Local residents stand in the water on a street flooded by the sea in the Centro Habana municipality in the Cuban capital in September 2017 in the wake of Hurricane Irma, one of the most intense storms in recent decades in this Caribbean island nation. CREDIT: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Aug 25 2021 (IPS)

Cuba, already beset by hurricanes, floods, droughts that deplete its main water sources, among other natural disasters, has seen its socioeconomic difficulties, similar to those faced by other Caribbean island nations, aggravated by the COVID-19 pandemic.

Despite the complexity of its domestic situation, Cuba has offered its best health resources to small island nations in the region and more than a dozen of them have received Cuban medical brigades to help them face the emergency created by the pandemic.

With differences and similarities, the Caribbean region shares the fate of other Small Island Developing States (SIDS), which are particularly vulnerable to the impact of climate change but are responsible for only 0.2 percent of the carbon dioxide (CO2) emissions that cause global warming."For Cuba and the rest of the Caribbean island nations the greatest challenges in relation to the implementation of the 2030 Agenda involve the indispensable creation of measures for adaptation to climate change." -- Marcelo Resende

The SIDS will hold a Solutions Forum on Aug. 30-31, promoted by the United Nations Food and Agriculture Organisation (FAO) and sponsored by Fiji, to exchange experiences on how to move forward in the midst of the climate and health crisis towards achieving the Sustainable Development Goals (SDGs) in just a few more years.

The virtual conference is based on the premise that the 38 SIDS that are members of the United Nations and the other 20 associated territories, beyond their differences in size and development, share common challenges as island nations and can also share successful sustainable management initiatives that can be replicated in the other members scattered throughout the developing regions of the South.

“SIDS are characterised by unique development needs and extreme vulnerability. Frequent exposure to hazards and natural disasters intensified by climate change” negatively impacts Cuba, as well as the rest of the countries, FAO representative in Cuba Marcelo Resende told IPS.

He said this Caribbean country “has a lot of expertise and know-how in the integration of environmental sustainability, disaster risk management and climate change adaptation, so this exchange and transfer of knowledge will be positive.”

The SIDS Forum aims precisely to promote and exchange innovation and digitalisation solutions for sustainable agriculture, food, nutrition, environment and health.

Cuba, the largest island in the Caribbean, faces increased frequency and intensity of extreme hydrometeorological events – not only tropical cyclones, but also drought, major floods, rising temperatures and sea level rise, which scientists currently project to reach 29.3 centimetres by 2050 and 95 centimetres by 2100.

A man rides his bicycle along a flooded street in the town of Batabanó, in southern Mayabeque province in western Cuba, an area of low-lying, often swampy coastal areas prone to frequent flooding during hurricanes and heavy rains. CREDIT: Jorge Luis Baños/IPS

Of the country’s 262 coastal settlements, an estimated 121 are at risk from the climate crisis. Of these, 54 are located on the south coast and 67 on the north coast, almost totally impacted in September 2017 by Hurricane Irma, which reached winds of 295 kilometres/hour and became one of the most intense storms in recent decades.

Irma devastated several Caribbean islands and in Cuba alone caused losses officially estimated at 13.18 billion dollars.

A prevention system that involves everyone from the government to urban and rural communities makes Cuba one of the best prepared Caribbean nations when it comes to prevention and mitigation of risks in case of disasters, despite the generally substantial economic damages.

In addition to legal measures to prevent human activities that accelerate the natural erosion of areas bordering the sea and the relocation of vulnerable settlements, this year the project “Increasing the climate resilience of rural households and communities through the rehabilitation of productive landscapes in selected localities of the Republic of Cuba” (Ires) began to be implemented.

The “Coastal resilience to climate change in Cuba through ecosystem based adaptation – MI COSTA” project was also created. Both initiatives are supported by the Green Climate Fund, an instrument of the United Nations Framework Convention on Climate Change (UNFCCC).

In addition to boosting the resilience of rural communities and protecting coastal communities, both projects are aimed at generating information that will facilitate the scaling up of the use of ecosystem-based adaptation practices at the national level, and the model can be used in other island nations with similar conditions.

“The impacts that are already being felt today associated with climate variability and the country’s vulnerability imply a large economic burden, which is becoming even more critical given the limitations and difficulties in accessing international financing,” said Resende.

The FAO representative noted that according to the executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, Caribbean SIDS will not achieve the sustainable development committed to in the 2030 Agenda if they fail to find effective ways to adapt to climate change.

“This means that for Cuba and the rest of the Caribbean island nations the greatest challenges in relation to the implementation of the 2030 Agenda involve the indispensable creation of measures for adaptation to climate change,” Resende stressed.

A row of solar panels on La Finca Vista Hermosa farm in Guanabacoa, one of Havana’s 15 municipalities, represents one of the small energy innovations that are part of the responses by some farms in Cuba aimed at making their production more sustainable. CREDIT: Jorge Luis Baños/IPS

Food security, also a priority

Improving sustainability, resilience and nutrition-based approaches to food systems, strengthening enabling environments for food security, as well as empowering people and communities for these strategies are also important challenges.

In this regard, Resende said that “Cuba is impacted by the steady degradation of its natural resources for food production (soil, water and biodiversity), and faces difficulties in the current context for the production, transformation and conservation of food,” which has repercussions on the instability of the physical availability of products in the markets.

For this island nation, which imports most of the food it consumes, these impacts are a challenge, “so the authorities are promoting an agenda of transformations and improvements in terms of supply and inclusive, sovereign and sustainable food systems, in compliance with the 2030 Agenda and as a priority that the country will face in the immediate future and beyond,” he said.

In July 2020 the Cuban government approved a National Plan for Food Sovereignty and Nutritional Education, which identifies as fundamental pillars the reduction of dependence on food and input imports, various intersectoral actions to bolster local food systems, and the mobilisation of educational, cultural and communication systems to strengthen food and nutritional education.

According to the objectives of the Global Action Programme on Food Security and Nutrition in Small Island Developing States, food systems should support local and family production, while providing a sufficient quantity of varied and nutritious quality food for their population, at a reasonable cost.

This transformation can help curb SIDS dependence on imports, as well as promote healthy eating and reduce obesity.

A patient receives the third dose of the Abdala anti-COVID vaccine at a hospital in Havana. Cuba has developed three vaccines against the coronavirus that could be used in other Caribbean island countries once all the steps for their international use have been completed. CREDIT: Jorge Luis Baños/IPS

The resurgence of COVID

The resurgence of the COVID-19 epidemic since late 2020 exacerbated the tension in Cuba’s weakened economy, which had to devote more resources to its hospital system, overwhelmed by the higher number of infections. However, Cuba already has three vaccines of its own: Abdala, Soberana 02 and Soberana Plus.

Authorities on the island have reaffirmed that the national biotechnology industry is in a position to produce by the end of 2021 at least 100 million doses of the vaccines, with which it intends to immunise the entire Cuban population before the end of the year as well as offer them to neighbouring countries, such as other Caribbean SIDS.

As of August 20, 27.8 percent of the island’s 11.2 million inhabitants had received the required three doses of one of the three locally produced vaccines.

On Aug. 11, the director of the Pan American Health Organisation (PAHO), Carissa F. Etienne, said that in the Caribbean, COVID cases have been on the rise in the Bahamas, Cuba, Jamaica, Martinique, Puerto Rico and Dominica – all members of the SIDS with the exception of Puerto Rico.

“In the last month, infections increased 30-fold in Martinique and there was a significant increase in hospitalisations,” she said.

Etienne announced that PAHO would use its Revolving Fund to help countries in the Latin American and Caribbean region acquire sufficient vaccines to curb the spread of COVID-19, on top of the assistance offered by Covax, a global mechanism to support the development, manufacture and distribution of vaccines.

The pandemic has severely impacted tourism, which many Caribbean economies and SIDS in general depend on. According to official figures Cuba’s tourism revenues fell in 2020 to 1.15 billion dollars – a 56.4 percent drop from 2019.

In addition to domestic problems, the tightening of the U.S. embargo is seriously hampering the Cuban economy, which shrank two percent in the first half of this year, after a 10.9 percent decline in 2020. Recovery will depend on curbing the epidemic and the rallying of the tourism industry.

(With reporting by Luis Brizuela from Havana.)

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For the construction of the suspended Yucatán Solar Park on the Yucatán peninsula in southeastern Mexico, the site was only partially cleared. Like most infrastructure projects involving Chinese companies and banks in Latin America, the plant lacks socio-environmental standards. CREDIT: Courtesy of Asamblea Múuch' Xíinbal

By Emilio Godoy
MEXICO CITY, Aug 4 2021 (IPS)

In southeast Mexico, work on the Yucatan Solar Park, owned by the Chinese company Jinko Solar, has been halted since 2020 for lack of proper consultation with indigenous communities, after affected local residents filed an injunction against the project.

In February 2019, residents of several Mayan indigenous villages in the municipalities of Cuncunul and Valladolid, in the state of Yucatan, demanded a halt to work on the park, run by Jinko Solar Investment Pte Ltd. Months later, a court ordered the suspension of the 71.5 million dollar project.

The conflict illustrates the need for Chinese corporations and banks to include socio-environmental safeguards in the financing, design, construction and operation of works in Latin America and the Caribbean, where there are at least 983 conflicts over mining, energy, transportation and communications projects, some of which are financed by Chinese firms.

Paulina Garzón from Ecuador, who is director of the non-governmental Latinoamerica Sustentable (LAS), said that although standards exist in China, they have not been internalised by the institutions.

“China has not included the economic cost in its developmentalist and extractivist vision, a cost that is paid in the long term by the affected populations and by the debtor countries. But these costs are not taken into account when the viability of granting the loan is assessed,” the head of LAS’ China-Latin America Sustainable Investments Initiative (CLASII), told IPS by telephone from Washington.

CLASII is about to publish research on the application of the environmental guidelines of the China Development Bank (CDB). These guidelines, established in 2004, are secret and there is no channel for denouncing the negative impacts of projects.

The organisation found eight Chinese guidelines for companies and investors, nine for financial institutions and seven sectoral guidelines for infrastructure, mining and forestry. The Chinese government will soon publish new regulations for the ministries of trade and environment on outbound investment.

In Argentina, the hydroelectric power plants under construction, named “Presidente Néstor Kirchner” and “Gobernador Jorge Cepernic”, with a combined capacity of 1,310 megawatts on the Santa Cruz River in Patagonia, in the south of the country, represent another emblematic case of the vicissitudes of projects that have Chinese financing.

In 2016 the Argentine Supreme Court halted work on the project, financed by the CDB and the Industrial and Commercial Bank of China (ICBC), until a public hearing and a new environmental impact assessment were conducted. The project was thus suspended for two years.

Construction of two hydropower plants in the Patagonia region of southern Argentina, financed by the China Development Bank, was stalled between 2016 and 2018 due to an order by the country’s highest court for a new environmental impact assessment and other unmet requirements. China is stumbling over socio-environmental safeguards as it makes headway in Latin America. CREDIT: IEASA

In a 2016 letter, the BDC Corporation reminded the Argentine Ministry of Finance and Treasury of several force majeure clauses for approving the power plants and their dams, such as the necessary approval by the lender of any contractual modifications.

The parties signed the 4.7 billion dollar financing agreement in 2014 and linked it to a similar one in 2012 for the 2.1 billion dollar upgrading of the Belgrano Cargas railway, which runs across northern Argentina.

“We wish to insist that the ongoing and successful implementation of the project is not only mutually beneficial and a bilateral win-win, but will also lay the foundation for deeper future economic cooperation” between the parties, the 2016 letter states, while warning of the risk of cross-default, should Argentina default on the 2014 agreement for the dams.

Gradual adherence to multilateral guidelines

Although several Chinese financial institutions have signed up to various voluntary socio-environmental guidelines, in practice none of the ones with a significant presence in infrastructure projects in Latin America have adhered, with the exception of ICBC, the largest of its kind in China and with operations in Argentina, Brazil, Mexico, Panama and Peru.

The Yucatan Solar Park, owned by Chinese company Jinko Solar, has been on hold in Mexico since 2019 due to a lack of adequate consultation with local indigenous communities. The image shows the planned location of the power plant, in the middle of the jungle in the southeastern state of Yucatan and, top right, the city of Valladolid. CREDIT: Justice Atlas

Three Chinese institutions have adhered to the United Nations Principles for Responsible Investment, a set of six socio-environmental safeguards.

Nine Chinese banks signed the Principles of Responsible Banking, with six other standards on environmental impact, sustainability, participation and transparency.

In addition, seven Chinese banks adopted the Equator Principles, a framework for defining, assessing and managing the socio-environmental risks of projects.

The Asian Infrastructure Investment Bank (AIIB), founded in 2015 to finance the “Belt and Road Initiative” (BRI), has only validated one project in Latin America out of 134 approved worldwide. However, the project, in Ecuador, does not involve infrastructure, but addresses the COVID-19 pandemic.

Although in 2019 several Chinese banks, such as the BDC and ICBC, signed the “Green Investment Principles” (GIP) to assess the potential social and environmental effects of BRI investments, there is still no evidence of their application by this initiative that emerged to promote a maritime and rail network from the Asian powerhouse to the western end of Europe and to Latin America.

For Enrique Dussel, director of the Centre for China-Mexico Studies at the National Autonomous University of Mexico (UNAM), the debate on safeguards is a novel one in the Asian giant.

“Historically, Chinese companies have shown great political pragmatism, the banks are interested in doing business and it did not matter if it was in activities that could be questioned from an environmental standpoint. The question was to mark a presence and participate in the Latin American market. Chinese pragmatism in these aspects practically leaves the responsibility up to the counterpart,” Dussel told IPS.

A magnet

The region attracted 138 Chinese infrastructure projects worth 94.09 billion dollars for the 2005-2020 period, according to the “Monitor of Chinese Infrastructure in Latin America and the Caribbean 2021“, drawn up by the Latin American and Caribbean Academic Network on China.

South America has been the biggest pole of attraction for Chinese investment, as Ecuador obtained 11 of the 40 infrastructure projects during the 2010-2014 period, while from 2015 to 2020 Argentina and Brazil accounted for 23 and 11 of the 92 projects in the region, respectively.

The projection of one of the two hydroelectric power plants financed by Chinese institutions in southern Patagonia, Argentina, whose construction generated tensions between Bejing and Buenos Aires due to intervention by the South American country’s justice system to verify compliance with socio-environmental requirements, which suspended the mega-projects for two years. CREDIT: Government of Argentina

Chile, Colombia and Mexico carried out infrastructure projects with Chinese companies and financing for the first time in the 2015-2020 period.

Energy, transportation, communications and telecommunications are among the main areas of Chinese involvement in the region. The incursion of the Asian giant has been based on public and some private companies, backed by funds from Chinese banks.

To shore up its foothold in Latin America, Beijing has created instruments into which it has injected multimillion-dollar funds, such as the Special Loan Programme for China-Latin America Infrastructure Project and the China-LAC Industrial Cooperation Investment Fund and bilateral cooperation funds.

That strategy is linked to the BRI, which several Latin American countries have joined, in an attempt to draw investment, and which is helping China fill the void left by the United States since 2016.

In December 2020, a group of international advisors to the BRI suggested that China adopt stricter environmental controls for its foreign investments.

According to this scheme, projects that could cause significant and irreversible environmental damage would be marked red, works of moderate and mitigable impact would be marked yellow, and projects without significant negative effects would be marked green.

Garzón and Dussel said there have been some changes.

“It is a process that we are going to see gradually. The institutions recognise the need to improve things and have taken a step to improve environmental behavior. The worrying thing is if this at some point becomes just a slogan that aims to improve the ability to approve projects and obtain a social license, rather than a serious practice,” said the head of CLASII.

Dussel noted, for his part, that “the AIIB is explicitly seeking to integrate environmental issues. There are many initiatives in this regard in China itself, to evaluate projects, attempting to compare the criteria for evaluation and implementation of Chinese infrastructure versus Western ones, specifically the World Bank’s. There is clearly a learning process.”

As the Chinese Infrastructure Monitor anticipates, infrastructure initiatives in the region will grow, with their attendant social and environmental fallout.

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say as more than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. Credit: Jeffrey Moyo/IPS

By Busani Bafana
BULAWAYO, Jan 16 2020 (IPS)

Zimbabwe needs urgent economic and political reforms to transform its economy amidst a growing national crisis, researchers say in a new study that urges swift policy changes and a sound financial framework to attract investment.

The country has been reeling from one of the worst droughts in decades, with the United Nation’s World Food Programme (WFP) identifying Zimbabwe as one of the 15 critical emergencies around the world at risk of crisis without rapid intervention.

• More than 7 million Zimbabwean are food insecure owing to a projected 50 percent fall in the 2019 cereal harvest. This month the WFP is doubling its assistance to reach 4.1 million people who are hardest hit in rural areas.

But the study, G20 Compact with Africa: No Reformers, No Compact- The Zimbabwean Case Study,  states that the G20 Compact with Africa (CwA) investment framework, initiated by the G20 countries in 2017, could support Zimbabwe’s economic transformation only if Zimbabwe was committed to undertaking reforms.

• The voluntary compact has been signed by 12 African countries to date, including Benin, Burkina Faso, Côte d’Ivoire, Ethiopia, Rwanda, Senegal, Togo and Tunisia. Zimbabwe is not a signatory.
• The compact seeks to stimulate economic growth, create employment and nurture investment. Through this partnership, African governments are responsible for spearheading reforms that will make their countries attractive to international investors.
• The focus of the CwA is to promote a sustainable development framework in those African countries that accepted the invitation to be part of the initiative, in an attempt to attract private investors. The framework is a three-tiered approach to reforming three economic fundamentals – macroeconomics, business and finance.

“As a reform strategy, the CwA framework has the potential to support Zimbabwe’s economic transformation agenda,” the study published last week by the South African Institute of International Affairs (SAIIA), an independent public policy think tank, stated. It further noted that the compact was relevant to Zimbabwe’s re-engagement agenda and the Transitional Stabilisation Programme (TSP), which was introduced in 2018 as a blue print to turn around the economy.

But a crisis of governance and financial stewardship has long been stalking Zimbabwe, a Southern African nation that was once a model of economic success and democracy in Africa. Life has become difficult for its citizens who have to battle with a high cost of living and many things are in short supply from water to electricity to monetary currency, jobs, food and even political freedoms.  

The report pointed out that Zimbabwe’s economic woes are multi-faceted — a result of a combination of factors, including economic mismanagement, chaotic land reform, indigenisation policies, political instability and fiscal mismanagement driven by corruption.

Cold reception for compact

Yet despite its relevance, the compact has failed to raise enthusiasm among Zimbabwean policymakers, and few economic stakeholders are aware of it, the study found, pointing out that the Zimbabwe government is desperate and preoccupied with finding a quick solution to the economic crisis.

The study also made a note that there is no reform culture among the custodians of reforms in Zimbabwe.

Besides, the country’s multilateral debt, estimated at over $8,2 billion, has prevented any potential inroads with the international organisations involved with the compact.

“Clearance of multilateral debt arrears: the sanctions rhetoric seems to have taken the centre
stage ahead of reform implementation,” noted the study, adding that, “This behaviour has promoted corruption and stands in the way of reforms; hence there is no CwA for Zimbabwe.”

Economic analyst, John Robertson, said nobody agrees with the government on the point of economic sanctions imposed by the Western countries on individuals accused of human rights abuses in Zimbabwe.

“The sanctions are not applied to the country; the sanctions did not cause the country’s failure. The failure is caused by our decision to close down our biggest industries,” Robertson told IPS, referring to the destruction of the agriculture sector and the collapse of the manufacturing sector.

Poor policy choices

“The policy choices that we made have caused so much damage to our productive sectors starting with agriculture,” said Robertson, adding, “We imposed upon ourselves a serious handicap when we said the land in the country no longer has market value land so [people with] land can no longer borrow against ownership rights to that land because the land is now the property of the state.”

David Moore, researcher and political economist at the University of Johannesburg, told IPS that if the ruling Zimbabwe African National Union – Patriotic Front (ZANU PF) party had maintained its neo-liberal and white-farmer-friendly economic promises it might have kept the “west” on its side.

But cabals and corruption cannot be dismantled – they are the pillars of the party, he said. And so the military-party complex so tight that it cannot be untied: they are integral parts of the country’s political economy.

Academic and social commentator, Rudo Gaidzanwa, concurred saying it will take pushing to get ZANU (PF) ruling party and its military allies to undertake political and social reforms.

“The types of political and economic reforms that the civilians want will undermine the interests of the militarist elements in the state and the security sector,” Gaidzanwa, a Sociology Professor at the University of Zimbabwe, told IPS.

