The IMF has made some encouraging improvements in paying attention to social protection, health, and education, but it needs to do much more to avoid, in its own words, “repeating past mistakes”, says new report. Credit: Charles Mpaka/IPS

By Baher Kamal
MADRID, Apr 19 2023 (IPS)

As many as 45 African countries –out of the Continent’s 54 nations–, all of them grouped in what is known as Sub-Saharan Africa, have now been further squeezed to their bones, as funding shrinks to lowest ever levels, and as a portion of the so-called aid goes back to the pockets of rich donor countries.

See what happens.

In its April 2023 World Economic Outlook, the International Monetary Fund (IMF) talks about a rocky recovery. In its reporting on that, it lowers global economic growth outlook as ‘fog thickens.’

“Donors have turned their aid pledges into a farce. Not only have they undelivered more than 193 billion dollars, but they also funnelled nearly 30 billion dollars into their own pockets by mislabeling what counts as aid"

It says that the road to global economic recovery is “getting rocky.’ And that while inflation is slowly falling, economic growth remains ‘historically low,’ and that the financial risks have risen.

Squeezed

Well. In its April Outlook, the IMF devotes a chapter to Sub-Saharan Africa, titled “The Big Funding Squeeze”.

It says that growth in Sub-Saharan Africa is expected to slow to 3.6 percent as a “big funding squeeze”, tied to “the drying up of aid and access to private finance,” hits the region in this second consecutive year of an aggregate decline.

If no measures are taken, “this shortage of funding may force countries to reduce fiscal resources for critical development like health, education, and infrastructure, holding the region back from developing its true potential.”

Some arguments

According to the IMF:

• Public debt and inflation are at levels not seen in decades, with double-digit inflation present in half of countries—eroding household purchasing power and striking at the most vulnerable.
• The rapid tightening of global monetary policy has raised borrowing costs for Sub-Saharan countries both on domestic and international markets.
• All Sub-Saharan African frontier markets have been cut off from market access since spring 2022.
• The US dollar effective exchange rate reached a 20-year high last year, increasing the burden of dollar-denominated debt service payments. Interest payments as a share of revenue have doubled for the average SSA country over the past decade.
• With shrinking aid budgets and reduced inflows from partners, this is leading to a big funding squeeze for the region.

The giant monetary body says that the lack of financing affects a region that is already struggling with elevated macroeconomic imbalances.

Unprecedented debts and inflation

In a previous article: The Poor, Squeezed by 10 Trillion Dollars in External Debts, IPS reported on the external debt of the world’s low and middle-income countries, which at the end of 2021 totalled 9 trillion US dollars, more than double the amount a decade ago.

Such debts are expected to increase by an additional 1.1 trillion US dollars in 2023, thus totalling 10.1 trillion US dollars.

Now, the IMF reports that “public debt and inflation are at levels not seen in decades, with double-digit inflation present in about half of the countries—eroding household purchasing power and striking at the most vulnerable.”

In short, “Sub-Saharan Africa stands to lose the most in a severely fragmented world and stresses the need for building resilience.”

Like many other major international bodies, the IMF indirectly blames African Governments for non adopting the “right” policies and encourages further investments in the region, while some insist that the way out is digitalisation, robotisation, etcetera.

The big contradiction

Here, a question arises: are all IMF and other monetary-oriented bodies’ recommendations and ‘altruistic’ advice the solution to the deepening collapse of a whole continent, home to around 1,4 billion human beings?

Not really, or at least not necessarily. A global movement of people who are fighting inequality to end poverty and injustice, grounded in the commitment to the universality of human rights: Oxfam, on 13 April 2023 said that multilateral lender’s role in helping to insulate people in low- and middle-income countries from economic crises is “incoherent and inadequate.”

For example, “for every $1 the IMF encourages a set of poor countries to spend on public goods, it has told them to cut four times more through austerity measures.”

Countries forced to cut public funding

Then the global civil society movement explains that an important IMF initiative to shore up poor people in the Global South from the worst effects of its own austerity measures and the global economic crisis “is in tatters.”

New analysis by Oxfam finds that the IMF’s “Social Spending Floors” targets designed to help borrowing governments protect minimum levels of social spending— are proving largely powerless against its own austerity policies that instead force countries to cut public funding.

“The IMF’s ‘Social Spending Floors’ encouraged raising inflation-adjusted social spending by about $1 billion over the second year of its loan programs compared to the first year, across the 13 countries that participated where data is available.”

IMF’s austerity policies

By comparison, the IMF’s austerity drive has required most of those same governments to rip away over $5 billion worth of state spending over the same period, warns Oxfam.

“This suggests the IMF was four times more effective in getting governments to cut their budgets than it is in guaranteeing minimum social investments,” said incoming Oxfam International interim Executive Director, Amitabh Behar.

“This is deeply worrying and disappointing, given that the IMF had itself urged countries to build back better after the pandemic by investing in social protection, health and education,” Behar said.

“Among the 2 billion people who are suffering most from the effects of austerity cuts and social spending squeezes, we know it is women who always bear the brunt.”

A fig leaf for austerity?

In its new report “IMF Social Spending Floors. A Fig Leaf for Austerity?,” Oxfam analysed these components in all IMF loan programs agreed with 17 low- and middle-income countries in 2020 and 2021.

Oxfam’s report: “The Assault of Austerity” found inconsistencies between countries. There is no standard or transparent way of tracking progress and many of the minimum targets were inadequate.

The IMF has made some encouraging improvements in paying attention to social protection, health, and education, the report goes on, but it needs to do much more to avoid, in its own words, “repeating past mistakes”.

The farce of aid budget

In another report titled “Obscene amount of aid is going back into the pockets of rich countries,” Oxfam informed that on 12 April 2023 the Development Assistance Committee of the Organisation for Economic Cooperation and Development. (OECD DAC) published its preliminary figures on the amount of development aid for 2022.

According to the OECD report, in 2022, official development assistance (ODA) by member countries of the Development Assistance Committee (DAC) amounted to USD 204.0 billion.

This total included USD 201.4 billion in the form of grants, loans to sovereign entities, debt relief and contributions to multilateral institutions (calculated on a grant-equivalent basis); USD 0.8 billion to development-oriented private sector instrument (PSI) vehicles and USD 1.7 billion in the form of net loans and equities to private companies operating in ODA-eligible countries (calculated on a cash flow basis), it adds.

Total ODA in 2022 rose by 13.6% in real terms compared to 2021, says the OECD.

“This was the fourth consecutive year ODA surpassed its record levels, and one of the highest growth rates recorded in the history of ODA…”

The rich pocketing ‘obscene’ percentage of aid

In response, Marc Cohen, Oxfam’s aid expert, said: “In 2022, rich countries pocketed an obscene 14.4 percent of aid. They robbed the world’s poorest people of a much-needed lifeline in a time of multiple crises.

“Donors have turned their aid pledges into a farce. Not only have they undelivered more than 193 billion dollars, but they also funnelled nearly 30 billion dollars into their own pockets by mislabeling what counts as aid”.

Rich countries inflating their aid budgets

“They continue to inflate their aid budgets by including vaccine donations, the costs of hosting refugees, and by profiting off development aid loans. It is time for a system with teeth to hold them to account and make sure aid goes to the poorest people in the poorest countries.”

View of a demonstration by social organizations in a Buenos Aires square in July. The scene occurs almost every day in the capital of Argentina, a country where poverty has held steady at around 40 percent of the population since before the COVID-19 pandemic. The possibility of a social uprising is one of the fears in the face of the deepening socioeconomic crisis. CREDIT: Daniel Gutman/IPS

By Daniel Gutman
BUENOS AIRES, Jul 27 2022 (IPS)

Darío is a locksmith in Flores, a traditional middle-class neighborhood in the Argentine capital, who will have to stop working in the next few days. “Suppliers have suspended the delivery of locks, due to a lack of merchandise or because of prices,” he laments. His case is an illustration of an economy gone mad in a country that once again finds itself on the brink of the abyss.

The problems that have been dragging on in this South American country, where the vast majority of the population has become poorer over the last four years and social unrest is on the rise, exploded this month with an exchange and financial crisis that created enormous uncertainty about what lies ahead.

The Central Bank ran out of dollars, and imports, which in large part are a source of inputs for domestic production, were restricted to the maximum. The result is fear, speculation, increased social unrest and out-of-control inflation, which is causing price references to be lost and some companies and businesses are hedging their bets with preventive increases, or they even decide not to sell.

Today, in the streets and in the media, the questions raised are whether the country is on the eve of a social outbreak and whether President Alberto Fernández, so politically isolated that he is questioned by his own government coalition, will reach the end of his term in December 2023.

At that time, Argentina will be celebrating 40 years of democracy, marked by a succession of economic crises that have left an aftermath of growing inequality and have caused distrust to spread easily in society at the first signs that things are not going well.

The crisis deepened at the beginning of the month, when the Jul. 2 resignation of then Economy Minister Martín Guzmán triggered a 50 percent drop in the parallel exchange rate — known locally as the dollar blue — the only one that can be freely acquired in a country with exchange controls, and this, in turn, further fuelled inflation, which in 2021 stood at 50 percent and this year is already expected to end above 90 percent.

“There has been a series of imbalances in Argentina’s macroeconomy for years, which means that today the government does not have the tools to deal with exchange rate and financial pressures,” Sergio Chouza, an economist who teaches at the public University of Buenos Aires (UBA), told IPS.

“In this country the value of the dollar dominates expectations about prices and as a result it is increasingly difficult to avoid a ‘spiral’ of inflation. At the same time, government bonds have collapsed and are already yielding less than those of Ukraine,” he adds.

Chouza says that the COVID-19 pandemic was one of the major contributing factors in triggering a situation that seems to have gotten out of control.

“There was an expansion of public spending, as in most of the world. But the problem is that while most countries financed it with credit, Argentina could not do so because it was already over-indebted,” the expert explains.

Homeless people who survive by picking through garbage in Buenos Aires sleep on the corner of a central street in Argentina’s capital. In 2021 the country experienced an economic recovery after the first year of the pandemic, but a rise in inflation in 2022 has aggravated the crisis once again. CREDIT: Daniel Gutman/IPS

Social protests

The square in front of the Palacio de Tribunales, in the heart of downtown Buenos Aires, is overflowing with people. The youngest protesters hold banners from social movements from poor outlying neighborhoods, but there are also entire families with small children in their arms. Traffic in the surrounding area is completely cut off as the columns of marchers continue to pour in.

It is a Thursday in July, but this is an image that can be seen practically every day in the Argentine capital, where the most vulnerable social sectors are staging a series of protests because, in the midst of the crisis, the government has suspended the expansion of the Potenciar Trabajo program.

This is the name of the National Program for Socio-productive Inclusion and Local Development, which offers a stipend from the government in exchange for four hours of work in social enterprises, such as soup kitchens or urban waste recyclers’ cooperatives.

“In our neighborhoods things have been very hard for many years, but now it’s getting worse because we can no longer afford to put food on the table,” Fernando, who preferred not to give his last name, told IPS. He is a young man from Laferrere, one of the poorest localities on the outskirts of Buenos Aires, who was a waiter in a bar before becoming unemployed in 2021. Today he does occasional construction work.

Santiago Poy, a researcher at the Observatory of Social Debt at the private Argentine Catholic University (UCA) tells IPS that, with the combination of currency devaluation and inflation since 2018, wages have lost around 20 percent of their purchasing power.

“Poverty stood at around 25 percent in 2017, climbed to 40 percent in 2019 and remained steady after that. Today there is a feeling of widespread impoverishment, despite the fact that the unemployment rate is only seven percent, because 28 percent of workers are poor,” says Poy, describing the situation in this Southern Cone country of 47.3 million people.

After the height of the pandemic in 2020, social indicators improved in 2021 but are worsening again this year and the vast social assistance network does not seem to be sufficient to curb the decline.

“Social aid is not going to solve things in Argentina, because the macroeconomy is a permanent factory of poverty,” says Poy.

One of the operations carried out last weekend by Economy Ministry personnel in supermarkets in Buenos Aires, in order to control price hikes on basic products and “dismantle speculative maneuvers,” as reported. CREDIT: Economy Ministry

The price race

“I am ashamed to set some prices at which I have to sell such basic things as bread, flour or sugar,” Fernando Savore, president of the Federation of Grocery Stores of the province of Buenos Aires, which groups 26,000 businesses in the country’s most populous region, tells IPS.

Savore says that since the beginning of the year the price hikes by suppliers have been constant, but that they skyrocketed in the first week of July, after the economy minister resigned.

“We have seen increases of more than 10 percent in food and more than 20 percent in cleaning products. I don’t think they are justified, but every time the dollar goes up, prices go up,” says Savore, who adds that grocers are hesitant to sell some products because of uncertainty about the costs of restocking them.

And in a context of overall jitters, the government unofficially leaks rumors about economic measures, which do not then materialize but fuel the sense of uncertainty.

President Fernández said that the lack of dollars would be solved if agricultural producers sold a good part of their soybean harvest, which they are currently withholding, worth 20 billion dollars.

They are obliged to export at the official exchange rate, whose gap with the parallel dollar has reached a record level of more than 150 percent, and they are apparently waiting for a devaluation.

On Jul. 25, the new economy minister, Silvina Batakis, met in Washington with the managing director of the International Monetary Fund (IMF), Kristalina Georgieva, to assure her that this country will comply with the agreement signed with the multilateral lender this year, which includes goals to reduce the fiscal deficit and increase the Central Bank’s reserves.

But in Argentina, few people dare to predict where the crisis is heading, and how quickly it will evolve.

A garbage picker walks down Santa Fe Avenue, one of the main avenues in Buenos Aires. Argentina suffered a deep economic and social decline in 2018 and 2019, which was accentuated in 2020 by the pandemic. Although in 2021 there was a rebound, the most vulnerable did not benefit. CREDIT: Daniel Gutman/IPS

By Daniel Gutman
BUENOS AIRES, Feb 2 2022 (IPS)

Accustomed for decades to recurring economic crises, and hit hard in recent years by a steady loss of purchasing power, Argentines were informed on Friday Jan. 28 of a last-minute agreement with the IMF which, in the words of center-left President Alberto Fernández, takes “the noose off their necks”.

The understanding, which will refinance a gigantic 45 billion dollar loan that the IMF (International Monetary Fund) gave Argentina in 2018, was reached within hours of the first installment falling due in 2022. Argentina owed 18 billion dollars in payments this year, which the country could not afford and which have now been postponed until 2026.

After exhausting other sources of financing and resorting to the IMF in 2018, Argentina underwent a pronounced economic and social decline, which led to then center-right President Mauricio Macri’s failure to win re-election in late 2019.

When recovery was expected in 2020, the country was hit by the COVID-19 pandemic and a historic collapse of more than 10 percent of the economy. And although there was a rebound in 2021, it did not benefit the most vulnerable, as inflation exceeded 50 percent and was even higher in the case of staple foods.

This South American country of 45 million inhabitants which is the third largest economy in Latin America has, according to official data, a poverty rate of more than 40 percent, a proportion that climbs to 54 percent among children under 14 – a phenomenon that is partly explained by the higher proportion of large families among the poor.

However, Argentina was heading for an even greater economic and social catastrophe, warned the president, if it did not reach an agreement with the IMF.

“We had an unpayable debt that left us with no present and no future, and now we have a reasonable agreement that will allow us to grow,” said Fernández.

Thus, the IMF is once again lending money to Argentina to pay its debt, thanks to an agreement subject to quarterly reviews of the national accounts that -according to the government- do not imply a structural adjustment, like the many that the country has experienced in the context of its traumatic relationship with the multilateral financial organization.

“The best thing about this agreement with the Fund is what was avoided,” economist Andrés Borenstein, professor of public finance at the public University of Buenos Aires (UBA), told IPS in Buenos Aires.

“Without this understanding, the country would run out of financing and the consequences would be paid by those who have the least, because there would be more inflation, a greater decline in the real value of wages and a sharper devaluation of the currency,” he explained.

The government sought to allay the fears of the public who, based on past experience, associate agreements with the IMF with public spending cuts that lead to a decrease in economic activity and to general impoverishment.

“Compared to previous agreements that Argentina signed, this one does not contemplate restrictions that postpone our development,” said Fernández. “There will be no drop in real spending and there will be an increase in public works investment by the national government.”

Analysts, however, do not take the president’s words at face value. “It is true that the agreement is quite reasonable for the situation Argentina was in, but, as in any IMF program, there will be adjustments,” said Borenstein.

“Sharp increases in utility rates are coming and that will have an indirect impact on inflation and consumption,” he added.

Indeed, in a brief communiqué, the IMF pointed out that it had agreed with the Argentine government to reduce the large state subsidies to energy companies, with the aim of gradually reducing the fiscal deficit – which will increase the burden

Argentine President Alberto Fernández announced on Jan. 28 the agreement with the International Monetary Fund which, he said, took “the noose off the country’s neck”. CREDIT: Casa Rosada

on society.

Between realism and skepticism

Although the agreement was described as positive by most economists and even by the opposition, it sparked an internal crisis in the government, with one wing believing that the negotiation was too soft.

The clearest sign of the crisis was the resignation of Máximo Kirchner (son of former president and current vice-president Cristina Fernández Kirchner) as president of the ruling party’s bloc in the Chamber of Deputies, with a letter in which he stated that the IMF has been “the key trigger for every economic crisis since the return of democracy” in Argentina in 1983.

On the street, skepticism prevailed. In response to questions from IPS, the most frequently heard comment was that this news will not change anything for ordinary people, who see inflation as their main daily problem and believe it will continue to be so.

Juan Galíndez, who commutes almost two hours a day from a poor suburb of Buenos Aires to the city center to watch over cars parked outside a club, told IPS: “I don’t care about the IMF agreement because I know it won’t change anything for me. As long as I can get a few pesos to live on, I’m fine.” Galíndez works in the informal economy and depends on tips from customers of the club.

The plight of the poor in Argentina, however, is cushioned by a strong social assistance scheme that benefits almost 45 percent of the population in its various forms.

“Argentina has had a decade of economic stagnation and 30 years of a more structural deterioration,” Agustín Salvia, director of the Social Debt Observatory at the private Argentine Catholic University (UCA), told IPS. “Since 2018, what we have seen is a debt crisis to which the pandemic was added and this had very harsh consequences: it raised poverty levels from 35 to 48 percent at its peak, in 2020.”

The expert said that as of 2021, when the COVID vaccines began to arrive, restrictions on movement were relaxed and a process of economic recovery began, and poverty decreased although it has not returned to pre-pandemic levels.

A clothing and footwear store in downtown Buenos Aires tries to attract customers with big sales, despite constantly rising prices in Argentina. CREDIT: Daniel Gutman/IPS

“It stabilized at around 40 percent, because there is little investment from small or large companies that generate quality employment. What is growing the most is precarious informal work, with low wages that lose against inflation, and self-employment,” said Salvia.

The inflation that hits the poor especially hard is fundamentally driven, according to economists, by a fiscal deficit that in 2021 reached three percentage points of gross domestic product (GDP) and that is difficult to lower without social costs, in a country that spends 40 percent of its budget on pensions and other social security benefits.

In the understanding with the IMF, a path of progressive reduction of government spending was established, which postpones the zero deficit goal until 2025, in the next presidential term, which begins in December 2023.

“The agreement imposes some conditions of course, but this time the IMF is not demanding structural reforms that affect pensions or labor rights, as it has in the past, which means that they are a little more lax,” said economist Martín Kalos.

