects.

With the “new evidence”, OECD researchers say that the main means through which inequality affects growth is by “undermining education opportunities for children from poor socio-economic backgrounds, lowering social mobility and hampering skills development.”

“People whose parents have low levels of education see their educational outcomes deteriorate as income inequality rises. By contrast, there is little or no effect on people with middle or high levels of parental educational background,” the OECD said in a statement.

According to researchers, anti-poverty programmes will not be enough to create greater equality of opportunities in the long term.  Essential measures will include “cash transfers and increasing access to public services, such as high-quality education, training and healthcare”, the OECD says.

Förster stressed that the inequality study focused on income and not wealth. But recent discussions have centred on both, particularly in France since the election of Socialist President François Hollande in May 2012.

Soon after his election, Hollande announced plans for a 75 percent tax on all income over one million euro, and a watered-down version of the plan was approved by French courts a year ago, even as many wealthy families fled to Belgium and elsewhere.

Economists of different political colours have argued about whether the increased taxation is good for the economy, and the debate has grown more heated with last year’s publication of Capital in the Twenty-First Century by renowned French economist Thomas Piketty.

A lecturer in Paris and internationally, Piketty advocates a global tax on wealth. He has carried out studies showing that income inequality has grown in many countries, alongside 30 years of declining tax levels.

The gap is particularly marked in the United States, but even in “egalitarian” France, the top one percent earned an average of 30,000 euro monthly in 2010, compared with 1,500 euro per adult of the poorest 50 percent.

According to the OECD, a similar situation exists in many of its 34 member countries, which include European nations and others such as Mexico, Chile and the United States.

“Today, the richest 10 percent of the population in the OECD area earn 9.5 times the income of the poorest 10 percent; in the 1980s, this ratio stood at 7:1 and has been rising continuously ever since.”

Bucking the trend, income inequality has been falling in Chile and Mexico, but the incomes of the richest are still more than 25 times those of the poorest in these two countries.

The OECD’s Latin American Economic Outlook 2015, produced with regional partners and also launched on Dec. 9, focuses on the role of education and skills, and experts said more needed to be done to “raise educational standards and address persistent and substantial socioeconomic inequalities.”

Förster told IPS that the organisation hoped governments would consider the findings as a basis to change policy, “otherwise we won’t get out of the current situation.”

(Edited by Phil Harris)

By Roberto Savio
ROME, Oct 22 2014 (IPS)

The new European Commission looks more like an experiment in balancing opposite forces than an institution that is run by some kind of governance. It will probably end up being paralysed by internal conflicts, which is the last thing it needs.

During the Commission presided over by José Manuel Barroso (2004-2014), Europe has become more and more marginal in the international arena, bogged down by the internal division between the North and the South of Europe.

Roberto Savio

We are going back to a new Thirty Years’ War – which took place nearly five centuries ago – between Catholics and Protestants. Catholics are considered profligate spenders, and there is a moral approach to economics from the Protestant side.

The Germans, for example, have transformed debt into a financial “sin”.  The large majority of Germans support the stern position of their government that fiscal sacrifice is the only way to salvation, and the looming economic slowdown will only strengthen that feeling. As a result, the handling of Europe’s internal governance crisis has largely pushed Europe to the side lines of the world.

It is a mystery why it is in the interests of Europe to push Russia into a structural alliance with China and, in such a fragile moment, inflict on itself losses of trade and investment with Russia which could reach 40 billion euro next year.“We are going back to a new Thirty Years’ War – which took place nearly five centuries ago – between Catholics and Protestants. Catholics are considered profligate spenders, and there is a moral approach to economics from the Protestant side.”

The latest issue of the prestigious Foreign Affairs magazine – the bible of the U.S. elite – carries a long and detailed article on “Why the Ukraine Crisis is the West’s Fault” by Chicago academic John J. Mearsheimer, who documents how the offer to Ukraine to join the North Atlantic Treaty Organisation (NATO) was the last of a number of hostile steps that pushed Russian President Vladimir Putin to stop a clear process of encroachment.

Mearsheimer wonders how all this was in the long term interests of the United States, beyond some small circles, and why Europe followed. But politics now has only a short-term horizon, and priorities are becoming conditioned by that approach.

A good example is how European states (with the exception of the Nordic states), have been slashing their international cooperation budgets. Not only have Spain, Italy and Portugal – and of course Greece – practically eliminated their official development assistance (ODA) budgets, but France, Belgium and Austria have also been following suit. Meanwhile China has been investing heavily in Africa, Latin America and, of course, Asia where the term ‘cooperation’ would not be the most appropriate.