“ZANU won’t stand for anything that undermines their hold over the state and the society. It is not likely that any meaningful reform will occur unless dramatic social and political changes occur in Zimbabwe,” she said, adding that the ZANU PF led-government and elites have used economic sanctions as a convenient excuse to evade responsibility for economic and social crises.

Sanctions have not prevented the president and his cohorts from pillaging mineral resources. The current chaos was ideal for pillaging resources and undermining the rule of law and democracy, she said.

• Zimbabwe’s late president Robert Mugabe, who was ousted from power in November 2017, is believed to have looted hundreds of millions of dollars, though no exact figure has been given.
• Tendai Biti, Zimbabwe’s finance minister between 2009-2013, told Deutsche Welle that Mugabe and his family where not the only ones responsible for looting the state and that during his term of office some $15 billion had “disappeared through other channels”.
• Last July the country’s auditor general released a report that since Mugabe’s ouster, executives at state-owned enterprises had mismanaged millions of dollars, spending the money to their personal benefit.

“Rigged elections are an issue because they prevent the will of the people from prevailing,” Gaidzanwa told IPS. “The present situation over contested presidential elections between (Nelson) Chamisa and (Emerson) Mnangagwa is symptomatic of that struggle…These issues have dogged our elections for decades and remain unresolved hence our dire economic and political situation.”

• After Mugabe was ousted from power Zimbabweans went to the polls in July 2018 to elect a new leader, with Mnangagwa winning 50.8 percent of the voted compared to Chamisa’s 44.3 percent.
• The results were disputed.

Economist and former parliamentarian, Eddie Cross sees the situation differently, saying Zimbabwe, despite its current challenges, has a good start to turn around its economic fortunes.

“We have a fiscal surplus, government salaries are down to a third of the budget from over 95 percent, we have a balance of payments surplus and nearly $1 billion in bank accounts,” Cross said, adding that Zimbabwe’s domestic debt has been devalued and exports are highly profitable.

“[Political] Stability is no longer an issue – it’s a done deal, what is a problem is financing and this is going to be a challenge because we really have to look after ourselves,” Cross, a member of the Reserve Bank of Zimbabwe’s Monetary Committee, told IPS in an interview. “A couple of billion dollars would be useful. Perhaps we can persuade Mrs. [Grace] Mugabe to bring some money back from abroad.”

Cross believes Zimbabwe can benefit from the G20 CwA even though the country is a pariah state.

“I think Brexit is important and also the IMF and if we play our cards right and get on with reforms I see no reason why we cannot be in a very different place in 2021.”

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:

Beirut, Lebanon

By Anne Oeking, Ralph Chami, Ekkehard Ernst, and Connel Fullenkamp
WASHINGTON DC, Oct 18 2018 (IPS)

Workers’ remittances—the money migrants send home to their families—command the attention of economists and policymakers because of their potential to improve the lives of millions of people.

Amounting to over $400 billion in 2017, remittances rank between official development assistance and foreign direct investment in terms of size. Such massive financial flows have important consequences for the economies that receive them, especially when many countries receive flows that are large relative to the size of their exports or even their economies.

Many argue that remittances help economies in two ways. First, because remittances are person-to-person transfers motivated by family ties, these transfers from outside the country help relatives back home afford the necessities of life.

But remittances also have the potential to fuel economic growth, by funding investment in human or physical capital or by financing new businesses.

Economists have worked to measure both of these effects. Many studies confirm that remittances are essential in the battle against poverty, lifting millions of families out of deprivation or bare subsistence.

But at the same time, economic research has failed to find that remittances make a significant contribution to a country’s economic growth (see Chart 1).

The latter result is puzzling, especially given the finding that remittance income helps families consume more. Consumption spending is a driver of short-term economic growth, which in turn should also lead to longer-term growth as industries expand to meet the increased demand.

But research that digs deeper into the remittance-growth nexus increasingly suggests that remittances change economies in ways that reduce growth and increase dependence on these funds from abroad. In other words, there is increasing evidence of a remittance trap that causes economies to get stuck on a lower-growth, higher-emigration treadmill.

Consider the case of Lebanon. For many years, this country has been one of the leading recipients of remittances, in both absolute and relative terms. During the past decade, inflows have averaged over $6 billion a year, equal to 16 percent of GDP. Lebanon received $1,500 a person in 2016, more than any other nation, according to IMF data.

Given the size of these inflows, it should not be surprising that remittances play a key if not leading role in Lebanon’s economy. They constitute an essential part of the country’s social safety net, accounting on average for over 40 percent of the income of the families that receive them.

But research that digs deeper into the remittance-growth nexus increasingly suggests that remittances change economies in ways that reduce growth and increase dependence on these funds from abroad. In other words, there is increasing evidence of a remittance trap that causes economies to get stuck on a lower-growth, higher-emigration treadmill.
They have undoubtedly played a vital stabilizing role in a country that has endured civil war, invasions, and refugee crises in the past several decades. In addition, remittances are a valuable source of foreign exchange, amounting to 50 percent more than the country’s merchandise exports. This has helped Lebanon maintain a stable exchange rate despite high government debt.

While remittances have helped the Lebanese economy absorb shocks, there is no evidence that they have served as an engine of growth. Real per capita GDP in Lebanon grew only 0.32 percent on average annually between 1995 and 2015. Even during 2005–15, it grew at an average annual rate of only 0.79 percent.

Lebanon is not an isolated example. Of the 10 countries that receive the largest remittance inflows relative to their GDP—such as Honduras, Jamaica, the Kyrgyz Republic, Nepal, and Tonga—none has per capita GDP growth higher than its regional peers.

And for most of these countries, growth rates are well below their peers. It is important to recognize that each of these countries is dealing with other issues that may also interfere with growth. But remittances appear to be an additional determining factor rather than just a consequence of slow growth. And remittances may even amplify some of the other problems that restrict growth and development.

Returning to the case of Lebanon, the country’s well-educated population could be expected to point to robust growth. Lebanese families, including those who receive remittances, spend much of their income on educating their young people, who score much higher on standardized mathematics tests than their peers in the region.

Lebanon is also home to three of the top 20 universities in the Middle East, and researchers at these universities produce more research than their regional peers. Lebanon’s abundant remittance inflows could provide seed capital to fund business start-ups led by its well-educated citizens.

But statistics show that Lebanon has much less entrepreneurial activity than it should, especially in the high-tech information and communication technology sector. The size of this sector is less than 1 percent of GDP, and Lebanon scores very low on international gauges of this sector’s development.

Studies of the overall spending habits of remittance-receiving households in Lebanon show that less than 2 percent of inflows goes toward starting businesses. Instead, these funds are typically spent on nontraded goods such as restaurant meals and services, and on imports.

Instead of starting new businesses—or even working in established ones—many young Lebanese choose to emigrate. The statistics are stark: up to two-thirds of male and nearly half of female university graduates leave the country. Employers complain of an emigration brain drain that has caused a dearth of highly skilled workers.

This shortage has been identified as a leading obstacle to diversifying Lebanon’s economy away from tourism, construction, and real estate, its traditional sources of growth. For their part, young people who choose to seek their fortune elsewhere cite a lack of attractive employment opportunities at home.

Part of the remittance trap thus appears to be the use of this source of income to prepare young people to emigrate rather than to invest in businesses at home. In other words, countries that receive remittances may come to rely on exporting labor, rather than commodities produced with this labor. In some countries, governments even encourage the development of institutions that specialize in producing skilled labor for export.

But why would this situation develop and persist?

Research into both the household-level and economy-wide effects of remittances on their recipients provides an answer to this question. The impact on individual countries that receive significant remittances—such as Egypt, Mexico, and Pakistan—has been studied, and cross-country analysis of a variety of countries that receive various amounts of remittances (and of those that send rather than receive remittances) has been performed as well. The insights from the academic literature can be combined into a consistent explanation of how and why economies that receive significant remittance inflows may become stuck at low levels of growth.

To begin with, remittances are spent mostly on household consumption, and the demand for all products (nontraded and traded) in an economy increases as remittances grow.

This places upward pressure on prices. The flood of foreign exchange, along with higher prices, makes exports less competitive, with the result that their production declines. Some have referred to this syndrome as Dutch disease (see Chart 2).

The effect of remittances on work incentives makes this problem worse, by increasing the so-called reservation wage—that is, the lowest wage at which a worker would be willing to accept a particular type of job. As remittances increase, workers drop out of the labor force, and the resulting increase in wages puts more upward pressure on prices, further reducing the competitiveness of exports.

Resources then flow away from industries producing tradable products that face international competition toward those that serve the domestic market. The result: a decline in the number of better-paid, high-skill jobs, which are typical in the traded sector, and an increase in low-skill, poorly paid jobs in the nontraded sector.

This shift in the labor market encourages higher- skilled workers to emigrate in search of better-paying jobs. Meanwhile, the cost of living for most families rises along with domestic prices, and the loss in competitiveness means that more products must be imported, hurting economic growth. This in turn increases the incentive for family members to emigrate so that they can send money home to help relatives shoulder the burden of the higher cost of living.

To make matters worse, remittances are often spent on real estate, causing home prices to rise and in some cases stoking property bubbles. This provides a motive to emigrate for young people seeking to earn enough to buy a home. The result of all this is a vicious circle of emigration, economic stagnation, rising cost of living, and more emigration.

Governments could potentially mitigate or break this cycle by taking steps to keep domestic industries competitive. But policies that can accomplish this, such as improving the education system and physical infrastructure, are expensive and take years to implement. And they require strong political will to succeed.

As research has shown, however, remittances have important political economy side effects (see Chart 3). In particular, large inflows allow governments to be less responsive to the needs of society.

The reasoning is simple: families that receive remittances are better insulated from economic shocks and are less motivated to demand change from their governments; government in turn feels less obligated to be accountable to its citizens.

Many politicians welcome the reduced public scrutiny and political pressure that come with remittance inflows. But politicians have other reasons to encourage remittances. To the extent that governments tax consumption—say through value-added taxes—remittances enlarge the tax base. This enables governments to continue spending on things that will win them popular support, which in turn helps politicians win reelection.

Given these benefits, it is little wonder that many governments actively encourage their citizens to emigrate and send money home, even establishing official offices or agencies to promote emigration in some cases.

Remittances make politicians’ job easier, by improving the economic conditions of individual families and making them less likely to complain to the government or scrutinize its activities. Official encouragement of migration and remittances then makes the remittance trap even more difficult to escape.

The absence of clear evidence linking remittances to increased economic growth—and the lack of examples of countries that experienced remittance-led growth—suggests that remittances do indeed interfere with economic growth. The example of Lebanon, moreover, gives a concrete example of how the remittance trap may operate.

And if a remittances trap does exist, then what?

Clearly, given their importance to the well-being of millions of families, remittances should not be discouraged. Is the remittance trap simply the cost societies must bear in exchange for a reduction in poverty? Not necessarily.

Preventing the two downsides of remittances—Dutch disease and weaker governance—could help countries avoid or escape the remittance trap. Improving the competitiveness of industries that face foreign competition is the general prescription for mitigating Dutch disease.

Specific measures include upgrading a country’s physical infrastructure, improving the education system, and reducing the cost of doing business. Governments could also play a more active role in stimulating new business formation, including seed funding or other financial assistance for start-ups. At the same time, remittance-receiving countries must also push for stronger institutions and better governance.

Enhancing economic competitiveness and strengthening governance and social institutions are already considered essential to the inclusive growth agenda. But the remittance trap lends urgency to these goals.

Avoiding this potentially serious pitfall of remittances may actually be the key to unlocking their development potential by removing a previously unrecognized obstacle to inclusive development.

*Opinions expressed in articles and other materials are those of the authors; they do not necessarily reflect IMF policy.

Excerpt:

Mongolian farmers harvest carrots as part of an FAO South-South Cooperation Programme between China and Mongolia. Credit: FAO

By Baher Kamal
ROME, Dec 4 2017 (IPS)

“There are new challenges to all states: among them, the real threat to multilateralism… South-South and triangular cooperation can contribute to a new multilateralism and drive the revitalisation of the global partnership for sustainable development.”

This is how Liu Zhenmin, the UN under-secretary general for Economic and Social Affairs, underscored the importance of South-South Cooperation at an event marking the United Nations Day for South-South Cooperation on 12 September, just few weeks ahead of the Global South-South Development Expo 2017 in Antalya, Turkey (27 to 30 November).

The statement came a few weeks ahead of US President Donald Trump’s announcement that his country was revoking its commitment to the September 2016 UN-promoted global pact that aims at guaranteeing the human rights of migrants and refugees worldwide, in what is widely considered as his third blow to multilateralism in less than one year since he took office after US withdrawal from both the Paris Climate Agreement and UNESCO.

Solutions and strategies created in the South are delivering lasting results around the world, said Amina Mohammed, the UN deputy secretary-general, on the occasion of the United Nations Day for South-South Cooperation.

“Nearly every country in the global South is engaged in South-South cooperation,” she added, citing China’s Belt and Road Initiative, India’s concessional line of credit to Africa, the Asian Infrastructure Investment Bank, and the Strategic Association Agreement by Mexico and Chile as few examples.

The deputy UN chief, however, also cautioned that progress has been uneven and extreme poverty, deep inequality, unemployment, malnutrition and vulnerability to climate and weather-related shocks persist, and underscored the potential of South-South cooperation to tackle these challenges.

Not a Substitute for North-South Cooperation

Significantly, Amina Mohammed highlighted that the support of the North is crucial to advance sustainable development.

“South-South cooperation should not be seen as a substitute for North-South cooperation but as complementary, and we invite all countries and organizations to engage in supporting triangular cooperation initiatives,” she said, urging all developed nations to fulfil their Official Development Assistance (ODA) commitments.

A Kenya delegation discuss with Indonesia goverment official about food security in their country. Credit: FAO

She also urged strengthened collaboration to support the increasing momentum of South-South cooperation as the world implements the 2030 Agenda for Sustainable Development and the 2015 Paris Agreement on Climate Change.

Further, noting the importance of the upcoming high-level UN Conference on South-South Cooperation to be hosted by Argentina on 20-22 March 2019, she said, “It will enable us to coordinate our South-South efforts, build bridges, cement partnerships, and establish sustainable strategies for scaling up impact together.”

The UN General Assembly decided to observe this Day on 12 September annually, commemorating the adoption in 1978 of the Buenos Aires Plan of Action for Promoting and Implementing Technical Cooperation among Developing Countries.

Key to Overcoming Inequalities

At the opening of the Global South-South Development Expo 2017 in Antalya, Turkey, Fekitamoeloa Katoa Utoikamanu, the UN High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), on 27 November said that as the most vulnerable countries continue to face serious development challenges, South-South cooperation offers “enormous opportunities and potential” to effectively support them in accelerating progress on implementing globally agreed goals.

“These are all countries faced with complex and unique development challenges which lend themselves to exploring how and where we can maximize South-South cooperation and leverage global partnerships to support countries’ efforts toward sustainable and inclusive futures,” said Utoikamanu.

The 2017 Global Expo gathered 800 participants from 120 countries, senior UN officials, government ministers, national development agency directors, and civil society representatives, to share innovative local solutions and push for scaling up concrete initiatives from the global South to achieve the 2030 Agenda and its 17 Sustainable Development Goals (SDGs).

“The central promise of the 2030 Agenda is to ‘leave no-one behind,’ and thus is about addressing poverty, reducing inequality and building a sustainable future of shared prosperity,” she explained. “But it is already clear that these noble Goals will be elusive if the 91 countries my Office is a voice for remain at the bottom of the development ladder.”

As such, she added, South-South collaboration has led to increasing trade between and with emerging economies, investors, providers of development cooperation and sources of technological innovations and know-how. “This trend is confirmed by trade preferences for [least developed country products], enhanced trade finance opportunities, but also innovative infrastructure finance emerging.”

“The complex and pressing challenges the vulnerable countries experience demand that we further strengthen and leverage South-South cooperation,” said Utoikamanu, adding that South-South cooperation is “not an ‘either-or’ – it is a strategic and complementary means of action for the transfer and dissemination of technologies and innovations. It complements North-South cooperation.”

Science, Technology, Innovation

The Antalya week-long Global South-South Development Expo 2017 focused on a number of key issues, including how to transfer science, technology and innovation among developing countries and, in general, on solutions ‘for the South, by the South.’

The future will be determined by the abilities to leverage science, technology and innovation for sustainable growth, structural transformation and inclusive human and social development, said Utoikamanu. “It is proven that innovative technologies developed in the South often respond in more sustainable ways to the contextual needs of developing countries. Last, but not least, this is a question of cost.”

In all this, the Technology Bank for the Least Developed Countries has a major role to play in boosting science, technology and innovation capacity. “It must facilitate technology transfer and promote the integration of [least developed countries] into the global knowledge-based economy.”

Hosted by the Government of Turkey and coordinated by the UN Office for South-South Cooperation (UNOSSC), the Antalya Global South-South Development Expo 2017’ was wrapped up on 30 November under the theme “South-South Cooperation in the Era of Economic, Social and Environmental Transformation: The Road to the 40th Anniversary of the Adoption of the Buenos Aires Plan of Action.”

Jorge Chediek, the Director of UNOSSC, said: “Many of the achievements of the expo are not reflected in these very impressive numbers themselves, they are reflected in the partnerships that are being established, in institutional friendships and agreements that are been developed and that will certainly generate results.”

UN Day for South South Cooperation. Credit: United Nations

By Miroslav Lajčák
UNITED NATIONS, Sep 25 2017 (IPS)

When the Charter of Algiers was adopted 50 years ago, it marked the unity of the Group of 77. This unity has not wavered since then.

Credit: UN Photo

Today I want to focus on the key role played by the Group of 77 in strengthening our multilateral work. And I want to identify opportunities for stronger cooperation, as we head into the 72nd Session.

I will first point to the Group’s commitment to maintaining momentum around the 2030 Agenda and the Paris Climate Agreement.

These two frameworks involve big commitments. And big commitments need loud reminders to ensure they are met. The Group of 77 has spoken in a united voice. Over the past two years, it has worked to remind us all of the financial pledges made to humanity and to the planet. And I intend to add my voice over the coming year.

G77 members have also played a major role in promoting specific goals and issues. We have seen this through initiatives to mobilize youth for Sustainable Development. We will see this again, with the launch of the International Decade for Action on “Water for Sustainable Development” in 2018. And the Group’s commitment to combating climate change will be clear throughout COP23, which will be chaired by Fiji.

In addition, the Group has also acted as an import platform for south-south cooperation. I stand ready to support the preparation leading to the Second UN Conference on South-South Cooperation, to be hosted by Argentina in 2019

This focus on financing and partnerships is very much in line with the priorities of my Presidency. I intend to work with the Group of 77 throughout the coming year to identify opportunities for the sharing of ideas and lessons learned.

Second, I want to stress that an active G77 is crucial in other areas.

In 2018 the General Assembly will be charged with adopting Global Compacts for Refugees and Migrants. To succeed, we must focus on the needs of people, rather than our individual positions or ideologies. And we will need active engagement from the Group of 77.

Additionally, I will convene a High-Level Event on Sustaining Peace in April 2018. It will offer us an important opportunity to strengthen UN actions around peace and prevention. I intend to consult many G77 members as we work towards this event.

Finally, another opportunity for better cooperation lies in our collective goal for a stronger United Nations.

The 72nd Session will see UN Member States consider the reform agenda of the UN’s Secretary-General. This will apply to the UN development system, peace and security architecture, and management. I am committed to facilitating open and inclusive dialogue on reforms. The G77 will be a key partner in this process.

For the UN to carry out the mandates set by Member States, it needs adequate funding. We will need a timely agreement on the UN regular budget for 2018-2019. I commend the Group for its active engagement in this area.

The Group of 77 has a loud – and a united – voice. It can call attention to the needs and priorities of its members. This helps to ensure a prominent role for Least Developing Countries, Landlocked Developing Countries, and Small Island Developing States on the international stage.

But, more importantly, the Group can shed light on the needs and priorities of the people living in these countries.

Many of them are facing challenges. Some have experienced the devastating impact of Hurricane Irma and Maria. Others are dealing with the effects of terrorism, conflict, or drought.

These people, however, are also creating opportunities. They are working to mediate conflicts – start new businesses – and advocate for people and the planet.

Let us ensure that the 72nd Session involves stronger cooperation between the G77 and UN bodies, including the General Assembly. And let us ensure that this cooperation is focused on the people you are all are here to represent.

Excerpt:

Mozambique is open for business. A new suspension bridge rises on Maputo Bay. Credit: Busani Bafana/IPS

By Busani Bafana
MAPUTO, Aug 17 2017 (IPS)

The rising Maputo-Catembe Bridge is a hard-to-miss addition to Mozambique’s shoreline.