Kalos told IPS that reducing the fiscal deficit was a path that Argentina was going to have to go down with or without IMF surveillance: “While no country likes to be audited on its sovereign policy decisions, this was an agenda that Argentina was not going to be able to escape.”

Central banks in Latin America, such as the Bank of Brazil, whose headquarters is pictured here, should create measures to address the climate crisis, such as a catalog of polluting activities that should not be financed and the magnitude of exposure to climate risks, so that financial institutions in the countries stop financing fossil fuels. CREDIT: BCB

By Emilio Godoy
MEXICO CITY, Sep 10 2021 (IPS)

Despite the impact that their policies have with regard to the climate emergency, Latin America’s central banks continue to avoid applying guidelines in measures that affect the operation of credit institutions, which distances them from compliance with the Paris Agreement on climate change.

Ilan Zugman, director in Latin America of the international non-governmental organisation 350.org, which promotes an energy transition that eliminates the use of fossil fuels, pointed out that central banks have the power to regulate financial institutions to stop providing resources for polluting activities.

Central banks “can tell banks that they can’t make loans to companies that further aggravate the climate crisis. There is a lot of room for a stronger role,” he told IPS from the southern Brazilian city of Curitiba."Industries don't want to leave their activities behind. They put a lot of pressure on governments and bank executives. We need to show more clearly what is happening in terms of climate risks, the losses that governments and central banks could suffer if we don't stop the climate crisis." -- Ilan Zugman

“But so far, that hasn´t been happening in many places, there are very few examples around the world. In Latin America there is nothing like that. They are lagging behind, we see more words than actions,” he argued.

The climate crisis poses challenges for financial bond issuers, investors, insurers, lenders and banking and financial regulators, which means these entities must analyse and provide information about how it affects their business and how their business impacts society and the environment, and in particular the climate.

Latin America is a region highly vulnerable to the impacts of the climate crisis, such as more intense storms, floods, droughts and rising sea levels, and the cost of failing to take measures is extremely high, as scientists and international organisations have warned.

In this region, only the Central Bank of Brazil (BCB) has made some progress – although without yet creating a comprehensive set of rules in this regard – by applying its first regulation on risk management and socio-environmental responsibility, established in 2014.

It launched three public consultations this year on requirements for risk management, reporting and policy on social, environmental and climate responsibility, which were completed in June. The standard will take effect on Jan. 1.

The BCB will implement the disclosure requirements this year, in a first phase addressing qualitative aspects of governance, strategy and risk management, and a second on quantitative facets, such as metrics and targets.

But no Latin American central bank has reported its exposure to the consequences of the climate crisis.

Amaury Oliva, director of Sustainability, Financial Citizenship, Consumer Relations and Self-Regulation at the private Brazilian Federation of Banks (Febraban), said the sector recognises “its role and responsibility” in expanding the financing of activities that contribute to the reduction of polluting emissions and mitigation and adaptation to climate change.

“It is important to continuously improve processes to manage and mitigate the risks associated with climate issues in banks’ activities and in their business with clients, in order to maintain the stability and resilience of the financial sector in this transition process,” he told IPS from São Paulo.

In the view of Oliva, whose federation represents 119 banks, “institutions must work to inform how they are incorporating climate issues into their risk management strategies and processes.”

Over the past three years, central banks around the world have carried out analyses on the need for climate guidelines, acknowledging that the phenomenon can undermine the very stability of the financial system.

In 2020, out of Febraban’s portfolio of legal entities and companies, 51 percent represented a threat to the climate and 44 percent to the environment, according to the green taxonomy used in institutional credit balances. This was an improvement compared to 2012, when 62 percent represented climate and 50 percent environmental threats.

Hurricanes such as Nora, which was intensified by the climate crisis and hit Mexico’s northern Pacific region at the end of August, are leaving heavy economic losses, and central banks could intervene to encourage financing for sustainable activities that do not fuel climate change. CREDIT: Emilio Godoy/IPSHurricanes such as Nora, which was intensified by the climate crisis and hit Mexico’s northern Pacific region at the end of August, are leaving heavy economic losses, and central banks could intervene to encourage financing for sustainable activities that do not fuel climate change. CREDIT: Emilio Godoy/IPS

In May 2020, the central Bank of Mexico (Banxico) released the results of a survey in which the country’s banks recognised the importance of the issue and the adoption of some measures. But neither Banxico nor the private Association of Banks of Mexico have disclosed their relation to climate risks.

In July, the Financial Stability Board (FSB), which brings together financial and banking authorities from around the world, published a roadmap that focuses on addressing the financial risks of the climate crisis through corporate disclosure of such information, data, vulnerability analysis, and regulatory and oversight tools.

In April, the Basel Committee on Banking Supervision (BCBS) of the Bank for International Settlements, a Geneva-based institution that groups central banks from around the world, published two reports on climate risk drivers and their transmission channels to the banking system, as well as financial risks and banking practices in the face of these risks.

In this region, only the central banks of Argentina, Brazil, Chile, Colombia, Mexico and Peru belong to the BCBS.

In “Climate-related financial risks: a survey on current initiatives”, carried out in April 2020 and to which only Argentina, Brazil and Mexico responded from this region, the majority of Basel Committee members considered it appropriate to address climate risks.

Most of the central banks that responded stated that they had conducted research to measure these threats but less than half had established guidelines in this regard or were in the process of doing so, without calculating their mitigation in bank capital requirements.

The Basel Committee includes 45 members from 28 jurisdictions, including central banks and industry regulators. It also has nine observers.

In addition, the Financial Stability Board, which brings together financiers, insurers, large non-financial corporations, accounting and consulting firms, as well as credit rating agencies, has created a Task Force on Climate-related Financial Disclosures (TCFD).

This group aims to make recommendations that promote informed investment, credit and underwriting decisions, as well as to help stakeholders better understand the concentration of carbon-footprint assets in the financial sector and the system’s exposure to climate risks.

It has issued recommendations on governance, strategies, risk management, metrics and targets, and plotted four scenarios based on a rapid energy transition, a two degree Celsius global temperature rise and a path of climate inaction, estimating transition and physical risks, respectively.

The Paris Agreement was signed in the French capital in December 2015 at the conclusion of the 21st Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change, and its core objective is to keep global temperatures from increasing more than 1.5 degrees Celsius.

This goal is considered to be the minimum necessary to avoid irreversible climatic and, consequently, human catastrophes.

But to achieve this, greenhouse gas emissions must be cut by 50 percent by 2030, and to reach this goal it is essential to curb the extraction and burning of fossil fuels.

Against this backdrop, at least four global voluntary standards initiatives on sustainable finance are underway. The most recent is the Net-Zero Banking Alliance, launched in April, which includes 53 banks from 27 countries whose total assets amount to 37 trillion dollars, almost a quarter of global banking assets.

But the banking and financial system continues to provide funds to the fossil fuel sector, especially gas, whose methane makes it even more polluting than carbon dioxide (CO2).

For Zugman, the solution is clear: outlining a classification of activities that excludes fossil fuels from financing.

“We have only seen some promises and agreements, but for 2022 or later. There are no timelines, clear goals or transparency that would enable us to monitor this. There are many mechanisms that need to be improved,” he said.

“Industries don’t want to leave their activities behind. They put a lot of pressure on governments and bank executives. We need to show more clearly what is happening in terms of climate risks, the losses that governments and central banks could suffer if we don’t curb the climate crisis,” he said.

The activist lamented that banks continue to lend to fuel the climate crisis and insisted that they should no longer do so.

However, he pointed out that there are multilateral entities, such as the International Monetary Fund, the World Bank and the Inter-American Development Bank, that have incorporated climate risks in their assessments of global financial stability and in their credit lines.

From 2022, the Organisation for Economic Co-operation and Development (OECD), which groups the world’s richest economies, will use a tool to monitor climate and transitional financial risks towards a low-carbon economy, as well as their potential impact on financial performance, natural capital and sustainable growth.

The question is when these tools will translate into concrete measures to stop the financing of polluting activities, while the climate emergency continues to wreak havoc in the region.

The central banks of Latin American countries should decisively join these policies to work from the financial sector to contain the climate crisis, said Zugman.

Credit: United Nations

By Maaike Beenes
UTRECHT, The Netherlands, Nov 11 2019 (IPS)

Would you trust an algorithm with your life? If that thought makes you uncomfortable, then you should be concerned about the artificial intelligence (AI) arms race that is secretly taking off, fueled by the arms industry.

Weapon systems that can select and attack targets autonomously, without real human control, are moving from science fiction to reality.

Take for example the Warmate 2. This Polish-made missile loiters over an area, controlled remotely by an operator, but can go into fully autonomous mode once a target has been identified.

Or the Dual-Mode Brimstone, a guided missile that can be assigned a target area after which it can find targets matching a predefined target type.

Right now these weapons are under human control, but the technology is designed to keep humans out of the picture. We are already well on our way down a very slippery slope.

For our new report* that we publish this week, we surveyed 50 weapons producers about their work on increasingly autonomous systems. The results show that although existing systems are still partly controlled, often remotely, by human operators, the industry is rapidly moving towards more and more autonomous systems.

In addition to asking the 50 companies to participate in the survey with questions about their policy and activities, the report analysed publicly available sources about the systems they are developing and military contracts they have already won.

Maaike Beenes

These companies are all working on technologies most relevant to lethal autonomous weapons while not having clear policies on how they ensure meaningful human control over such weapons.

The group of high concern companies includes three of the world’s largest arms producers: Lockheed Martin, Boeing and Raytheon (all US), as well as AVIC and CASC (China), IAI, Elbit and Rafael (Israel), Rostec (Russia) and STM (Turkey).

Turkey’s state-owned weapons producer STM, for example, has developed the Kargu system. The Kargu is a kamikaze drone that flies to an area based on preselected coordinates and can then select targets based on facial recognition.

Some reports suggest the Kargu will soon be deployed on the Turkish-Syrian theater. This loitering munition may very soon cross the threshold to a weapon system without meaningful human control.

The results of this research are deeply concerning. Lethal autonomous weapon systems, which select and attack targets without meaningful human control, raise a host of legal, security and ethical concerns.

Crucially, removing the human from the ultimate kill-decision means delegating the decision to end a human being’s life to an algorithm-operated machine. This is fundamentally opposed to the right to life and human dignity.

An unarmed drone deployed to a UN peacekeeping mission. Credit: United Nations

But there are not just ethical concerns. Lethal autonomous weapons systems would be able to operate at speeds incomprehensible to humans.

Their high levels of autonomy would also make it very difficult to predict how they will react to unanticipated events, as we have already seen with accidents with self-driving cars. Any such unintended actions would significantly raise the risk of conflict escalation.

Lethal autonomous weapons are therefore not only unethical, but also pose a serious risk to international peace and security. It is also highly unlikely they would be able to comply with the key principles of International Humanitarian Law (IHL).

IHL requires distinguishing between civilians and combatants and to assess for each attack whether the civilian harm that would be caused by an attack is proportional to the expected military advantage. These are all highly context-dependent considerations, and that is exactly what algorithms are really bad at.

These concerns have sparked intense debates among states, which have discussed autonomous weapons at the UN Convention on Certain Conventional Weapons (CCW) since 2013.

These discussions have been productive in the sense that it has become clear the large majority of states want to ensure meaningful human control over the use of force.

Currently 30 states have already called for a preventive treaty that prohibits lethal autonomous weapons and ensures such human control. However, the debate is being stalled by a handful of countries that are enabling a global AI-arms race.

It is urgent for states to take action now that the development of lethal autonomous weapons can still be prevented rather than cured. Adopting new international law is the most effective way to do that.

It is clear that most states are ready to take their responsibility but as they meet this week in Geneva for the annual Meeting of High Contracting Parties to the CCW, it will become clear whether they are capable of making sufficient progress to prevent the world from a disastrous revolution in warfare.

The link to the report: https://www.paxforpeace.nl/slippery-slope

Excerpt:

The United Nations headquarters showcasing the Sustainable Development summit, September 2015. The essayist, an expert in governance and democracy, bemoans the growing participation of multinational corporations in UN system forums. Credit: CIA PAK/UN PHOTO

By Harris Gleckman
UNITED NATIONS, Sep 4 2019 (IPS)

Global governance is slipping away from the United Nations.

Whether it is in managing the Internet, where the UN’s governing structure offers only an advisory role for governments; or climate change, where the most exciting actions are now corporate-led partnerships outside the UN Framework Convention on Climate Change; or the Gates Foundation-sponsored Gavi, The Vaccine Alliance, which is in a tug of war with the World Health Assembly on who sets health policy in developing countries, the institutional basis for global decision-making is changing.

Where nongovernmental organizations (NGOs) were once the largest nonstate entities attending UN system meetings, transnational corporations have become the biggest players. They participate in well-attended public-private partnership sessions at the UN Conference on Trade and Development, the Human Rights Council and the High-Level Political Forum, the key body for following up on the Sustainable Development Goals.

The latest institutional foray is a World Economic Forum-UN partnership agreement. Under this arrangement, senior UN leaders are invited at national, regional and international levels to interact with forum members, many of whom are actually causing the global problems that the UN system is tasked to fix, such as climate change.

These developments are part of a new global governance approach, one in which a team of corporate executives, leaders of civil society organizations (CSOs) , officials from governments and the UN system, academics and other players take on the governance of a specific international challenge.

In the economic, social and environmental fields, this governance arrangement is called multistakeholderism, as each new global decision-maker is said to represent a “stakeholder” in an issue. In practice, these governance arrangements can have a role equal to or greater than the one held by the intergovernmental body officially assigned to address a universal problem.

These experiments in a new form of global governance and the 2010 report on the Global Redesign Initiative by the World Economic Forum run counter to efforts to enhance a sense of democracy as part of global decision-making.

Corporate executives — not leaders of small- and medium-size enterprises, nor microenterprises — are central to these groups and public-private partnerships. Yet these bodies have their own internal governance and constituencies; as a result, they redraft global principles that were agreed on by governments to meet their own, often business-focused, concerns.

The selected government officials, those considered sympathetic to the goals of multistakeholders, sit on the board as only one of the decision-makers. At the same time, the other players are elevated to a role in global governance without any democratic basis for their participation.

This dynamic is quite different from the one prevalent during the conferences of the 1990s, when civil society organizations, farm and labor organizations, educators, scientists, women and businesses gathered to provide diversified voices to governments, which alone led international decision-making.

UN public-private partnerships tend to worsen changes in the relationship between the intergovernmental process and UN secretariat staff members, who act as the administrative arm of a UN entity.

Where once the secretary-general and the heads of UN specialized agencies and programs saw themselves — and were seen by UN member governments — as governed by a specific intergovernmental body, now the secretariats act more autonomously. They strike up relationships with multiplayer bodies like the World Economic Forum and corporations without intergovernmental oversight.

A result of the increase in institutional ties between the UN and senior corporate executives is that civil society organizations, educators, scientists, women and other social communities have less ability to influence the behavior of the UN bodies and the intergovernmental process.

The weakening tie is driven both by outside factors and internal realities. The pressures on the UN system are significant. There is the cumulative effect, for example, of more than 30 years of flat or negative regular budget growth of the UN.

As an extension of President Trump’s effort to deconstruct the domestic regulatory state in the United States, his administration is also striving to deconstruct the UN system.

Internally, the secretariats perceive that taking relatively autonomous actions is one way to deliver on their generic assignments and to offset the underfunded regular budget by reaching out to potential corporate donors.

This increased autonomy is often reflected in more willingness to accept invitations to join a multistakeholder group to “represent” the UN and governments or to invite major corporations to join a secretariat-led multiparty group. These new links can allow corporations to assert that they are working with the UN — albeit without intergovernmental oversight.

They can also influence a UN secretariat to frame solutions to global problems in ways that are sensitive to their corporate constituency but not necessarily focused on government expectations or the need for leading the world toward systemic reforms.

Of course, the interests of corporations vary. For some consumer-oriented businesses, their increased role in UN operations is a chance to secure a role in creating a global sustainability market for a specific product or service.

For other multinationals, particularly those affiliated with the World Economic Forum, it is an opportunity, after the shocks of the 2008 financial crisis, to re-legitimate the globalized market in the minds of international and national elites.

It does not need to be so. Steps can be taken by governments to reassert leadership in managing globalization and mitigating global environmental crises. These could include a clear definition of conflict of interests to guide secretariats when they partner with a specific enterprise; an intergovernmental review of multistakeholders’ plans to ensure they follow UN goals; and improving intergovernmental oversight of the entire UN system through regular meetings of the heads of all intergovernmental bodies.

With the advent of many players involved in decision-making and international public-private partnerships, the secretariats are increasingly semiautonomous from their intergovernmental body, reaching out to one constituency, the international business community, thus marginalizing their overall roles with other global constituencies.

These developments undermine a public view that democracy — one country-one vote with all of its exceptions — will be the guiding global governance principles today and in the future.

The post They Call it Multistakeholderism. Where Does That Leave the UN? appeared first on PassBlue.

By Adam Tooze
NEW YORK, Aug 1 2019 (IPS)

In the grand European political reshuffle of 2019, it turned out that Christine Lagarde was the answer to the conundrum of who should replace Mario Draghi at the European Central Bank. But her move opens another question. Who succeeds Lagarde at the International Monetary Fund?

The question is a European question because, as part of the founding compromise of the Bretton Woods institutions in 1944, the United States nominates the head of the World Bank and the position of managing director at the IMF is taken by a European.

America’s interest at the IMF is secured by its blocking position as the largest individual shareholder and since the 1990s by the nomination of the first deputy managing director. Today that role is occupied by David Lipton, who is currently filling in for Lagarde.

So far, even in an age of growing international tension, that basic distribution of spoils has held up. When Jim Yong Kim abruptly announced his departure from the World Bank in January 2019, the Trump administration nominated David Malpass as his successor. Despite his reputation as a critic of the bank, in April, Malpass was elected unanimously and unopposed. No one wanted to add to the simmering tension with the White House.

Now, having rolled out the red carpet for Lagarde, the Europeans are mobilising to complete the reshuffle by nominating one of their own for the IMF.

Indefensible and anachronistic

Though they have tradition on their side, the fact that the Europeans feel entitled to proceed in this way is indefensible and anachronistic. It is bad for the legitimacy of the IMF and unhealthy for Europe as well.

The eurozone crisis created a toxic codependency between the eurozone and the IMF which needs to be dissolved once and for all. The fact that the Europeans are treating the leadership of a global institution as a bargaining counter in an intra-European political deal — involving the presidency of the European Parliament, the European Council and the European Commission — adds insult to injury.

Faced with the bullying of the likes of Donald Trump and Vladimir Putin, the European Union preens itself as an upholder of multilateral order and co-operation. And such institutions as the World Trade Organization and the IMF do embody general principles of global governance.

But the acceptance of those rules in turn depends on the acceptance by the key players of an underlying distribution of power. Given the huge shift in the balance of the global economy in recent decades, the power-sharing agreement hashed out between the Europeans and the Americans in the final stages of World War II looks increasingly threadbare.

The fact that the emerging-market economies of Asia should have more voice in the Bretton Woods institutions has been acknowledged at least since the Asian financial crises of the late 1990s. In the wake of that crisis, the manner in which the IMF had dealt with countries such as Indonesia and South Korea triggered a major legitimacy crisis. In political terms, borrowing from the IMF became toxic.