But the best example of Europe’s inability to be in sync with reality is the last cut in the Erasmus programme, which sends tens of thousands of students every year to another European country. Has it been overlooked that one million babies have been born to couples who met during their Erasmus scholarships, and that this programme is being cut at a moment when anti-Europe parties are sprouting everywhere?

In fact, education – and especially culture (and medical assistance) – are under a continuous reduction in spending. As Giulio Tremonti, Finance Minister under Italian Prime Minister Silvio Berlusconi, famously said, “you don’t eat with culture”.

The per capita budget for culture in southern Europe is now one-seventh that of northern Europe. Italy, which according to UNESCO holds 50 percent of Europe’s cultural heritage, has just decided in its latest budget to open up 100 jobs in the archaeological field with a gross monthly salary of 430 euro. In today’s market, this is half what a maid receives for 20 hours of work a week.

Italian politicians do not say so explicitly, but they believe that there is already such rich heritage that there is no need for further investment and, anyhow, the tourists continue to arrive. The budget for all Italian museums is close to the budget of the New York Metropolitan Museum … in the real world, this is like somebody who wants to live by showing the mummified body of his great grandmother for the price of a ticket!

It can be said that, in a moment of crisis, the budget for culture can be frozen because there are more urgent needs. But no need is more urgent than to keep Europe running in the international competition in order to ensure a future for its citizens. And yet, the budget for research and development, which is essential for staying in the race, is also being cut year by year.

Let us look at the situation since 2009. Spain has reduced investment in R&D by 40 percent, which has led to a 40 percent cut in financing for projects and a 30 percent cut in human resources. Italian universities have witnessed a total cut of 20 percent in spending which has meant a reduction of 80 percent in hiring and 100% in projects, while 40 percent of PhD courses have disappeared.

France has cut hiring in centres of research by 25 percent and in universities by 20 percent. Less than 10 percent of demand for projects receives financing because funds are no longer available.

Greece has cut budget for centres of research and universities by 50 percent since 2011, and has frozen the hiring of any new researchers.

In the same period in Portugal, universities and research centres have suffered a cut of 50 percent, the number of scholarships for PhDs has been cut by 40 percent and post-doctoral courses by 65 percent.

It is important to recall that the Lisbon Strategy, the action programme for jobs and growth adopted in 2000,  aimed to  make the European Union “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion” by 2010. Not only were most of its objectives not achieved in 2010, but Europe continues to slide backwards. The Lisbon Strategy had set 3 percent of GNP for R&D, but southern Europe is now below 1.5 percent.

A notable exception is the United Kingdom. The current government, which works in strong synchronicity with the City and its industrial constituency, has funded a 6 billion euro “Innovation and Research Strategy for Growth” plan to the applause of the private sector.

China is steadily increasing steadily its R&D budget, which is now 3 percent (what the Lisbon Strategy had set for Europe), but it aims to reach 6 percent of GNP by 2020 and, in just seven years, China has become the largest producer of solar energy, bankrupting several U.S. and European companies.

Is cutting Europe’s future in international competition really in the interests of Germany? Or it is that politics are losing the view of the forest while they discuss how many trees to cut, to reach a compromise between the Catholics and the Protestants?

We are now making of economics a moral science, which makes of Europe an unusual world. (END/IPS COLUMNIST SERVICE)

(Edited by Phil Harris)

Excerpt:

By Yilmaz Akyüz
GENEVA, Jul 16 2014 (IPS)

Since the onset of the crisis, the South Centre has argued that policy responses to the crisis by the European Union and the United States has suffered from serious shortcomings that would delay recovery and entail unnecessary losses of income and jobs, and also endanger future growth and stability. 

Despite cautious optimism from the International Monetary Fund (IMF), the world economy is not in good shape. Six years into the crisis, the United States has not fully recovered, the Euro zone has barely started recovering, and developing countries are losing steam. There is fear that the crisis is moving to developing countries.

Yilmaz Akyuz

There is concern in regard to the longer-term prospects for three main reasons.

First, the crisis and policy response aggravated systemic problems, whereby inequality has widened. Inequality is no longer only a social problem, but also presents a macroeconomic problem. Inequality is holding back growth and creating temptation to rely on financial bubbles once again in order to generate spending.

Second, global trade imbalances have been redistributed at the expense of developing countries, whereby the Euro zone especially Germany has become a deadweight on global expansion.