The 725-million-dollar bridge – billed to be the largest suspension bridge in Africa on its completion in 2018 – represents Mozambique’s new investment portfolio and a show of its policy commitment to boosting international trade.“African governments have identified policy incoherence as the elephant in the room." --Wadzanai Katsande of FAO

But the country can improve on its trade and investment if it can effectively align its national trade and agricultural policies to ensure sufficient coordination between trade and agricultural policymakers, experts say.

Initiatives to improve agricultural productivity, value chain development, employment creation, and food security are often constrained by market and trade-related bottlenecks which are a result of the misalignment between agricultural and trade policies.

This was part of findings discussed at a meeting convened by the United Nations’ Food and Agriculture Organisation (FAO) in the Mozambican capital earlier this month. The high-level meeting attracted decision makers from the ministries of agriculture, finance, trade, industry and commerce, private sector representatives and donor groups.

To help address this challenge, FAO, in collaboration with Enhanced Integrated Framework (EIF) at the World Trade Organisation and the European Centre for Development Policy Management (ECDPM), has piloted a regional project to help countries coordinate policy making processing, starting with agriculture and trade.

Mozambique is one of four countries in East and Southern Africa targeted in the pilot project aimed at developing a model for best practices in policy development and harmonization in enhancing economic development.

An assessment of the agriculture and trade policy framework and policymaking processes in Mozambique has been done to understand decision making in setting objectives and priorities for the country’s agriculture and trade sector.

The assessment also sought to contribute to the development of a coherent national policy framework on agricultural trade in Mozambique, said Wadzanai Katsande, Outcome Coordinator for the Food Systems Programme of the FAO.

Though listed as one of the Least Developed Countries (LDC) in the world, Mozambique is rich in natural and mineral resources including gas. The country is a bright investment destination in Africa.

Policy alignment is the key

“On paper, policies sound well and good, but in practice the story is different. There are still coordination and consistency issues in the policy formulation and implementation processes within and between agriculture and trade and these need to be addressed,” says Samuel Zita, an International Trade and Development Consultant, who recently led on an analytical study commissioned by the FAO on “Coordination between agriculture and trade policy making in Mozambique.”

“When agriculture and trade policies speak the same language that creates some predictability to investors, any disconnect between the two can have a negative effect on foreign direct investment,” Zita told IPS.

The study which focused on the country’s Comprehensive Africa Agriculture Development Programme (CAADP) and Enhanced Integrated Framework (EIF) processes also looked at the policy documents from these processes such as the CAADP National Agricultural Investment Plan (PNISA)] and the Diagnostic Trade Integration Strategy (DTIS). It recommended that Mozambique should improve the dissemination of policies, plans and strategies to stakeholders through various media. In addition, there should be an improvement in the description and publication of agricultural production and trade data.

Agriculture – defined by the national constitution as the basis of the country’s economic development – contributes 25 percent to Mozambique’s GDP of nearly 14 billion dollars. Raw aluminium, electricity, prawns, cotton, cashew nuts, sugar, citrus, coconuts and timber are major exports.

Policy cohesion can help facilitate trade development by simplifying the regulatory and policy environment for small businesses, so countries can attract private sector investment at local and international levels, says Jonathan Werner, Country Coordinator, Executive Secretariat of the Enhanced Integrated Framework at the WTO.

“We are facing many challenges for regional trade integration in Africa,” Werner Told IPS. “Our findings have shown that aligned policy processes can help create an enabling environment for trade and development.”

Policy cementing the SDGs

African governments have committed themselves to a multitude of agreements, protocols and declarations meant to promote greater agriculture productivity and trade which are major drivers of economic growth, but something is still missing in getting it all together: effective policies both at national and regional levels. Until the well-meaning policies trade and agriculture are aligned, Africa will continue to miss out on attracting the level of investment it should.

Mozambique has taken the first steps towards aligning its national agriculture and trade sector policies to boost economic development.

“African governments have identified policy incoherence as the elephant in the room and getting the policies in trade and agriculture to speak to each other is key to turning policies into action,” Katsande said noting that agriculture and trade development form the basis of key initiatives such as the Comprehensive Africa Agriculture Development Programme (CAADP), the Malabo Declaration and African Union’s Agenda 2063.

A boost for Inter-Africa trade

Africa has no less than 14 regional trading blocs but inter-Africa trade is low at 12 percent of the continent’s trade, according to statistics from the Common Market for Eastern and Southern Africa (COMESA). However, Africa’s trade with Europe and Asia is at nearly 60 percent. Some of the bottlenecks to Africa trading with Africa include trade policy harmonization, reducing export/import duties low production capacity, differing production quality standards and poor infrastructure.

The United Nations Conference on Trade and Development (UNCTAD) estimates that the Continental Free Trade Area (CFTA) set to be signed into operation by December 2017 will help double inter African trade. In 2012 African head of state endorsed the establishment of the free trade area by 2017. Trade is one of the pathways to unlocking economic growth in Africa to boost employment and foster innovation in a continent replete with opportunities.

Gerhard Erasmus, an associate at the Trade Law Centre, a trade law capacity building institution based in Cape Town, South Africa, said low inter-Africa trade was a real issue which has been blamed by some economists on the fact that African nations often produce the same goods (mostly agriculture and basic commodities) for which the intra-African export opportunities are limited.

“Unless we move up the ladder of value addition, industrialization and services we will remain stuck,” Erasmus said. “Thus domestic development plans need adjustment and targeted investments are necessary. There are many trade facilitation challenges, from long queues at border posts, corruption, uncoordinated technical standards and requirements, to red tape and inadequate infrastructure.”

Eramus said regional economic communities and even the African Union had policies and plans to address the many trade challenges, but implementation often encountered problems at national levels regarding political buy-in, lack of resources, technical capacity problems, and plain bad governance.

Africa is not trading enough with Africa to boost economic development, but a new free trade area could change all that. Credit: Busani Bafana/IPS

By Busani Bafana
BULAWAYO, Zimbabwe, Sep 9 2016 (IPS)

Getting just a sliver of the global trade in goods and services worth more than 70 trillion dollars, Africans have every excuse to decide to trade among themselves.

Many argue that it is the only way to leverage trade to secure a better life for the continent’s more than a billion people who need food and jobs.The prospects of a single market are appetizing: 54 countries, over a billion people and a combined GDP in excess of 3.4 trillion dollars, nearly double the current annual value of traded goods and services in Africa.

The Africa rising narrative might be getting the much needed validation to tackle widening inequality, joblessness, generalized poverty, food and nutritional insecurity that eclipse successes in meeting some of the development targets included in the newly agreed Sustainable Development Goals (SDGs).

A rich but poor Africa

The narrative of a poor Africa is about to change. That is, if Africa stands together as much as it did in fighting for its political independence. This time the fight is for a place on the global trade stage. After years of negotiations and the establishment of several free trade blocs, the signing of the Continental Free Trade Area (CFTA) agreement targeted for December 2017 could set Africa on a new development path.

Africa has more to gain than lose in creating the CFTA, which will rival trade agreements like the EU-US Transatlantic Trade and Investment Partnership (TTIP) and the 16-member Regional Comprehensive Economic Partnership (RCEP). Africa already has the Tripartite Free Trade Area (TFTA) signed in June 2015 combining three largest trading blocs: The East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC).

The three regional economic communities have a combined GDP in excess of 1.3 trillion dollars and a population of 565 million. However, the TFTA, which has been signed by 16 of the 26 member countries, is yet to be ratified to come into force, a blow for the journey to the CFTA.

In their paper on the adoption of the TFTA, Calestous Juma, Professor of the Practice of International Development and Director of the Science, Technology, and Globalization Project at the Belfer Center for Science and International Affairs at  Harvard University, and Francis Mangeni, COMESA Director of Trade, Customs and Monetary Affairs, view regional trade as part of a broader strategy for long-term economic transformation.

They argue that African trade integration measures combine the facilitation of free movement of goods and services, investment in infrastructure, and promotion of industrial development as part of the long-term political vision to unleash the continent’s entrepreneurial potential through regional trade culminating in the African Economic Community by 2028.

Market in Kivu, DRC. A Continental Free Trade Area could transform Africa’s economic fortunes. Credit: Busani Bafana/IPS

Global trade is an undisputed source of economic development and a decider between the rich and the poor as it facilitates wealth creation and spurs innovation in every sector.

According to United Nations Conference on Trade and Development, global trade is on the rise but developing countries, many in Africa, account for a small share of this global commerce. Foreign direct investment has gone up in Africa from 9 billion dollars in 2000 to 55 billion in 2014, but rich countries have benefitted more, a situation the first target of the expired Millennium Development Goal 8 sought to address through the development of an open, rule based, predictable and nondiscriminatory trading and financial system.

While an equitable trade system is a global ideal, Africa has the potential to turn the trade tide in its favour by transforming political will into action. Africa has a wide range of natural and mineral resources making beneficiation industries a viable investment option that will help cut unemployment and eliminate poverty which dog many countries in Africa.

Prospects and problems

The prospects of a single market are appetizing: 54 countries, over a billion people and a combined GDP in excess of 3.4 trillion dollars, nearly double the current annual value of traded goods and services in Africa.

“The proposed Continental Free Trade Area will expand the continent’s regional investment to West Africa which is currently not covered by the tripartite consolidation of COMESA, EAC and SADC,” Juma told IPS. “This will enlarge investment opportunities for Africans to invest across the continent. A larger continental market will also make African more attractive to foreign investors.”

Juma, who is writing a book on the CFTA to be published to coincide with signing of the agreement in 2017, believes that a larger single market will enable African factories to operate at full capacity, which will in turn stimulate greater technological innovation.

“The impact on innovation will include greater movement of skills to the continent from outside and across the continent between countries. Africans will be able to learn new skills from their foreign counterparts which will help to strengthen the continent’s technological base,” he said.

Africa has as many trade opportunities as it has obstacles to realizing the free movement of goods, services and people. One of the major obstacles to the CFTA identified by Juma is adjusting national laws and practices to enable countries to implement the agreement. Resistance will come from firms that have been previously protected from external competition. A solution, Juma is convinced, lies in balancing corrective measures with incentives.

“The agreement needs to include remedies and incentives that help countries to adjust to the new regime,” he said. “In this regard, the agreement should not be about free trade but it should also have provisions for infrastructure and industrialisation. It should be an economic development agreement, not just a free trade arrangement.”

Africans not trading with Africans

Statistics from COMESA indicate that inter-Africa trade is a paltry 12 percent compared to trade with Europe and Asia, at nearly 60 percent. At the heart of the poor intra-African trade are prohibitive national trade measures. It is easier to buy products from Europe than for African countries to sell to each other.

Trade policy harmonisation and reducing export/import duties are critical to freeing the movement of goods and people. Last month, the African Union launched the electronic Pan African passport, paving the way for free movement across borders and an important step towards a free trade zone. The passport, initially for African heads of state, foreign ministers and diplomats, will be available to African citizens by 2018.

African governments under the African Union have established the Continental Free Trade Agreement Negotiating Forum which has met several times to hammer out modalities of the continent wide free trade zone mooted in 2012. African Union Commissioner for Trade and Industry, Fatima Haram Acyl, told the first meeting of the negotiating forum in February 2016 that the Continental Free Trade Area will integrate Africa’s markets in line with the objectives and principles of the Abuja Treaty.

It remains for Africa to up investments in road, rail and air infrastructure, communications and seamless service delivery and agriculture which are disproportionate among the 54 member states creating unease as to what a single market will mean for both poor and rich economies.

Economic disparities present a hurdle Africa must overcome as many of Africa’s 54 countries are small, with populations of less than 20 million and economies under 10 billion dollars. National markets would be insufficient to justify investments as adequate supply of inputs and sufficient demand would be too expensive or out of reach that a bigger market will achieve.

The consulting firm McKinsey predicts consumer spending in Africa will rise from 860 billion dollars to 1.4 trillion by 2020, potentially lifting millions out of poverty should a single market be inaugurated.

The United Nations Economic Commission for Africa (UNECA) has calculated that the CFTA could increase intra-African trade by as much as 35 billion dollars per year over the next six years.

Concluding CFTA negotiations this year in good time for the 2017 deadline could open a new chapter in African trade and chart a new path towards economic independence and growth. The only question that remains is, will it happen?

This story is part of special IPS coverage of the United Nations Day for South-South Cooperation, observed on September 12.

Over the next decade, China will be home to the world's largest elderly population, while India -- because of its demographic dividend – will require jobs for the world's largest workforce. This offers both nations opportunities to work together. Credit: Neeta Lal/IPS

By Neeta Lal
NEW DELHI, Sep 8 2016 (IPS)

Despite bilateral dissonances and an unresolved boundary issue, India and China — two of the world’s most ancient civilisations — are engaged in vigorous cooperation at various levels. The Asian neighbours’ relationship has also focussed global attention in recent years on Asia’s demographically dominant, major developing economies engaged in common concerns of poverty alleviation and national development.

As the world’s two most populous nations, making up nearly 37 percent of humanity, India and China are committed to improve the lot of their people. These complementarities offer the scope to work in synergy and strengthen ties. Over the next decade, China will be home to the world’s largest elderly population while India — because of its demographic dividend — will require jobs for the world’s largest workforce. This area offers both nations opportunities to work together.With Western economies remaining skittish, India - with its 1.25 billion people and bubbling entrepreneurial energy - offers Chinese investors enormous scope for growth.

As neighbours, China and India have also shared a long history of cultural, scientific, and economic linkages. Following a brief border war in 1962, bilateral trade and investment suffered. However, the last decade the economic relationship of the two giant nations has gained traction. And from just about 3 billion dollars in trade at the turn of the century, the countries are now eyeing 100 billion dollars worth of merchandise trade. This will mean tremendous opportunities for traders and investors in both countries.

Apart from sharing a new extroversion and enthusiasm in their economic policies, Delhi and Beijing have also tightened their economic embrace with the rest of the world. China and India are also members of the World Trade Organization, India as a founding member and China since 2001.

Analysts say that robust economic ties between China and India will also play a stellar role in one of the most important bilateral relationships in the world by 2020. Even conservative estimates suggest that, by 2020, China-India trade could surpass US-China trade.

There is a plethora of business opportunities for India and China, in sectors such as agriculture and food processing, asset management, construction and infrastructure, pharmaceuticals, electronics and information technology, and transport and logistics. The pharmaceutical sector also offers gargantuan business potential for both countries.

China also has a vast underused manufacturing capacity, plus capital surpluses in need of new markets. With Western economies remaining skittish, India – with its 1.25 billion people and bubbling entrepreneurial energy – offers Chinese investors enormous scope for growth.

India, a nation of 1.2 billion people, shares common concerns of poverty alleviation and nation-building with China. Credit: Neeta Lal/IPS

China is also seeking greater economic cooperation with India on the Bangladesh-China-India-Myanmar corridor and the New Silk Route programme. Beijing could help accelerate India’s economic take-off by focusing on the key areas of manufacturing, roads, railways and industrial parks, which can form the bedrock for bilateral ties.

Beijing and New Delhi’s attempts to build a strategic and cooperative partnership while expanding trade and economic cooperation has resulted in China emerging as India’s biggest trading partner. However, a few wrinkles need to be ironed out on this front. India’s trade deficit with China has ratcheted up from 1 billion dollars in 2001-02 to 48.43 billion in 2014-15. This asymmetry has raised issues of sustainability.

However, bilateral engagements in this sphere have raised hopes of a more sustainable trade trajectory. Towards this end, the Commerce Ministries of both the countries have also signed a Five-year Development Programme for Economic and Trade Cooperation in September 2014 to lay down a medium-term roadmap for promoting balanced and sustainable development of economic and trade relations.

signs of cooperation are also visible in recent bilateral agreements inked for railway cooperation, smart cities, and skill development. Although the two countries are considered political rivals, in October 2013, China and India inked the Border Defence Cooperation Agreement. The Agreement acknowledges “the need to continue to maintain peace, stability and tranquillity along the line of actual control in the India-China border areas and to continue implementing confidence building measures in the military field along the line of actual control.”

China and India are also among 21 Asian countries to sign on to a new infrastructure investment bank — the Asian Infrastructure Investment Bank — which will offer the region a counterpoint to West-dominated financial institutions like the World Bank. China and India’s combined resources and talents can power regional and global economic growth.

Despite being critical of China’s expansionist policies, and increasing assertiveness in the Indian Ocean Region and the South China Sea, India is keen on robust ties with China. As well as pursuing bilateral cooperation in areas like infrastructure, industry, communications and energy, both India and China are also forging Sino-Indian cooperation at multilateral forums like the G20, the East Asia Summit and BRICS.

The two sides have strengthened strategic dialogue on such major international issues as climate change and global action, and safeguarded the common interests of emerging markets and developing countries. Delhi and Beijing are also keen to augment cooperation in such fields as railway and industrial park construction, security, anti-terror and anti-extremism, and to expand communication and exchanges in education and tourism, and facilitate more exchanges among regional governments of both countries, and jointly safeguard their common interests as well as those of all developing countries.
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Given that India and China have many shared goals and areas of convergences, a bilateral relationship premised on a balanced economic engagement, along with some inventive and bold thinking on the political front, can benefit both nations while jumpstarting an Asian revolution.

This story is part of special IPS coverage of the United Nations Day for South-South Cooperation, observed on September 12.

By Benjamin W. Mkapa
GENEVA, Aug 16 2016 (IPS)

The EPA issue has once again re-emerged when, in early July, Tanzania informed East African Community( EAC) members and the European Union (EU) that it would not be able to sign the Economic Partnership Agreement (EPA) between European Union (EU)  and the six EAC member states.

The European Commission reportedly proposed signature of the EAC EPA in Nairobi, on the sidelines of the 14th session of the UN Conference on Trade and Development (UNCTAD XIV).

Benjamin William Mkapa

This is a major quadrennial event where all United Nations member states negotiate guidance for UNCTAD. For the European Commission, it would have been a propitious place for a signature ceremony as it would have projected the EPA as a “trade and development” agreement to the benefit of EAC.

Nevertheless, the agreement is antithetical to Tanzania’s as well as the region’s trade and development prospects.

The EPA for Tanzania and the EAC never made sense. The maths just never added up. The costs for the country and the EAC region would have been higher than the benefits.

As a least developed country (LDC), Tanzania already enjoys the Everything but Arms (EBA) preference scheme provided by the European Union.

In other words, we can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms. If we sign the EPA, we would still get the same duty-free access, but in return, we would have to open up our markets for EU exports.

The EPA is a free trade agreement. Under it, Tanzania would have to reduce to zero the tariffs on 90 per cent of all its industrial goods trade with the EU, according duty-free access for almost all the EU’s non-agricultural products into the country.

Such a high level of liberalisation vis-à-vis a very competitive partner is likely to put our existing local industries in jeopardy and discourage the development of new industries.

Research using trade data shows that Tanzania currently produces and exports on 983 tariff lines (at the HS 6 digit level.) The EU produces and exports on over 5,000 tariff lines. If the EPA were implemented, 335 of the 983 products we currently produce would be protected in the EPA’s “sensitive list,” but 648 tariff lines would be made duty-free.

So the existing industries on these 648 tariff lines would have to compete with EU’s imports without the protection of tariffs. Will these sectors survive the competition?

These 648 tariff lines include agricultural products (maize products, cotton seed oil cake); chemical products (urea, fertilisers); vehicle industry parts (tyres); medicaments; intermediate industrial products ( plastic packing material, steel, iron and aluminium articles, wires and cables); parts of machines and final industrial products (weighing machines, metal rolling mills, drilling machines, transformers, generating sets, prefabricated buildings etc); parts of machines (parts of gas turbines, parts of cranes, work-trucks, shovels, and other construction machinery, parts of machines for industrial preparation/ manufacturing of food, aircraft parts etc).

We can already export duty-free and quota-free to the EU market without providing the EU with similar market access terms. If we sign the EPA, we would still get the same duty-free access, but in return, we would have to open up our markets for EU exports
The list does not stop here. Liberalisation (zero tariffs) also applies to the many industrial sectors that Tanzania and the EAC do not yet have existing production/exports ­ about 3,102 tariff lines for Tanzania.

Statistics show that in fact, for the EAC region, the African market is the primary market for its manufactured exports. In contrast, 91% of its current trade with the EU is made up of primary commodity exports (agricultural products such as coffee, tea, spices, fruit and vegetables, fish, tobacco, hides and skins etc).

Only a minuscule 6% or about $200,000 of EAC exports to the EU is composed of manufactured goods.In contrast, of the total EAC exports to Africa, almost 50% is made up of manufactured exports – about $2.5 billion – according to 2013 ­ 2015 data. Of this, $1.5 billion are EAC country exports to other EAC countries.

These figures tell two stories: One; the importance of the African market for EAC’s aspirations to industrialise. In contrast, the EU market plays almost no role in this. Two the EAC internal market makes up 60% of EAC’s manufactured exports to Africa, i.e., the EAC regional market is extremely valuable in supporting EAC’s industrialisation efforts.