Over the protest of several non-EU members of its board, the IMF’s involvement in the eurozone forced the fund to override the basic principles of crisis-fighting it had developed since the 1990s.

By 2007, when the Spaniard Rodrigo Rato casually resigned from the managing directorship and handed the job to the ambitious French socialist Dominique Strauss-Kahn, the fund was in freefall. Its client list had shrunk to Turkey and Afghanistan. Without the fees it earns from lending, the fund’s budget was contracting and ‘DSK’ began his term in office by downsizing its team of economists.

Some would of course wish the IMF good riddance. But the financial crisis of 2008 put paid to that idea. The fund’s client list rapidly expanded, led by desperate eastern-European economies such as Hungary, Latvia and Ukraine. The initiation of the G20 leadership meetings in November 2009 created a new global forum in which the emerging-market economies had more adequate weight.

And it was the London G20 meeting in April 2009 which agreed to adjust the balance of IMF voting rights and to raise its funding to over USD 1 trillion. This restored the IMF as a 21st-century crisis-fighting organisation.

Confidence shaken

But where and how should that firepower be directed? In 2010 global financial confidence was shaken by the outbreak of the eurozone crisis. The thought of involving the IMF in the affairs of the eurozone horrified both the Sarkozy government in France and the ECB.

But Europe’s own crisis-fighting apparatus worked painfully slowly. To stabilise the situation, a bargain was struck between the German chancellor, Angela Merkel, and the US president, Barack Obama, supported by the ambition of DSK.

The IMF became deeply embroiled in both the national crisis programmes for Greece, Ireland and Portugal and the overall backstop to the eurozone. In May 2010 no less than €250bn of the fund’s resource were earmarked to complement the European Financial Stability Facility, the hastily improvised predecessor of the European Stability Mechanism.

Over the protest of several non-EU members of its board, the IMF’s involvement in the eurozone forced the fund to override the basic principles of crisis-fighting it had developed since the 1990s. From 2010 to 2015 it found itself underwriting debt-restructuring programmes, which the fund’s own economists knew were inequitable and unsustainable.

When DSK’s career began to unravel in 2011, via a series of accusations of alleged sexual offences (charges were eventually dropped or he was acquitted), the Europeans even had the effrontery to argue that his successor must be European because the IMF was now existentially entangled with the eurozone.

And the Obama administration insisted the IMF had to remained involved, for fear that Europe might trigger another ‘Lehman moment’.

To be instrumentalised in this way by its two largest shareholders was bad for the legitimacy of the IMF as a global institution and it was bad for Europe. Not only did the fund, as part of the ‘troika’ with the commission and the ECB, underwrite Europe’s disastrous management of the eurozone debt crisis. The ability to call on the fund meant also that Europe could drag its feet over building its own safety net.

It is to Lagarde’s credit that she has gone a long way towards extricating the IMF from the eurozone, refusing to sign up to its third bailout for Greece in 2015. But the experience only confirms that the fund is not safe in Europe’s hands.

Matter of contention

Meanwhile, the argument for an increase in emerging-market-economy influence over the IMF is stronger than ever. Today the EU27, excluding the UK, has a voting share of 25.6 per cent, compared with 16.5 per cent for the US, China’s 6 per cent, 5.3 per cent for Germany, 4 per cent for France and India’s 2.6 per cent. How exactly quotas should be revised is a matter of contention.

Is the relevant criterion the size of foreign exchange reserves or of gross domestic product? If GDP, then is to be measured at purchasing-power parities or current exchange rates?

In PPP terms China is the largest economy in the world; at current exchange rates it still a long way behind the US. And how should the closed nature of much of the Chinese economy weigh in the balance?

Picking the formula is itself a highly political exercise. But even if one takes the formula for IMF quotas agreed by the existing dispensation, the implications are stark. China’s voting share should double to 12.9 per cent.

The voting share of the EU should fall to 23.3 per cent and that of the US should be adjusted down to 14.7 per cent. The latter change is critical because it would push the US below the 15 per cent of the vote it needs to exercise a veto over the decisions of the board, which require an 85 per cent majority.

We are in a fragile moment in global politics. America is erratic. Tensions with China are mounting. The EU has decisions to make about where it stands.

There is no chance of America accepting such a change. Indeed, there is no realistic prospect of Washington signing off on any quota adjustment. Under Obama, the Republicans in Congress took until January 2016 to approve the modest shift in the balance of voting rights accepted by the US administration in London in the spring of 2009.

For the Europeans to take advantage of this deadlock to once again appoint one of their own to the managing directorship would be a blatant demonstration of bad faith. If Europe is serious about securing the international order by means of progressive accommodation of the legitimate demands of rising powers, it could send an important signal by opening Lagarde’s replacement to well-qualified candidates from emerging markets. There are several obvious possibilities.

Front runners

The three most commonly mentioned front runners would be: Augustin Carstens, formerly of the Mexican central bank and currently running the Bank for International Settlements in Basle; Raghuram Rajan, formerly chief economist at the IMF, head of the central bank of India and now kicking his heels at the Booth School of business at the University of Chicago; and Singapore’s former finance minister Tharman Shanmugaratnam, who was the first Asian to chair the IMF’s key policy steering group, the International Monetary and Financial Committee.

The fact that these men come from emerging-market economies does not make them advocates of heterodox views — all are habitués of the Davos circuit. Rajan is the highest profile in intellectual terms. But his preferences run in the redirection of ordoliberalism. Rajan was one of the fiercest critics of the unconventional monetary-policy measures pursued by Ben Bernanke’s Federal Reserve.

Nevertheless, for any of them to head the IMF would be an acknowledgement of the fundamental shift in the balance of the world economy. And any of them would be a stronger candidate than the short list that the Europeans have so far come up with.

Mark Carney, the (Canadian-born) head of the Bank of England, is the only ‘European’ who could match up to these three in terms of standing in the world of global finance. But, despite his Irish passport, he has been ruled out as insufficiently European. And given its need for support over Brexit, Dublin is not going to force the issue.

Regrettably, the decisive voices in Europe are determined that a representative of the eurozone should have the job. And at this point the familiar European squabbling begins. The southern Europeans have two candidates in the ring: Mário Centeno of Portugal, the current head of the Eurogroup, and Nadia Calviño, the Spanish economy minister and a former senior EU official. Both lack profile and would struggle to find the support of northern Europe.

Deeply implicated

The two candidates who would attract the support of northern Europe are deeply implicated in the disaster of the eurozone. Olli Rehn, the governor of the Finnish central bank, was widely thought of as an alternate for Jens Weidmann in the ECB stakes.

He would no doubt attract support from the new ‘Hanseatic League’, with all that implies: between 2010 and 2014, as commissioner for economic and monetary affairs and the euro in the Barroso commission, Rehn vocally advocated the austerity line.

But even worse would the man who is apparently the front runner, Jeroen Dijsselbloem, the former finance minister of the Netherlands. As president of the Eurogroup from 2013 to 2018, he personified the combination of populist northern resentment and fiscal narrow-mindedness that dictated eurozone policy towards Cyprus and Greece. If he were to emerge as the IMF’s managing director, it would be a truly horrible twist in the saga of the fund’s entanglement with the eurozone.

We are in a fragile moment in global politics. America is erratic. Tensions with China are mounting. The EU has decisions to make about where it stands. In the UN and Bretton Woods institutions, created in the final stages of World War II, it has an anachronistic over-representation. There is a risk that Europe’s preoccupation with its own problems will undercut the legitimacy of those institutions.

Instead Europe should put what leverage it retains to good use. It should start by inaugurating a new era at the IMF.

This article is a joint publication by Social Europe and International Politics and Society —IPS-Journal.

Excerpt:

By Frank Bainimarama
SUVA, Fiji, Jun 27 2019 (IPS)

SUVA, Fiji, 27 June 2019 (IPS) — Are the most climate-vulnerable nations of the world right to demand that developed and major economies commit to carbon neutrality by 2050?

Should the poorest nations of the world insist that the “haves” put their significant economic and political resources behind aggressive efforts to combat climate change?

Frank Bainimarama

The answer is yes, of course, and the reason is simple: We cannot save the world from climate catastrophe if the largest emitters of CO2 don’t step up now.

And the most vulnerable countries of the world cannot adequately reduce our emissions and adapt to the effects of climate change without economic support from the developed world that is flexible and accessible. Governments, private financial institutions, international financial institutions and foundations must be a part of the solution.

Last week, European Union leaders missed a critical opportunity to develop a more aggressive collective mitigation target by 2020 and achieve carbon neutrality by 2050. Perhaps more importantly, they had a chance to lead the world to carbon neutrality, but they failed to step up at the critical moment.

Their failure was a bitter disappointment to countries, like Fiji, that are doing everything within our means to achieve those same results. Island nations are determined to lead by example.

We have laid the ground work, but unfortunately, our efforts, strenuous though they may be, will not be enough alone. We need developed economies—and advanced developing economies—to make the same strenuous effort.

We are at a critical juncture in this fight, at a point where we know we can still act globally to change the course of human-made climate change or fail to act and face the reverberations of climate, environmental and biodiversity crises for generations to come.

The political and scientific ground has shifted under our feet since we signed the Paris Agreement in 2015. Governments have changed, and populists and climate sceptics have gained ascendancy in some countries.

Then, last October, the IPCC released its Special Report on 1.5 Degrees, which made it clear that time is closing in on us; we simply don’t have the time to turn the tide that we thought we had in Paris.

It was a struggle then for small island states and members of the High Ambition Coalition to win the inclusion in the Paris Agreement of an aspiration to limit global warming to of 1.5 degrees, when the official goal of the agreement was 2 degrees.

Now we find that we are less than 12 years away from dramatic, far-reaching, and possibly irreversible consequences of surpassing 1.5 degrees of warming if we keep going the way we’re going. We simply cannot miss opportunities like the one the EU missed last week, and we must embrace all possible solutions.

There are three things we need to focus on now. First, we need to reduce the amount of carbon we are releasing into the atmosphere. This means that countries need to set much more ambitious targets in their national climate commitments under the Paris Agreement that lead to rapid decarbonisation of high-emitting industries and sectors.

I am encouraged to see that the number of countries that are stepping up to the 2020 deadline is growing, but I’m both proud and concerned that most of these are from the developing world. The names of many developed and major economies are still notably absent from this list.

Second, we need to remove more of the carbon that has already been emitted into the atmosphere and this means massively increasing our investment in nature — developing and implementing natural climate solutions that can be implemented worldwide.

Nature has the incredible power to remove carbon dioxide from the earth’s atmosphere, but we are currently failing to protect this vital resource. We will not be able to achieve 1.5 degrees without dramatically recalibrating how we look after and restore our natural landscapes. Under the leadership of China and New Zealand, we are expecting a big step forward on this front at the upcoming UN Secretary-General’s Climate Summit (in New York on September 23 this year).

And, third, developed and major economies should increase the amount — and rapidly deploy — climate finance for developing countries to allow us to achieve and increase our mitigation targets, as well as urgently build our resilience to the impacts of climate change. This means at least $100 billion a year by 2020.

The irony of the EU’s failure of will is that so many European leaders understand fully what is at stake, and many individual European countries—and non-European countries—are beginning to take responsible action.

Still, it is a sad fact that the Marshall Islands and Fiji—two of the most marginal carbon emitters in the world—are the only two countries to have officially submitted long-term plans to the UN for achieving net-zero emissions by 2050.

The Paris Agreement committed signatories to achieving net carbon neutrality by the second half of the 21st century, but it was unclear what was intended by the term “second half.”

We know now that the deadline must be the beginning of the second half, not the end. Fifty years of ambiguous wiggle room, 50 years of hesitancy, and 50 years of procrastination will lead us to the catastrophe we fear.

Setting a date for achieving net-zero, matched with boosting short-term action, is critical and that’s where national leadership comes in. It gives all the relevant stakeholders, government departments, businesses and citizens the signal they need to start making concerted changes.

If developing countries can develop robust emissions-reduction targets that truly drive us toward the goals we agreed to in Paris, then other nations can, too.

The EU, and the rest of the developed world, can still change course. The UN Secretary General’s Climate Summit in September will provide a forum for every country to lay out their climate ambitions before the world and be judged.

I urge developed countries to come to New York with the most aggressive and most ambitious plans they can devise. In Paris, the small island states used our moral weight to push the world to accept the aspiration of limiting global warming to 1.5 degrees. In New York, vulnerable developing countries must do the same.

We cannot accept that countries with the means to do more will sit on the sidelines and do less.

Excerpt:

Diego Garcia island, which hosts a United States military base in the Indian Ocean. (Photo: NASA)

By Arul Louis
UNITED NATIONS, Feb 28 2019 (IPS)

Mauritius has scored a victory over Britain at the International Court of Justice (ICJ) in a case involving the decolonisation of the strategically important island of Diego Garcia that is home to a United States military base.

The ICJ said on Monday that Britain must give up to Mauritius control of the Chagos Archipelago where the Indian Ocean military base is located on the Diego Garcia island.

The opinion issued in The Hague by the court’s majority that included Judge Dalveer Bhandari of India said that the decolonisation of Mauritius “was not lawfully completed” when it attained independence because Britain carved away the Chagos Archipelago from Mauritius and retained control of it.

The opinion handed down by the majority of 13 judges said Britain “is under an obligation to bring to an end its administration of the Chagos Archipelago as rapidly as possible.”

The sole dissenter was American Judge Joan E. Donoghue. Britain is not represented on the bench after it withdrew the nomination of Judge Christopher Greenwood for re-election in 2017 when he could not get a majority of the votes in the General Assembly against Bhandari.

The court gave the opinion, which is non-binding, at the request the United Nations General Assembly made in a 2017 resolution.

Vehemently opposed by the US and Britain, the resolution received the vote of 94 countries while 15 voted against it and 65 abstained.

Britain has opposed the referral to the court saying it was a bilateral matter with Mauritius and indicated it would reject it.

There is unlikely to be any challenges to the US Diego Garcia base from Mauritius, either.

“We are not asking for the dismantling of the base”, Prime Minister Pravind Jugnauth Mauritian said after the ICJ opinion, according the Mauritian newspaper L’Express.

It reported that he did not want to reveal the next step that his country was going to take but said he wanted Britain “to recognise the unity of Mauritius”.

Britain cut off the Chagos Archipelago from Mauritius in 1965 before granting it independence in 1968.

The people living on Diego Garcia were forcibly removed from there by the colonial administration and it was leased to the US, which set up its strategic Indian Ocean military base on the island.

About 50 countries gave the court written statements, some against Britain and other in support of it.

Vishnu Dutt Sharma, the Legal Adviser of the External Affairs Ministry submitted India’s statement that said that the process of decolonisation was not completed because Britain had not complied with UN resolutions for it.

In the 1970s and 1980s India had vehemently opposed the US base in Diego Garcia.

Then-Prime Minister Indira Gandhi called the base 2,000 kilometres from India as a threat to India.

Since then the strategic environment and India’s interests have changed due the rise of China and the threats to navigation from piracy. India is now developing close defence ties with the US and toned down its rhetoric.

When the resolution to refer matter to the court was taken up at the UN in 2017, India’s Permanent Representative Syed Akbaruddin said that while supporting the position of Mauritius as “a matter of principle” to uphold the process of decolonisation and the respect for sovereignty of nations, “India shares with the international community, security concerns relating to the Indian Ocean”.

Credit: IMF

By Chris Wellisz
WASHINGTON DC, Jan 2 2019 (IPS)

It happened again and again in a career punctuated by upheavals: the peso crisis of 1994, the Asian crisis of 1997, and finally, the big one—the global financial crisis of 2008.

Each time he started a new government job, Timothy Geithner hoped to find a letter from his predecessor, explaining what to do and whom to call if things fell apart. The desk drawer was always empty.

“Financial crises are probably the most devastating economic events that can happen to a country,” says Geithner, who fought the last conflagration as president of the Federal Reserve Bank of New York and later US Treasury secretary. “I’d like our successors to have a better base of knowledge.”

So every summer, Geithner takes time off from his job as president of Warburg Pincus, a private equity firm, to help teach a two-week crisis management workshop for regulators from around the world.

It’s one part of the Yale Program on Financial Stability, which also offers a master’s degree and is undertaking an ambitious project to create, on a very large scale, what Geithner never found in that desk drawer—a manual for crisis managers.

“A lot of times we’ve made the same mistakes in fighting financial crises over time simply because there was no body of knowledge that people had jointly studied and debated,” says Andrew Metrick, a professor of finance at Yale who founded and runs the program. “It’s almost like you show up at the emergency room and the doctor says, ‘It looks like a broken arm. I think I’ve seen someone once do something for a broken arm.’”

Metrick was one of those emergency room financial doctors. Six months after the collapse of Lehman Brothers in September 2008, he got a call from the Obama administration.

They desperately needed a financial economist. So Metrick moved to Washington to work for the Council of Economic Advisers. There, as chief staff economist, he helped develop programs to revive housing and financial markets.

When it came time to propose legislation, he discovered that academic research wasn’t very useful.

“There was no real great connection between academic knowledge, economic intuition, and what we actually could put in the law because there just wasn’t a good body of research there,” Metrick says. “I was determined that when I came back to the academy I would try to be part of something that would help to fill that gap.”

That was the genesis of the Yale Program on Financial Stability, which got off the ground in 2014 with donations from organizations including the Alfred P. Sloan Foundation.

Geithner joined soon after, teaching, raising money, and chairing the advisory board, which includes former central bankers such as the Federal Reserve’s Ben Bernanke, Mexico’s Agustín Carstens, and Malaysia’s Zeti Akhtar Aziz.

Geithner brought a practical focus to what became known as the New Bagehot Crisis-Response Project, named for Walter Bagehot, a 19th century British economist and author of Lombard Street: A Description of the Money Market, a bible of sorts for the guardians of financial stability.

The project’s 14 researchers compile case studies of responses to the global financial crisis and the euro crisis that followed it. Eventually, they plan to study manias and panics going back to the South Sea Bubble in the 18th century.

While the global crisis spawned countless books, articles, and memoirs, the Bagehot project seeks to analyze it in a systematic way—and determine what kinds of government actions worked, what kinds didn’t, and why. The architects of crisis-fighting programs in various countries are consultants on the project.

“Our focus is really on the technical details of the interventions,” Metrick says.

Their plan is to create an online tool that crisis managers can turn to in real time, in case they need to recapitalize a bank, say, or set up an emergency liquidity facility. They will also learn what to avoid, like Ireland’s decision to guarantee the liabilities of its banks, which transformed a bank run into a far more serious sovereign debt crisis.

“Because the classic panic happens pretty rarely in the same country, even though it happens around the world with pretty appalling frequency, there’s not actually that much institutional memory, and there certainly wasn’t at the Treasury or the Fed, about how you deal with a systemic financial crisis,” Geithner says in an interview.

The summer symposium—Geithner called it a “war college”—was a two-week workshop for central bankers and regulators. The central banks of China, Europe, Japan, and the United States all sent participants, along with agencies like the Bank for International Settlements and the European Stability Mechanism.

Another piece of the Yale program is the two-day Financial Crisis Forum, where veterans including former Treasury Secretary Henry Paulson offer their insights on subjects from capital injections to frozen money markets.

“For the current generation of officials, especially the younger ones who attend the conference, learning from history is vital,” says Paul Tucker, deputy governor of the Bank of England from 2009 to 2013. “Going forward, current officials also need to learn from the crises that, believe it or not, were averted or successfully contained.”