Third, systemic financial instability remains unaddressed, despite the initial enthusiasm in terms of reform of governance of international finance, and in addition new fragilities have been added due to the ultra-easy monetary policy.“The external financial vulnerability of the South is linked to developing countries’ integration in global financial markets and the significant liberalisation of external finance and capital accounts in these countries” – Yilmaz Akyuz

The policy response to the crisis has been an inconsistent policy mix, including fiscal austerity and an ultra-easy monetary policy. While the crisis was created by finance, the solution was still sought through finance. Countries focused on a search for a finance-driven boom in private spending via asset price bubbles and credit expansion. Fiscal policy has been invariably tight.

The ultra-easy monetary policy created over one trillion dollars in fiscal benefits in the United States – which was more than the initial fiscal stimulus; the entire initial fiscal stimulus was limited to 800 billion dollars.

There was reluctance to remove debt overhang through comprehensive restructuring (i.e. for mortgages in the United States and sovereign and bank debt in the European Union). Thus, the focus was on bailing out creditors.

There was also reluctance to remove mortgage overhang and no attempt to tax the rich and support the poor, particularly in the United Kingdom and the United States – where marginal tax rates are low compared with continental Europe. There has been resistance against permanent monetisation of public deficits and debt, which does not pose more dangers for prices and financial stability than the ultra-easy monetary policy.

The situation in the United States has been better than in other advanced economies. The United States dealt with the financial but not with the economic crisis, whereby recovery has been slow due to fiscal drag and debt overhang. And employment is not expected to return to pre-crisis levels before 2018.

As for the Euro zone, Japan and the United Kingdom, all have had second or third dips since 2008. None of them have restored pre-crisis incomes and jobs.

Meanwhile, trade imbalances have not been removed, but redistributed. East Asian surplus has dropped sharply and Latin America and sub-Saharan Africa have moved to large deficits. Developing countries’ surplus has fallen from 720 billion dollars to 260 billion dollars. On the contrary, advanced economies have moved from deficit to surplus, whereby U.S. deficits have fallen and the Euro zone has moved from a 100 billion dollars deficit to a 300 billion dollars surplus.

As tapering comes to an end and the U.S. Federal Reserve stops buying further assets, the attention will be turned to the question of exit, normalisation and the expectations of increased instability of financial markets for both the United States and the emerging economies.

This exit will also create fiscal problems for the United States because, as bonds held by the Federal Reserve mature and quantitative easing ends, long-term interest rates will rise and the fiscal benefits of the ultra-easy monetary policy would be reversed.

Developing countries lost steam as recovery in advanced economies remained weak or absent due to the fading effect of counter-cyclical policies and the narrowing of policy space. China could not keep on investing and doing the same thing. Another factor contributing to the change of context in developing countries has been the weakened capital inflows that became highly unstable with the deepening of the Euro zone crisis and then Federal Reserve tapering. Several emerging economies have been under stress as markets are pricing-in normalisation of monetary policy even before it has started.

The external financial vulnerability of the South is linked to developing countries’ integration in global financial markets and the significant liberalisation of external finance and capital accounts in these countries. These include opening up securities markets, private borrowing abroad, resident outflows, and opening up to foreign banks. While developing countries did not manage capital flows adequately, the IMF did not provide support in this area, tolerating capital controls only as a last resort and on a temporary basis.

Several deficit developing countries with asset, credit and spending bubbles are particularly vulnerable.  Countries with strong foreign reserves and current account positions would not be insulated from shocks, as seen after the Lehman crisis. When a country is integrated in the international financial system, it will feel the shock one way or another, although those countries with deficits remain more vulnerable.

In regard to policy responses in the case of a renewed turmoil, it is convenient to avoid business-as-usual, including using reserves and borrowing from the IMF or advanced economies to finance large outflows. The IMF lends, not to revive the economy but to keep stable the debt levels and avoid default. It is also inconvenient to adjust through retrenching and austerity.

Ways should be found to bail-in foreign investors and lenders, and use exchange controls and temporary debt standstills. In this sense, the IMF should support such approaches through lending into arrears.

More importantly, the U.S. Federal Reserve is responsible for the emergence of this situation and should take on its responsibility and act as a lender of last resort to emerging economies, through swaps or buying bonds as and when needed. These are not necessarily more toxic than the bonds issued at the time of subprime crisis. The United States has much at stake in the stability of emerging economies. (END/IPS COLUMNIST SERVICE)

*   A longer version of this column has been published in the South Centre Bulletin (No. 80, 30 June 2014).