The EPA would threaten this regional industrialisation opportunity that is currently blossoming since most EU manufactured products would enter the EAC market dutyfree. Just as our manufactured products are not competitive in the EU market, even though they can be exported dutyfree, might it not be the case that when EU manufactured products can come duty-free into the EAC market, EAC manufactured products may also not sell? The EPA could in fact destroy our economic regional integration efforts.

The pains EAC has taken to build a regional market may instead help serve EU’s commercial interests by offering the EU one EAC market, rather than ensuring that that market can be accessed by our own producers.

The other area where EPA hits the heart of our industrialisation aspirations are its disciplines on export taxes. At the World Trade Organization, export taxes are completely legal.The logic of export taxes is to encourage producers to enter into value-added processing, hence encouraging diversification and the upgradation of production capacities. Developed countries themselves had used these policy tools when they were developing.

The EU has a raw materials initiative aimed at accessing non-agricultural raw materials found in other countries. According to the European Commission, ‘securing reliable and unhindered access to raw materials is important for the EU. In the EU, there are at least 30 million jobs depending on the availability of raw materials.’ In implementing this initiative, the EU has used trade agreements to discipline export taxes.

The EPA prohibits signatories from introducing new export taxes or increase existing ones. For Tanzania and the EAC region with its rich deposits of raw material, including tungsten, cobalt, tantalum etc; such disciplines in the long-run would be incongruent with our objective to industrialise and add value to our resources.

The other area of loss resulting from the EPA is tariff revenue, and the numbers are not small. Conservative estimates (assuming import growth of 0.9% year on year) show that for the EAC as a whole tariff revenue losses would amount to $251 million a year by the end of the EPA’s implementation period Cumulative tariff revenue losses would amount to USD 2.9 billion in the first 25 years of the EPA’s life.

For Tanzania, the losses based on 2013/­2014 import figures are about $71 million a year by year 25. Cumulatively, just for Tanzania, they come up to $700 million over the first 25 years.

Where is the Promised Development Aid?

EU has made many promises that the EPA would be accompanied by development assistance. Hence the EAC EPA incorporates a ‘Development Matrix’ containing a list of economic development projects for the EAC. The price tag of implementing this Development Matrix is $70 billion.

The Matrix and assistance is to be reviewed every 5 years. For the time-being, the EU has pledged to contribute a paltry $3.49 million, which translates into 0.005% of the total required funds!This is also a far cry from the tariff revenue losses the region faces ­the $251 million a year mentioned above.

The only area where the EPA is supposed to serve the interest of the EAC is by providing duty-free access to Kenya. As a non-LDC, Kenya does not have duty-free access via the EU’s EBA. Kenya’s main export item to the EU is flowers ­ just over $500,000 a year.

Without the EPA, Kenyan’s flowers would be charged a 10% customs duty. There are other Kenyan exports also ­vegetables, fruit, fish – that will face tariffs. However, the flower industry has thus far been the most vocal. Nevertheless, all in all, Kenyan exports to the EU market (including the UK) amounts to about $1.5 billion.

If no EPA is signed, the extra duties charged to Kenyan exports amounts to about $100 million a year. Is this worth signing an EPA for? — The avoidance of duties of $100 million? The tariff revenue losses as the EPA is implemented (and more tariff lines are liberalised) would be comparable.

This does not even include the tariff revenue losses of the other EAC LDCs, nor the challenges posed to domestic/ regional industries. In addition, the Brexit development is further reason for the region to pause and reconsider.

The UK is a major export market for Kenya, absorbing 28% of Kenya’s exports to the EU. This reduces the EPA’s supposed ‘benefits’ by a quarter for Kenya. There is a possible solution for Kenya ­ to apply for the EU’s Generalised System of Preferences Plus scheme (GSP+). Under this, almost all of Kenya’s current exports could enter EU duty-free including flowers and fish.

This option could be explored. Alternatively all EAC countries would do well to attempt to diversify production and exports away from primary commodities towards value-added products, and also to diversify our export destinations. Africa is a critical market for EAC’s manufactured goods. Regional integration and trade is the most promising avenue for EAC’s industrial development. The EPA would derail us from that promise.

This article was published firstly in Daily News of Tanzania

Excerpt:

The United Nations’ leading development organisation UNCTAD recently obtained a renewed mandate for its work, but not without difficulty.

This is because the developed countries are now much more reluctant to give concessions to the developing countries, thus showing up the present shaky state of North-South relations and of development cooperation.

Martin Khor

The 14th session of the United Nation Conference on Trade and Development (dubbed UNCTAD 14) concluded in Nairobi on 22 July with an agreed declaration on global economic issues.

It also gave UNCTAD another four-year mandate for its activities of research, intergovernmental meetings, and technical assistance.

Reaching this consensus was hailed as a success in multilateral cooperation on trade, development, and related issues. However, an agreement was reached, on what should have been non-controversial issues, only after a lot of difficult wrangling between the developed and developing countries.

Formed in 1964, UNCTAD is the UN’s premier economic development organisation. In its hey- day from the 1960s to the 1980s, it was the world’s most important negotiating forum on trade issues, specialising in global commodity agreements.

It helped lead the developing countries’ initiative for a “new international economic order”. It was also designated the UN’s focal point for the integrated treatment of trade and development and with areas of finance, technology, and investment.

For over half a century, UNCTAD has championed the cause of developing countries. But in recent decades, under the influence of developed countries, its role was downgraded. Many of its important issues were passed on to other organisations over which the developed countries have more control, such as the OECD, World Trade Organisation, IMF and World Bank.

The developing countries have had to fight continuously to slow down or stop the decline of the UNCTAD and the UN in general.

At UNCTAD 14, the delegations spent hectic days and sleepless nights to thrash out hundreds of disputed paragraphs which could not be agreed on even after many months of negotiations in Geneva.

Principles or even phrases that have long been agreed to as part of global cooperation are now challenged or even made taboo by the developed countries.

They had previously been amenable to place on record the need to transfer technology and provide financial resources and special treatment to developing countries.

Now it is considered almost too sensitive to propose language on “additional financial resources”and “technology transfer”, while big battles have to be waged to reaffirm the long-accepted principles of “common but differentiated responsibility” and “special and differential treatment for developing countries.”

The developed countries have become less secure in their domination over the global economy and thus they are no longer willing to recognise many of the rights of and concessions to the developing countries that are embedded in the global development system.

It was thus a big challenge for the developing countries, led by their umbrella group, The G77, and China, to get their developed-country partners to reach a consensus at UNCTAD 14, as illustrated by the following examples.

First, the developing countries fought to re-affirm the need for countries to have “policy space”. This concept agreed to at an earlier UNCTAD conference, implies that developing countries should be given the right to make use of policies and instruments required for their development.

Many trade and investment agreements have been identified as containing provisions that restrict or even eliminate the ability of developing countries to pursue pro-development policies.

The developing countries proposed language on policy space in many parts of the document, but they faced resistance. Eventually only a mild and conditioned reference was accepted, as follows: “….and respecting each country’s policy space while remaining consistent with relevant international rules and its commitments.”(Para 3 of the Declaration).

Second, the developing countries wanted an expanded mandate for UNCTAD’s important work on external debt issues. UNCTAD has been the UN system’s main organisation on debt; it has championed debt relief for poor countries, and the need for an international debt restructuring mechanism to resolve debt crises.

Developing countries wanted to stress that UNCTAD has a role in the prevention and resolution of debt crises and not just debt management, but this faced objections. Further, language was introduced to narrow the scope of UNCTAD’s debt work to one of complementing the work of the IMF and World Bank, which would have curbed its independence.

At the last minute, developing countries managed to add “as appropriate”, implying that the “complementing” function would be used only at UNCTAD’s own discretion.

Third,the developing countries wanted to mention the need to rapidly conclude the Doha Round at the World Trade Organisation. This is hardly a radical idea since the need to conclude the Doha trade negotiations has been a longstanding mantra for many years in international discussions and many declarations on development.

However, the developed countries have recently decided to give up on the Doha Round altogether, to the frustration of developing countries. Thus, at their insistence, work on the Round was not even mentioned in the UNCTAD14 outcome.

Fourth, in many other fora, including the UN climate change convention, “technology transfer” has become a taboo phrase, and even its mention has been opposed, especially by the US.

It is to the credit of developing countries that this term appears several times in the UNCTAD 14 declaration, including that UNCTAD should assist developing countries to identify ways to operationalize technology transfer (Para 40f).

Fifth, the need for international cooperation on tax issues (including how to deal with tax evasion, tax avoidance and tax havens) has become a hot topic recently. Most developing countries have been excluded from the international discussions on these issues as they are mainly held at the OECD (the club of developed countries) of which they are not members.

They asked during the UNCTAD negotiations for the setting up a UN committee on tax issues at which all countries could discuss and make decisions, but this was not acceptable to the developed countries.

However the final document but does mention taxation a number of times, thus providing UNCTAD a mandate, though limited, in pursuing the issue.

There were other positive elements too at UNCTAD 14. The role of UNCTAD as the focal point in the UN system dealing in an integrated manner with trade and development and inter-related areas of finance, technology, and investment, was reaffirmed.

Also reaffirmed is the importance of UNCTAD’s “independent development oriented analytical work”. And the conference gave a fresh mandate for UNCTAD’swork in the next four years.

These reaffirmations of UNCTAD’s roles and mandates were hailed as a victory, for it was uncertain until the last hours whether an overall agreement could be reached on the Declaration.

This situation depicts the underlying conflicting positions, with the South desiring that UNCTAD expand its mission to champion the cause of development and the North attempting to restrict the role of UNCTAD to a bare minimum.

As UNCTAD 14 neared conclusion, UNCTAD Secretary General Mukhisa Kituyi remarked: “I’m delighted that our 194 member states have been able to reach this consensus, giving a central role to UNCTAD in delivering the sustainable development goals.”

It is to the credit of the developing countries and the G77 and China, that they succeeded in having many of their main points, although in diluted form, included in the UNCTAD 14 outcome.

Although it may not have the same clout as during its high years some decades ago, UNCTAD lives on to fight another day.

Ministerial Segment of the High-level Political Forum on Sustainable Development Goals. Credit: UN Photo/Manuel Elias.

By an IPS Correspondent
UNITED NATIONS, Jul 22 2016 (IPS)

UN member states “are going beyond rhetoric and earnestly working to achieve real progress” towards the Sustainable Goals, the members of the Group of 77 and China said in a ministerial statement delivered here on 18 July.

The statement was delivered by Ambassador Virachai Plasai, Chair of the Group Of 77 (G77) and China during the High Level Political Forum (HLPF) which took place at UN Headquarters in New York from 18 to 20 July.

During the forum, the 134 members of the G77 and China reaffirmed the importance of not only achieving the Sustainable Development Goals but also the driving principle of leaving no one behind.

“We must identify the “how” in reaching out to those furthest behind,” said Plasai who is also Ambassador and Permanent Representative of the Kingdom of Thailand to the UN.

“To make this real, we cannot simply reaffirm all the principles recognised in the (2030) Agenda, including the principle of common but differentiated responsibilities, but must earnestly implement them in all our endeavours,” Plasai added.

The UN’s 193 member states unanimously adopted the 2030 Development Agenda, including the 17 Sustainable Development Goals, in September 2015. The goals reflect the importance of the three aspects of sustainable development: economic, social and environmental, and countries will work towards achieving them by the year 2030.

However more still needs to be done to ensure that developing countries have access to the resources they need to meet the goals, said Plasai.

“We reiterate that enhancing support to developing countries is fundamental, including through provision of development financial resources, transfer of technology, enhanced international support and targeted capacity-building, and promoting a rules-based and non-discriminatory multilateral trading system,” he said.

“We urge the international community and relevant stakeholders to make real progress in these issues, including through the G20 Summit in China which will focus on developing action plans to support the implementation of the 2030 Agenda.”

At a separate meeting during the High Level Political Forum the G77 and China noted some of the specific gaps that remain in financing for development.

During that meeting the G77 and China expressed concern that rich countries are failing to meet their commitments to deliver Official Development Assistance (ODA) – the official term for aid – to developing countries.

“We note with concern that efforts and genuine will to address these issues are still lagging behind as reflected in this year’s outcome document of the Financing for Development forum which failed to address (gaps in ODA),” said Chulamanee Chartsuwan, Ambassador and Deputy Permanent Representative Of The Kingdom of Thailand to the UN, on behalf of the Group of 77 and China.

Speaking during the forum on July 19, UN Secretary-General Ban Ki-moon underscored the importance of the High Level Political Forum, “as the global central platform for follow-up and review of the Sustainable Development Goals.”

Ban presented the results of the first Sustainable Development Goals report released by the UN Department of Economic and Social Affairs on July 20. The report used “data currently available to highlight the most significant gaps and challenges” in achieving the 2030 Agenda, said Ban.

“The latest data show that about one person in eight still lives in extreme poverty,” he said.

“Nearly 800 million people suffer from hunger.”

“The births of nearly a quarter of children under 5 have not been recorded.”

“1.1 billion people are living without electricity, and water scarcity affects more than 2 billion.”

Leaving No One Behind

Ban also noted that the importance of collecting data about the groups within countries that are more likely to be “left behind”, such as peoples with disabilities or indigenous peoples.

Collecting separate data about how these groups fare is considered one way for governments to help achieve Sustainable Development Goal 10 which aims to decrease inequality within countries.

However SDG 10 also aims to address inequalities between countries, an important objective for the G77, as the main organisation bringing together developing countries at the UN the G77 wants to make sure that countries in special circumstances are not left behind.

Countries in special circumstances include “in particular African countries, least developed countries, landlocked developing countries and Small Island Developing States, as well as countries in conflict and post-conflict situations,” said Chartsuwan.

However while the world’s poorest and most fragile countries have specific challenges, many middle income countries also have challenges too, the G77 statement noted.

Climate Change Agreement Needs Implementation

Developing countries, and particularly countries with special circumstances, are among those that are most adversely affected by climate change, and therefore wish to see speedy adoption and implementation of the Paris Climate Change Agreement alongside the 2030 Agenda.

Ban told the forum that he will host a special event during the UN General Assembly at 8am on September 21 for countries to deposit their instruments of ratification.

“We have 178 countries who have signed this Paris Agreement, and 19 countries have deposited their instrument of ratification.”

“As you are well aware, we need the 55 countries to ratify, and 55 percent of global greenhouse gas emissions accounted.”

“These 19 countries all accounted is less than 1 percent of greenhouse gas emissions.”

“So we need to do much more,” he said.

The G77 Newswire is published with the support of the G77 Perez-Guerrero Trust Fund for South-South Cooperation (PGTF) in partnership with Inter Press Service (IPS).

By Martin Khor
GENEVA, Jun 21 2016 (IPS)

The last World Health Assembly (WHA) in Geneva (23-28 May) discussed the manifold global health crises that require urgent attention, and adopted resolutions to act on many issues. We are currently facing many global health related challenges, and as such multiple actions must be taken urgently to prevent these crises from boiling over.

Martin Khor

The WHA is the world’s prime public health event and this year 3,500 delegates from 194 countries took part, including Health Ministers of most countries. World Health Organization (WHO) Director-General, Dr. Margaret Chan gave an overview of some of the successes and further work needed on the global health front.

The good news includes 19,000 fewer children dying every day, 44% drop in maternal mortality, 85% of tuberculosis cases that are successfully cured, and the fastest scale-up of a life-saving treatment in history, with over 15 million people living with HIV now receiving therapy, up from just 690,000 in 2000. As a result, aid for health is now far more effective, and the issue of health has become an investment for stable and equitable societies, not just a drain on resources.

The recent Ebola and Zika outbreaks showed how global health emergencies can develop very quickly. There is a dramatic resurgence of emerging and re-emerging infectious diseases, which the world is currently not prepared to cope with. Dr. Chan gave three examples of the emerging global health emergencies: climate change, antimicrobial resistance, and the rise of chronic-communicable diseases as the leading causes of death worldwide.

Many of the issues addressed are largely anthropogenic, created by policies that place economic interests above health and environmental concerns. Fossil fuels power economies, medicines for treating chronic conditions are more profitable than a short course of antibiotics, and highly processed foods provide longer term profit than fresh fruits and vegetables.

Unchecked, these emergencies will eventually reach a tipping point and become irreversible and as regards antimicrobial resistance, “we are on the verge of a post-antibiotic era in which common infectious diseases will once again kill.” On moving ahead, Dr. Chan highlighted universal health coverage as an essential aspect of the Sustainable Development Goals. It is the ultimate expression of fairness that ensures no one is left behind, and to provide comprehensive care for all.

A question however, was not covered by Dr Chan in her speech; how can some governments- especially in underdeveloped countries, obtain enough funds to finance the idealistic goal of providing healthcare for their citizens?

The Assembly agreed that WHO set up a new Health Emergencies Programme, enabling it to provide rapid, consistent, and comprehensive support to countries and communities facing or recovering from various emergencies, disease outbreaks, disasters or conflicts.

The WHO has produced a new paper to set up a global stewardship framework to support the development, control and appropriate use of new antimicrobial medicines and diagnostic tools to counter the threat of a global increase in antimicrobial resistance. The Secretariat has made quite a lot of progress, but action on the ground is still slow, in the Asia-Pacific region so far, only six countries have completed their national plans and another five have plans that are being developed.

WHO assistant Director-General, Keiji Fukuda said that focus in the upcoming year will include: making progress on the Global Action Plan (established in 2015), further developing the global stewardship framework, and involving political leaders by meeting in the United Nations headquarters in New York in September.

There were two issues on childhood nutrition that highlighted the need to put health concerns above corporate interests. The first of these issues was childhood and adolescent obesity. In 2014, an estimated 41 million children under 5 years were affected by being overweight or obese, and 48% of them lived in Asia and 25% in Africa.

The Commission on Ending Childhood Obesity recommended the promotion of healthier foods, reducing the consumption of highly processed foods and sugar-sweetened beverages by children and adolescents. It proposed more effective taxation on sugar-sweetened beverages and curbing the marketing of unhealthy foods.

On the second issue, the Assembly welcomed WHO guidance on ending the inappropriate promotion of foods for infants and young children. According to the guidelines, to support breastfeeding, the marketing of “follow-up formula” and “growing-up milks” targeted for babies aged 6 months to 3 years should be regulated in the same manner as infant formula for babies below 6 months.

On access to medicines and vaccines, the WHA agreed on measures to address the global shortage of medicines and vaccines, including monitoring supply and demand, improving procurement systems and improving affordability through voluntary or compulsory licensing of high-priced medicines.

An interesting and well-attended side event was organised by India on behalf of the BRICS countries (Brazil, Russia, India, China and South Africa) on the effects of free trade agreements on access to medicines. After remarks from the health ministers of these, the main speaker, American law professor Frederick Abbott, spoke about why the Trans Pacific Partnership Agreement (TPPA) could make it very difficult for the TPPA members to have access to affordable medicines.

His warning was complemented by the head of UNAIDS Michel Sidibé who estimated that the annual cost of treating 15 million AIDS patients could increase from US$2 to US$150 billion without the availability of generic drugs, costing about US$10,000 per patient annually.

Air pollution and the use of chemicals were other important environmental issues highlighted by the Assembly. Every year, 8 million deaths are attributed to air pollution – 4.3 million indoor and 3.7 million due to outdoor air pollution. The Assembly has also welcomed a new WHO roadmap to respond to the adverse health effects of increasing air pollution.

Since 1.3 million deaths worldwide are caused by exposure to extremely harmful chemicals, among them lead and various pesticides. WHA would like to ensure that the use and production of chemicals is regulated to minimize adverse health and environmental effects by 2020. Some agreed actions include the transfer of expertise, technologies and scientific data, and exchanging good practices to manage chemicals and waste between cooperating countries. WHO will develop a roadmap to meet the 2020 goals and the associated SDG targets.

A controversial issue that has taken two years of negotiations was how WHO should cooperate with non-state actors. The WHA finally adopted the WHO Framework of Engagement with Non-State Actors (FENSA), which provides WHO with policies and procedures to engage with NGOs, private sector entities, philanthropic foundations and academic institutions.

On the one hand, there is the aim to strengthen WHO’s engagement with non-state stakeholders. On the other hand, there is the need for WHO to avoid conflicts of interest that may arise when corporations and their foundations, associations and lobbies wield large and undue influence if they are allowed to get too close to WHO. Many NGOs and several developing countries are concerned about how this corporate influence is undermining WHO’s public health responsibilities, and that FENSA will worsen rather than reverse this trend.