Finally, there is Yale’s one-year master’s degree in systemic risk, which offers early career professionals a chance to hone their skills and develop new ones. A recent graduate is Özgü Özen Çavuşoğlu, who returned to her job in the financial stability division of Turkey’s central bank and is now researching an early-warning system for the country’s economy.

Just as important, she says, was the opportunity to forge bonds with colleagues from across the globe.

“We are living in an interconnected world,” Özen Çavuşoğlu says. “That’s why the network of people with the same understanding will play an important role in having a stable global economy.”

The link to the original article: https://www.imf.org/external/pubs/ft/fandd/2018/12/tim-geithner-yale-program-financial-stability-wellisz.htm?utm_medium=email&utm_source=govdelivery

Excerpt:

Credit: Institute for Palestine Studies

By Thalif Deen
UNITED NATIONS, Jul 24 2018 (IPS)

The Group of 77 (G77) — the largest single coalition of developing countries at the United Nations– is to be chaired by Palestine, come January.

“It’s a historical first, both for Palestine and the G77,” an Asian diplomat told IPS, pointing out that Palestine will be politically empowered to collectively represent 134 UN member states, including China.

Created in June 1964, the 54-year-old Group comprises over 80 per cent of the world’s population and approximately two-thirds of the United Nations membership

Traditionally, the G77 speaks with a single voice before the 193-member General Assembly, the highest policy making body at the UN, and also at all UN committee meetings and at international conferences.

Under a system of geographical rotation, it was Asia’s turn to name a chairman for 2019. The Asian Group has unanimously endorsed Palestine, which will be formally elected chair at the annual G77 ministerial meeting, scheduled to take place in mid-September.

Palestine will take over from the current chair, Egypt, which is representing the African Group of countries.

The chairmanship is a tremendous political boost for Palestine at a time when it is being increasingly blacklisted by the Trump administration which is kowtowing to the Israelis.

Although it is not a full-fledged UN member state, Palestine is recognized by 136 UN members, and since 2012, has the status of a “non-member observer state” –as is the Holy See (the Vatican).

Nadia Hijab, President, Al-Shabaka Board of Directors, told IPS: “At a time when Israel is moving on all fronts to wipe Palestine definitively off the map through relentless colonization – and to muscle in on UN committees despite its flagrant violations of international law — it is a source of solace to see Palestine slated for a very visible role at the UN.”

However, comforting as this may be, she pointed out, it will take a lot more than this to make “Palestine” a reality on the ground.

Sadly, the Ramallah-based Palestinian leadership has been unwilling or unable to end security coordination with Israel and to heal internal divisions. Instead, she said, it is cracking down on peaceful Palestinian protests.

”It is also reshaping the Palestine Liberation Organization, which has always been recognized as the sole legitimate representative of the Palestinian people, in a way that excludes alternative and opposing views,” Hijab declared.

Martin Khor, Advisor to the Malaysia-based Third World Network, told IPS: “I think it will be a historic and a significant development-first for the G77 countries to elect Palestine as its chair, and thereby affirm their confidence in its leadership.”

The election will also prove that the State of Palestine itself has decided it can mobilise its human and material resources to take on the complex task of coordinating the largest grouping in the UN system– even though it has to fight its own very challenging battles of survival and independence, said Khor, the former executive director of the Geneva-based South Centre.

“Both Palestine and the G77 deserve the support of people around the world to wish them success in voicing and defending the interests of developing countries in these very difficult times when international cooperation and multilateralism are coming under attack,” he said.

Last week, the Trump administration refused to grant visas to a six-member Palestinian delegation that was expected to participate at the UN’s High-Level Political Forum (HLPF) on Sustainable Development which took place July 16-18.

This was clearly in violation of the 1947 US-UN Headquarters Agreement which calls on the US, among other obligations, to facilitate delegates participating at UN meetings.

Asked about the visa refusal, UN deputy spokesperson Farhan Haq told reporters last week: “Well, certainly, we’re aware of this latest incident, but as far as I’m aware, there is a Host Country Committee that deals with disputes involving access to the United Nations and any problems dealing with the host country on that.”

”As of now, the Host Country Committee has not been approached or formally informed of this, so they haven’t acted on this. But it’s normally their role to deal with this situation. Of course, we would hope that all of those who are here to attend UN meetings would have the ability to do so,” he added.

Samir Sanbar, a former UN Assistant Secretary-General who headed the Department of Public Information (DPI), told IPS chairing the G-77 will be an unprecedented role for Palestine. He said leading that large, varied yet collaborative group will require tactful handling by all sides at a time when the rightful Palestinian cause needs every support as the region—and a fragmented conflicted, almost leaderless world— is facing serious challenges.

“It is hoped that Ambassador Riyad Mansour, Permanent Observer of the State of Palestine and an experienced diplomat with proven U.N. record, will be given the opportunity and required leeway to operate in an inclusive, patient and fruitful manner to enhance the role of the G 77 while advancing the status of the Palestine, said Sanbar, who served under five different UN secretaries-general.

At the UN, the Trump administration has been increasingly undermining the Palestinian cause – a cause long supported by an overwhelming majority of member states in the world body.

In May, the US relocated its embassy from Tel Aviv to Jerusalem even though the UN has deemed it “occupied” declaring that the status of East Jerusalem should be subject to negotiations and that East Jerusalem will be the future capital of the State of Palestine.

Last month, the Trump administration also reduced its funding—from an estimated $360 million in 2017 to $60 million this year — to the UN Relief and Works Agency (UNRWA), created in 1949 to provide assistance to over 5.5 million refugees resulting from the creation of Israel in 1948.

Last year when Secretary-General Antonio Guterres proposed the appointment of former Palestinian Authority Prime Minister Salam Fayyad as UN’s Special Representative in Libya, the proposal was shot down by US Ambassador Nikki Haley, purely because he was a Palestinian.

And speaking before the US House Appropriations State and Foreign Operations Subcommittee, Haley went even further down the road when she indicated she would block any appointment of a Palestinian official to a senior role at the UN because Washington “does not recognize Palestine” as an independent state.

Suddenly, the Palestinians, for the first time, seem blacklisted– and declared political outcasts– in a world body where some of them held key posts in a bygone era.

Guterres, who apparently relented to US pressure by stepping back on Fayyad’s appointment plucked up courage to tell reporters: “I think it was a serious mistake. I think that Mr. Fayyad was the right person in the right place at the right time, and I think that those who will lose will be the Libyan people and the Libyan peace process.”

And, he rightly added: “”I believe that it is essential for everybody to understand that people serving the UN are serving in their personal capacities. They don’t represent a country or a government – they are citizens of the world representing the UN Charter and abiding by the UN Charter,” he said, pointedly directing his answer at Haley

A former chair of the G77 chapter in Vienna told IPS although the Palestinian issue is fundamentally a political one, centred as well on the legitimacy and legality of Israeli occupation, it no longer remains in the political-legal realms exclusively.

He said there are a large number of issues of economic, social and cultural and environmental nature, including health, education, food, water, etc, which arises both directly from conditions of occupation, as well as laterally from other conditions such as denial of humanitarian access, and, very recently, the declaration of “Israel as a Jewish state”.

It is logical that advancing a struggle on these issues call for a broad forum of solidarity, and the G 77 fits the bill, he noted.

In an oped piece marking the 50th anniversary of the G77, Mourad Ahmia, the G77 Executive Secretary said: “When it was established on Jun. 15, 1964, the signing nations of the well-known “Joint Declaration of Seventy-Seven Countries” formed the largest intergovernmental organisation of developing countries in the United Nations to articulate and promote their collective interests and common development agenda.

Since the First Ministerial meeting of the G-77 held in Algeria in October 1967, and the adoption of the “Charter of Algiers”, the Group of 77 laid down the institutional mechanisms and structures that have contributed to shaping the international development agenda and changing the landscape of the global South for the past five decades, he pointed out.

“Over the years, the Group has gained an increasing role in the determination and conduct of international relations through global negotiations on major North-South and development issues.”

The Group has a presence worldwide at U.N. centres in New York, Geneva, Nairobi, Paris, Rome, Vienna, and Washington D.C., and is actively involved in ongoing negotiations on a wide range of global issues including climate change, poverty eradication, migration, trade, and the law of the sea.

“Today, the G-77 remains the only viable and operational mechanism in multilateral economic diplomacy within the U.N system. The growing membership is proof of its enduring strength,” he declared.

A group of demonstrators protest in the Argentine city of Rosario against the wave of lay-offs of public employees since President Mauricio Macri took office. Credit: Courtesy of Indymedia.org

By Yilmaz Akyüz
GENEVA, Jun 5 2018 (IPS)

It is now more than a decade and a half since the last severe currency crisis in a major emerging economy ‒ that was in Argentina in 2001-2002 following a series of crises in Russia, Turkey and Brazil.  It is now common knowledge that such crises generally occur when countries fail to manage surges in capital inflows so as to prevent build-up of fragility including currency appreciations, large and persistent current account deficits, increased leverage and currency and maturity mismatches in balance sheets.  

The absence of a major crisis in the Global South since the early years of the new millennium owes not so much to judicious management of the surge in capital inflows that had begun in the early 2000s and continued with full force after the global financial crisis, as to persistently benign global financial conditions resulting from exceptional monetary policies in the US, Europe and elsewhere in advanced economies and favourable global risk appetite.

Even though there has been no fundamental reversal of these policies, the arrival of Minsky moment appears to be imminent with markets, in expectations of normalization of monetary policy in the US, getting nervous about the risks they have taken by investing heavily in emerging economies with poor economic fundamentals in search for yield in conditions of low global interest rates and ample supply of liquidity.

Yilmaz Akyüz, chief economist of the South Centre, Geneva.

The first serious signs have appeared in Argentina with the recently elected government of Macri knocking on the doors of the IMF. But Argentina is perhaps only the tip of an iceberg. Several other emerging economies are equally and even more susceptible to sudden stops and reversals of capital flows and currency and balance of payments crises.

In typical IMF interventions in previous crises, liquidity support was provided mainly to keep debtor countries current on their payments to international creditors and to maintain the capital account open.  As a result, obligations to private creditors were translated into debt to the IMF. Simultaneously, austerity was imposed on debtors by means of hikes in domestic interest rates, fiscal retrenchment, cuts in employment, wages and pensions in order to achieve a sharp turnaround in the current account, primarily through import compression, and to restore confidence among international creditors and investors.

This approach to crisis management was widely criticised on several grounds.  A strong case was made that the combination of debtor austerity and creditor bailout would lead to inequality between debtors and creditors in the incidence of the burden of the crisis, create moral hazard by allowing creditors to avoid the full consequences of the risks they have taken and are paid for, and endanger the financial integrity of the Fund.

Inequalities could also be created among creditors; in the event of a default and restructuring, those who exit first could escape without haircut, leaving the others to take the full brunt of debt write-offs. Profit opportunities are also created for vulture funds, at the expense of genuine creditors as well as the debtor, as seen in the case of Argentina.

Considerable scepticism was also expressed within the Fund about the wisdom of using public money to bail out private creditors and investors.  During the earlier episodes of crises, the IMF Board recognized the need for involving the private sector in forestalling and resolving financial crises, but insisted on voluntary mechanisms, notably collective action clauses (CACs) and automatic rollover clauses in debt contracts and informal negotiations between debtors and creditors.

However, as these proved ineffective and some advanced economies started to oppose bailouts, the IMF Board agreed that in extreme circumstances, if it is not possible to reach agreement on a voluntary standstill, members may find it necessary, as a last resort, to impose one unilaterally, and that since there could be a risk that this action would trigger capital outflows, a member would need to consider whether it might be necessary to resort to the introduction of more comprehensive exchange or capital controls.

No protection against litigation was offered, but it was suggested that the Fund could signal its acceptance of a standstill imposed by a member by lending into arrears to private creditors.  The Fund staff went further and proposed a formal Sovereign Debt Restructuring Mechanism (SDRM) to facilitate sovereign bond workouts.  However, this did not elicit adequate support and had to be abandoned. The issue was soon forgotten with a rapid recovery of capital inflows to emerging economies and bounce back of economic activity in crisis-hit countries.

However, private sector involvement in crisis resolution was back on the agenda again with the onset of the Eurozone crisis.  The Fund turned its attention to sovereign debt restructuring after misjudging the sustainability of the Greek debt, very much in the same way as it had done with Argentina about a decade earlier, pouring in money to bail out private creditors.

It restarted searching ways and means for involving the private sector in crisis resolution so as to “limit the risk that Fund resources will simply be used to bail out private creditors” and to ensure that private creditors made some concessions and took some losses on their holdings as a condition for Fund lending.

Subsequently it was suggested that the sovereign approaching the Fund for assistance were to be asked to find ways of rolling over all bonds and commercial loans falling due within the life of the Fund programme.  This would be necessary whether external payments difficulties are perceived to be as one of liquidity or solvency which is often difficult to identify with a reasonable degree of precision ex ante.

This so-called “reprofiling” was again to be market-based and voluntary.  However, no statutory mechanism was proposed for bailing in the private creditors in the event of failure of a voluntary agreement.  In such an event, as long as the IMF stood firm in refusing lending without private sector involvement, the debtor would have had no option but to impose unilateral standstills on its obligations to private creditors, but without any statutory protection against litigation.  Although various proposals were made outside the Fund to address the holdout problem and protect debtors against litigation, the matter was once again put aside without being resolved.

The stakes are now getting higher because of massive amounts of external liabilities that emerging economies built up in the past ten years.  These are not only in debt contracted in reserve currencies, notably by private corporations, but also unprecedented amounts of foreign holdings in local deposit, bond and equity markets.

Furthermore, most emerging economies have eliminated or significantly reduced restrictions over capital outflows by residents. Consequently, exit of nonresidents from local markets and capital flights by residents now constitute bigger sources of potential drain on reserves of emerging economies than external debt contracted in reserve currencies.

Emerging economies are widely commended for large amounts of international reserves they have accumulated in the new millennium.   However, in the large majority of cases these came from capital inflows rather than current account surpluses. Cumulatively, all G20 emerging economies except China and Russia have registered current account deficits since the beginning of the millennium, at a total amount of some $2 trillion while their external labilities have increased by over $4 trillion.

Reserves accumulated is less than a quarter of the increase in total liabilities while the rest of capital inflows (new liabilities) has been used for financing current account deficits or private acquisition of assets abroad – assets that would not necessarily return at times of interruption and reversal of non-resident capital inflows.

As of end 2016, on average, the reserves of deficit G20 emerging economies were less than one-third of their total non-FDI external liabilities including debt issued internationally and non-resident holdings in local deposits, bonds and equities.   In many cases these holdings plus short-term forex debt reach or exceed international reserves. In most cases reserves would be totally inadequate to provide a reliable buffer against a generalized exit of non-residents and a widespread capital flight by residents.

Given the dismal record of the IMF in crisis intervention and management, many emerging economies are loath to go back to the IMF in the event of a severe currency and liquidity crisis, except those such as Argentina whose neo-liberal policies are strongly supported by the IMF.  In any case at some $800 billion, the lending capacity of the IMF would be too small to take on the task. The level of liquidity that may be needed by many emerging economies in the event of capital reversals exceed by a large margin what the IMF could provide under exceptional financing.

Most emerging economies would also be highly reluctant to resort to unilateral debt standstills and exchange controls in view of their exposure to creditor litigation and chronic dependence on international lenders and investors.  On the other hand, not much relief could be expected from South–South multilateral arrangements for liquidity provision, notably the Chiang-Mai Initiative Multilateralization (CMIM) of East Asian countries and the Contingent Reserve Arrangement (CRA) of BRICS.

These are not only small in size but also have design problems. The CMIM has never been called upon, even during the global crisis. It does not include a common fund but a series of promises to provide liquidity, with each country reserving the right not to contribute to the specific request by a member.  Its size is $240 billion and access beyond 30 per cent of quotas is tied to an IMF program.

The CRA is also designed to complement rather than substitute the existing IMF facilities. Its size is even smaller, $100 billion, and access beyond 30 per cent is also tied to the conclusion of an IMF programme. Thus, these regional arrangements do not provide escape from IMF conditionality and surveillance.

That leaves bilateral swaps among central banks and bilateral lending by governments of reserve-currency countries, notably the US, and surplus emerging economies with ample international reserves such as China.  A very large part of bilateral swaps established by the US Federal Reserve is with other advanced economies.

Those with emerging economies (Brazil and Mexico) are too small to provide much relief.   In the words of the former chair of the US Federal Reserve, Janet Yellen, expanding the swap lines to serve as a safety net for countries encountering balance of payments pressures is not within the Fed’s mandate and therefore is a complete non-starter.  China has swaps with over 30 countries. But these are mostly with advanced economies and designed to support trade and investment and to promote the international use of renminbi rather than boost reserves.

To sum, as recognised by the IMF, the global financial safety net including international reserves, Fund resources, bilateral swap arrangements, regional financing arrangements is “fragmented with uneven coverage” and “too costly, unreliable and conducive to moral hazard”.

Given the aversion of emerging economies to the IMF and unilateral debt standstills and exchange controls, the next crisis is likely to be even messier than the previous ones. Some countries may seek and succeed in getting bilateral support from China or some reserve-currency countries according to their political stance and affiliation.

For instance, one of the most vulnerable emerging economies, Turkey, is likely to approach China, Russia or some Gulf states with strong reserve positions rather than the IMF if its currency goes into a free fall. In such cases, crisis intervention would become even more politicised than in the past and a lot less reliant on multilateral arrangements.

By failing to establish an orderly and equitable system of crisis resolution, the IMF may very well find its role significantly diminished in the management of the next bout of crises in emerging economies. In other words, multilateralism, however imperfect, could face another blow in the sphere of finance after trade.

Excerpt:

The opening panel of the Forum, 'The urgency and logic of investing in violent conflict'. Credit: SIPRI

By Thalif Deen
STOCKHOLM, Sweden, May 8 2018 (IPS)

The underlying message at the fifth annual Stockholm Forum on Peace and Development was summed up in its telling title “The politics of peace.”

But the task ahead was overwhelmingly difficult: How do you advance peace and development against the backdrop of political unrest in parts of Asia and Africa and continued conflicts in the Middle East— all of them amidst rising global military spending triggering arms sales running into billions of dollars.

In his opening address, the chairman of the Board of Governors of the Stockholm International Peace Research Institute (SIPRI) Jan Eliasson set the theme for the three day meeting when he declared: “No peace without development and no development without peace”.

“And none of the above without human rights,” said Ambassador Eliasson, the former Deputy Secretary-General of the United Nations.

The three-day meeting, May 7-9, was attended by more than 350 political leaders, high-level policy makers, academics and representatives of civil society organizations.

In his keynote address to the plenary, the President of the UN General Assembly (PGA) Miroslav Lajcak underlined the new UN concept of “sustaining peace” which has been the focus of two resolutions, one by the Security Council and the other by the General Assembly.

“It has spurred new initiatives. It has got us all talking – and acting,” he said.

And, two weeks ago, the UN hosted a High-Level Meeting on “Peacebuilding and Sustaining Peace”.

The meeting showcased some best practices. “We learned about how we are moving from stand-alone actors or activities for peace, to pooling our assets”, said Lajcak, who is also the Foreign Minister of Slovakia.