Excerpt:

By Yilmaz Akyüz
GENEVA, Mar 24 2014 (IPS)

The United Nations’ Post-2015 Development Agenda should not simply extend the Millennium Development Goals (MDGs), or reformulate the goals, but focus instead on global systemic reforms and secure an accommodating international environment for sustainable development.

The MDGs are based on a donor-centric view of development with a focus on poverty and aid. They do not embrace a large segment of the population in the developing world, notably in middle-income countries, which fall outside the thresholds set in MDGs but still have their development aspirations unfulfilled.

It would be agreed that development is much more than the sum total of MDGs or any such arbitrary collection of a limited number of specific targets. But it is not possible to reach an international agreement on all important dimensions of economic and social development and environmental protection.

Any international agreement on such specific development targets would naturally be selective, leaving out many dimensions to which several countries may attach particular importance.There is no automatic trickle down from economic growth to human and social development.

Thus, instead of focusing on selective specific targets in the areas of economic and social development and environmental protection, we should aim at creating an enabling international environment to allow each and every country to pursue developmental objectives according to their own priorities with policies of their own choice.

Sustained economic growth is absolutely necessary for progress on the social front. No country has ever achieved constant improvements in living standards and human development indicators without sustaining a rapid pace of economic growth.

Without this, progress in human and social development would naturally depend on external and domestic transfer mechanisms – that is, aid and redistribution of public spending, respectively. Since there are limits to such transfers, social progress cannot go very far without an adequate pace of income and job generation.

Industrialisation is essential for reducing income, productivity, technology and skills gaps with more advanced economies since there are limits to growth and development in commodity-dependent and service economies.

We also know that there is no automatic trickle down from economic growth to human and social development. Policies and institutions are needed to translate economic growth to social development.

Job creation holds the key to improvements in living standards and to human development. But economic growth is not necessarily associated with the creation of jobs at a pace needed to fully absorb the growing work force. Thus, active policies are needed to provide secure and productive job opportunities.

Equity is an important ingredient of social cohesion and development. Prevention of widened inequality in income distribution calls for intervention in market forces, targeted policies and correctives.

Industrialisation and development cannot be left to market forces alone and least of all to global markets. Successful development is associated neither with autarky nor with full integration into world markets dominated by advanced economies, but strategic integration in trade, investment and finance designed to use foreign markets, technology and finance in pursuit of national industrial development.

To succeed, developing countries need to have adequate policy space. However, their policy space is considerably narrower than that enjoyed by today’s advanced economies in the course of their industrialisation because of the tendency of those who reach the top to “kick away the ladder” and deny the followers the kind of policies they had pursued in the course of their development.

It is necessary to reform multilateral and bilateral arrangements to allow developing countries as much economic policy space as those enjoyed by today’s advanced economies in the course of their industrialisation and development.

Developing countries also enjoy much less environmental space than that enjoyed by today’s advanced economies in the course of their industrialisation, and hence face greater constraints in attaining growth and development without compromising future generations’ well-being.

Thus, action is also needed at the international level in order to ease the environmental constraints over economic growth and development in developing countries and to compensate the costs inflicted on them by environmental deterioration resulting from years of industrialisation in advanced economies.

Finally, there is a need for a development-friendly global economic environment. We need mechanisms to prevent adverse spillovers and shocks to developing countries from policies in advanced economies or destabilising impulses from international financial markets.

Adequate policy space and a development-friendly global economic environment call for action at the international level on several fronts:

• Review multilateral rules and agreements with a view to improving the policy space in developing countries in pursuit of economic growth and social development.

• Attention to the international intellectual property regime with a view to facilitating technological catch-up and improving health and education standards and food security in developing countries.

• Industrial, macroeconomic and financial policies of developing countries are severely constrained by bilateral investment treaties and free trade agreements signed with advanced economies. These agreements are designed on the basis of a corporate perspective rather than a development perspective and they give considerable leverage to foreign investors and firms in developing countries. They need to be revised or dismantled.

• Remove terms unfavourable to commodity-dependent developing countries in contracts with transnational corporations to enable them to add more value to commodities and obtain more revenues from commodity-related activities.

• Introduce multilateral mechanisms to bring discipline policies in advanced economies to prevent adverse consequences for and spillovers to developing countries, including agricultural subsidies, restrictions over labour movements and transfer of technology and beggar-my-neighbour monetary and exchange rates policies.

• Establish mechanisms to bring greater stability to exchange rates of reserve currencies and prevent competitive devaluations and currency wars.