On the health-related Sustainable Development Goals, the Assembly agreed to prioritize universal health coverage; to work with actors outside the health sector to address the social, economic and environmental causes of health problems, including antimicrobial resistance; to expand efforts to address poor maternal and child health, infectious diseases in developing countries; and to put a greater focus on equity within and between countries.

The WHA also adopted many other resolutions on international health regulations including; tobacco control, road traffic deaths and injuries, HIV, viral hepatitis and sexually transmitted infections, Mycetoma, integrated health services, the health workforce, the Global Plan of Action on Violence, Prevention and Control of Non-communicable Diseases, the Global Strategy for Women’s, Children’s and Adolescents’ Health, and healthy ageing.

Excerpt:

Progress for Least Developed Countries could be a mixed blessing. Credit: Amantha Perera/IPS.

By Aruna Dutt
UNITED NATIONS, May 13 2016 (IPS)

The United Nations will undertake a major review of progress made in the world’s 48 Least Developed Countries (LDCs) later this month.

By Roberto Azevêdo
CAPE TOWN, South Africa, Apr 12 2016 (IPS)

There is a misconception, by some, that the World Trade Organization (WTO) is a barrier to regional integration. It is one of a number of misconceptions that do not match up with the facts like the perception that the WTO is a rich man’s club. Today the WTO has 162 members and rising at all stages of development. 43 of those members are African countries and rising. The organization now covers around 98% of world trade. It is a truly global organization, one where everybody has an equal say. And it is an organization which supports regional integration in Africa. Indeed, I would say that the need for better integration across the continent is indisputable.

Roberto Azevêdo

We need to tackle these barriers. And I would argue that doing this will help drive Africa’s integration globally. The statistics I just quoted show that the vast majority of Africa’s trade is with the rest of the world. And existing WTO rules give a great deal of flexibility for members to pursue regional agreements. This is plain in the proliferation of such agreements that we have seen in recent years. But they are not a new phenomenon.

Indeed, regional initiatives such as the Southern African Customs Union predate the multilateral system by some decades. Different kinds of trade initiatives have always co-existed with the multilateral system. It is important that they are coherent and compatible, so that they can all help to spread the benefits of trade.

The economic map of Africa today is defined by these efforts: from Southern African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Economic Community of West African States (ECOWAS), and the East African Community (EAC) to the Tripartite Free Trade Agreement and, in due course, the Continental Free Trade Area.

The WTO supports these efforts. And the WTO’s Trade Facilitation Agreement provides a very practical mechanism for taking them forward. This Agreement, finalised in 2013, is about simplifying and standardising customs procedures, thereby reducing the time and cost of moving goods across borders. We expect that, when fully implemented, the Agreement could reduce trade costs by an average of 14.5%.

The East African Community has already applied a range of trade facilitation reforms, which have delivered remarkable results in cutting the time and expense of moving goods between countries. Rolling out such measures would unlock the potential of many traders across the continent especially small and medium-sized enterprises. But, in order to benefit from the Agreement, first it must be ratified.

The Trade Facilitation Agreement is notable for the benefits it will deliver but also because it was the first multilaterally agreed deal in the WTO’s history. We held another ministerial conference in December last year, in Nairobi and WTO members agreed to eliminate agricultural export subsidies. This helps to level the playing field, so that farmers in developing countries may compete on better terms.

Of course domestic subsidies still exist, so there is much work still to do. But that doesn’t change the fact that abolishing export subsidies is a big step. This is something which developing countries have been fighting for over many years.

In fact, it is the biggest reform of agricultural trade rules for 20 years. And it is a key target of the United Nations’s new Sustainable Development Goals delivered just three months after the goals were agreed. In the context of regional integration it is important to recognise that results like this could only be delivered at the global level. That’s why we need trade initiatives on all levels to be working well.

And this brings me to the other topic before us today the Doha round of world trade negotiations. This action on export competition was part of the Doha round as were other elements that were delivered in Nairobi, relating to food security and Least Developed Countries (LDCs).Notwithstanding these outcomes, clearly progress on the round as a whole has been too slow. It has not delivered as we had hoped when the round was launched in 2001.

The future of Doha was a major feature of the debate in Nairobi, and in the end members could not agree on a common position. Members are committed to keeping development at the centre of our work. They are also committed to addressing the remaining Doha issues, such as agriculture (particularly domestic subsidies), market access for industrial goods and services.

But, they do not agree on how to tackle them. And, at the same time, some members would like to start discussing other issues, in addition to the remaining Doha issues. Members have wisely decided to reflect on how these differences might be overcome and how we might collectively move the agenda forward.

So we are in a very important period right now. Members are talking to each other about how to advance the Doha issues and, potentially, how to move forward on other issues as well. Of course the economic outlook is tough at present, not least given the slump in commodity prices.

To recall Nelson Mandela’s words, there is much ’wise work’ to be done.

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Excerpt:

By Anis Chowdhury and Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Mar 31 2016 (IPS)

Many well-meaning people believe that “good governance” is key to inclusive development. But research claiming that “good governance” is essential for rapid growth suffers from serious methodological or conceptual limitations. Existing definitions are extremely broad, suffer from functionalist tautology, or mainly refer to corruption.

Defining Good Governance

Invoking a functionalist definition (such as ‘good governance’ is “good-for-economic-development”), one cannot define a country’s ‘quality of government’ without measuring its effects. As The Economist (June 4, 2005) noted, defining ‘good governance’ as “good-for-economic-development” may generate tautological explanations and meaningless policy implications: “What is required for growth? Good governance. And what counts as good governance? Whatever promotes growth. And what is required for growth?”

Attempts to define Quality of Governance (QoG) as multi-faceted also suffer from tautology: “What is required for the quality of life enjoyed by citizens? Quality of governance. What is quality of governance? That which promotes the quality of life. . . .”.

If good governance or “QoG is everything, then maybe it is nothing”. Those who have defined ‘good governance’ as what can be shown to be “good for economic development” illustrate this problem. Many important non-economic attributes of good governance, such as trust and subjective measures of well-being, are left out by such definitions.

Thus, ‘good governance’ cannot be defined precisely, and hence, cannot be meaningfully or usefully monitored. Of course, the dire conditions typically associated with failed states probably preclude most economic or social progress, and cause declining living standards. Even recent World Bank research has been sceptical about the World Bank’s own frequently cited World Governance Indicators (WGIs), observing “there is little if any evidence on the concept validity of the six WGI indexes”.

The WGIs do not take into account country-specific challenges and environments, which could be different, not only between developing and developed countries, but also among developing countries. They also suffer from the typical biases of perceptions-based subjective measures. There is also no historical evidence that limited government is better for development — a premise of the WGIs. The view that the existence of government failures implies that minimalist government is best for development has no factual basis.

Growth

Many countries that have performed well in terms of growth, structural transformation and equity, have fallen short on the most widely used “good governance” indicators. Also, not all good governance reforms are similarly feasible or beneficial, let alone necessary or desirable in all circumstances.

For example, the United States and the Republic of Korea did not improve governance significantly until they had become quite affluent. Contrary to the often exaggerated claims about how much ‘institutions matter’, greater transparency, accountability and participation are often a consequence, rather than a direct cause of faster development.

Instead, all the ostensible evidence actually links good governance indicators to income levels. Observing the absence of any strong evidence relating standard good governance criteria to growth, Dani Rodrik notes that “the incontrovertible long-run association between good governance and high incomes provides very little guidance for appropriate strategies to induce high growth”.

Poor countries suffer a multitude of constraints, and effective growth acceleration interventions must address the most binding growth bottlenecks. Thus, as a rule, broad good governance reforms are neither necessary nor sufficient for growth.

Corruption

The popular governance focus on corruption presumes that government policy discretion and interventions necessarily lead to corruption and abuse even though there is no factual basis for this presumption. Small governments are not synonymous with the absence of corruption while countries with very low levels of corruption have relatively large governments, as in Scandinavia and the Netherlands.

Also, defining good governance simply in terms of the absence of corruption is not very useful. While corruption is antithetical to good governance, good governance implies much more than merely the absence of corruption, clientelism, nepotism, cronyism, patronage, discrimination, and regulatory or policy capture.

If good governance indicators suffer from measurement problems, and if the causality from good governance to economic growth cannot be ascertained, is there any causal link between economic growth and corruption? This is relevant, as in practice, the good governance agenda often focuses mostly on anti-corruption measures.

Conceivably, corruption adversely affects development in many different ways, especially if it diverts resources that would otherwise be invested productively. However, the evidence does not show anti-corruption measures accelerating economic growth. Rather, while all corruption is damaging in some way, and is hence undesirable, some types of corruption are much more damaging than others.

Claiming to fight corruption in developing countries generally — by implementing a laundry list of desired governance reforms — seems laudable, impressive and deserving of support, but such efforts typically ignore more feasible and targeted policies that can improve economic performance.

Necessary?

The World Bank’s 1997 World Development Report advised developing countries to pay attention to 45 aspects of good governance. By 2002, the list had grown to 116 items. Countries wanting to improve their governance must undertake a great deal more as good governance advocates continue to extend their indicators lists. And the longer they wait, the more they will need to do!

Unfortunately, the long and lengthening agenda often means that a multitude of governance reforms need to be undertaken urgently, typically with little thought to their sequencing, interdependence, or relative contributions to reforming governments to be more efficient, effective and responsive, let alone to accelerate development and alleviate poverty.

Among the multitude of governance reforms deemed necessary, there is typically little guidance about what is considered essential and what is not, what should come first and what should follow, what can be achieved in the short term and what can only be achieved over the longer term, what is feasible and what is not.

The presumption that good governance accelerates growth, and hence, that comprehensive institutional reform is a pre-requisite for development continues to lose support. Large-scale institutional transformation of the type envisioned by the good governance agenda has never been a prerequisite for accelerating economic growth or poverty reduction.

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Excerpt:

Not abundant anymore. Women queue at a borehole in Bulawayo as the country faces a groundwater crisis in the absence of rain. Credit: Ignatius Banda/IPS

By Ignatius Banda
BULAWAYO, Zimbabwe, Feb 23 2016 (IPS)

Sijabuliso Nleya has been kept busy in the past few weeks digging up sand. He is not a sand poacher like scores of people who local district councils across the country say are digging along dry river beds for sand used in the construction of houses. “The situation is terrible,” said Nleya, who owns a plot in Douglasdale, a small farming community on the outskirts of Bulawayo.

Together with other men, he has been filling up dry wells and boreholes, as groundwater increasingly becomes an unforeseen casualty of climate change, thanks to the absence of rainfall for long periods across the country. “The dry wells have become dangerous when in the past they were a source of our livelihood. It’s better to fill them with sand than dream that they will provide us with water one day,” Nleya told IPS.

Underground water sources sustained farming activities here earlier with maize, tomatoes, cabbages and a range of vegetables, including paprika, being sold in the city. “Only a few boreholes now are functioning and we have watched our source of income evaporate,” he explained. Zimbabwe has always considered irrigation fed by groundwater as the bulwark against low rainfall, but the climate ministry says thousands of boreholes have dried up across the country, putting a further strain on the poorly funded agriculture sector that has long relied on the rains.

In Bulawayo, hundreds of community gardens that provide economic safety nets for low-income households use borehole water. Now, with thousands going dry across the country, authorities have raised concerns about the far-reaching implications not only for incomes but health, especially as HIV/AIDS patients rely on produce from these gardens for their nutritional requirements. According to the environment, water and climate minister Oppha Kashiri, more than 12,000 boreholes across the country have gone dry, in a country that is experiencing its worst drought in recent years. “Our water sources are drying up in all the seven catchment areas,” he told journalists on February 4.

President Robert Mugabe has declared drought as a national disaster as more than a quarter of the population face food shortages. Aid agencies report that up to 2.5 million people require food assistance.” The agriculture ministry says up to 90 per cent of the rain-fed maize crop planted last year has been a write off.

According to the Southern African Development Community’s groundwater and drought management programme, up to 70 per cent of the population in the region relies on groundwater, and in a 2015 assessment noted that climate change was exacerbating the groundwater crisis. The Zimbabwe National Water Authority (ZINWA), a government department under the water ministry, says up to 70 per cent of the population resides in the rural areas where the primary sources of water are boreholes and wells. Scarcity is now forcing humans and livestock to share water sources.

More urban residents are using groundwater. Although the drilling of new boreholes is banned, the haphazard sinking of boreholes continues and is exhausting the water table. “It is vital to highlight that groundwater is a very finite resource which can easily run out if there is no balance between replenishing of groundwater stock and extraction,” warned this agency. “Due to increasing water shortage and the growing reliance of urban communities on borehole water, minimum groundwater utilisation standards have been disregarded and this has seen a prompt decline in the water table with boreholes in some suburbs dying,” the water authority added.

Measures to introduce taxes on groundwater users has failed to stem the widespread domestic use of borehole water as the capital city struggles to provide potable water from household faucets. The absence of rainfall only worsens groundwater management. Amidst the groundwater crisis, the Vice-President Emmerson Mnagagwa on February 10 launched a US$1.5 billion appeal for drought relief, with about US$350 million expected towards the rehabilitation of irrigation infrastructure largely fed by boreholes. A countrywide assessment by the agriculture ministry says more than 16,000 cattle have died because of drought. In the past, farmers relied on groundwater to ensure the availability of pastures throughout the year. Not any more

However, Peter Makwanya, a climate change researcher at the Zimbabwe Open University believes the solution could lie in building more reservoirs to harvest rainwater as many part of the country experience flash floods where millions of litres go to waste: “there are quite a number of sustainable ways to save water through rainwater harvesting. Now that groundwater levels are getting depleted, it’s not favourable to encourage people to continue exploiting underground water,” he told IPS. According to him, “farmers can also re-use grey water (water that has been used before) and this can go a long way in achieving water security. This water can be used on a small-scale basis to achieve household sustainability.”

Nleya and millions of subsistence farmers, residents and villagers, who rely on groundwater, are the human face of the ravages of climate change. “We never thought water could actually disappear in the ground as we have always had functioning boreholes and wells, we hope we get rains soon,” he said.

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Participants at a recent workshop on South-South Cooperation in Xiamen, China. Credit: Pratyush Sharma/IPS

By Pratyush Sharma
NEW DELHI, Feb 19 2016 (IPS)

China’s strength in South-South Cooperation (SSC) lies in its carrying out big-ticket infrastructure projects in diverse developing countries. It is remarkable in terms of project scale, speed and cost-effectiveness and has been playing a positive role in promoting partner’s nation-building, economic development and social progress. However, the swift completion of China’s infrastructure projects also has its sets of problems like little or no paper-work leading to lack of transparency, oversight and post-project monitoring. The backlash against Chinese labourers employed by Chinese companies in developing countries has been routinely highlighted by the international media with allegations of skirmishes with the local population, corruption coupled with resource theft.

Another important feature is the government-to-government and demand-driven nature of China’s SSC. However, this too has resulted in claims that it dispenses its development projects in partner countries at the behest of political elites rather than the general population. China is conscious of these accusations. It has taken active steps to mend its image and intends to adopt a more inclusive approach for its SSC. These include seeking social appraisal of their infrastructure projects, elucidation of outcomes and not just its output. Chinese projects not only aspire to create local jobs (output) but are also mindful of the nature of jobs (outcome) projects create for local residents in partner countries.

Other outcomes may include gender parity and pay parity of the workforce till the time the management of projects is in Chinese hands. Also, they now pay more emphasis on capacity-building and ‘direct aid’ (scholarships and fellowships), are now more forthcoming in working along with civil society organisations (CSOs) and they now focus on soft resource development. China encourages its state-owned firms to conduct social and environmental impact assessments and shoulder more social responsibility to enhance transparent management. They are now more open to coordinate with international stake-holders for carrying its development work in the global South.

Two cases in point are the coordination of Chinese humanitarian workers with the teams of multilateral humanitarian organisations in the aftermath of Cyclone Komen in Myanmar in 2015 and coordinated efforts of Chinese restoration experts with their French and Japanese counterparts in restoration projects of Ankor temples in Cambodia. Equality and mutual respect are the core values – when providing assistance, China adheres to the principles of non-interference in the internal matters of its partner, non-conditionality (both economic and political) and respecting partner’s right to independently choose their own paths and models of development.

China provides assistance to the best of its ability to other developing countries within the framework of SSC to support and help, especially the least developed countries (LDCs) to reduce poverty and improve livelihoods. For instance, the TAZARA Project, rail link between Dar-es-Salaam in Tanzania to Kapiri Mposhi (near Lusaka) in Zambia was constructed by China on demand by the leaders of the respective countries through a turn-key project worth US $500 million. The project was deemed financially unviable by Western lenders when Julius Nyerere of Tanzania approached the West to help reduce Zambia’s economic dependence on Rhodesia (now Zimbabwe) and South Africa (then apartheid-ridden) through this railway line.

At the China-Africa Forum Summit 2015, China identified five major pillars for bilateral cooperation in 10 major areas. These include consolidating political mutual trust, striving for win-win economic cooperation, enhancing exchanges, learning from each other’s cultures, helping each other in security, and cementing unity and coordination on international affairs. While the 10 sectors identified for priority cooperation are wide-ranging, they include the areas of industrialisation, agricultural modernisation, infrastructure, financial services, green development, trade and investment facilitation, poverty reduction, public health, people-to-people exchanges, and peace and security.

Chinese projects, especially in Africa and elsewhere, have been embroiled in different controversies and have attracted a bad press, internationally and locally. China has included justice, openness, inclusiveness and sustainability as new pillars and security and terrorism issues are the new sectors where China’s SSC is venturing for the first time. China, recently brokered reconciliatory talks between the Afghanistan government and the Taliban. Also, the proposed triangular development cooperation between China and France; and between China and UK for Africa’s development is a never-tried-before phenomenon and remains to be seen as to how it would pan out. This particular proposal was received with a lukewarm response from African leaders.

In this regard, the role of platforms like China Agricultural University’s China International Development Research Network assumes special significance as it tries to fill the knowledge gap by sharing knowledge on international development with outstanding individuals and institutions, both within China and abroad. It aspires to develop a knowledge pool on international development in China, to facilitate the exchange between China and the international development community. An Indian counterpart Forum for Indian Development Cooperation set up in 2013 has undertaken a similar inclusive stance.

China’s strengths in SSC include prioritisation to aid payment and delivery over transparency and post-project monitoring. Financing for infrastructure projects is primarily done by China Exim Bank, which also provides concessional loans for infrastructure building and supporting the trade of Chinese goods. The China Exim bank is increasingly making use of a deal structure – known as the “Angola mode” or “resources for infrastructure” – whereby repayment of the loan for infrastructure development is made in terms of natural resources (for example, oil). On average, Chinese loans are offered at an interest rate of 3.6 per cent with a grace period of 4 years and a maturity of 12 years. Overall, this represents a grant element of around 36 per cent, which qualifies as concessional loan according to official definitions. However, the variation around all of these parameters is considerable across countries. The interest rate varies from 0.25 per cent to 6 per cent, grace period from 2 to 10 years, maturities from 5 to 25 years and overall grant element from 10 to 70 per cent.

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The steep fall in global oil prices has hit Gulf economies severely. Saudi Arabia, United Arab Emirates (UAE), Qatar, Bahrain are expected to run huge budget deficits as shrinking revenues from selling cheaper oil cannot fund their mounting expenditures. As they tighten their belts, the brunt of adjustment will be felt by migrants, who constitute the bulk of the labour force. Reforms include cutting fuel, power, water, education subsidies and a value-added tax (VAT). This will affect migrants and reports indicate family members are returning home.

N Chandra Mohan

As oil prices are likely to remain depressed — as global markets “drown in oversupply”, to borrow an expression of the International Energy Agency — the Gulf economies are looking to a future beyond oil. Saudi Arabia, for instance, is looking to diversify into mining and subsidy reforms. In an interview to The Economist, Muhammad bin Salman, Saudi Arabia’s deputy crown prince and defence minister stated “there were unutilised assets: expanding religious tourism, like increasing the numbers of tourists and pilgrims to Mecca and Medina will give more value to state-owned lands in both cities”.

Other Gulf economies are thinking on similar lines. Among other options, UAE is investing big time into the India growth story. The crown prince of Abu Dhabi and deputy supreme commander of the UAE armed forces, Sheikh Zayed Bin Sultan Al Nayan made a three day- visit to India in February and inked many agreements including investing in the country’s infrastructure, energy and aviation. India intends to tap investments of nearly $75 billion from the sovereign wealth fund of this Gulf economy, besides intensifying greater cooperation on the security front.

However, the crash in oil prices is not the only challenge confronting the Gulf. At an IISS Bahrain Bay Forum meeting last November, Bahrain’s minister for industry, commerce and tourism, Zayed Al Zayani stated that economic disorder and lack of opportunity are contributing to instability in the region. He emphasised the need for “unprecedented” economic reform across the Gulf in the wake of the lower oil revenues. These policies include the generation of millions of jobs for the youth in these economies that continue to depend heavily on expatriate labour from India, Pakistan, Bangladesh and Philippines.