Providing one concrete example, the PGA said he actually saw this in action, when he travelled to the Colombian town of Totoró. “There, I saw a real commitment to peace – from the various United Nations Agencies, from government officials and from indigenous communities.”

“And, I saw how all these stakeholders could come together – under a United Nations inter-agency programme –for a common goal: to make the peace agreement stick.”

Secondly, he said, “we talked a lot about partnerships. Years ago, the United Nations was like an island. Too often, it acted alone. But, we have all, now, realised something important: Sustaining Peace is not owned by any one entity. It can only be achieved, if we all work together. “

“We heard, during the Meeting, that partnerships with regional organisations are particularly crucial. And, given where we are, today, this Forum is a good opportunity to look at how we can build up stronger links between the European Union and the United Nations, for Sustaining Peace.”

“Thirdly, I want to say this – very clearly: Not one discussion failed to have a gender dimension. And, I mean that. Not one.”

The other featured high-level participants at the Forum included Margot Wallstrom, the Foreign Minister of Sweden, Isabella Lovin, the Swedish Minister for International Development Cooperation and Climate Change, Gbehzohngar Milton Findley, Foreign Minister of Liberia, Adela Raz, Deputy Foreign Minister of Afghanistan and Hassan Hussein Hajji, Minister of Justice of Somalia.

Meanwhile, a new SIPRI report, released last week, highlights the rise in global military spending at a time when there is widespread speculation about a new cold war between the United States and Russia.

And US President Donald Trump’s public war-mongering and military threats against countries such as Iran, and until recently, North Korea -– is also likely to escalate military spending further.

And, most visibly, the continued conflicts in Syria and Yemen and the instability in Iraq, Libya and Afghanistan, have triggered a rise in arms spending and bolstered US and Western arms sales to the war zones in Asia and the Middle East.

Asked if there are any hopes of a decline in arms spending in the foreseeable future, Pieter Wezeman, Senior Researcher in the Arms and Military Expenditure Programme, at the Stockholm International Peace Research Institute (SIPRI), told IPS “right now there is little hope that global military expenditure will decrease in the near future.”

For 2017, he said, global military spending remained stable for yet another year.

However, this happened at a time that Russia had to decrease its military spending due to the bad economic situation in the country and the year after Saudi Arabia had cut its spending a lot, he explained.

“If those two countries will maintain ambitions to improve their armed forces, we can expect they will increase military spending as soon as their economies improve,” Wezeman predicted.

Saudi Arabia started to increase its spending in 2017, despite the continuing low oil prices. At the same time there are no indications that China will end the long lasting steady annual increases in its spending.

The decrease in US spending ended in 2016, according to Wezeman.

Trump has pushed for increases and a substantial increase in 2018 is likely. Finally, many states in Europe have started to increase their spending in response to heightened threat-perceptions towards Russia, and in relation to the conflicts in the Middle East.

On the contrary, doesn’t it appear that spending will also keep rising in the context of a “new cold war between the US and Russia?

He pointed out that the heightened tensions between the US and most of Europe on one side and Russia on the other are a clear motive for increased military spending.

However, rivalry between major states in the Asia Pacific region, roughly China on the side and the USA, India Japan on the other are also a major element, he declared.

In its report, released May 2, SIPRI said total world military expenditure rose to $1.7 tillion in 2017, a marginal increase of 1.1 per cent in real terms from 2016.

“Continuing high world military expenditure is a cause for serious concern”’ warned Ambassador Eliasson. It undermines the search for peaceful solutions to conflicts around the world.”

After 13 consecutive years of increases from 1999 to 2011 and relatively unchanged spending from 2012 to 2016, total global military expenditure rose again in 2017.* Military spending in 2017 represented 2.2 per cent of global gross domestic product (GDP) or $230 per person.

‘The increases in world military expenditure in recent years have been largely due to the substantial growth in spending by countries in Asia and Oceania and the Middle East, such as China, India and Saudi Arabia,’ said Dr Nan Tian, Researcher with the SIPRI Arms and Military Expenditure (AMEX) programme. ‘”At the global level, the weight of military spending is clearly shifting away from the Euro–Atlantic region”, he added.

The writer can be contacted at thalifdeen@ips.org

Patricia Espinosa, executive secretary of the United Nations Framework Convention on Climate Change, at the One Planet Summit in Paris. Credit: AM

By Paris Correspondent
PARIS, Dec 14 2017 (IPS)

As funding to combat climate change has lagged behind lofty words, the One Planet Summit in France this week invited governments and business leaders to put money on the table.

The result was a significant number of international pledges – both for investment in green energy and divestment from fossil fuels – as various sectors responded to the call from French President Emmanuel Macron for urgent action.Some of the drive at the summit came from small island states, which have been battered by recent hurricanes and other disasters.

“We’re not going fast enough,” Macron said at the Dec. 12 summit, which he co-convened with the United Nations and the World Bank. “Some countries present will see their territories disappear. We all have to move forward… The time is now.”

French multinational insurance company AXA announced that it plans to have 12 billion euros in green investments by 2020 and that it would divest 2.4 billion euros from certain coal-company activities.

Meanwhile the World Bank Group (WBG) highlighted its funding of projects in India for street lighting; in West Africa to tackle “coastal erosion, flooding and climate change adaptation”; in Indonesia regarding geothermal-power development; and with the Global Covenant of Mayors in a new “Cities Resilience Programme” (CRP).

“Over the next three years, the CRP will leverage $4.5 billion in World Bank loans to catalyze billions in public and private capital for technical assistance, project co-financing and credit enhancement,” said World Bank Group President Jim Yong Kim.

He said that the programme would essentially “act as an investment banker for cities to structure programs to address their vulnerabilities to climate change”.

Kim also announced that the World Bank would not be financing upstream oil and gas after 2019, but that in “exceptional circumstances”, consideration would be given to such financing in the “poorest countries” where there is a clear benefit in terms of “energy access for the poor”.

The bank said it was on track to meet its target of 28 percent of its lending going to climate action by 2020.

With these and other announcements, the One Planet Summit, held two years after the signing of the landmark Paris Agreement, aimed to add momentum to the push for adequate financing of climate adaptation and mitigation, said some observers, while others termed it a public-relations exercise.

The summit brought together heads of state, local government representatives, non-governmental organizations – and schoolchildren. Journalists were out in force, alongside United Nations delegations, at the Seine Musicale venue, an imposing new arts centre on an island in the river Seine, just outside Paris.

Government leaders arrived by boat with UN Secretary-General António Guterres, Macron and Kim, the co-convenors, for a packed afternoon of panel discussions and speeches, following morning events.

“Technological progress has already revealed the falsehood that responding to climate change is bad for the economy,” said Guterres. “Finance could be, should be and will be a decisive factor.”

Some of the drive at the summit came from small island states, which have been battered by recent hurricanes and other disasters.

Caribbean representatives announced the launch of a 8-billion-dollar investment plan to create the world’s first “climate-smart zone”. The bodies involved include the Inter-American Development Bank, the World Bank, the Caribbean Development Bank and private groups, forming a “Caribbean Climate-Smart Coalition”.

The goal is to find a way “to break through the systemic obstacles that stop finance flowing to climate-smart investments”, the Caribbean Development Bank said.

Juvenel Moȉse, Haiti’s president and a participant at the summit, spoke of the vulnerability of the region, emphasizing that all the islands are suffering from the impacts of climate change. He said that Haiti was in a “very fragile zone”.

American actor Sean Penn, also present, said he had got involved in helping Haiti to rebuild after the 2010 earthquake that devastated the country, and he said more financing was needed.

“I call on all those gathered to stand with Haiti,” he urged.

Meanwhile, Canada and the World Bank Group said they would support small island developing states to expand their renewable-energy infrastructure to achieve greater access to energy and to decrease pollution.

In side events around the summit, groups such as the International Development Finance Club (which groups 23 international, national and regional development banks from across the world), highlighted their “green financial flows”.

The group said that in 2016, IDFC members made new commitments representing 173 billion dollars in finance, an increase of 30 billion from 2015.

The eve of the summit, Dec. 11, was titled Climate Finance Day, and it was also the 20th anniversary of the Kyoto Protocol. Patricia Espinosa, the Executive Secretary of UN Climate Change (UNFCCC), told journalists that the long years of negotiations had provided a framework in which all sectors of society could take action, as governments “cannot do it alone”.

She said there was a growing sense of urgency, especially after recent extreme weather events that had seen some communities “losing everything they have built throughout their lives”. More support was needed for adaptation, she and other officials noted.

At the summit, the Agence Française de Développement – an IDFC member — signed accords with Mauritius, Niger, Tunisia and the Comoros – as part of the agency’s Adapt’Action Facility.

With financing of 30 million euros over four years, Adapt’Action seeks to “accompany 15 developing countries that are particularly vulnerable to climate change impacts, in the implementation of the Paris Agreement regarding adaptation,” the agency stated.

An official from Niger spoke compellingly of problems that included desertification. The country has been cited as an example of France not doing enough for its former colonies, and political analysts question whether that will change under Macron.

The European Union meanwhile said that its External Investment Plan (EIP) is set to mobilise some 44 billion euros to “partner countries in Africa and the EU Neighbourhood” by 2020.

Among its goals, the EIP aims to “contribute to the UN’s sustainable development goals while tackling some of the root causes of migration,” according to the EU.

Regarding Asia and the Pacific, officials at the summit said action by countries in the region were “encouraging”. Heads of state included the prime ministers of Bangladesh and Fiji, who spoke of their climate initiatives. Fiji’s Prime Minister Frank Bainimarama said the country was among the first emerging states to offer a green bond.

The international nature of the summit made the U.S. absence even more noticeable. As U.S. President Donald Trump had announced earlier this year that the country would withdraw from the Paris Agreement, he was not invited, French officials said.

Other American climate figures were present, however, such as businessman and former New York Mayor Michael Bloomberg, former California governor and actor Arnold Schwarzenegger, Microsoft founder Bill Gates and former Secretary of State John Kerry.

Bloomberg said that around the world, businesses were taking “responsible” action because investors want to put their money in environmentally friendly companies.

Still, for some NGOs, not enough is being done, and the summit was more of what they had heard before.

“If governments and business are sincere in their commitment to the goals of the Paris Agreement, they would cease their financing of dirty and harmful energy projects around the world and would instead accept their responsibility for providing public finance to address climate change instead of letting business dictate the agenda,” said Meena Raman of Third World Network.

A man pushes a cartful of garbage near a busy intersection in Yangon, Myanmar. Credit: Amantha Perera/IPS

By Jomo Kwame Sundaram
KUALA LUMPUR, Aug 22 2017 (IPS)

Following the 2007-2008 global financial crisis and the Great Recession in its wake, the ‘new normal’ in monetary policy has been abnormal. At the heart of the unconventional monetary policies adopted have been ‘asset purchase’ or ‘quantitative easing’ (QE) programmes. Ostensibly needed for economic revival, QE has redistributed wealth – regressively, in favour of the rich.

As its failure to revive most economies becomes apparent, and opposition to growing inequality rises, QE may soon end, judging by recent announcements of some major central banks. Already, the US Federal Reserve and the Bank of England have been phasing out purchases of financial assets, while the European Central Bank (ECB) is publicly considering how quickly to do so from December. Meanwhile, these monetary authorities are considering raising interest rates again.

Evaluated by its own declared objectives, QE has been a failure. Forbes magazine, the self-avowed ‘capitalist tool’, has acknowledged that QE has “largely failed in reviving economic growth”. By ‘injecting’ money into the economy, QE was supposed to induce banks to lend more, thus boosting investment and growth. But in fact, overall bank lending fell after QE was introduced in the UK, with lending to small and medium sized enterprises (SMEs) – responsible for most employment – falling sharply.

Bank failure to finance productive investments was not because corporations were short of cash as they have considerable reserves. Instead, the problem is due to under-consumption or overproduction, exacerbated by protracted stagnation and worsening inequality. After all, producing more when demand is soft or shrinking only leads to excess supply or gluts.

QE’s regressive wealth distribution

But QE has transferred wealth and income to the rich in the guise of reviving the world economy. New money created by QE was not invested in new productive activities, but instead mainly flowed into stock markets and real estate, pushing up share and property prices, without generating jobs or prosperity. QE has enriched asset owners, increasing the wealth of the rich, while not generating real wealth.

By effectively devaluing currency, QE has diminished money’s buying power, thus reducing real incomes. However, first-time or new asset purchasers lose, having to spend more to buy more expensive assets such as shares or real property. While increased asset prices have to be paid by purchasers, the additional cost to existing asset owners is partially compensated for by higher prices received for assets sold.

Thus, the claim that QE would encourage investment as well as boost growth and employment has disguised the massive redistribution or wealth transfer to the rich. QE, especially in the US and UK, has seen real wages fall as profits rose. While output may have recovered, real wages have been generally lower.

In the South too

QE has had similar effects in the global South, enriching asset owners at the expense of the ‘asset-poor’, while making their economies more vulnerable. QE also caused housing, stock market and commodity price bubbles as speculators rushed to buy up such assets. Until petrol prices fell in late 2014, oil-exporting countries enjoyed cash windfalls, at the expense of oil-importing countries, sometimes with devastating consequences, even if only temporary.

QE triggered huge capital flows into the developing world. Around 40 percent of the US Fed’s first QE credit expansion and a third from QE2 went abroad, mostly to ‘emerging markets’. Much of this went into buying existing assets, rather than into productive new investments. And if their currencies strengthened, their exports were undermined.

On the other hand, QE also exacerbated competitive currency devaluations. By reducing the value of their own currencies, ‘reserve currency’ monetary authorities effectively caused other currencies to appreciate, damaging their exports and trade balances.

Be prepared

Unlike productive long-term investments, ‘hot money’ inflows of speculative capital worsen currency volatility. Rising interest rates in the West are likely to trigger a mass exodus of capital from emerging markets, potentially triggering currency collapses in emerging markets again, as in mid-1997.

With various recent developments conspiring to reverse the last several years of unconventional monetary policies in the North, emerging markets and other developing economies are generally poorly prepared for the forthcoming change in circumstances.

While policy options in different scenarios are already being publicly considered in the Western reserve currency economies, an ostrich-like approach of not discussing and preparing for such changes is much more widespread in other economies, with potentially catastrophic consequences.

Excerpt:

By Azza Karam
UNITED NATIONS, Jul 4 2017 (IPS)

A decade ago, it was difficult to get Western policy makers in governments to be interested in the role of religious organizations in human development. The secular mind-set was such that religion was perceived, at best, as a private affair. At worst, religion was deemed the cause of harmful social practices, an obstacle to the “sacred” nature of universal human rights, and/or the root cause of terrorism. In short, religion belonged in the ‘basket of deplorables’.

Azza Karam, Senior Advisor, UNFPA and Coordinator, UN Interagency Task Force on Religion and Development

Yet, starting in the mid-1990s with then President of the World Bank, James Wolfenson, and celebrated in 2000 under then UN Secretary-General Kofi Anan when the Millenium Development Goals were agreed to, a number of religiously-inspired initiatives coalesced, all trying to move ‘religion’ to international development’s ‘basket of desirables’.

The arguments used to begin to generate positive interest in the role of religious NGOs in international multilateral fora were relatively straightforward. Today they are almost a cliche: religious institutions are the oldest social service providers known to human kind, and several basic health and educational institutions of today, are administered or influenced to some extent, by religious entities.

So if we are serious about strengthening health systems and universal access to healthcare, enhancing educational institutions, content and accessibility, protecting our environment, safeguarding the rights of marginlised and vulnerable populations, countering social exclusion and ensuring human dignity, then – the argument is – we have to work with those who influence minds, hearts, and continue to provide and manage significant amounts of social services in most countries. Facts and figures as to how many social services are provided by/through religious institutions continue to be provided and roundly disputed.

The number of initiatives within the secular multilaterals – like the UN – which focused on ‘religion and development’ began to slowly attract the attention (and the money) of some western donor governments such as Switzerland and Norway, both of whom were keen on mobilising religious support for women’s rights in particular. Some governments (such as the USA and the UK) dabbled in engaging with religious NGOs both at home in their own countries, and supporting some of them in their development and humanitarian work abroad.

Nevertheless, from a multilateral perspective, the larger tapestry of western donor support to efforts around religion, tended to be marginal – dipping toes in the water rather than taking a plunge.

With the increasing presence of al-Qaeda on the world stage in 2001, and the subsequent war in Iraq and Afghanistan, the world witnessed the emerging gruesome hydras of religious extremism, at once fueling, and being fueled by, the phenomena of ultra nationalism, racism, xenophobia and misogyny. Some western governments spoke openly of engaging religious actors in counter-terrorism, but this narrative was fraught with political tensions.

It was only when migrants appeared to ‘flood’ European shores (albeit in numbers which are only a fraction of those ending up in developing countries), that there was a noticeable surge of keen interest by several western governments in ‘this religion thing’.

For the UN developmental entities who had invested significantly to generate the interest of their largest western donors in the relevance of religions to development, spurred by the learning from the MDGs and with a view to realizing Agenda 2030, there was a noticeable volte face which was taking place right under their noses.

Almost overnight, UN-steered initiatives to engage with religious actors and enhance partnerships around health, education, environment, women’s rights, humanitarian work, all of which had been painstakingly prepared and backed by years of research, consultations, networking and shared practice (as the work of the UN Interagency Task Force on Religion and Development testifies) became the object of desire by some governments.

Rather than seek to support the UN in continuing to engage with this work and the critical partnerships developed and labored over for years, however, the objective of these governments is to seek to directly manage the convening, networking and funding roles of faith-based entities, ostensibly with the same objectives of achieving the SDGs.

But there is a critical difference between the UN convening and working with faith-based organizations and religious leaders, and one or a handful of governments doing so. To survive, to thrive, and to protect human rights, the agenda of multilateral entities has to remain distinct from the national self-interest of any one government – or a handful thereof – no matter how powerful this government (or these governments), may be.

This applies to all issues, constituencies and types of partnerships outlined in SDG 17. But the argument here is even more powerful: that where religions are concerned, the need for unbiased and non-partisan engagement with religious actors, distinct from any one nation’s self-interest, is crucial.

If there is suspicion about the role of a non-western government in supporting religious actors in countries outside of its own, then why do we not also suspect western governments of involving themselves in supporting religious efforts in countries other than their own?

This question becomes especially pertinent when we begin to look at the religious composition of the western governments now keen on ‘supporting religion and development’ abroad – they are mostly Christian. And if we look at the governments viewed with much suspicion who have long been supporting religious engagement overseas (also for development and humanitarian purposes, one might add), they tend to be Muslim. A coincidence perhaps?

To avoid these kinds of questions, it would behoove all concerned parties interested in achieving the significant targets of the Sustainable Development Goals, and with a view to endorsing the United Nations’ mandate of safeguarding peace and security and protecting human rights, to support the efforts of the UN system in engaging the whole of civil society.

Rather than efforts driven by some governments, to work with select religious actors, in some countries, the challenge (which is fully achievable) is to strengthen the multi-faith and broad-based civic coalitions of legally registered, bona fide NGOs, working with and known to their governments and to the UN entities, at national, regional and global levels, to deliver for the world.

Otherwise, the danger is that such efforts will be misconstrued as the new colonial enterprise in international development, playing into rising religious tensions globally. History is replete with examples where mobilizing religious actors in other countries, no matter how well-intentioned, can create some rather unholy alliances.