• Reduce global trade imbalances through faster growth of domestic demand, income and imports in countries with slow growth and large current account surpluses in order to allow greater space for expansionary policies in deficit developing countries.

• Reversal of the universal trend of growing income inequality should be a global goal. This calls for reversing the secular decline in the share of labour in income in most countries.

• Regulate systemically important financial institutions and markets, including international banks and rating agencies and markets for commodity derivatives with a view to reducing international financial instability and instability of commodity prices.

• Establish impartial and orderly workout procedures for international sovereign debt to prevent meltdown in developing countries facing balance-of-payments and debt crises.

• Secure a fair and equitable allocation of usable carbon space between advanced economies and developing countries, taking into account cumulative contributions of advanced economies to atmospheric pollution.

• Introduce international taxes in areas such as financial transactions or energy to generate funds for development assistance as well as for financing the costs of climate change mitigation and adaptation in developing countries.

• Reform international economic governance in ways commensurate with the increased participation and role of developing countries in the global economy. Re-examine the role, accountability and governance of specialised institutions such as the International Monetary Fund, the World Bank and the World Trade Organisation, and the role that the U.N. can play in global economic governance.

Excerpt:

By Roberto Azevêdo
GENEVA, Mar 20 2014 (IPS)

The Bali Package, approved on Dec. 7 by the World Trade Organisation (WTO) members, was a historic achievement, representing a significant boost for trade, growth and development around the world. But its true significance lies in what it allows us to do next to conclude the Doha Development Agenda.

As we prepare to seize this opportunity in 2014, it is timely to look back on the challenges which emerged in the international trading environment in 2013 and to consider how members might respond.

The WTO report on developments in the international trading environment which was circulated on Jan. 31 aims to provide an assessment of a range of trade and trade-related issues and trends during the period from mid-October 2012 to mid-November 2013.We must acknowledge that the stock of current trade restrictions and distortions continues to accumulate.

Put simply, it is a health-check on global trade and I think the diagnosis is cautiously positive although there are still reasons to be concerned about restrictive measures. We were not in great shape last year and we have picked up a few bad habits which we need to shake off. But overall trade growth is beginning to recover and we have a healthier outlook for 2014.

Let me mention some of the substantive findings of the report.

First, in terms of trade in goods, its volume expanded by less than 2.5 percent in 2013.

Growth projections for 2014 are much improved, hovering somewhere between 4 and 4.5 percent but this is still below the historical average since 1990 of 5.5 percent.

We are, of course, keeping a close eye on recent developments in the global economy and their impact on these projections.

Regarding developments in trade measures, there are two specific categories: trade remedy actions; and other trade measures.

Counting both categories together the report shows that overall 407 new restrictive measures were reported during the review period. This is compared to 308 in the same period a year earlier.

These new restrictive measures affect about 1.3 percent of world merchandise imports valued at 240 billion dollars.

Moreover, they add to the existing stock of restrictions and other impediments to the flow of international trade.

Looking specifically at trade remedy actions which were mostly anti-dumping and safeguard measures we saw 217 initiations of new trade remedy investigations. This covers around 0.2 percent of world imports, and compares to 138 terminations of either investigations or existing duties.

As was the case in 2012, therefore, more trade remedy actions were initiated than were terminated in 2013.Trade remedy activity is therefore clearly on the rise.

The number of new other trade measures also increased from 164 in the previous year to 190 during the review period.

The majority of such new measures were applied to imports mostly in the form of import tariff increases and customs procedures, covering around 1.1 percent of world goods imports.

Compared to the trend in new restrictive measures, the number of new trade-facilitating measures fell to 107 in 2013, well down from 162 a year earlier. These measures cover the equivalent of 1.4 percent of world merchandise imports which is approximately 258 billion dollars.

These measures, plus the number of terminations of trade remedy actions, represent little more than one-third of the total measures covered in the report.

This paints a rather unflattering picture of the ratio of trade restrictive measures to facilitation measures. We must acknowledge that the stock of current trade restrictions and distortions continues to accumulate.

I strongly believe we have a collective responsibility to attend to the risk posed by the cumulative effect of new and existing trade restrictions.

During the period covered by this report, members notified 23 new Regional Trade Agreements (RTAs) to the WTO, bringing the total number in force today to 250.

Negotiations on new RTAs are also continuing, in some cases between parties that collectively account for very substantial shares of world trade and GDP.