All of this is not good news for expatriate workers in the Gulf. The steep increase in fuel and utility charges will hit their living standards. For instance, Qatar doubled these charges in September 2015. Saudi Arabia and Oman cut subsidies in December 2015. Saudi Arabia is thinking of a VAT by end-2016. In Bahrain, the expatriate workers also face the gradual loss of subsidies. These reforms in question also include replacing expatriate with local workers — Saudi Arabia, for instance, might soon start with the 10 million jobs being occupied by non-Saudi employees.

For such reasons, migration to the Gulf is at an inflexion point. In an earlier period, when oil prices were high and rising, these economies had booming revenues to build airports, highways and ports. Since the 1970s, those who constructed such infrastructure are the 16-odd million migrants from South Asian countries like India, Pakistan, Bangladesh, Nepal and Sri Lanka. As this oil-financed construction boom is over, there is less need for unskilled expatriates. As noted earlier, the Gulf economies now have the compulsion to employ their own young and increasingly educated work force.

There is thus a troubling shadow over the sustainability of private transfers or remittances to South Asian economies. In Nepal, remittances from all sources constitute 30 per cent of GDP. The consequence of return migration thus is bound to be serious for the Himalayan kingdom’s external profile. In Sri Lanka and Bangladesh, remittances are equally important amounting to 9.4 per cent of GDP and 8.6 per cent of GDP respectively according to the World Bank. In India, the share is less at 3.4 per cent of GDP but the problem will be serious in states like Kerala that is the ground zero for Gulf emigration.

Research has established that remittances augment savings and investments of recipient households and help in poverty reduction. If such inflows reduce over the near-term, they would worsen these distributional outcomes. While remittances contribute to better economic performance, they are also a source of output shocks when they turn volatile – see a discussion paper on the effect of remittances for 24 Asia/ Pacific economies by Katsushi S Imai, Raghav Gaiha, Abdilahi Ali and Nidhi Kaicker for the Asia-Pacific Division of the International Fund for Agricultural Development.

In this context, Kerala’s experience is relevant since it vitally depends on private transfers, which amount to one-thirds of its net state domestic product. The Thiruvananthapuram-based Centre for Development Studies (CDS) has been doing pioneering work on emigration and the impact of remittances on Kerala’s economy. CDS has, in fact, completed six large-scale surveys on migration — in 1998, 2003, 2007, 2008, 2011 and 2014. These surveys point to a decreasing trend in emigration from Kerala, bulk of which is to the Gulf economies. The era of large scale emigration is over.

If more South Asian expatriates return home, there is bound to be an adverse impact on the labour market. The rate of joblessness would spike upwards. With questions as to how long the good times will last on the remittances front, there is bound to be an adverse impact on South Asian economies. With less remittances inflows, they would register higher current account deficits, which is the broadest measure of the trade imbalance in goods and services with the rest of the world. Lower remittances, in turn, would lower per capita income, all of which contribute to social tensions. The challenge for policy is to cope with such inflows becoming less important in the region.

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Costa Rican President Luis Guillermo Solís (centre-right) received United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan (centre-left) in the presidential palace in San José on Friday Feb. 12. Credit: Diego Arguedas Ortiz/IPS

By Diego Arguedas Ortiz
SAN JOSE, Feb 12 2016 (IPS)

A visit by United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan to Costa Rica paved the way for closer trade ties between the two countries, especially in the areas of tourism and sustainable energy.

During the first official visit ever to this Central American nation by a UAE foreign minister, Al Nahyan and his Costa Rican counterpart and host, Manuel González, signed two agreements.

One of them refers to air services, and will boost visits by Emirati tourists to Costa Rica.

They also agreed to immediately begin the process of negotiating and promoting investment in tourism.

“This agreement opens up opportunities to take better advantage of air services between the two countries,” Al Nahyan said in Costa Rica’s presidential palace, after an official meeting with this country’s president, Luis Guillermo Solis, at the start of his one-day visit to San José on Friday Feb. 12.

“I think you have a wonderful, beautiful country,” the minister said in a press conference at the end of his meeting with the president. “Of course, there is the problem of the distance between us, but I believe that after opening the air route between Dubai and Panama City, it will be easier to get back and forth between our countries.”

He was referring to the new Emirates airlines route that will begin to operate on Mar. 31 as the world’s longest flight – nearly 18 hours – according to the company.

Al Nahyan also announced that mechanisms would be sought to facilitate visas between the two countries, in order to expedite trade.

“We have a lot of work to do with my colleague, Costa Rica’s foreign minister, to talk to the airlines and make sure things work out,” he said.

A flight between Panama City and San José takes less than one hour, and more and more airlines are connecting the two cities.

United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan (left) and his host, Costa Rican Foreign Minister Manuel González, in the Costa Rican Foreign Ministry after signing the agreements reached during the Emirati minister’s visit. Credit: Foreign Ministry of Costa Rica

“Emirates will fly from Dubai to Panama; this strengthens potential ties, not only between the UAE and Panama but with the entire Central American region, and particularly Costa Rica,” Foreign Minister González told IPS in an exclusive conversation about the visit.

The other agreement signed on Friday afternoon in Costa Rica’s Foreign Ministry provides a framework for cooperation, accompanied by a mechanism for formalising bilateral political consultations, which will facilitate diplomatic relations between the federation of seven emirates and this Central American nation.

Costa Rica was the fourth and last country on Al Nahyan’s official Latin America tour, which began Feb. 4 in Argentina before taking him to Colombia and Panama.

The Emirati minister said a key area of cooperation between the two countries would be energy, where both countries are pioneers in complementary niches.

“I know Costa Rica wants and plans to use more renewable energy, and I know they have done a great deal in terms of legislating to strengthen that sector,” he said.

This country does not depend on fossil fuels for electricity, because 97 percent of its electric power comes from renewable sources. But the use of fossil fuels in transportation means they still represent around 80 percent of the total energy mix.

The UAE has committed nearly 840 million dollars to help other countries of the developing South produce clean energy.

“That’s why we’re in Costa Rica: to see what has been done in this area, and to create a legal foundation with respect to how we can cooperate,” Al Nahyan said in the news briefing.

Solís, of the centre-left Citizen Action Party, said the UAE invited this country to take part in an annual energy conference held early in the year in the Gulf nation.

“Costa Rica will be represented there with the highest-level technical teams, precisely to seek opportunities for cooperation in energy,” the president said.

In an opinion piece published by the La Nación newspaper, Al Nahyan explained that his country is “an important investor in a series of international commercial clean energy projects. And we are proud to be the host country for the International Renewable Energy Agency (IRENA).”

The Emirati minister also stressed that “like Costa Rica, we recognise that turning to clean energies is the most promising solution. The United Arab Emirates has been a major investor in clean energy sources for many years, both within the country and abroad.

“Costa Rica has been one of the most ambitious and progressive-thinking countries in the issues of climate change and sustainable development at the international level,” the minister concluded in his article.

Minister González explained in his dialogue with IPS that there are three major areas where his country and the UAE find points in common: human rights, the fight against climate change, and the struggle against people trafficking and in favour of associated labour rights.

With respect to ties in the field of energy, he explained that the Emirates have “an economy very focused on oil and gas, and with the drop in prices of fossil fuels, they have seen the need to focus on other sectors of the economy.”

This new openness and their traditional leadership in renewable energy “opens up opportunities for Costa Rica, which does not depend on oil and gas,” González said.

The Costa Rican minister sees the UAE as a key actor in the Middle East, a region “with which we are seeking closer ties.”

González said his guest “has expressed interest in Latin America, as demonstrated by this tour,” and noted that he was one of the promoters of the Global Forum on the Relationships between the Arab World, Latin America and the Caribbean Region.

“I met with him in the context of the United Nations General Assembly, in September of last year, and suggested that he consider making a visit to the region, and specifically to Costa Rica,” González added.

Costa Rica has consulates in Lebanon and Jordan and an embassy in Qatar. But it does not yet have a consulate or embassy in the UAE.

“We hope to boost to their maximum expression our relations with the Arab world,” González said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The Four Seasons hotel in the upscale Buenos Aires neighbourhood of Recoleta was remodeled this decade with a multi-million dollar investment by the Dubai-based Albwardy Investment Group. This is just one example of investment in Argentina by the United Arab Emirates, which is expected to increase in different sectors as a result of the visit here by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES , Feb 1 2016 (IPS)

The new government of Argentina and the United Arab Emirates (UAE) are strengthening the relationship established by the previous administration, at a time when this South American country is seeking to bring in foreign exchange, build up its international reserves and draw investment, in what the authorities describe as a new era of openness to the world.

Bilateral ties will be boosted during a visit to the Argentine capital by the UAE’s foreign minister, Sheikh Abdullah bin Zayed Al Nahyan, on Feb. 4, the start of his Latin America tour which will also take him to Ecuador, Colombia, Panama and Costa Rica before he flies out of the region on Feb. 12.

After several high-level meetings on Feb. 5, the minister’s visit will end with the signing of five agreements on taxation, sports, cooperation between the state news agencies Telam (Argentina) and WAM (UAE), and an Emirati loan to the southern province of Neuquén.

Mauricio Macri, who was sworn in as president of Argentina on Dec. 10, already indicated his interest in stronger ties when he met on Jan. 20, during the World Economic Forum in Davos, Switzerland, withHamad Shahwan al Dhaheri, executive director of the private equities department of the Abu Dhabi Investment Authority (ADIA).

ADIA, considered the second-largest sovereign wealth fund in the world, manages the excess oil revenues of the UAE, a federation of seven emirates: Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain.

The centre-right Macri, of the Cambiemos coalition, and Al Dhaheri“discussed the prospects opening up for Argentina and were enthusiastic about this new era for the country,” Telam reported from Davos.

The news agency was referring to the end of 12 years of government by the late Néstor Kirchner (2003-2007) and his widow and successor, Cristina Fernández (2007-2015), of the Front for Victory, the Justicialista (Peronist) Party’s centre-left faction, which defines itself as anti-neoliberal.

“Argentina has to position itself as a serious, predictable interlocutor,” this country’s foreign minister, Susana Malcorra, said in Davos.

“The question of economic opening, the search for investment and business opportunities is essential in our agenda,” she stressed.

According to a report from its embassy in Buenos Aires, the UAE has a significant presence in international capital markets through different investment institutions, such as ADIA, Dubai Ports World, Dubai Holding and Abu Dhabi’s International Petroleum Investment Co.

The then president of Argentina, Cristina Fernández, with her host, United Arab Emirates President Khalifa bin Zayed Al Nahyan, at a January 2013 meeting in Abu Dhabi during her official visit to the Gulf nation when bilateral relations were given a major boost. Credit: Government of Argentina

The UAE is a timely interlocutor for Argentina, Luis Mendiola, an expert on the Middle East, the Arab world and Africa with the Argentine Council for Foreign Relations (CARI), underlined in an interview with IPS.

“Their biggest problem is the extraordinary abundance of capital…the question is where to put it to get the best returns on the extraordinary surplus capital they produced during nearly a decade and a half of high oil prices,” added Mendiola, who served as ambassador to Saudi Arabia from 1996 to 2005.

These funds, he said, could go into major infrastructure projects in areas like housing, energy, transport and communications.

In January 2015, the authorities in the southern Argentine province of Neuquén reported that they had secured an 18 million dollar loan from the Abu Dhabi Fund for Development, to finance the Nahueve Hydroelectric Project for the promotion of irrigation in new productive areas, among other aims.

The two countries established diplomatic ties in 1975 and opened embassies in 2008. But relations moved to a new plane when President Fernández visited Abu Dhabi in January 2013, where she met with UAE President Khalifa bin Zayed al Nahyan.

During that visit, cooperation agreements were signed in the area of food, with the opening of the Emirati market to non-traditional Argentine products, and this country opened its first business office in the UAE.

In 2014, as the Argentine-Arab Chamber of Commerce informed IPS, trade between Argentina and the UAE amounted to 228 million dollars, with this South American country enjoying a surplus, exporting 198.9 million dollars in mainly foodstuffs and steel pipe and tube products.

But Mendiola believes there is greater potential to tap because besides boasting one of the highest per capita incomes in the Gulf, the UAE is a business hub which re-exports products to third countries and large markets, such as Saudi Arabia, India, Iran and Pakistan.

Bilateral ties were reinforced in April 2014, with a visit to Argentina by Mohammed bin Rashid Al Maktoum, vice president and prime minister of the UAE and emir of Dubai.

A memorandum of understanding for cooperation in the peaceful use of nuclear energy was signed during that visit.

On that occasion, Fernández emphasised the Argentina forms part of the “exclusive club” of nations “that can produce nuclear energy, but that do so on a non-proliferation basis.”

The then president also referred to the UAE’s “enormous interest” in investing in Argentina and financing projects aimed at bolstering food security.

In November 2015, with support from the local government, five family farming cooperatives from Argentina took part in an international specialty food festival in Dubai.

During the meeting in Buenos Aires, agreements were also reached to promote tourism initiatives and projects in renewable energy – an area in which the UAE, despite its status as one of the world’s largest oil producers, is considered a pioneer among the Gulf countries and even at the international level, Mendiola noted.

“The Emiratis are very good at forging ahead and moving into new areas, and in that sense they are a model, at least in the Gulf region,” he added.

During his visit to Argentina, Al Maktoum remarked that his country did not invest “according to preferences or political motives, but based on economic questions.”

For that reason Mendiola said he was not “surprised” by the UAE’s interest in Latin America “because the Gulf countries in general have always had extremely pragmatic foreign policies which are at the same time modest, in terms of maintaining a low profile.”

“I think the difference now is they are taking advantage of the fact that there is a new government in Argentina, which presents itself to the world as very different from the last one, and that is raising a lot of interest because they have an extraordinary level of reserves as well as investment abroad,” he said.

Mendiola pointed out that the UAE did not have a “clear” presence in Latin America until recently, unlike in Africa and Asia.

“Up to now, South America was a caboose for the Gulf countries, from the point of view of their economic interests. And the change in government without a doubt awakened curiosity and interest in seeing how to best take advantage of these opportunities,” he added.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

The corn is cooked with limewater to eliminate aflatoxins that cause liver and cervical cancer. Here a worker at the Grulin company is stirring the corn before it is washed, drained and ground, in San Luís Huexotla, Mexico. Credit: Emilio Godoy/IPS

By Emilio Godoy
TEXCOCO, Mexico , Dec 18 2015 (IPS)

Every day in the wee hours of the morning Verónica Reyes’ extended family grinds corn to make the dough they use in the tacos they sell from their food truck in Mexico City.

Sons, daughters-in-law and nephews and nieces divide the work in the family business that makes and sells cecina (dried, salted meat) tacos, longaniza (a kind of Spanish sausage), quesadillas and tlacoyos (thick stuffed oval-shaped corn dough tortillas).

“We cook the corn the night before and we grind it early in the morning, to serve people at 8:00 AM,” said Reyes, who has made a living selling food for years.

The family loads up the metal countertop, gas cylinders, tables, chairs, ingredients and over 60 kg of corn dough in their medium-sized truck before heading from their town of San Jerónimo Acazulco, some 46 km southwest of Mexico City, to whatever spot they have chosen that day to sell their wares.

When the taco truck packs up, it has sold just about all the food prepared that day.

The cooked corn dough takes on a yellow tone, an effect caused by a process called nixtamalisation – the preparation of corn or other grain, which is soaked and cooked in an alkaline solution, usually limewater, and hulled.According to the United Nations Food and Agriculture Organisation (FAO), 25 percent of world food crops are contaminated with aflatoxins.

This technique dates back to before the arrival of the Spanish conquistadors in Mexico in the 15th century, when local indigenous people cooked corn this way.

Nixtamalisation significantly reduces aflatoxins – any of several carcinogenic mycotoxins produced by molds that commonly infect corn, peanuts and other crops.

“In Mexico aflatoxins are a serious problem,” Ofelia Buendía, a professor at the department of agroindustrial engineering at the Autonomous University of Chapingo, told IPS. “A major effort has been made to eliminate them. The most effective is the traditional nixtamalisation technique.”

She has specialised in “nixtamalising” beans, quinoa, oats, amaranth, barley and other grains, and in producing nutritional foods.

Mexico’s corn dough and tortilla industry encompasses more than 78,000 mills and tortilla factories, over half of which are concentrated in just seven of the country’s 31 states.

Nearly 60 percent of the tortillas sold were made with nixtamalised dough.

Corn is the foundation of the diet in Central America and Mexico, where the process of nixtamalisation is widely used.

But consumption of tortillas has shrunk in Mexico, from 170 kg a year per person in the 1970s to 75 kg today, due to the inroads made by fast food and junk food.

Mexico is now cooperating with Kenya in east Africa to transfer know-how and technology to introduce the technique, to help that country reduce aflatoxins.

Mexico and Kenya signed two cooperation agreements, one of which offers technical support and involves the sending of mills by Mexico’s International Development Cooperation Agency.

Kenya needs 45 million 90-kg bags of corn a year, and only produces 40 million.

According to the United Nations Food and Agriculture Organisation (FAO), 25 percent of world food crops are contaminated with aflatoxins, and the U.S. Centers for Disease Control and Prevention estimate that more than 4.5 billion people in the developing world have chronic exposure to them.

Studies by the International Food Policy Research Institute (IFPRI) suggest that approximately 26,000 people in sub-Saharan Africa die every year of liver cancer associated with chronic exposure to aflatoxins.

At 3:00 AM, the machines are turned on in the processing plant of the Comercializadora y Distribuidora de Alimentos Grulin food processing and distribution company in the town of San Luís Huexotla, some 50 km east of Mexico City.

The work consists of washing the corn cooked the night before, draining it, and grinding it to produce the dough for making tortillas and toast, which are packaged and distributed to sales points in the area.

“Nixtamalisation respects the nutrients in the corn, although some are lost in the washing process,” José Linares, director general of Grulin, told IPS. “There are faster systems of nixtamalisation, but they’re more costly. The technology is shifting towards a more efficient use of water and faster processing.”

His father started out with one tortilla factory, and the business expanded until the Grulin company was founded in 2013.

Grulin processes between 32 and 36 50-kg balls of dough a day. One kg of corn produces 1.9 kg of dough.

The corn is cooked for 90 minutes and then passes through a tank of limewater for 30 seconds before going into tubs with a capacity of 750 kg, where it remains for 24 hours. It is then drained and is ready for grinding between two matching carved stones.

Officials from the Kenya Agricultural and Livestock Research Organisation (KALRO) have visited Mexico to learn about nixtamalisation and test corn products.

The experts who talked to the Kenyan officials said the technique could be adopted by nations in Africa.

“In Africa they want to know about the process, because of its tremendous uses for food. Some variables can be influenced, such as texture and taste,” said Buendía. “The Chinese eat tortillas, so this technique could be adopted. These opportunities cannot be missed.”

Besides cultural questions, the availability of water and generation of waste liquid – known as ‘nejayote’ – can be problems. For every 50 kg of corn processed, some 75 litres of water are needed. The nejayote, which is highly polluting because of its degree of alkalinity, is dumped into the sewer system.

Academic researchers are investigating how to make use of the waste liquid to produce fertiliser, to reuse it in washing the corn, and to make water use more efficient.

“It would be necessary to overcome the cultural barriers, and make sure the taste of lime isn’t noticeable….The technique is replicable,” said Grulin’s Linares.

In 2009, the International Institute of Tropical Agriculture (IITA), the African Agricultural Technology Foundation (AATF), and the U.S. Department of Agriculture – Agricultural Research Service developed a biological control technology called AflaSafe, to fight aflatoxins in corn and peanuts. It is so far available in Nigeria, Burkina Faso, Gambia, Kenya, Senegal and Zambia.

Edited by Estrella Gutiérrez and Verónica Firme/Translated by Stephanie Wildes

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

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

N Chandra Mohan

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

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

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

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

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

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

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

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

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

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Excerpt:

By Jomo Kwame Sundaram
ROME, Nov 11 2015 (IPS)

Slower economic growth since 2008, and especially with the commodity price collapse since the end of last year, threatens to reverse the exceptional half-decade before the financial crash when growth in the South stayed ahead of the North. From 2002, many developing countries – including some of the poorest– had been growing much faster after a quarter century of stagnation in Africa, for example.

Jomo Kwame Sundaram. Credit: FAO

But this has not been their delayed reward for sticking to policies prescribed by conventional wisdom as claimed by some latter-day apologists for the structural adjustment programmes of the last two decades of the 20th century. Instead, a more favourable international environment, including higher commodity prices, low interest rates and renewed aid flows, along with accelerated growth in China and India, have been the main reasons.

Recent trends need to be seen in a longer historical context if the right lessons are to be drawn. Economic growth in the 1980s and 1990s was generally slower than in the preceding two decades. But despite the spectacular growth of several developing countries, sub-Saharan Africa lost due to stagnation for more than two decades from the late 1970s and Latin America lost at least the 1980s.

Government policies from the 1980s – ostensibly to conform to ‘market expectations’ – often cut public spending on primarily social expenditures. As national-level inequalities grew in most countries from the 1980s, inter-national inequalities among countries continued to grow. Economic welfare in developing countries has been further squeezed by demographic pressures including rapid urbanization.

Nascent industrialization in many countries was aborted by structural adjustment and economic liberalization. Premature trade liberalization has thus exacerbated de-industrialization, unemployment and fiscal deficits without generating alternative sources of economic growth. Low income countries as well failed and failing states are generally characterized by modest industrialization which, in turn, retards structural transformation and more inclusive sustainable development.

The negative developmental implications of policies and programmes forced on developing countries, regardless of historical circumstance and economic context, are now well known. There is a world of difference between measured liberalization from a position of economic strength, as in newly industrialized East Asia from the 1980s, and their forced adoption, to meet World Trade Organization or loan obligations. Despite pious official rhetoric claiming the contrary, multilateral rules are far from supportive of sustainable development and need to be reformed accordingly.

Since the late 19th century, adverse terms of trade movements – favouring manufactures over primary commodities, temperate compared to tropical agricultural products, or manufactures from developed countries against those from developed countries – have meant that many developing countries have been producing and exporting much more, but earning relatively less from doing so.

International financial liberalization was supposed to attract private capital to fill financing gaps. But instead, it has resulted in net capital flows from the ‘capital poor’ to the ‘capital rich’, increased financial volatility and slower economic growth. Bitter experience has also shown that ‘shock therapy’ – often involving financial system ‘big bangs’ – has generally caused more harm than good.

Considering their greater vulnerability to external vicissitudes, developing countries must have greater fiscal space to ensure countercyclical capacity as well as sustained public spending for needed investments in physical and social infrastructure and human resources. Strengthening the tax base, ensuring more reliable sources of international finance and channelling aid through national budgets can be crucial.

Instead of the current fetish with eliminating fiscal deficits, a more balanced and appropriate approach to macroeconomic stabilization is needed, to minimize disruptive swings in economic activity and external balances, while fostering a virtuous cycle of greater macroeconomic stability, investment, growth and employment generation. Developing countries need to strengthen their capacities and capabilities and to ensure sufficient ‘policy space’ in order to pursue appropriate reforms favouring sustainable development.

It has often been claimed that development could only be attained through retrenchment of the state. In much of the developing world, however, this has left choice-less illiberal democracies and frustrated disenfranchised citizens. Instead, democratically accountable governments should consult widely among their citizens to promote investments for structural transformation and better employment.

The global economy now risks continuing its downward spiral into protracted stagnation. The International Monetary Fund’s improved surveillance mechanisms have not led to better international macroeconomic coordination, as touted. Instead, the path to sustainable development remains blocked by self-imposed deflationary policy constraints and a refusal to provide needed aid or to cooperate to increase taxation for all.

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Excerpt:

The United Arab Emirates foreign minister, Abdullah bin Zayed Al Nahyan, shakes hands with his opposite number in Cuba, Bruno Rodríguez, after raising the UAE flag at the opening of the Emirati embassy in Havana on Oct. 5, 2015. Credit: Jorge Luis Baños/IPS

By Patricia Grogg
HAVANA, Oct 6 2015 (IPS)

Cuba and the United Arab Emirates agreed to strengthen diplomatic ties and bilateral cooperation during an official visit to this Caribbean island nation by the UAE minister of foreign affairs, Sheikh Abdullah bin Zayed Al Nahyan.

During his 24-hour stay, Al Nahyan met on Monday Oct. 5 with Cuban authorities, signed two agreements, and inaugurated his country’s embassy in Havana, which he said was a clear sign of the consolidation of the ties established by the two countries in March 2002.

“I am sure that the next few years will witness the prosperity of our ties,” he added during his official meeting with his Cuban counterpart, Bruno Rodríguez, with whom he signed an agreement on air services “between and beyond our territories” which will facilitate the expansion of opportunities for international air transport.

In the meeting, Rodríguez reaffirmed his government’s support for Arab peoples in their struggle to maintain their independence and territorial integrity.

According to official sources, the two foreign ministers concurred that the opening of the UAE embassy is an important step forward in bilateral ties and will permit closer follow-up of questions of mutual interest.

Al Nahyan also met with the first vice president of the councils of state and ministers, Miguel Díaz Canel. The two officials confirmed the good state of bilateral ties and the possibilities for cooperation on the economic, trade and financial fronts, Cuba’s prime-time TV newscast reported.

The foreign ministers of Cuba and the United Arab Emirates, Bruno Rodríguez (left) and Abdullah bin Zayed Al Nahyan, during the Oct. 5, 2015 agreement-signing ceremony in Cuba’s ministry of foreign affairs in Havana. Credit: Jorge Luis Baños/IPS

Cuba’s minister of foreign trade and investment, Rodrigo Malmierca, signed a credit agreement with the Abu Dhabi Fund for Development, to finance a solar energy farm that will generate 10 MW of electricity.

Al Nahyan first visited Havana on Oct. 1-2, 2009 in response to an official invitation from minister Rodríguez. On that occasion they signed two agreements, one on economic, trade and technical cooperation, and another between the two foreign ministries.

“We have great confidence in Cuba’s leaders and in our capacity to carry out these kinds of projects,” Al Nahyan told the local media on that occasion.

United Arab Emirates, a federation made up of seven emirates – Abu Dhabi, Ajman, Dubai, Fujairah, Ras al-Khaimah, Sharjah and Umm al-Quwain – established diplomatic relations with Cuba in March 2002, in an accord signed in Cairo.

The decision to open an embassy in the Cuban capital was reached in a June 2014 cabinet meeting presided over by Sheikh Mohammed bin Rashid Al Maktoum, the UAE vice president and prime minister, and the ruler of Dubai.

In late February 2015, Al Maktoum received the letters of credentials for the new ambassador of Cuba in the UAE, Enrique Enríquez, during a ceremony in the Al Mushrif Palace in the Emirati capital.

The United Arab Emirates foreign minister, Abdullah bin Zayed al Nayhan, unveils a plaque commemorating the official opening in Havana of the new UAE embassy, together with his opposite number in Cuba, Bruno Rodríguez. Credit: Jorge Luis Baños/IPS

Later, UAE Assistant Foreign Minister for Political Affairs Ahmed al Jarman and Enríquez discussed the state of bilateral relations and agreed to take immediate concrete steps to expand and strengthen ties in different areas.

Enríquez also met with Cubans living in Abu Dhabi with a view to bolstering relations between them and their home country. They agreed on periodic future gatherings.

In May 2014, the UAE and Cuba signed an open skies agreement to allow the airlines of both countries to operate in each other’s territories, as well as opening the door to new plans for flights between the two countries, the UAE General Civil Aviation Authority (GCAA) reported.

The accord formed part of a strategy to boost trade with other countries, said Saif Mohammed al Suwaidi, director general of the GCAA, who headed a delegation of officials and representatives of national airlines during a two-day visit to Cuba.

The UAE signed similar agreements with other Latin American countries, including Argentina, Brazil, Chile, Colombia and Mexico, as part of its effort at closer relations with this region, which is of growing interest to the Gulf country.

Talks have also been announced between the UAE and Russia to build a giant airport in Cuba, which would serve as an international airport hub for Latin America, the Abu Dhabi-based National newspaper reported in February.

The proposal is being discussed by the Russian government and the Abu Dhabi state investment fund Mubadala, mandated to diversify the emirate’s economy.

In 2013 and 2014, UAE was named the world’s largest official development aid donor in a report released by the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD). In 2013, the Gulf nation provided five billion dollars in ODA to other countries.

Last year, according to OECD data, the only Gulf country to have a Ministry of International Cooperation and Development spent 1.34 percent of their gross domestic product in development cooperation.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

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:

The heads of state of three of the five BRICS countries - Russia, India and Brazil – pose for a photograph during the 2014 BRICS Summit. Credit: Official Flickr Account for Narendra Modi/CC-BY-SA-2.0

By Kanya D'Almeida
UNITED NATIONS, Jul 7 2015 (IPS)

Just days ahead of a summit of the BRICS group of emerging economies (Brazil, Russia, India, China and South Africa) in which the five countries are expected to formally launch their New Development Bank (NDB), 40 NGOs and civil society groups have penned an open letter to their respective governments urging transparency and accountability in the proposed banking process.

“In terms of the type of development the bank delivers, we don't have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions." -- Gretchen Gordon, coordinator of Bank on Human Rights
The NDB is expected to finance infrastructure and sustainable development in the global South.

With an initial capital of 100 billion dollars, it was born from a combination of circumstances including emerging economies’ frustration with the largely Western-dominated World Bank Group (WBG) and International Monetary Fund (IMF).

According to a 2014 Oxfam Policy Brief, another factor leading to the creation of the BRICS Bank was a major gap in financing for infrastructure projects, with official development assistance (ODA) and funding from multilateral institutions meeting just two to three percent of developing countries’ needs.

Strained by economic sanctions as a result of the Ukrainian crisis, Moscow has been particularly keen to bring the fledgling lending institution to its feet and has been pushing international rating agencies to rate the bank’s debt, as a necessary first step for it to begin operations.

Even without counting the contributions of its newest member – South Africa – the four BRIC nations represent 25 percent of global gross domestic product (GDP) and 41.4 percent of the world’s population, or roughly three billion people.

In addition, the borders of these countries enclose a quarter of the planet’s land area on three continents.

But even as the five political leaders prepare to take centre stage in the Russian city of Ufa on Jul. 9, citizens of their own countries are already expressing doubts that the nascent financial body will truly represent a break from traditional, Western-led development models.

“The existing development model in force in many emerging and developing countries is one that favors export-oriented, commodity driven strategies and policies that are socially harmful, environmentally unsustainable and have led to greater inequalities between and within countries,” said the statement, released on Jul. 7

“If the New Development Bank is going to break with this history, it must commit itself to the following four principles: 1) Promote development for all; 2) Be transparent and democratic; 3) Set strong standards and make sure they’re followed; 4) Promote sustainable development,” the signatories added.

Gretchen Gordon, coordinator of Bank on Human Rights, a global network of social movements and grassroots organisations working to hold international financial institutions accountable to human rights obligations, told IPS, “[Although] the Bank’s Articles of Agreement have an article on Transparency and Accountability […] thus far we haven’t seen any indication of operational policies on transparency or anything relating to accountability mechanisms.”

“And unfortunately,” she added, “there is no open engagement with civil society on these questions.”

“In terms of the type of development the bank delivers, we don’t have signs yet that the NDB will go in a qualitatively different direction than the Washington Consensus institutions,” Gordon told IPS in an email.

“That is why civil society groups in BRICS countries are calling for a participative and transparent process to identify strategies and policies for the NDB that can set it on a different path and actually deliver development.”

A primary concern among NGOs has been that the BRICS bank will replicate the old “mega-project” model of development, which has proven to be a failure both in terms of poverty eradication and increased access to basic services.

A recent international investigation revealed that in the course of a single decade, an estimated 3.4 million poor people – primarily from Asia, Africa and Latin America – were displaced by mega-projects funded by the World Bank and its private sector lending arm, the International Finance Corporation (IFC).

Though these projects were ostensibly aimed at strengthening transportation networks, expanding electric grids and improving water supply systems, they resulted in a worsening of poverty and inequality for millions of already marginalised people.

Following closely on the heels of this damning expose, a major report by the international watchdog Human Rights Watch (HRW) found that the Bank’s lax safeguards and protocols resulted in a range of rights violations against those who spoke out against the economic, social and environmental fallout of Bank-funded projects.

Behind this track record, rights groups and NGOs are concerned that a new development bank operating on within a broken framework will contribute to the spiral of violence and poverty that has marked the age of mega-projects.

At a time when one billion people lack access to an all-weather road, 783 million people live without clean water supplies and 1.3 billion people are not connected to an electricity grid, there is no doubt that the developing world stands to gain greatly from a Southern-led financial institution.

What remains to be seen is to what extent the new bank will move away from the old model of financing and truly set a standard for inclusive and pro-poor development.

Edited by Kitty Stapp

“Just as the world is moving towards multi-polarity, so is Asia … The economic fragmentation of the region and the competitive pursuit of security interests may well consign the Asian Century into a brief interlude rather than a millennial transformation”. Photo credit: Public domain via Wikimedia Commons

By Shyam Saran
NEW DELHI, Jun 1 2015 (IPS)

It has been apparent for some time that we are in the midst of a historic shift of the centre of gravity of the global economy from the trans-Atlantic to what is now becoming known as the Indo-Pacific.  

This is an emerging centre of economic dynamism and comprises what was earlier confined to the Asia-Pacific but now includes the South Asian region as well.

This is a region which now accounts for nearly 40 percent of world gross domestic product (GDP), which is likely to rise to 50 percent or more by 2050.  Its share of world trade is now 30 percent and growing.

Shyam Saran

This year, the region has become the largest source of foreign direct investment (FDI), surpassing the European Union (EU) and the United States. China has been the main driver of this historic shift, but other Asian economies have also made significant contributions.

As the Chinese economy begins to slow, India shows promise of regaining an accelerated growth trajectory under a new and decisive political leadership. This will help extend the scale and direction of this shift. Its geopolitical consequences will be profound.

It must be recognised that the economic transformation of Asia, in particular the spectacular growth of China, has been enabled by an unusually extended and liberal global economic environment, underpinned by the faith in globalisation and open markets.

It has also been enabled by a U.S.-led security architecture in the region which kept in check, though did not resolve, the long-standing political fault lines and regional conflicts over competing territorial claims and unresolved disputes.

This relatively benign and supportive economic and security environment is in danger of unravelling precisely at a time when the situation in the region is becoming more complex and challenging.  Paradoxically, this is partly a consequence of the very success of the region in achieving relative economic prosperity.“The danger is that instead of an inclusive and regionally integrated Asia, we may end up with exclusive and competing clusters, moving at different speeds, with different norms and standards. This may well undermine the very basis of Asia’s economic dynamism”

We are witnessing new trends in the region which, unless managed with prudence and foresight, may well sour the prospects of an Asian Century.

The relatively open and liberal trade and investment regime, in particular access to the large consuming markets of the United States, European Union and Japan, is now under serious threat.

Protectionist trends are already visible in these advanced economies as they struggle with prolonged economic stagnation which is the fall-out of the global financial and economic crisis of 2007-2008.

Instead of the consolidation and expansion of the open and inclusive economic architecture that had hitherto been the hallmark of the regional and global economy, we are witnessing its steady fragmentation.

In the Indo-Pacific region, there are competing regional trade arrangements and investment regimes, with no clarity on the contours of a new and emerging economic architecture.

The United States is spearheading its Trans-Pacific Partnership (TPP) which will include some Asian economies, but not India and China.

China has countered by proposing a free trade area encompassing the current Asia-Pacific Economic Cooperation (APEC) membership.  This will include China and the United States but not India and some of the Association of Southeast Asian Nations (ASEAN) economies.

The Regional Cooperation Economic Partnership (RCEP) would include all ASEAN countries plus China, Japan, Republic of Korea, India, Australia and New Zealand, but not the United States.

And finally, there is the East Asia Summit process (EAS) which includes all the above-mentioned countries but also the United States and Russia.

The danger is that instead of an inclusive and regionally integrated Asia, we may end up with exclusive and competing clusters, moving at different speeds, with different norms and standards.  This may well undermine the very basis of Asia’s economic dynamism.

In the security field, too, we are witnessing a growing salience of inter-state tensions and competitive military build-up.

The U.S.-led security architecture remains in place formally but its erstwhile predominance is diminished.

The gap between the military capabilities of China and the United State is closing steadily. As China’s security footprint expands beyond its shores, it will inevitably intersect with the existing deployment of the forces of the United States and its allies and partners.

Faced with an increasingly uncertain security environment and threatened by a more insistent assertion of territorial claims by China, the countries of the region, including Japan, Republic of Korea, members of ASEAN, Australia and India are building up their own defences, in particular maritime capabilities, and this itself is escalating tensions.

There is as yet no emerging regional security architecture which could help manage inter-state tensions in the region. This includes the growing possibilities of confrontation between the United States and China.

In the absence of such a regional security architecture, based on a broad political consensus and a mutually acceptable Code of Conduct, the region may well witness a heightening of tension and even conflict.  These developments would inevitably and adversely impact on the dense network of trade and investment relations that bind the countries of the region together and erode the very basis of their prosperity.

In this context, mention may be made of the Chinese One Belt One Road (OBOR) initiative which seeks to deploy China’s surplus capital to build a vast network of transport and infrastructural links not only across the Indo-Pacific but also straddling the Eurasian landmass.

The newly established Asian Infrastructure Investment Bank (AIIB) initiated and led by China would become a key financing instrument for the OBOR.  China has also recently come out with a new Defence White Paper, which puts forward a new strategy of Open Seas, shifting the emphasis from coastal and near sea defence to an expanding naval presence which matches China’s growing global profile and world-wide location of Chinese-controlled economic assets.

While China’s investment in regional infrastructure in Asia may be welcome, it will inevitably be accompanied by a security dimension which may heighten anxieties among countries in the Asian region and beyond.

It is apparent from the above analysis that it is no longer possible for any major power in the Indo-Pacific to unilaterally seek a position of overweening economic dominance or military pre-eminence of the kind that the United States enjoyed over much of the post-Second World War period.

Just as the world is moving towards multi-polarity, so is Asia.  It is now home to a cluster of major powers with significant economic and security capabilities and interests. The only practical means of avoiding a unilateral and potentially destructive pursuit of economic and security interests would be to put in place an inclusive economic architecture underpinned  by a similarly inclusive security architecture which provides mutual reassurance and shared opportunities for promoting prosperity.

The economic fragmentation of the region and the competitive pursuit of security interests may well consign the Asian Century into a brief interlude rather than a millennial transformation. (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 Dr. Palitha Kohona
COLOMBO, May 8 2015 (IPS)

Sustainable development is central to a range of key discussions at the United Nations and elsewhere at the moment.

Amb. Palitha Kohona. Credit: U.N. Photo/Mark Garten

The role of South-South cooperation in the context of sustainable development deserves greater recognition as significant numbers of developing countries begin to ascend the development ladder in a sustainable manner, causing fundamental changes to the development infrastructure the world has known up to now.

The steady expansion of South-South cooperation is causing a lasting impression on the existing order of things.

First, the best practices adopted by the more economically advanced developing countries could provide workable and relevant models for the others.

Some developing countries have recorded impressive economic successes and the policies they have successfully implemented could be shared. Contrary to existing practice, models of development will increasingly be borrowed from outside the developed world.

Secondly, some advanced developing countries have accumulated considerable international currency reserves and developed relevant technology which could be effectively deployed in the rest of the developing world. This is happening already.

Thirdly, the flow of funding and technology from other developing countries to the rest of the South will result in dramatic changes to relationships largely based on post-colonial and historical dependencies and the inevitable conditionalities. This would create an uncomfortable challenge for those used to the current relationship patterns.The traditional development cooperation patterns, many dependent on former colonial ties, perpetuating a dependent mindset and loaded with conditionality, may be sputtering to an end as a new framework of South South cooperation consolidates itself in the global arena.

Sustainable development was the underlying concept that inspired States as they painstakingly negotiated the Rio+20 outcomes document, The Future We Want.

The Member States are currently working on the Post-2015 Development Agenda, essentially drawing on the report of the Open Working Group (OWG), to produce a master plan for progress, to be realised by 2030, that will ensure just, equitable and inclusive growth. The report of this exercise will be submitted for adoption to the U.N. High Level Summit to be held in September 2015 in New York.

The Post-2015 Development Agenda will seamlessly expand the significant achievements secured under the Millennium Development Goals which targeted eight specific areas. The new enterprise will touch upon many more aspects of our lives, including of women, youth, children, the disadvantaged and the marginalised, in a manner that the Millennium Development Goals did not.

A process culminating in a meeting of States Parties in Addis Ababa in July on Financing for Development will build on the accords of Monterrey and Doha and will adopt recommendations on the funding aspect for the Post-2015 Development Agenda.

The alleviation of poverty and the elimination of hunger are at the core of this exercise. We live in a world where close to 800 million people go to bed hungry every night. It is estimated that ending poverty in the world will cost 66 billion dollars per year. Over one billion live on less than 1.25 dollars per day. Over 2.5 billion have no access to clean water and proper sanitation resulting in massive health issues, including the stunting of children.

The number of least developed countries has remained the same since the year 2000, the year the MDGs were adopted, although progress has been made towards making the world a better place over the last 15 years.

Along with addressing poverty and hunger, the international community is discussing the related challenges, inter alia, of providing better health care and education for all, creating better cities and communities, ensuring decent work, confronting the daunting challenges facing the oceans, the imminent threat of climate change and biodiversity loss, mainstreaming women and children’s issues, providing energy for all, ensuring sustainable industrialisation, and building global partnerships.

The way humanity will address the threats confronting the oceans, in particular, its riches valued at an estimated 24 trillion dollars, will have a major impact on the environment, climate change, the livelihoods of millions of people and the economies of many countries, especially the Small Island Developing States and the Less Developed Countries.

In the implementation of the Millennium Development Goals adopted in 2000, the international community failed specifically on Goal 8 which focused on partnerships. The commitments made on the delivery of assistance to the developing world by the traditional donor community, including technology transfer, failed to materialise to the extent anticipated despite the solemn accords reached at Monterrey, Doha and elsewhere.

The gap between the rich and the poor has continued to grow and the elimination of poverty in many developing countries remains an ever distant dream, affecting a huge proportion of the global population.

Against this challenging background, the advances made by some developing countries provide practical examples of useful best practices and provide possible opportunities for a new framework for development cooperation.

China has pulled out over 680 million from extreme poverty in a short period of 30 years. This is an unprecedented achievement in human history. Its economy, which was at the bottom end of the world in the 1950s, is second only to that of the United States today and is expected to grow further.

Despite its headlong rush towards development and the enormity of the attendant challenges, China is also making impressive gains in the harnessing of alternative energy such as hydro, solar, wind, bio mass and gassified coal, bringing in to question the defensive contention of those industrialised countries which have argued that such a comprehensive embrace of alternative energy would result in major job losses and negative effects on their economies.

The initially costly, but essential, shift to renewable energy will facilitate continuing development in a sustainable manner, and the experiences of countries such as China, India and Brazil may provide an attractive model for other developing countries.

Many countries in South East Asia are also making rapid economic progress with Indonesia expected to become the sixth largest economy of the world by 2030. Sri Lanka, despite its developing country status, has attained enviable targets in the delivery of education services, health care and the integration of women to the national economy.

UNICEF highlights Sri Lanka as a success story. State-sponsored agricultural extension services which increasingly emphasise sustainability have been a major factor in the impressive advances made in this sector by Sri Lanka.

Bangladesh has halved the number of people living in poverty. While the experiences of any one developing country, or the technical knowhow deployed, may not necessarily be duplicated in another, useful lessons can still be learnt.

The lessons that can be shared are evident and South-South Cooperation has become a significant trove of experiences that can be accessed as the challenge of development is addressed. Interestingly, China studied the Greater Colombo Export Processing Zone of Sri Lanka before it established its spectacularly successful Shenzhen Zone.

Infrastructure projects could be and have been funded from public private partnerships, government to government arrangements or by the private sector. Africa’s current spurt of growth has been facilitated by a combination of these mechanisms, with much of the crucial funding and technology coming from China and a lesser amount from India, Brazil, etc..

Sri Lanka’s recent surge in economic expansion depended much on Chinese, and to a lesser extent on Indian, funding and technology. China’s initiative to establish an Asian Infrastructure Investment Bank (AIIB), which was initially proposed in 2013 by President Xi Jingping, is attracting even traditional donor states in unexpected numbers (57 as of now), despite initial reservations.

It is clear that South-South cooperation is playing a crucial role, especially in developing countries, in adding zest to their economies. Important lessons are being learnt and fundamental changes to established frameworks in global cooperation are being introduced. It may even be argued that the catalyst that propelled many developing country economies to a different level was the recent expansion of cooperation from other developing countries.

The traditional development cooperation patterns, many dependent on former colonial ties, perpetuating a dependent mindset and loaded with conditionality, may be sputtering to an end as a new framework of South South cooperation consolidates itself in the global arena. The states negotiating the Post-2015 Development Agenda will be conscious of the need to reflect the changing nature of the global development framework in their work.

Edited by Kitty Stapp

Excerpt:

The Asian Development Bank (ADB) has invested 1.2 billion dollars in Afghanistan for roads, railways, and airport projects. Credit: Giuliano Battiston/IPS

By Kanya D'Almeida
UNITED NATIONS, Mar 27 2015 (IPS)

First the centre of the silk route, then the epicenter of bloody conflicts, Afghanistan’s history can be charted through many diverse chapters, the most recent of which opened with the election of President Ashraf Ghani in September 2014.

Having inherited a country pockmarked with the scars of over a decade of occupation by U.S. troops – including one million unemployed youth and a flourishing opium trade – the former finance minister has entered the ring at a low point for his country.

“Our goal is to become a transit country for transport, power transmissions, gas pipelines and fiber optics.” -- Ashraf Ghani, president of Afghanistan
Afghanistan ranks near the bottom of Transparency International’s most recent Corruption Perceptions Index (CPI), tailed only by North Korea, Somalia and Sudan.

A full 36 percent of its population of 30.5 million people lives in poverty, while spillover pressures from war-torn neighbours like Pakistan threaten to plunge this land-locked nation back into the throes of religious extremism.

But under this sheen of distress, the seeds of Afghanistan’s future are slumbering: vast metal and mineral deposits, ample water resources and huge tracts of farmland have investors casting keen eyes from all directions.

Citing an internal Pentagon memo in 2010, the New York Times referred to Afghanistan as the “Saudi Arabia of Lithium”, an essential ingredient in the production of batteries and related goods.

The country is poised to become the world’s largest producer of copper and iron in the next decade. According to some estimates, untapped mineral reserves could amount to about a trillion dollars.

Perhaps more importantly Afghanistan’s landmass represents prime geopolitical real estate, acting as the gateway between Asia and Europe. As the government begins the slow process of re-building a nation from the scraps of war, it is looking first and foremost to its immediate neighbours, for the hand of friendship and mutual economic benefit.

Regional integration 

Speaking of his development plans at the New York-based Council on Foreign Relations (CFR) Thursday, Ghani emphasised the role that the Caucasus, as well as Pakistan and China, can play in the country’s transformation.

“In the next 25 years, Asia is going to become the world’s largest continental economy,” Ghani stressed. “What happened in the U.S. in 1869 when the continental railroad was integrated is very likely to happen in Asia in the next 25 years. Without Afghanistan, Central Asia, South Asia, East Asia and West Asia will not be connected.

“Our goal is to become a transit country,” he said, “for transport, power transmissions, gas pipelines and fiber optics.”

Ghani added that the bulk of what Afghanistan hopes to produce in the coming decade would be heavy stuff, requiring a robust rail network in order to create economies of scale.

“In three years, we hope to be reaching Europe within five days. So the Caspian is really becoming central to our economy […] In three years, we could have 70 percent of our imports and exports via the Caspian,” he claimed.

Roads, too, will be vital to the country’s revival, and here the Asian Development Bank (ADB) has already begun laying the groundwork. Just last month the financial institution and the Afghan government signed grant agreements worth 130 million dollars, “[To] finance a new road link that will open up an east-west trade corridor with Tajikistan and beyond.”

Thomas Panella, ADB’s country director for Afghanistan, told IPS, “ADB-funded projects in transport and energy infrastructure promote regional economic cooperation through increased connectivity. To date under the Central Asia Regional Economic Cooperation (CAREC) programme, 2.6 billion dollars have been invested in transport, trade, and energy projects, of which 15 are ongoing and 10 have been completed.

“In the transport sector,” he added, “six projects are ongoing and eight projects have been completed, including the 75-km railway project connecting Hairatan bordering Uzbekistan and Mazar-e-Sharif of Afghanistan.”

Afghanistan’s transport sector accounted for 22 percent of the nation’s gross domestic product (GDP) during the U.S. occupation, a contribution driven primarily by the presence of foreign troops.

Now the sector has slumped, but financial assistance from the likes of the ADB is likely to set it back on track. At last count, on Dec. 31, 2013, the development bank had sunk 1.9 billion dollars into efforts to construct or upgrade some 1,500 km of regional and national roads, and a further 31 million to revamp four regional airports in Afghanistan, which have since seen a two-fold increase in usage.

In total, the ADB has approved 3.9 billion dollars in loans, grants, and technical assistance for Afghanistan since 2002. Panella also said the bank allocated 335.18 million dollars in Asian Development Fund (ADF) resources to Afghanistan for 2014, and 167.59 million dollars annually for 2015 and 2016.

China too has stepped up to the plate – having already acquired a stake in one of the country’s most critical copper mines and invested in the oil sector – promising 330 million dollars in aid and grants, which Ghani said he intends to use exclusively to beef up infrastructure and “improve feasibility.”

Both India and China, the former through private companies and the latter through state-owned corporations, have made “significant” contributions to the fledgling economy, Ghani said, adding that the Gulf states and Azerbaijan also form part of the ‘consortium approach’ that he has adopted as Afghanistan’s roadmap out of the doldrums.

‘A very neoliberal idea’

But in an environment that until very recently could only be described as a war economy, with a poor track record of sharing wealth equally – be it aid, or private contracts – the road through the forest of extractive initiatives and mega-infrastructure projects promises to be a bumpy one.

According to Anand Gopal, an expert on Afghan politics and award-winning author of ‘No Good Men Among the Living’, “There is a widespread notion that only a very powerful fraction of the local elite and international community benefitted from the [flow] of foreign aid.”

“If you go to look at schools,” he told IPS, “or into clinics that were funded by the international community, you can see these institutions are in a state of disrepair, you can see that local warlords have taken a cut, have even been empowered by this aid, which helped them build a base of support.”

Although the aid flow has now dried up, the system that allowed it to be siphoned off to line the pockets of strongmen and political elites will not be easily dismantled.

“The mindset here is not oriented towards communities, it’s oriented towards development of private industries and private contractors,” Gopal stated.

“When you have a state that is unable to raise its own revenue and is utterly reliant on foreign aid to make these projects viable […] the straightforward thing to do would be to nationalise natural resources and use them as a base of revenue to develop the economy, the expertise of local communities and the endogenous ability of the Afghan state to survive.”

Instead what happens is that this tremendous potential falls off into hands of contracts to the Chinese and others. “It’s a very neoliberal idea,” he added, “to privatise everything and hope that the benefits will trickle down.

“But as we’ve seen all over the world, it doesn’t trickle down. In fact, the people who are supposed to be helped aren’t the ones to get help and a lot of other people get enriched in the process.”

Indeed, attempts to stimulate growth and close the wealth gap by pouring money into the extractives sector or large-scale development – particularly in formerly conflict-ridden countries – has had disastrous consequences worldwide, from Papua New Guinea, to Colombia, to Chad.

Rather than reducing poverty and empowering local communities, mining and infrastructure projects have impoverished indigenous people, fueled gender-based violence, and paved the way for the concentration of wealth in fewer and fewer hands.

A far more meaningful approach, Gopal suggested, would be to directly fund local communities in ways that don’t immediately give rise to an army of middlemen.

It remains to be seen how the country’s plans to shake off the cloak of foreign occupation and decades of instability will unfold. But it is clear that Afghanistan is fast becoming the new playground – and possibly the next battleground – of emerging players in the global economy.

Edited by Kitty Stapp

The entrance to Chinatown in Buenos Aires, where a sign promotes the renovation of Argentina’s railways, partly financed by Beijing. Credit: Fabiana Frayssinet/IPS

By Fabiana Frayssinet
BUENOS AIRES, Feb 23 2015 (IPS)

The government of Argentina is building a marriage of convenience with China, which some see as uneven and others see as an indispensable alliance for a new level of insertion in the global economy.

The process forms part of a radical change with respect to Argentina’s diplomacy, which years back involved ties with the United States described as “carnal relations.”

President Cristina Fernández called the new relationship with China an “integral strategic alliance,” after signing a package of 22 agreements with Chinese leader Xi Jinping in Beijing on Feb. 4.

The accords include areas like space technology, mining, energy, financing, livestock and cultural matters. They cover the construction of two nuclear and two hydropower plants, considered key to this country’s goal of energy self-sufficiency.

“Although they are important, the new agreements and others that were signed earlier are insufficient to gauge the dimension of the bilateral commitment,” said Jorge Castro, the director of the Strategic Planning Institute and an expert on China.

“For Argentina, the relationship with China has elements that are essential for insertion into the international system of the 21st century, along with other countries of the South, headed by Brazil,” he told IPS.

“These ties are between the new fulcrum of the global economy, China-Asia, and Argentina as a nation and as a regional unit,” he said.

Castro pointed out that Asia’s giant is currently South America’s leading trade partner, due to the volume of its purchases of raw materials, which implies a level of interdependence given that “China has placed the food security of its population in the hands of South American countries.”

In the case of Argentina, China is its second-largest trading partner, after neighbouring Brazil – displacing long-time partners like the United States and European countries.

In 2014, exports to China totalled five billion dollars while imports stood at 10.8 billion dollars – a bilateral record which represented 11.5 percent of this country’s trade balance, according to Argentina’s Chamber of Commerce.

Prior accords that cemented the alliance

Before Fernández’s visit to China, the two countries had already signed investment agreements in strategic sectors, such as the one between China’s Sinopec and Argentina’s YPF, two state-owned oil companies, for the exploitation of one of the Loma Campana deposits of unconventional oil and gas resources in Vaca Muerta in southern Argentina.

There was also an accord for China to provide some 2.5 billion dollars in financing for the reconstruction of the railway of the Belgrano Cargas y Logística company, which will transport Argentine and Brazilian agricultural products to Chilean ports on the Pacific ocean.

“The investment agreements with China are important to the extent that they facilitate the conditions to continue generating, for example, the infrastructure for development that Argentina needs, in a scenario” of a shortage of foreign currency, economist Fernanda Vallejos told IPS.

The Chinese space station under construction in the southern Argentine province of Neuquén, rejected by the political opposition of all stripes and social groups. Credit: Courtesy of DesarrolloyDefensa

In July 2014, Argentina reached an 11 billion dollar currency swap agreement with China, to shore up this country’s weakened foreign reserves, of which it received one billion dollars in December.

The swap “has been a very powerful instrument,” which is added to measures by the government and the Central Bank to promote exchange stability and help slow down inflation, said Vallejos, a member of a group that advises the Ministry of the Economy and Public Finance.

Critical voices

Sectors of the business community are critical of the alliance with Beijing, such as the Argentine Industrial Union (UIA) or the Chamber of Exports, which sounded a warning about the asymmetrical nature of the relationship.

This country’s exports to China are only half of what it imports from the Asian giant, and they are basically raw materials or farm products. A full 75 percent is soy or by-products.

Imports, by contrast, are mainly machinery and electronics, computers, telephones, chemical products, motorcycles or parts for household appliances.

The UIA said the framework agreement on economic cooperation and investment, signed in July 2014 and pending final approval by the legislature, “contains clauses that pose an enormous risk to Argentina’s development.”

“Over the last decade, China’s strategy has pursued two central objectives: to consolidate its transnational companies in global value chains and to obtain commodities and inputs with little value-added, for its growing productive and employment needs,” the UIA said in a communiqué.

“In free trade agreements in this era of globalisation, the essential thing is not trade but investment,” said Castro, who questioned the concept of “asymmetry” and backed the agreement with China.

The China expert said the relationship should be analysed in a broader context. For example, by remembering that in the next 10 years, China’s foreign direct investment is estimated to climb to 1.1 trillion dollars.

“The question is how to manage to be part of China’s flow of investment in industry in the next 10 to 20 years,” Castro said.

The UIA agrees that it is important to be part of that current, but with allocations that would not harm local goods and services, which have no chance of receiving Chinese financing, the business chamber said.

The UIA and some trade unions also worry that Chinese labour power, which is included in several projects, will displace local workers.

“Don’t worry, we continue to defend Argentine workers and the business community’s participation,” said centre-left President Fernández, who urged those sectors to engage in technical discussions about the accords.

The new empire?

Some in Argentina see the China of the 21st century as the new England of the 19th century or the United States of the 20th century, in terms of economic and territorial hegemony and domination.

They also question the construction of a Chinese space tracking and control station in the southern Argentine province of Neuquén, which according to the government will monitor, control and gather data as part of China’s programme of missions to explore the moon and outer space.

Raúl Dobrusin, an opposition legislator from Neuquén, told IPS that the agreement, which grants China the use of 200 hectares for 50 years and is opposed by left-wing groups and social organisations, did not go through the Neuquén provincial legislature, which was not informed of the details of the accord.

So far there is no Chinese military presence in the construction project, said Dobrusin, but in his view, the space station poses “major geopolitical risks.”

“If there is a confrontation between powerful nations, we will be a place to be taken into account by the enemies of China…In short, we are getting into an area where the possibility of deciding whether or not to participate in conflicts is no longer a sovereign decision, they won’t ask us,” he warned.

“The alliance transcends economic matters and forms part of the search for independence, on both the economic and political fronts, which makes it possible to reach economic and social development goals, by breaking the yoke of neoliberalism and the empire-dependence logic,” said Vallejos.

China, in her view, “is far from the voracity of the Western powers…It is part of a new global order that is struggling to be born, where the role of emerging countries is no longer one of colonialism but of assuming the position of builders of our own destiny,” said the economist.

“That does not mean that China isn’t obtaining benefits from its ties with our nations, but that it is possible to build a win-win relationship for all of the parties involved,” she said.

Edited by Estrella Gutiérrez/Translated by Stephanie Wildes

Luis Almagro, Minister for Foreign Affairs of Uruguay, addresses the opening of the 16th session of the Human Rights Council, in Geneva, Switzerland. Credit: UN Photo/Jean-Marc Ferré

By Luis Almagro
MONTEVIDEO, Jan 18 2015 (IPS)

Two decades after the first Summit of the Americas, a lot has changed in the continent and it has been for the good. Today, a renewed hemispheric dialogue without exclusions is possible.

Back in the mid-1990s, at the time of the Miami summit, it was the time of imported consensus, models of economic and social development exclusively based on the market and its supposed perfect allocation of resources through the invisible hand.Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

Hidden under a development rationale, the greatest wave of privatisation and deregulation took over the continent. The role of the state was reduced to be a facilitator of a process based on the principle of survival of the fittest. Solidarity, equity and justice were all values from the past and poverty a necessary collateral damage.

However, these values were in the top of the minds of the people of the hemisphere, who turned their backs to these policies and instead during the past 15 years, have forcefully supported the alternatives that combine economic growth with social inclusion, broadening opportunities for all citizens.

Economic growth went hand in hand with social inclusion, adding millions to the middle class – which today accounts for 34 percent of Latin Americans – surpassing the number of poor for the first time in the history.

If this was possible it was because governments added to the invisible hand of the market, the very visible hand of the state.

And this took place within the context of the worst post war global financial crisis that led to an unprecedented recession in the United States and Europe, which the latter still strives to leave behind.

Growth with social equity turned out to be the new regional consensus.

Today, this binds the region together.

Today, conditions are present to set up a more realistic cooperation in the Americas, where all members could partner in equal conditions, from the most powerful to the smallest islands in the Caribbean.

Today, nobody holds the monopoly over what works or does not; neither can anybody impose models because the established truths have crashed against reality. While in the 1990s social exclusion in domestic policies and voice exclusion at the international level were two sides of the same token, this in not any longer acceptable.

Today, all voices count, and if they do not, they will have to. The powerful club of the G8 turned into the G20; still, this is not enough to embrace the new reality of our hemisphere.

To the existing bodies, the region has added in this past decade the dynamic UNASUR in South America and CELAC in the Americas, thus leaving the OAS as the only place for dialogue among all countries of the Americas, whether large, medium, small, powerful or vulnerable.

But, governmental or inter-governmental actors by themselves are not the only answer to the problems of today´s world. Non-state actors of the non-governmental world, the private sector, trade unions and social organisations must be part of the process.

Leaders need to interpret the time in order to generate an agenda for progress, but progress that is tangible for people, for citizens, to whom we are accountable to.

Therefore, in a more uncertain international economic environment, we should focus on maintaining and expanding our social achievements and a new spirit of cooperation in the Americas can be instrumental for that.

The Summit of the Americas in Panama, in April 2015, may be the beginning of this new process of confidence building, where all countries can feel they can benefit from a cooperative agenda. This will be a historical moment because this time there will be no exclusions.

The recent good news on the diplomatic front related to the normalisation of diplomatic ties between the U.S. and Cuba and the participation of Cuba in the Summit represent an additional positive signal. Panama deserves the support of the entire region before and during the Summit.

This will be a great opportunity to strengthen democratic values, the defence of human rights, institutional transparency and individual freedoms together with a practical agenda for cooperation for shared prosperity in the Americas.

Edited by Kitty Stapp

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