Excerpt:

Credit: Kristin Palitza/IPS

By Phillip Kaeding
UNITED NATIONS, Jul 17 2016 (IPS)

In a petition signed by 150 NGOs, the Coalition for Human Rights in Development have called for development banks to make sure that human rights are respected by their beneficiaries.

Multilateral development banks like the World Bank or the European Investment Bank (EIB) often work with governments and corporations planning mega projects in developing countries. For example, Dutch, Finnish and Central American banks had all funded the Agua Zarca dam in Honduras, the same dam environmental activist Berta Cáceres, was murdered for protesting against.

Organizations like Human Rights Watch and Oxfam say that the financiers also bear responsibilities when local peoples’ rights are abused to help facilitate projects. The petitioners want the development banks to stand up for human rights in the regions where they fund projects.

The new petition states that “Global Witness identified 2015 as the worst year on record for killings of land and environmental defenders, with 185 killings across 16 countries.”

The prominent case of Berta Cáceres is no exception. Soleyana Gebremichael, Ethiopian blogger talked about the situation in her home country at a press conference on Thursday:

“For the last 10 years, the civil society space had been shrinking. Ethiopia enacted two laws in 2009: The first one is the civil society proclamation and the second one was the anti-terrorism proclamation. The civil society proclamation… basically limits the activities of civil society organisations by limiting their resources.”

Gebremichael, who received the International Press Freedom Award with her co-bloggers from Zone 9 in 2015, said that the development banks should work together with civil society organizations on the issues, as a way to work with governments without pressuring them directly.

Often, the banks argue that they do what they can,said Jessica Evans, senior international financial institutions advocate at Human Rights Watch.

“In the case of Uzbekistan, we have been told by World Bank officials that they have behind those doors raised concerns with the government of Uzbekistan about the attacks against the independent human rights defenders that are monitoring forced labor and other human rights abuses linked to the agriculture sector. This had no impact whatsoever,” she said.

How does such a constellation emerge? Mandeep Tiwana, Head of Policy and Research at Civicus, blames entanglements between politics and the economy:

“States are increasingly outsourcing their responsibilities… This leads to an increased avenue to corruption due to collusion among elites. Civil society organizations, when they try to expose these corrupt links between elites, are attacked.”

The development banks, Tiwana argues, support growth-oriented development programs as in Ethiopia and therefore ignore other issues. He sees a neoliberal paradigm at the bottom of the problem.

More than the historical and political causes, the practical solution is what international NGOs are now interested in. The petition addressing all major multilateral development banks suggests seven steps:

First, the banks “should systematically analyze the environment for freedoms of expression, assembly, and association, and the realization of other human rights critical for development. Once they have undertaken this analysis they should build it into their country development strategies,” said Evans.

Then, the Coalition emphasizes, policies to increase accountability and secure human rights considerations in every project must be implemented.

The agenda is quite ambitious. But according to Tiwana, it is essential to target the links between financial institutions and governments together with local civil society organizations.

“Development banks often work with large state-entities and state-entities often enable the participation of several private actors, some of them could be linked to very influential people.”

“So the public has a very important role to play in ensuring that the deals that are made… have gone through the constitutional and lawful discourse. And that’s why civil society is extremely important to shine a spotlight on these contracts and on these activities,” he says.

In many ways, the issued statement appeals to the conscience of Western bank managers and policy-makers. New conflict is likely to occur with multilateral banks from the East like the Asian Infrastructure Investment Bank (AIIB) entering the big stage of development financing. The AIIB is also addressed in the petition.

Months ago, Amnesty International and others pointed out that human rights standards are not the AIIB’s priority. A race to the bottom regarding human rights in development projects is a huge danger in the eyes of the Coalition for Human Rights in Development.

There is a “broader pattern which is emerging as the result of multilateral development banks failing to prioritize public participation in the work that they do and refusing to meaningfully work to prevent reprisals,” says Evans.

“What we are seeing is that the multilateral development banks are continuing on business as usual rather than working with the human rights defenders themselves to put pressure on governments and others that are attacking them.”

Credit: Alexandra Di Stefano Pironti/IPS.

By Thalif Deen
UNITED NATIONS, Jul 7 2016 (IPS)

The Beijing-based Asian Infrastructure Investment Bank (AIIB), which was launched last year with the aim of funding projects on a continent with some of the world’s most populous nations, has pledged over $500 million in four concessional loans to Bangladesh, Indonesia, Pakistan and Tajikistan.

All projects, to be funded by the AIIB, will be “lean, green and clean”, according to the bank’s President Jin Liqun.

“The bank was born with the birthmark of China, but its upbringing is international,” he said, as the 57-member bank also includes Britain, France and Germany.

Martin Khor, Executive Director of the Geneva-based South Centre, told IPS: “The AIIB is a very important initiative whose time has come.”

For so many decades, he pointed out, the international development bank arena was led by the developed countries and there has been so much criticism about the governance system in which the developing countries have a minority of voting rights.

“The AIIB is an institution with a different governance structure with developing countries in the majority but with also participation from many developed countries that decided to join,” he added.

Moreover, said Khor, the AIIB is filling in a deficiency because it is funding the infrastructure needs of developing countries.

The first board meeting last month — and the first projects approval– show that the bank is finally operating, and smoothly too.

“The management has also proclaimed that global standards on environmental and social safeguards will be adopted for the projects.  I hope they keep to this promise.”

The whole operation of the new bank, he noted, will be a great challenge for the developing countries, especially China, which had conceptualized the bank and has the highest equity share, to demonstrate they can lead a successful development bank.

“I am confident the bank will be successful,” predicted Khor.

Last month, the Board of Directors approved the Bank’s first four project-loans financing investments in power distribution and expansion in Bangladesh; road improvements in Tajikistan; highway construction in Pakistan; and slum upgrading in Indonesia.

The Bangladesh project was the Bank’s first stand-alone operation, and the other three projects are co- financing operations with the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and World Bank, respectively.

Both the United States and Japan have so far declined to join the bank.

Asked about the role of the US, State Department spokesman John Kirby told reporters last year: “We’ve noted that China has expressed an interest in leading this effort”.

Obviously, other countries are deciding for themselves the degree to which that they want to participate in this.

“What’s, I think, is important for us – and this was part of the discussion that we had with the Chinese when they were here – is that we welcome the rise of a peaceful, prosperous China; a China that contributes to stability and security, which does include economic dimensions in the region.”

“But the participation of other countries in this are obviously sovereign decisions they have to make. And we’ll just – we’ll see where it goes,” Kirby added.

Palitha Kohona, the former Permanent Representative of Sri Lanka to the UN, told IPS the AIIB  was China’s response to some immediate practical challenges that were emerging in the Asia-Pacific region.

Despite acquiring the status of the world’s second biggest economy, China’s influence in the Bretton Woods institutions (the World Bank and the International Monetary Fund) was limited as the voting power and the senior staff positions in them were dominated by the US and its allies, said Kohona, who has a track record of successfully negotiating with the Chinese.

He said China naturally wished to secure a bigger role in global development and finance, commensurate with its newly acquired stature.

Furthermore, China had accumulated vast financial reserves which it was now seeking to deploy in a secure and mutually advantageous manner, he argued.

“The AIIB was also going to play a part in China’s efforts to project soft power. Importantly, many developing countries of the Asia-Pacific region had always wanted to see established a lending institution that did not lend with cumbersome and unacceptable strings attached. The AIIB was a response to these needs”.

“Although the US and some of its allies talked about the possibility of lending standards being diluted and political considerations influencing decisions, one needs to remember that the West always used the Bretton Woods institutions to advance their political objectives.”

The conditionality that accompanied IMF lending invariably resulted in street riots and deaths. Wikileaks famously revealed how Hillary Clinton as Secretary of State attempted to prevent the IMF from extending a standby loan facility to Sri Lanka which was at the time on the verge of militarily defeating the Tamil Tigers after 27 years of deadly conflict and who were designated as a foreign terrorist group by the US itself, said Kohona.

“The US lobbied hard to prevent its allies from joining the AIIB. But with the prospect of their own companies participating in infrastructure development projects, many Western countries with ailing economies, broke ranks and joined the Bank. Australia, New Zealand, Germany, the UK, and France being among them. China clearly established itself as a lead player in global finance and development through the AIIB, Kohona declared.

In June, AIIB President Jin Liqun and Chinese Vice Minister of Finance Shi Yaobin signed a Contribution Agreement on China’s $50 million contribution to the newly established AIIB Project Preparation Special Fund (the Fund).

The Fund is aimed at supporting Bank members in preparing “sound project proposals”. China’s contribution, the first to the Fund, will allow it to be operational in the fall of 2016.

According to AIIB, the Fund is expected to provide grants to the Bank’s low and middle income member countries for preparation activities, including environmental, social, legal, procurement and technical assessments and analyses, and advisory services. The Bank will seek additional contributions to ensure the Fund’s sustainability.

Although Asia faces a huge infrastructure financing gap, Jin said, there is a shortage of ‘shovel-ready’ bankable projects owing to the capacity limitations.

“Our members have highlighted these constraints during the Bank’s establishment process. I am delighted that our Board has responded to our members’ needs very quickly through the establishment of this Fund. We are very appreciative of China’s timely and generous contribution which will allow us to kick- start the Fund, and have it operational in the autumn.”

The writer can be contacted at thalifdeen@aol.com

Credit: Servaas van den Bosch/IPS

By Phillip Kaeding
UNITED NATIONS, Jun 28 2016 (IPS)

Currently only six percent of humanitarian aid worldwide comes in the form of cash handouts, yet many aid organisations believe that cash transfers should be seen as the rule, not the exception.

Both the World Food Program (WFP) and World Vision International, who work together in Somalia, South Sudan and other crisis-ridden countries, stressed the advantages of cash instead of in kind allowances at a meeting held here Monday.

“There is no longer a question about ‘does cash work’ or ‘is cash the right tool’,” said Amir Mahmoud Abdulla, Deputy Executive director of the WFP.

George Fenton of World Vision explained:

“Digital humanitarian cash transfers are one of the most significant and most exciting innovations of today. They offer… a greater dignity, choice and flexibility for crisis-affected people.”

Due to increasingly widespread mobile phone ownership, cash transfers are now often made digitally. In some circumstances, including refugee camps, aid organisations may hand out cash directly.

The transfers are usually given unconditionally, since this is considered an effective way to provide assistance to a person in need. Whereas in-kind assistance such as food or materials, may not suit the specific needs of the recipient, cash transfers allow recipients to spend money on their most urgent needs, while also supporting local markets.

However, while cash transfers have been considered successful in the settings where they have so far been rolled out, humanitarian organisations, such as the World Bank now want to work out how to make wider use of the concept. As Amir Abdulla put it: “How do we take it to scale?”

In order to do this, some obstacles need to be overcome, methods of delivery have to be streamlined and there has to be a response to the “need to marry cash and technology,” as Fenton puts it.

Colin Bruce, senior advisor to the World Bank President, told the meeting about upcoming challenges: “Until we can better coordinate those processes (needs assessments and response analyses), it’s going to be very difficult to get the kind of upstream thinking, funding and programming necessary to take cash to scale.”

Secondly, a “change in mindsets” has to take place, as Sarah Bailey told IPS this week. Bailey is a Research Associate at the Overseas Development Institute (ODI) and Secretariat Manager of the High Level Panel on Humanitarian Cash Transfers which produced the report Doing Cash Differently. She explained to IPS that “cash transfers turn notions of aid and charity on their head. Rather than the giver deciding that people need food or clothes, the choice is with the people themselves.”

The desired shift to cash-based aid is closely linked to the fund-raising side of humanitarian programs. Charlotte Lattimer of the non-profit research organization Development Initiatives emphasized that although funding increased in the last year, there still exists “an enormous shortfall in terms of meeting humanitarian needs”.

Donors are increasingly asking for more transparency and more precise reporting on exactly how funds are spent, which is difficult if it is spent by the recipients instead of the aid organization.

Still “cash transfers are a tangible opportunity for more aid transparency because it’s easier to track the movement of money than the movement of food and buckets. Far from cash transfers being a risk to accountability, cash can be a vehicle for it,” Bailey told IPS.

Further research may help determine whether cash transfers can provide the transparency donors ask for. With innovations in the field of digital transactions and mobile banking and payment, the infrastructure for new aid delivery concepts improves year by year.

It is this development that aid organizations hope will catch the attention of donors. Bailey explained to IPS why she is convinced that cash transfers will become more and more important. At the end of the day, financial arguments decide financial questions: “Delivering cash is cheaper than delivering in-kind aid. You do not need to rent a warehouse and hire a driver to get money to people. As aid agencies use cash more it will become even cheaper with economies of scale.”

An aerial view of the Village of Kolhuvaariyaafushi, Mulaaku Atoll, the Maldives, after the Indian Ocean Tsunami. UN Photo/Evan Schneider

By Ahmed Sareer
UNITED NATIONS, Jun 25 2016 (IPS)

Last month, over two thousand high-level participants from across the world met in Antalya, Turkey for the Midterm Review of the Istanbul Programme of Action, an action plan used to guide sustainable economic development efforts for Least Developed Countries for the 2011 to 2020 period. The main goal was to understand the lessons learnt by the world’s Least Developed Countries (LDCs) over the past five years and apply the knowledge moving forward.

For my country, the Maldives, the past five years have been a chance to experience first-hand the realities of life after graduation from LDC status. In January 2011, the Maldives was officially removed from the list of LDCs, the culmination of decades of hard work and determined efforts of developing the country. The Fourth UN Conference on LDCs, held in May 2011, was the last for the Maldives as an LDC, but last month in Antalya, we went back because we believed it was important to share the lessons we had learnt since 2011.

While our graduation was naturally a moment of pride and cause for celebration for a country only 50 years old, it was accompanied by a sense of uncertainty about the challenges we would face following the withdrawal of the protections and special preferences afforded to LDCs.

Ultimately, we were able to forge ahead in spite of these difficulties and adapted to the new realities. We ensured that our economy, driven by a world-class tourism sector, and a robust fisheries industry, would continue to be competitive and dynamic. We focused on fostering a business-friendly climate, while making prudent investments for future growth.

However, we remain conscious of the degree to which the gains we have made are vulnerable to exogenous shocks. On 20 December 2004, the United Nations General Assembly (UNGA) decided to graduate the Maldives effective 1 January 2008. But just four days before the UNGA decision, a catastrophic tsunami swept across the Indian Ocean, claiming the lives of over 275,000 people in fourteen countries.

Several islands were rendered uninhabitable; nearly one in ten people were left homeless.

Farms were destroyed, the fresh water lens corrupted, with large-scale loss to infrastructure. The economic cost of the destruction was equivalent to close to 70 percent of GDP, a blow from which it took us over a decade to recover.

The Maldives is not alone in facing such vulnerabilities. For many countries, particularly Small Island Developing States (SIDS) such as our own, an end to LDC status does not necessarily herald the disappearance of structural barriers to growth—such as limited access to markets, geographical isolation, environmental pressures, or difficulty achieving economies of scale.

By 1997, the Maldives had already exceeded two of the three thresholds that determine LDC status—GNI per capita, and the Human Capital Index, measured in terms of undernourishment, child mortality rates, secondary school enrolment rates, and adult literacy.

But we did not exceed the threshold for the third criterion, the Economic Vulnerability Index (EVI), which measures the structural vulnerability of countries to exogenous economic and environmental shocks – we did not meet this threshold to date. It is not necessary to meet all three thresholds to in order to graduate—meaning we were considered ready for graduation.

As the tragedy of 2004 taught us, persistent vulnerabilities have the potential to undermine, if not reverse, gains made towards development. Despite meeting the formal requirements, we were not yet ready. The lessons of our own experiences have meant that the Maldives has been consistent in calling for a smoother and more holistic approach to the graduation process.

Firstly, the criteria for graduation must account for the structural vulnerabilities of developing countries. The fact that economic vulnerability can be disregarded in determining whether a country is ready to graduate from LDC status represents a critical oversight.

Second, the Economic Vulnerability Index itself must also be redesigned to better account for vulnerability. At present, the index fails to account for key considerations such as geographic and environmental vulnerability, import dependency, and demographic pressures.

With greater attention being paid to the effects of climate change on developing countries, most notably in the Sustainable Development Goals (SDGs), evaluating vulnerabilities more comprehensively is a task that has acquired even greater importance.

Lastly, the extension of support and assistance to countries must be determined on the basis of their individual capabilities and challenges, rather than their mere place on a list. We would be remiss to overlook the role that development assistance, including that provided by the UN, has played in helping the Maldives progress—as it has for many others—particularly in regards to our work in disaster preparedness and climate change mitigation.

The withdrawal of such assistance—including preferential trade access and concessionary financing—following our graduation from the ranks of the LDCs has meant increased fiscal challenges. This disregards the unique challenges faced by countries like the Maldives due to their specific structural constraints—constraints ignored under the present graduation regime.

While efforts have been made to smooth the graduation process for LDCs—in 2004, and most recently in 2012—the process remains deeply flawed and in need of comprehensive reform. To this end, the Maldives has called for the World Trade Organization (WTO) to extend the application of TRIPS (trade-related aspects of intellectual property rights) for all LDCs, in addition to the exploration of a “small and vulnerable economy” category at the United Nations, which would recognize the particular needs of such countries.

Similarly, we must move towards devising measures of development that do more than just record national income, and instead provide a more meaningful assessment of national capability and capacity, for which GDP can often be a poor proxy.

No country wishes to be called “least developed”, much less remain in that classification indefinitely, but the factors driving underdevelopment must be meaningfully dealt with if we wish to attain genuinely sustainable development. It is for this reason that we believe that the desire by countries to eradicate poverty and achieve economic development must be met with commitment on part of the United Nations and other organizations to chart a realistic and holistic path towards that end.

Excerpt:

Vineyards belonging to the Dominio del Plata winery in Luján de Cuyo in the Argentine province of Mendoza. It is one of the companies taking part in the Federal Programme for Cleaner Production, which involves a sustainable reconversion inthe wine-growing industry. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
LUJÁN DE CUYO, Argentina , Oct 20 2015 (IPS)

The region of Cuyo in west-central Argentina is famous for its vineyards. But it is one of the areas in the country hit hardest by the effects of climate change, such as desertification and the melting of mountain top snow. And local winegrowers have come up with their own way to fight global warming.

In the cup, malbec, Argentina’s flagship red wine, still has the same intense flavour and colour.

But behind the production process is a new environmental reconversion, which began four years ago in the arid province of Mendoza, where vineyards bloom in the midst of oases created by human hands.

Only 4.8 percent of the desert province of Mendoza is green; 3.5 percent is dedicated to agricultural production, which uses 90 percent of the water consumed, and the rest is urban areas.“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case.” -- René Mauricio Valdés

“We are trying to maintain the same production levels, using less water and less energy, reducing waste, reusing waste products, and creating less pollution,” the provincial coordinator of the Federal Programme for Cleaner Production, Germán Micic, told Tierramérica.

The initiative, launched by the national Secretariat of the Environment and Sustainable Development, benefits some 1,250 small and medium-sized companies in Argentina.

It is carried out with technical and administrative support from the United Nations Development Programme (UNDP) and funds from the Interamerican Development Bank. In Mendoza, 210 companies – 60 percent of them wineries – are participating. They receive advice and up to 28,000 dollars in funds.

“We’re producing the same wine, but in a sustainable manner,” said Luis Romito, the head of the Sustainability Commission of the Bodegas de Argentina wineries association, while participating in the Climate Change Forum organised this month in Mendoza by the National University of Cuyo and the UNDP.