My view is that these initiatives are positive and are to be welcomed but they can only ever be one part of the wider picture. Agreements such as these cannot be sufficient on their own to ensure gains which can be realised on a global scale. In fact, the proliferation of regulations and standards could multiply costs rather than reduce them.

The multilateral trading system was never the only option for international trade negotiations. It has always co-existed with, and benefitted from, other initiatives. They are not mutually exclusive alternatives.

We must think about how the two processes – global and regional – can move forward together to reduce costs effectively and to curb protectionism.

As I have said before, 2014 is a pivotal year for the WTO. It is the year that we will implement our first negotiated outcomes and the year that the Doha Round is put back on track.

Excerpt:

Guo Shuqing, chairman of the China Construction Bank, speaks about China's five-year plan at the World Economic Forum in Sept. 2011 Credit: World Economic Forum/CC-BY-SA-2.0

By Suvendrini Kakuchi
TOKYO, Oct 13 2012 (IPS)

Developing countries – ­relegated to the sidelines of the West-led postwar expansion – have emerged as the saving grace of the global economy against a backdrop of calls for a new economic model that can ease the ravages of globalisation and address the lack of confidence in market-based systems.

Indeed, supporting economic growth in developing countries in a way that expands domestic productivity and stimulates global demand has been a core message at the annual meetings of the World Bank and International Monetary Fund (IMF) underway in Tokyo this week.

Financial leaders and influential policymakers have also identified the importance of investment in infrastructure and technology transfer in order to boost sustainable growth in developing economies.

“The envisaged global superhighway has not realised enough growth in the world,” said IMF Managing Director Christine Lagarde, pointing out that economic expansion is currently being recorded mostly in developing countries.

Speaking at a discussion on globalisation here, Lagarde says the key economic challenge today is the trend of decreasing job opportunities for youth, suggesting that nations can help each other in meeting these challenges.

“I fear an intergenerational conflict if our financial model leaves increasing debt for the younger generation,” she warned.

Western economies in particular have been hit with massive unemployment among the younger generation. Unemployment rates are as high as 50 percent in countries such as Spain and Greece, both dealing with severe austerity plans imposed by global financial lending institutions.

But Asia, by contrast, has been recording expansion. China, Asia’s growth engine, has shown an average annual 10 percent GDP growth over the past decade and is now the world’s second largest economy.

But even that expansion is slowing down as Asia and Africa feel the impact of slow demand in the West, a situation that has raised new fears of further global recession.

In a statement after a meeting Thursday, the Group of Twenty Four, comprising rapidly developing and emerging economies, stressed the importance of a significant mobilisation of resources and investment, especially in infrastructure.

It also called for strengthening existing financial architecture and institutions, but said it anticipated a large funding gap given the scale of needs.

“We are seriously concerned about the fragility of the global economic and financial situation, particularly in view of low growth and continued uncertainties and risks within the Euro area, notwithstanding the recent policy actions and the buttressing of firewalls, as well as risks from possible aggressive fiscal tightening in the United States,” the G-24 said in a communiqué released here.

“Moreover, instability in financial markets, fiscal adjustments and deleveraging by banks has impacted growth, with adverse effects on the economies of many emerging market and developing countries,” it added. “World trade growth has sharply decelerated and the flow of capital (to these countries) has become more erratic.”

Klaus Schwab, founder and executive chairman of the World Economic Forum, says the time has come when no country, business, organisation or civil organisation can think individually or in isolation. “To ease fears that point to an expanded global recession, we need to think on a global partnership base. Leadership needs to be distributed collectively,” he said.

Japan, host of the IMF-WB meetings and currently struggling with growth rates of less than three percent, has been working to play a key role in the exploration of a new economic way to go forward.

While government subsidies to companies have helped to restrain unemployment – now around four percent – Japan has also been grappling with increasing inequity since its rapid post-war economic development ended in a long recession for the past three decades.

Participants agreed that globalisation is here to stay, but that the search continues for a more inclusive model where rich countries share policymaking and technology with frontier economies to create a more balanced allocation of natural resources and achieve sustainable growth.

This means an acknowledgement of the emerging scenario where secure jobs are no longer the norm. “The young must be supported and educated to create their jobs,” Schwab said.

Liberian President Ellen Johnson Sirleaf explained there is an imperative need to invest in countries such as hers, where the government struggles to provide funds to empower vulnerable sectors.

“We need a new economic model that emphasizes…sustainable growth in developing countries that is based on scaling up our infrastructure that can shift the emphasis where natural resources can be secure,” stressed Sirleaf.

*This story first appeared on IPS TerraViva