Some of these practices have begun to be implemented by Dominio del Plata, a family winery at the foot of the Andes mountains, in Agrelo, a town in the department of Luján de Cuyo.

By changing equipment and modifying processes, the family business has managed to use less water in the production of its wine.

In the wine production process, water is mainly used for washing, rinsing, heating and cooling.

One example of the changes introduced was the replacement of manual washing of the grape picking lugs, which took some 20 minutes per unit, by automated industrial washers.

“The lug is washed in five minutes with this machine,” Marcelo del Popolo, the winery’s adviser on quality and environmental responsability, told Tierramérica. “We have reduced water consuption by some 60,000 litres a month. In three months of harvest, that’s 180,000 litres of water saved.

“And the water used in the washing process goes down a drain and is carried to a treatment plant, and is then used to irrígate the vineyards,” he said.

And irrigation systems are being improved in Mendoza, where 90 percent of water is used in agricultural activities, and where water shortages are increasingly severe as a result of global warming.

“Water is vital to our province, and we are being seriously affected by this problem,” Ricardo Villalba, an expert in geosciences and former director of the Mendoza-based Argentine Institute of Snow Research, Glaciology and Environmental Sciences, told Tierramérica. “Water is the element that controls regional development.”

Wine storage tanks with special jackets maintain temperatures more efficiently in wineries in the wine-growing region of Luján de Cuyo in the Argentine province of Mendoza, which are taking part in a special programme to create more green-friendly processes to help combat the effects of climate change. Credit: Fabiana Frayssinet/IPS

“Our province basically depends on the water that comes from the snow up in the mountains, and all of the global forecasts and models indicate that there will gradually be less and less snow,” said Villalba, who is a member of the Intergovernmental Panel on Climate Change (IPCC).

The wine-growing industry, which represents six percent of GDP in Mendoza and 1.3 percent of GDP nationwide, also aims to reduce energy consumption, which in Argentina is responsible for 43 percent of greenhouse gas emissions.

In the wineries, energy is used for heating, cooling, pumping of liquids and lighting.

“In each one of these stages we can incorporate modifications of equipment or processes, which make significant energy savings possible,” Micic said. “From jackets on the tanks to maintain temperatures more efficiently to the installation of advanced new pumps for a stronger water flow and lower energy consumption, through the change of compressors and lighting.”

Del Popolo said: “We keep track here of the water that comes in and the temperature we manage to achieve. By doing this we have reduced the energy used for heating by 15 percent.”

The company also uses green-friendly materials like lightweight wine bottles and lighter boxes that use less cardboard. Plastic and other waste products like broken bottles are classified, recycled and reused.

“We’re using boxes that we have already recycled many times over,” he said.

The benefits to the environment also bring considerable cost savings.

“We have addressed two fundamental questions: savings in energy and in water. And in both of them, we’re also seeing significant economic savings,” said the head of the winery, which plans in the future to invest in a solar thermal system for heating and fermentation.

This, according to UNDP representative in Argentina René Mauricio Valdés, is what makes the project self-sustainable.

“Many people think investing in ecological practices has an additional cost and won’t necessarily bring the company any benefits. This shows that is not the case,” said Valdés during a visit to the winery.

Fincas Patagónicas Tapiz, an olive oil producer in the neighbouring department of Maipú, is another company taking part in the programme in Mendoza.

Among other measures, it implemented a system to circulate water heated by solar energy around the tanks of oil to eliminate that energy expense.

It also insulated the room holding the tanks of oil, to keep the temperature steady. This made it possible to avoid the need to use air conditioning in the entire plant, which consumed an enormous amount of energy.

“If the temperature of the oil drops below 14 or 15 degrees Celsius, it solidifies and I can’t filter it,” plant manager Sebastián Correas explained to Tierramérica. “Which means that in the (southern hemisphere) winter I have to keep heating the entire plant until the warmer temperatures of September and October make it possible to bottle the oil.”

Argentina is not one of the world’s top emitters of greenhouse gases. Producing 0.66 percent of all greenhouse gases released globally, it is 22nd in a ranking that counts the 28 European Union countries as a single bloc.

But Villalba, the scientific researcher, believes that Argentina, like Mendoza, has a role to play.

“We are going to have to prepare ourselves for this, for example to continue to be leaders in the production of malbec at a global level,” he said.

This story was originally published by Latin American newspapers that are part of the Tierramérica network.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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

By Jaya Ramachandran
BERLIN, Sep 9 2015 (IPS)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Edited by Kitty Stapp

The migrants photographed here were being loaded on to a cargo plane in Kufra, located in southeastern Libya. Credit: Rebecca Murray/IPS

By Thalif Deen
UNITED NATIONS, Sep 3 2015 (IPS)

The military conflicts and political instability driving hundreds of thousands of refugees into Europe were triggered largely by U.S. and Western military interventions for regime change – specifically in Iraq, Afghanistan, Libya and Syria (a regime change in-the-making).

The United States was provided with strong military support by countries such as Germany, Britain, France, Italy and Spain, while the no-fly zone to oust Libyan leader Muammar Gaddafi was led by France and the UK in 2011 and aided by Belgium, Denmark, Norway and Canada, among others.

“[European leaders] stay silent about the military intervention and regime change in which Europeans were major actors, interventions that have torn the refugees’ homelands apart and resulted in civil war and state collapse.” -- James A. Paul, former executive director of the New York-based Global Policy Forum
Last week, an unnamed official of a former Eastern European country, now an integral part of the 28-nation European Union (EU), was constrained to ask: “Why should we provide homes for these refugees when we didn’t invade their countries?”

This reaction could have come from any of the former Soviet bloc countries, including Hungary, Slovakia, Bulgaria, Romania, the Czech Republic, Slovakia or Latvia – all of them now members of the EU, which has an open-door policy for transiting migrants and refugees.

The United States was directly involved in regime change in Afghanistan (in 2001) and Iraq (in 2003) – and has been providing support for the ouster of Syrian President Bashar al-Assad battling a civil war now in its fifth year.

U.N. Secretary-General Ban Ki-moon, who says he is “horrified and heartbroken” at the loss of lives of refugees and migrants in the Mediterranean and Europe, points out that a large majority of people “undertaking these arduous and dangerous journeys are refugees fleeing from places such as Syria, Iraq and Afghanistan.”

James A. Paul, former executive director of the New York-based Global Policy Forum, told IPS the term “regime change refugees” is an excellent way to change the empty conversation about the refugee crisis.

Obviously, there are many causes, but “regime change” helps focus on a crucial part of the picture, he added.

Official discourse in Europe frames the civil wars and economic turmoil in terms of fanaticism, corruption, dictatorship, economic failures and other causes for which they have no responsibility, Paul said.

“They stay silent about the military intervention and regime change in which Europeans were major actors, interventions that have torn the refugees’ homelands apart and resulted in civil war and state collapse.”

The origins of the refugees make the case clearly: Libya, Syria, Iraq, Afghanistan are major sources, he pointed out.

Also many refugees come from the Balkans where the wars of the 1990s, again involving European complicity, shredded those societies and led to the present economic and social collapse, he noted.

Vijay Prashad, professor of international studies at Trinity College, Connecticut, and the George and Martha Kellner Chair in South Asian History, told IPS the 1951 U.N. Refugee Convention was dated.

He said the Covenant “was written up for the time of the Cold War – when those who were fleeing the so-called Unfree World were to be welcomed to the Free World”.

He said many Third World states refused this covenant because of the horrid ideology behind it.

“We need a new Covenant,” he said, one that specifically takes into consideration economic refugees (driven by the International Monetary Fund) and political (war) refugees.

At the same time, he said, the international community should also recognize “climate change refugees, regime change refugees and NAFTA [North American Free Trade Agreement] refugees.”

The 1951 Convention guarantees refugee status if one “has a well-founded fear of persecution because of his/her race, religion, nationality, membership in a particular social group or political opinion.”

Asked about the Eastern European reaction, Prashad said: “I agree entirely. But of course one didn’t hear such a sentiment from Lebanon, Turkey, Jordan and others – who also welcomed refugees in large numbers. Why say, ‘Why should we take [them]?’ Why not say, ‘Why are they [Western Europe and the U.S.] not doing more?’” he asked.

While Western European countries are complaining about the hundreds of thousands of refugees flooding their shores, the numbers are relatively insignificant compared to the 3.5 million Syrian refugees hosted by Turkey, Jordan and Lebanon – none of which invaded any of the countries from where most of the refugees are originating.

Paul told IPS the huge flow of refugees into Europe has created a political crisis in many recipient countries, especially Germany, where neo-Nazi thugs battle police almost daily, while fire-bombings of refugee housing have alarmed the political establishment.

The public have been horrified by refugees drowning in the Mediterranean, deaths in trucks and railway tunnels, thousands of children and families caught on the open seas, facing border fences and mobilized security forces.

Religious leaders call for tolerance, while EU politicians wring their hands and wonder how they can solve the issue with new rules and more money, Paul said.

“But the refugee flow is increasing rapidly, with no end in sight.  Fences cannot contain the desperate multitudes.”

He said a few billion euros in economic assistance to the countries of origin, recently proposed by the Germans, are unlikely to buy away the problem.

“Only a clear understanding of the origins of the crisis can lead to an answer, but European leaders do not want to touch this hot wire and expose their own culpability.”

Paul said some European leaders, the French in particular, are arguing in favour of military intervention in these troubled lands on their periphery as a way of doing something.

Overthrowing Assad appears to be popular among the policy classes in Paris, who choose to ignore how counter-productive their overthrow of Libyan leader Gaddafi was a short time ago, or how counter-productive has been their clandestine support in Syria for the Islamist rebels, he declared.

Paul also said “the aggressive nationalist beast in the rich country establishments is not ready to learn the lesson, or to beware the “blowback” from future interventions.”

“This is why we need to look closely at the ‘regime change’ angle and to mobilize the public understanding that this was a crisis that was largely ‘Made in Europe’ – with the active connivance of Washington, of course,” he declared.

Edited by Kanya D’Almeida

By Roberto Savio
SAN SALVADOR, Aug 20 2015 (IPS)

The long saga on Greece is apparently over – European institutions have given Athens a third bailout of 86 billion euros which, combined with the previous two, makes a grand total of 240 billion euros.

Roberto Savio

There is no doubt that the large majority of European citizens are convinced that this is a great example of solidarity, and that if Greece is not now able to walk on its own feet, the responsibility will lie solely with Greek citizens and their government.

But this is only due to the fact that the media system has, by and large, ceased to provide alternative views … and some people even ignore that the bailout is a loan, and therefore increases the country’s debt.

In fact, the productive economy of Greece saw very little of that money because the bailouts were merely financial operations and Greek citizens, not only did not see anything, they have even had to pay a brutal price.

The truth behind the operation has been aptly described by Mujtaba Rahman, the respected chief Eurozone analyst for the London-based Eurasia Group, who said: “The bailout is not really about a growth plan for Greece, but a plan to make sure the European Central Bank (ECB) and the International Monetary Fund (IMF) get paid, and the euro area does not break up.”

And the purpose of this third bailout is clear. Of the famous 86 billion, 36 billion will go to pay the debt with the other European governments (and first of all Germany). Another 25 billion will go to recapitalize the Greek banks, because much capital left the country, heading for safer European banks. Another 18 billion will go to pay interest on the debt which Greece has been piling up. And, finally, seven billion will go to pay the debt of the state with Greek enterprises.“How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?”

So, seven will go to the real economy and nothing to the citizens, who will have now to go through several new drastic measures of austerity, which will further depress their standards of living and their ability to spend.

Financially, the bailouts have been a success. All the losses and bad exposure of European institutions have been passed on to Greece. Before the first bailout, French banks were exposed with bad bonds for 63 billion euros, now only for 1.6 billion with no losses. German banks have gone from 45 to five billion.

What is intriguing is that a number of studies show that until the very last moment, when it was widely known that Greece was in deep crisis, European banks and investors continued to buy Greek bonds.

Were they certain that Greece would pay? No, but they were confident that the Greek government would be rescued, and that they would therefore recover their investments, which is exactly what happened.

The financial system has now a life of its own and has nothing to do with real economy, which it dwarfs by being 40 times larger (if we judge by the volumes of daily financial transactions against the production of goods and services). Capital is untouchable and circulates freely in Europe, unlike its citizens. And now there is a great wave of legislation to introduce lower taxation for the richest one percent!

During the negotiations, one frequent accusation levelled against the Greeks was that they were unable to have their rich ship-owners pay their share of taxes. Of course, ship-owners place their money where it cannot be reached.

But is this not hypocritical when we know that there are at least two trillion euros stashed in fiscal paradises, and that, just to give one example, nobody has got Ryanair to really pay taxes? Not to mention the fact that when he was prime minister of Luxembourg, European Commission President Jean-Claude Juncker granted secret tax rebates to over a hundred international companies?

Now Agence France Press has circulated a new astonishing study from the German Leibnitz Institute of Economic Research, which says that Germany has profited from the Greek crisis to the tune of 100 billion euros, saving money through lower interest payments on funds the government borrowed amid investor “flights to safety” and “these savings exceed the cost of the crisis – even if Greece were to default on its entire debt.”

Meanwhile, a large number of studies point out how, by having a positive balance of trade with its European partners, Germany is in fact sucking capital from Europe.

Interpreting the third bailout and its conditions of austerity as a mere economic operation would be to commit a great error.

No economist can believe that Greece will be able to pay back and not only because it has always had a fragile economy, with little industry and with tourism as its main source of income (aggravated by decades of mismanagement and the corruption of its traditional parties, the very parties that European leaders would like to see come back).

Greece is already in recession and now the doubling of VAT is going to compress consumption further, also because there will now be further reductions in pensions and public salaries (which have been already cut by 20 percent).  It is widely believed that the Greek debt will now reach 200 percent of its GDP, up from 170 percent prior to the bailout.

How could any economist, even in the first year of studies, fail to understand that, by cutting consumption and raising taxes you are bound to depress an already depressed economy?

Well, it is no coincidence that the IMF, which is the Rotary Club of conservative economists, has refused to join this bailout. The IMF has said it will not put in any money unless European creditors (which is a diplomatic way of saying Germany) accept a restructuring of the Greek debt.

It is clear that the bailout has not been a technical but a political operation. Many European leaders, starting with Juncker himself, intervened in last month’s internal Greek referendum, asking Greeks to vote against Prime Minister Alexis Tsipras. They indicated clearly and openly, in a campaign that the Wall Street Journal repeated in the United States, that the revolt against austerity and the neoliberal economy should be stopped dead in its tracks to avoid political contagion.

For her part, German Chancellor Angela Merkel has declared on German television that she has come to the conclusion that °Tsipras has changed°. This has an air of dejà vu … was it not then British Prime Margaret Thatcher who, intent on destroying the trade unions, launched her famous TINA slogan – There Is No Alternative?

And is there no alternative to this kind of Europe? (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 Federico Lavopa
BUENOS AIRES, Aug 12 2015 (IPS)

The investor-state dispute settlement (ISDS) system has come under increasing criticism in recent years.

Inconsistent decisions, poorly reasoned awards, lack of transparency, parallel proceedings, serious doubts about arbitrator’s impartiality and the sheer size of the compensations sought by investors and awarded by arbitration tribunals are just some examples of the flaws that have been pointed out by detractors of the system.

Federico Lavopa

The dozens of cases that were initiated against Argentina as a result of the outburst of one of its worst economic and financial crises in late 2001 became an often-quoted sad illustration of many of these shortcomings of the ISDS system.

Apart from the tragic consequences entailed by the economic and political crisis which was faced by Argentina, in particular in 2001/2002, which included a fall in gross domestic product (GDP) per capita of 50 percent, an unemployment rate of over 20 percent, a poverty rate of 50 percent, strikes, demonstrations, violent clashes with the police, dozens of civil casualties and a succession of five presidents in 10 days, Argentina received a flood of claims from foreign investors that were filed under different ISDS mechanisms and, in particular, before the International Centre for Settlement of Investment Disputes (ICSID).

Indeed, in the period 2003-2007, claims against Argentina represented one-quarter of all the cases initiated within the framework of the ICSID Convention. These claims before international arbitral tribunals challenged the changes to the economic rules that Argentina had implemented to contain the effects of perhaps the worst economic cycle of its history.

After 1991, Argentina had embarked on an economic deregulation and liberalisation programme. Among others, this programme included the convertibility of the Argentine peso and the creation of a currency board to maintain parity between the peso and the U.S. dollar by limiting the local money supply to the amount of Argentina’s foreign exchange reserves. “If all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars”

This economic and pro-market programme was accompanied by a strong emphasis on the attraction of foreign investment which, among other aspects, resulted in the conclusion of 58 bilateral investment treaties (BITs) – 55 of which came into effect.

It also included a mass privatisation process of public companies which, at that time, represented an important part of the domestic economy.

This market-oriented model reached its limits in the late 1990s, and in May 2003 a new president took office, whose government reformed the regulatory framework for the economy – particularly that for the public services privatised over the 1990s – and introduced a package of emergency laws which implied a considerable change in the conditions under which foreign investors and, in particular, public services providers had to run their business in Argentina.

As a consequence, many of them decided to resort to the investor-state dispute settlement mechanisms embodied in the dozens of bilateral investment treaties that Argentina had signed in the 1990s. In total, in the period 2001-2012, exactly 50 cases were filed against Argentina.

A striking characteristic of the Argentinian experience is the amount of requests for compensations made by the companies that sued Argentina. According to estimates made when the peak of cases following the crisis was reached, if all investors that sued Argentina had obtained 100 percent of their claims, the total amount that the country should have had to bear would have been at around 80 billion dollars.

This sum would have been practically impossible to pay, even if Argentina had not been undergoing a period of acute economic crisis, because it represented approximately 13 percent of Argentina’s GDP for 2013.

Although Argentina’s response to this flood of cases was varied and it is still early to offer definite figures, it is already possible to conclude that, in general, arbitration tribunals were prone to render awards in favour of investors.

Almost 45 percent of the cases have received a condemnatory award, although most of these cases could still be reversed by annulment proceedings, whereas only 15 percent of the arbitration proceedings ended up with a final decision completely in favour of Argentina. The remaining 30 percent are mostly cases which resulted in an agreement between the parties or which were altogether suspended.

All in all, of the 80 billion dollars of the possible amount of compensations calculated when the peak of cases against Argentina was reached following the crisis, Argentina has so far received final rulings involving the payment of 900 million dollars.

The first salient conclusion is that the ISDS system has a very low capacity to adapt to totally exceptional circumstances for which it does not seem to have been designed. Despite the efforts of Argentinian attorneys to show that the measures implemented in the post-crisis period were adopted in an emergency context, being so exceptional as to justify any breach of the substantial clauses of the BITs, few tribunals were prepared to sustain this defence.

This notwithstanding, and with most of these cases having already been dealt with, the upcoming scenario for Argentina seems much less drastic than that forecast when the peak of cases was reached.

While they represent a heavy burden for a developing country like Argentina, so far the compensations actually paid amount to a small portion of the sum initially estimated.

The Argentinian case also represents a worrisome example of the failure of the ISDS system to ensure coherence and soundness in its decisions.

Although the dozens of cases submitted against Argentina addressed exactly the same package of measures (the post-crisis emergency laws) and  had to assess very similar arguments of the different claimants and a practically identical series of defences put forward by the Argentinian government, the conclusions at which they arrived have shown striking differences.

Additionally, some of the decisions have been subject to strong criticism and/or declared null and void by annulment committees.

Finally, the experience of Argentina shows the difficulties that arbitration tribunals might encounter when trying to scrutinise the economic policy choices made by governments. On top of the sensitiveness of examining sovereign decisions of States, arbitrators might find themselves in the awkward situation of deciding on highly technical matters which they are clearly ill-equipped to assess.

The case of Argentina thus represents a sad example of the urgent need to reconsider and reform the ISDS system. Yet, the lessons to be drawn from this experience do not seem to lead to clear conclusions about which direction to take.

On the one hand, the system has proved to be extremely inflexible, which prevented it from addressing the exceptional peculiarities of the Argentinian case. On the other hand, however, the wide margin of discretion available for the arbitral tribunals resulted in the adoption of inherently poor decisions, and with high levels of incoherence among them. (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. 

*  This column is based on a paper with the same title published as South Centre Investment Policy Brief No 2, July 2015, available here.

Excerpt:

By Roberto Savio
SAN SALVADOR, Aug 1 2015 (IPS)

In recommendations to German Chancellor Angela Merkel at the end of July, the German Council of Economic Experts outlined how a weak member country could leave the Eurozone and called for strengthening the European monetary union.

German Finance Minister Wolfgang Schäuble wants Greece out because he does not believe that it will ever be able to refund the loans it has received so far, and because he thinks it is question of principle to be strict. In an interview with Der Spiegel a few days after the historical date of Jul. 13, at the end of negotiations on Greece, he said: “My grandmother used to say: benevolence comes before dissoluteness.”

Roberto Savio

Explaining the recommendations of the Council of Economic Experts, however, its chairman Christoph M. Schmidt expressed another opinion. “To ensure the cohesion of monetary union, we have to recognise that voters in creditor countries are not prepared to finance debtor countries permanently … A permanently uncooperative member state should not be able to threaten the existence of the euro.”

This is the best illustration of Germany’s Europe. Any country which does not fit into the German scenario will have to quit. Europe is no longer a question of solidarity, it is all about fiscal and monetary considerations.

Germany now says that federalism has exceptions – whenever a member of the Eurozone is perceived to be challenging the rules of the monetary union, it will be subject to complete annihilation of its state sovereignty and national democracy. This is the kind of federalism that Germany has now proclaimed.

This German position on its vision of Europe, where political and ideal considerations are no longer the basis of the European project, has triggered a strong response from a normally obedient France.“We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane. Monetary union is no longer just a step towards a democratic political union”

President François Hollande, who appears to have suddenly woken up, has come out with a call to reinforce European integration through the establishment of a “Eurozone government”, which run in the opposite direction from that of Berlin.

Germany will of course go ahead and pursue its own course, but the Paris-Berlin axis which was conceived as the fulcrum of European integration has now been seriously weakened after Germany’s imposed agreement on Greece on Jul. 13. So we have now a major realignment.

France has been the country which has always blocked any substantial progress on European integration, by continually voting against any radical step towards integration in order to preserve as much of its national sovereignty as possible.

Now it is Germany which is intent on changing the course of integration, from a political project to a fixed exchange monetary system based on creditor countries – a system in which some democracies are more equal than others.

Schäuble has been reported as expressing concern over the European Commission’s increased political role, interfering in political issues for which it has no mandate. And it is a stark fact that the Jul. 13 Brussels agreement has sought to remove politics and discretion from the functioning of the monetary union, an idea that has long been very dear to the French, and now are the French who want more European integration as protection from a German Europe.

We should all realise that the idea of Europe as a political project, based on solidarity and mutual support, is on the wane.

Monetary union is no longer just a step towards a democratic political union, as Helmut Kohl and François Mitterand sought at the reunification of Germany, and the creation of the Euro.

We are, in fact, going back to a more toxic version of the old exchange-rate mechanism of the 1990s that left countries trapped in a mechanism which worked primarily for Germany, and which led to the exit of the British pound and the temporary exit of the Italian lira.

But the euro, as Nobel laureate in economics Paul Krugman says, “has turned into a Roach Motel, a trap that’s hard to escape.” Once you’re in, you cannot get out, and you have to accept the diktat of the creditors.

Another Nobel laureate in economics, Joseph Stigliz, who was Chief Economist of the World Bank, says that the current European policy of austerity at any cost, is like going back to a “19^th century debtors’ prison. Just as imprisoned debtors could not make the income to repay, the deepening depression in Greece will make it less and less able to repay.”

Of course, what is never said openly (except by Stigliz) is that in the Greek bailout one central reason for the extremism of the new package of conditions was to teach a lessons to a radical left-wing party, Syriza, and to the Greek people who had had the audacity to reject the calls from European leaders to vote against that party.

It is not by chance that countries like Poland, which were asking to be admitted to the Eurozone, have withdrawn their applications.  The euro has become a rallying political issue, with parties from all over Europe asking to withdraw. It has become the first line of action for those who oppose European integration.

Until now, the answer of European governments has been that withdrawal is impossible under the European constitution. But now that the German Council of Economic Experts has come out with a concrete proposal on how to do that, that line of defence is crumbling.

According to many analysts, Angela Merkel is playing with fire. Germany cannot remain a credible leader of a coalition of Northern and Eastern European countries and ignore the realities and needs of Southern Europe. This is unsustainable, even in the medium term.

Meanwhile, the world goes on. Within seven years India will have overtaken China as the most populous country in the world, while within a few decades Nigeria will have a larger population than the United States.

And Europe? Europe will have become the continent with most old people and lower productivity, and will have to face its four horses of the apocalypse:

• a solution to relations with Russia;
• common agreement on how to deal with the dramatic flow of immigrants, when countries are not even able to relocate 40,000 people in a region of 450 million;
• a real policy on the explosive Middle East and terrorism; and soon
• the request of United Kingdom for a new agreement on the European Union, or else it will exit Europe.

We can safely bet that those negotiations, which will be based purely on economic issues, will be the kiss of death for the original European dream. (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 Daya Thussu
LONDON, Jul 22 2015 (IPS)

The formal opening of the BRICS Bank in Shanghai on Jul. 21 following the seventh summit of the world’s five leading emerging economies held recently in the Russian city of Ufa, demonstrates the speed with which an alternative global financial architecture is emerging.

The idea of a development-oriented international bank was first floated by India at the 2012 BRICS summit in New Delhi but it is China’s financial muscle which has turned this idea into a reality.

Daya Thussu

The New Development Bank (NDB), as it is formally called, is to use its 50 billion dollar initial capital to fund infrastructure and developmental projects within the five BRICS nations – Brazil, Russia, India, China and South Africa – though it is also likely to support developmental projects in other countries.

According to the 43-page Ufa Declaration, “the NDB shall serve as a powerful instrument for financing infrastructure investment and sustainable development projects in the BRICS and other developing countries and emerging market economies and for enhancing economic cooperation between our countries.”

The NDB is led by Kundapur Vaman Kamath, formerly of Infosys, India’s IT giant, and of ICICI Bank, India’s largest private sector bank. A respected banker, Kamath reportedly said during the launch that “our objective is not to challenge the existing system as it is but to improve and complement the system in our own way.”

The launch of the NDB marks the first tangible institution developed by the BRICS group – set up in 2006 as a major non-Western bloc – whose leaders have been meeting annually since 2009. BRICS countries together constitute 44 percent of the world population, contributing 40 percent to global GDP and 18 percent to world trade.“Our objective is not to challenge the existing system as it is but to improve and complement the system in our own way” – Kundapur Vaman Kamath, head of the New Development Bank (NDB)

In keeping with the summit’s theme of ‘BRICS partnership: A powerful factor for global development’, the setting up of a developmental bank was an important outcome, hailed as a “milestone blueprint for cooperation” by a commentator in The China Daily.

The Chinese imprint on the NDB is unmistakable. The Ufa Declaration is clear about the close connection between the NDB and the newly-created Asian Infrastructure Investment Bank (AIIB), also largely funded by China. It welcomed the proposal for the New Development Bank to “cooperate closely with existing and new financing mechanisms including the Asian Infrastructure Investment Bank.” China is also keen to set up a regional centre of the NDB in South Africa.

If economic cooperation remained the central plank of the Ufa summit, there is also a clear geopolitical agenda.

The Global Times, China’s more nationalistic international voice, pointed out that the establishment of the NDB and the AIIB will “break the monopoly position of the International Money Fund (IMF) and the World Bank (WB) and motivate [them] to function more normatively, democratically, and efficiently, in order to promote reform of the international financial system as well as democratisation of international relations.”

The reality of global finance is such that any alternative financial institution has to function in a system that continues to be shaped by the West and its formidable domination of global financial markets, information networks and intellectual leadership.

However, China, with its nearly four trillion dollars in foreign currency reserves, is well-placed to attempt this, in conjunction with the other BRICS countries. China today is the largest exporting nation in the world, and is constantly looking for new avenues for expanding and consolidating its trade relations across the globe.

China is also central to the establishment of the Shanghai Cooperation Organisation (SCO), a Eurasian political, economic and security grouping whose annual meeting coincided with the seventh BRICS summit. Founded in 2001 and comprising China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, the SCO has agreed to admit India and Pakistan as full members.

Though the BRICS summit and the SCO meeting went largely unnoticed by the international media – preoccupied as they were with the Iranian nuclear negotiations and the ongoing Greek economic crisis – the economic and geopolitical implications of the two meetings are likely to continue for some time to come.

For host Russia, which also convened the first BRICS summit in 2009, the Ufa meeting was held against the background of Western sanctions, continuing conflict in Ukraine and expulsion from the G8. Partly as a reaction to this, camaraderie between Moscow and Beijing is noticeable – having signed a 30-year oil and gas deal worth 400 billion dollars in 2014.

Beijing and Moscow see economic convergence in trade and financial activities, for example, between China’s Silk Road Economic Belt initiative for Central Asia and Russia’s recent endeavours to strengthen the Eurasian Economic Union. The expansion of the SCO should be seen against this backdrop. Moscow has also proposed setting up SCO TV to broadcast economic and financial information and commentary on activities in some of the world’s fastest growing economies.

Whatever the outcome, it is clear that a new international developmental agenda is being created, backed by powerful nations, and to the virtual exclusion of the West.

China is the driving force behind this. Despite its one-party system which limits political pluralism and thwarts debate, China has been able to transform itself from a largely agricultural self-sufficient society to the world’s largest consumer market, without any major social or economic upheavals.

China’s success story has many admirers, especially in other developing countries, prompting talk of replacing the ‘Washington consensus’ with what has been described as the ‘Beijing consensus’. The BRICS bank, it would seem, is a small step in that direction.

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:

St Kitts and Nevis has launched a 1-megawatt solar farm at the country’s Robert L Bradshaw International Airport. A second solar project is also nearing completion. Credit: Desmond Brown/IPS

By Desmond Brown
FORT-DE-FRANCE, Martinique, Jul 21 2015 (IPS)

A leading geothermal expert warns that the small island states in the Caribbean face “a ticking time bomb” due to the effects of global warming and suggests a shift away from fossil fuels to renewable energy is the only way to defuse it.

President of the Ocean Geothermal Energy Foundation Jim Shnell says to solve the problems of global warming and climate change, the world needs a new energy source to replace coal, oil and other carbon-based fuels.  OGEF’s mission is to fund the R&D needed to tap into the earth’s vast geothermal energy resources."You need to have a balance of your resources but it is quite possible to have that balance and still make it 100 percent renewable and do without fossil fuels altogether." -- Jim Shnell

“With global warming comes the melting of the icecaps in Greenland and Antarctica and the projection is that at the rate we are going, they will both melt by the end of this century,” Shnell told IPS, adding “if that happens the water levels in the ocean will rise by approximately 200 feet and there are some islands that will disappear altogether.

“So you’ve got a ticking bomb there and we’ve got to defuse that bomb and if I were to rate the issues for the Caribbean countries, I would put a heavyweight on that one.”

It has taken just eight inches of water for Jamaica to be affected by rising sea levels, with one of a set of cays called Pedro Cays disappearing in recent years.

Scientists have warned that as the seas continue to swell, they will swallow entire island nations from the Maldives to the Marshall Islands, inundate vast areas of countries from Bangladesh to Egypt, and submerge parts of scores of coastal cities.

In the Caribbean, scientists have also pointed to the likelihood of Barbuda disappearing in 40 years.

Shnell said countries could “essentially eliminate” the threat by turning to renewable energy, thereby decreasing the amount of fossil fuels or carbon-based fuels they burn.

“The primary driver of climate change is greenhouse gasses and one of the principal ones in terms of volume is carbon dioxide,” he said.

“For a long time a lot of electricity, 40 per cent of the electricity produced in many countries, would come from coal because it was a very inexpensive, plentiful form of carbon to burn.

“But now countries have seen that they need to move away from that and in fact the G7 just earlier this month got together and in their meeting, the leaders declared that they were going to be 100 percent renewable, that is completely stop burning carbon, coals and other forms of fossil fuels by the end of this century. The only problem is that for global warming purposes that’s probably too late,” Shnell added.

Shnell was among some of the world’s leading renewable energy experts who met here late last month to consider options for renewable energy development in the Caribbean.

The Martinique Conference on Island Energy Transitions was organised by the International Renewable Energy Agency (IRENA) and the French Government, which will host the United Nations International Climate Change Conference, COP 21, at the Le Bourget site in Paris from Nov. 30 Dec. 11 2015.

Senior Energy Specialist at the World Bank Migara Jaywardena said the conference was useful and timely in bringing all the practitioners from different technical people, financial people and government together.

“There’s a lot of climate funds that are being deployed to support and promote clean energy…and we talked about the challenges that small islands, highly indebted countries have with mobilising some of this capital and making that connection to clean energy,” Jaywardena told IPS.

“They want to do it but there isn’t enough funds and remember there’s a lot of other competing development interests, not just energy but non-energy interests as well. Since this conference leads to the COP in Paris, I think being a part of that climate dialogue is important because it creates an opportunity to begin to access some of those funds.”

“As an example, for Dominica we have an allocation of 10 million dollars from the clean technology fund to support the geothermal and that’s a perfect example of where climate funds could be mobilised to support clean energy in the islands,” Jaywardena added.

Shnell said Caribbean economies are severely affected by the cost of fuel but that should be an incentive to redouble their efforts to get away from importing oil.

“The oil that you import and burn turns right around and contributes to global warming and the potential flooding of the islands, whereas you have some great potential resources there in terms of solar and wind and certainly geothermal,” he said.

“What we’re advocating is the mixture of those resources. We feel it would be a mistake to try to select one and make that your 100 percent source of power or energy but it’s the mix, because of different characteristics of each of them and different timing of availability and so forth, they work much better together.”

He noted that wind and solar are intermittent while utility companies have to provide power all the time.

“So you need something like geothermal or hydropower that works all the time and provides enough energy to keep the grid running even when there is no solar energy. So you need to have a balance of your resources but it is quite possible to have that balance and still make it 100 percent renewable and do without fossil fuels altogether,” Shnell said.

A legislator in St. Kitts and Nevis said the twin island federation has gone past fossil fuel generation and is now adopting solar energy with one plant on St. Kitts generating just below 1 megawatt of electricity and another being developed which would produce 5 megawatts.

“In terms of solar we’ll be near production of 1.5 megawatts of renewable energy. As a government we are going full speed ahead in relation to ensuring that there’s renewable energy, of course, where the objective is to reduce electricity costs in St. Kitts and Nevis,” Energy Minister Ian Liburd told IPS.

In late 2013 legislators in Nevis selected Nevis Renewable Energy International (NREI) to develop a geothermal energy project, which they said would eventually eliminate the need for existing diesel-fired electrical generation by replacing it with renewable energy.

Edited by Kitty Stapp

Jomo Kwame Sundaram. Credit: FAO

By Jomo Kwame Sundaram
ROME, Jul 14 2015 (IPS)

The growth in global interdependence poses greater challenges to policy makers on a wide range of issues and for countries at all levels of development.

Yet, the mechanisms and arrangements put in place over the past three decades have not been adequate to the challenges of coherence and coordination of global economic policy making. The recent financial crises have exposed some such gaps and weaknesses.The U.N. was among the very few warning Mexico in 1994 and the East Asian countries in 1997 that excessive liberalisation threatened crisis.

Reforming the international economic governance architecture, through the United Nations system, can address these problems.

Although sometimes seemingly slow, the U.N. has a clear advantage in driving discussion on reform because of its more inclusive and open governance.

Lop-sided influence in the current international financial system is a principal reason why many countries lack confidence in the existing arrangements. Rebuilding confidence in such arrangements will require that all parties feel they have a stake in the reform agenda.

But the U.N. is also suited to drive the discussion because of its long tradition of reliable work on international economic issues.

The United Nations secretariat has developed and maintained an integrated approach to trade, finance and sustainable development, with due attention to equity and social justice issues.

The ongoing ‘secular stagnation’ has again highlighted the interdependence of global economic relations, exposing a series of myths and half-truths about the global economy.

These include the idea that the developing world has become “decoupled” from the developed world; that unregulated financial markets and the new financial instruments have ushered in a new era of “great moderation” and “stability”; and that macroeconomic imbalances — due to decisions made in the household, corporate and financial sectors — are less dangerous than those involving the public sector.

The U.N. secretariat has long doubted such arguments, and warned that any unravelling of global macroeconomic imbalances would be unruly.

Also, persistent asymmetries and biases in global economic relations have particularly hit developing countries, both emerging and least developed.

Not surprisingly, the U.N. Secretariat has also drawn attention to the close links between the financial crisis and the food and energy crises.

A more integrated approach to handling these threats is needed, particularly to alleviate the downside risks for the poorest and most vulnerable communities.

The U.N. Secretariat has a strong track record of identifying systemic threats from unregulated finance, warning against a misplaced faith in self-regulating markets and offering viable solutions to gaps and weaknesses in the international financial system.

Special drawing rights (SDRs), the 0.7 per cent aid target and debt relief, for example, were all conceived within the U.N. system during the 1960s and 1970s.

From the 1980s, the U.N. secretariat – both in New York and Geneva — have consistently warned against the excessive conditionalities attached to multilateral lending, promoted the idea of rules for sovereign debt restructuring, and cautioned that the international financial institutions were moving away from their traditional mandates of guaranteeing financial stability and providing long-term development finance.

During the 1990s, U.N. agencies warned against the dangers to economic stability, particularly in developing countries, from volatile private capital flows and the speculative behaviour associated with unregulated financial markets.

The U.N. was among the very few warning Mexico in 1994 and the East Asian countries in 1997 that excessive liberalisation threatened crisis.

The U.N. system was also almost alone among international institutions to identify growing inequality as a threat to economic, political and social stability, and insisted early on measures for a fairer globalisation.

Many of these concerns culminated in the 2002 Financing for Development Conference in Monterrey, Mexico.

More recently, the U.N. has insisted on the importance of policy space for effective development strategies and particularly on the need for macroeconomic policies to support long-term growth, technological upgrading and diversification.

Some countries have sometimes resisted such work by the U.N. secretariat.

However, the combination of a strong track record and a core secretariat steeped in its tradition of an integrated approach to policy-oriented research places the U.N. secretariat in the best position to advance current discussions to reform the international financial architecture.

Edited by Kitty Stapp

Excerpt: