Latest Developments, July 23

In the latest news and analysis…

Legal first
The Globe and Mail reports that a Canadian court has ruled that Canada’s HudBay Minerals can be sued in Canada over alleged human rights abuses in Guatemala:

“The decision opens the door to other cases in which companies could face liability on their home turf for incidents that happen overseas.

In the Guatemalan lawsuits, one case involved the alleged beating, machete hacking and killing of a local Mayan community leader who voiced opposition to the mine: Adolfo Ich Chaman. Another man was shot and now uses a wheelchair. There are also allegations that 11 women were gang-raped by men in mine security uniforms.”

Mortal sin
The New York Times reports that UK pharmaceutical giant GlaxoSmithKline’s ethical lapses in China may go well beyond recent bribery allegations:

“The [auditors'] report revealed that the drug’s project leader belatedly learned the results of three studies of ozanezumab in mice. During their investigation, auditors came across six studies whose results had not been reported, even though early trials in humans were already under way.

‘If that’s true, it’s a mortal sin in research requirements,’ said Arthur L. Caplan, the head of the division of medical ethics at NYU Langone Medical Center. He served as the chairman of an advisory committee on bioethics at Glaxo from 2005 to 2008. ‘No one could approve human trials without having that information available, scientifically or ethically. That’s kind of a Rock-of-Gibraltar-sized ethics violation.’ ”

Bad treaties
Lee Sheppard writes in Forbes that the Organisation for Economic Co-operation and Development’s new “action plan” on corporate tax avoidance, endorsed by the G20, is unlikely to help poor countries:

“Multinationals are doing business and extracting resources from poor countries without paying for the costs of their activities or otherwise contributing to the cost of government. Insufficient corporate tax payments are not the full extent of their depredations.
A couple decades ago, many developing countries signed OECD model treaties with developed countries that are home to multinationals. They didn’t realize the full ramifications of the concessions they were making. They were told that a tax treaty is good for inbound investment. The fact is that multinationals will do business in any country where there is money to be made, tax treaty or not. Ask Brazil, which has no tax treaty with the United States.
Developing countries should not sign OECD model tax treaties.”

Criminal words
The Independent reports that a French politician is under investigation for “apologising for crimes against humanity” after allegedly making anti-Roma comments:

“Gilles Bourdouleix, who is also the MP for Cholet, near Nantes, made the comment after 150 traveller caravans moved on to a municipally owned field near his town on Sunday.
The gypsies refused requests to move on and made Nazi salutes at the mayor, according to reports. A regional newspaper, the Courrier de L’Ouest, reported that Mr Bourdouleix then turned away and said: ‘Maybe Hitler didn’t kill enough of them.’ ”

Secret war
Foreign Policy reports on what appears to be an undeclared, escalating and illegal war waged by the US in Somalia:

“Last year, according to [the UN Monitoring Group for Somalia and Eritrea], the United States violated the international arms embargo on Somalia by dispatching American special operations forces in Russian M-17 helicopters to northern Somalia in support of operations by the intelligence service of Puntland, a breakaway Somali province.

Two U.S. air-charter companies linked to American intelligence activities in Somalia have increased the number of clandestine flights to Mogadishu and the breakaway province of Puntland by as much as 25 percent last year.

The flights — which have not been reported to the U.N. Security Council — suggest a further strengthening of American cooperation with Somalia’s National Intelligence Agency in Mogadishu and the Puntland Intelligence Service, which has been cooperating with U.S. counterterrorism operations for more than a decade.”

Corrupting perceptions
The Center for Global Development’s Alex Cobham argues that Transparency International’s oft-cited corruption ranking of countries provides “an unhelpfully distorted reflection of the truth”:

“[University of Minnesota law professor Stuart Vincent] Campbell writes that, in contrast to the [Corruption Perceptions Index] ranking which in 2010 put Brazil 69th, behind Italy and Rwanda, ‘The 2010 Global Corruption Barometer [based on a broader survey of Brazilian citizens] found that only 4 percent of Brazilians had paid a bribe, which is a lower percentage of bribe-givers than the survey found in the United States or any other country in Latin America.’

The CPI embeds a powerful and misleading elite bias in popular perceptions of corruption, potentially contributing to a vicious cycle and at the same time incentivizing inappropriate policy responses. The index corrupts perceptions to the extent that it’s hard to see a justification for its continuing publication. For the good of the organization, its important aims and the many people committed to its success, Transparency International should drop the Corruption Perceptions Index.”

Raw deal
Oxfam’s Jennifer Lentfer reproduces US Congressional testimony, including that of NFL star Anquan Boldin, on whether there is such a thing as an “African resource curse”:

“Meanwhile, the community that lost its land sees little benefit from the enormous mine in what was once their backyard. No percentage of the revenue from the mine, which is bigger than several football stadiums and brings in untold revenues, ever makes its way back to the community. The mining company did leave the community with one gift though. Because the mining company also took ownership of the community’s water source, they built a brand new well in the middle of the community. They now have access to water whenever the company decides to turn on the water (which is rare), and assuming they’ve paid their monthly bill to the mining company. This is the definition of a raw deal.”

Latest Developments, October 20

In the latest news and analysis…

Deregulating Africa
The top headline in the World Bank’s new Doing Business report is Sub-Saharan Africa’s newfound enthusiasm for business-friendly regulations.
“Over the past year a record number of governments in Sub-Saharan Africa changed their economy’s regulatory environment to make it easier for domestic firms to start up and operate. In a region where relatively little attention was paid to the regulatory environment only 8 years ago, regulatory reforms making it easier to do business were implemented in 36 of 46 economies between June 2010 and May 2011. ”

Seed politics
Intellectual Property Watch’s Catherine Saez reports that the Geneva-based International Union for the Protection of New Varieties of Plants is facing calls for greater transparency and protests from farmers over seed policies.
“Protesters’ main concern is the fact that the 1991 UPOV Convention prevents the saving and sharing of farmers seeds. If they originally buy protected varieties, farmers would like to be able to save some of their harvest and share and exchange some of it with other farmers without paying additional royalties.
They claim that original seeds were removed freely from farmers’ fields by breeders. They add that those seeds that were used to engineer new varieties were selected and saved over thousands of years by farmers.”

Connecting the dots
The UN News Centre reports that Secretary General Ban Ki-moon and General Assembly President Nassir Abdulaziz Al-Nasser are calling for a “courageous” blueprint to tackle both world poverty and environmental destruction ahead of next year’s sustainable development summit in Rio de Janeiro.
“Mr. Al-Nasser stressed the need for policy-makers to ‘connect the dots between issues’ so that they develop policies that are ‘coherent, effective and beneficial.’
He added it was vital to ensure that the outcome of Rio+20 ‘is innovative and at the same time practical in its approach to tackling issues of sustainable development and poverty eradication.’”

The everywhere war
The UN News Centre also reports that Christof Heyns, the organization’s top expert on “extrajudicial, summary or arbitrary executions” is calling on national governments to respect international agreements in pursuing their security interests.
“On targeted killings, the Special Rapporteur said the current use of drones and raids into countries where there is not a recognized armed conflict to kill an opponent, such as in Pakistan or Yemen, is highly problematic
While such operations may be designed to hit a particular target, civilian casualties remain, and it is used on such a large scale that it can hardly be described as targeted.
‘The use of such methods by some States to eliminate opponents in countries around the world raises the question why other States should not engage in the same practices. The danger is one of a global war without borders, in which no one is safe,’ stressed Mr. Heyns.”

Sins of omission
Research firm Maplecroft has released a report assessing the worldwide risks faced by businesses of being complicit in human rights violations, with a particular emphasis on countries that are essential the global supply chain, such as China, India and Mexico.
“The ongoing use of forced labour in emerging economies indicates an unwillingness or a critical lack of capacity to address both the symptoms and causes, leaving business to police the problem itself,” according to Maplecroft’s Alyson Warhurst. “Responsible organisations must ensure that they and their business partners are fully compliant with international labour standards or they risk damaged reputations, litigation, investor alienation and reduced profits from consumer backlash and hidden costs relating to reduced productivity linked to adverse working conditions.”

Greasing palms, pumping oil
IRIN reports that even before Uganda begins pumping oil, concerns over the dreaded “resource curse” are growing, due in no small part to the actions of foreign companies.
“Prime Minister Amama Mbabazi has been accused of receiving funds to lobby for oil production rights on behalf of the Italian oil firm ENI, which eventually lost its bid for exploration rights to British firm Tullow Oil. Along with Mbabazi, Foreign Affairs Minister Sam Kutesa and Internal Affairs Minister Hilary Onek are both accused of taking bribes from Tullow Oil worth over US$23 million and $8 million respectively.”

Smokin’ profits
The Wall Street Journal reports Philip Morris International’s third-quarter earnings were up 31 percent, largely thanks to increased sales in Asian markets such as Indonesia and the Philippines.
“The company has sought to increase growth in emerging markets as volumes have slipped in more established European markets. As a result of the volume decline in developed countries, Philip Morris must enact price increases or cut costs to increase or maintain profitability.”

The price of gold
Blogger Tim Hoiland draws attention to a recent Tufts University report on the costs and benefits of Guatemala’s Marlin gold mine, which is owned by Canada’s Goldcorp.
“Overall, the report concludes that, when juxtaposed against the long-term and uncertain environmental risk, the economic benefits of the mine to Guatemala and especially to local communities under a business-as-usual scenario are meager and short-lived.”

Latest Developments, October 18

In the latest news and analysis…

FDI dangers
Reuters reports international negotiations have not succeeded in producing voluntary guidelines to curb land grabs in poor countries, a phenomenon driven by uncertain markets and a race to the bottom to attract foreign investment.
“Countries who want to attract investment are currently competing with each other to provide buyers with the best deal, such as a low price for land, low taxes, and few demands for employment creation and protection of the local food system, [the U.N.'s special rapporteur on the right to food, Olivier] De Schutter said.
Targeted African and Asian countries would benefit from a common set of guidelines, which would increase their bargaining position and make it easier for them to demand conditions to protect vulnerable land-users, he said.”

Conflict minerals
Reuters also reports on the battle in Washington over the Securities and Exchange Commission’s attempts to implement a legal provision requiring companies to disclose if their products contain “conflict minerals” from the Democratic Republic of Congo.
“Companies and business groups have largely opposed the measure as proposed, saying it captures far too many companies who do not directly manufacture their goods and have little say or knowledge about the origins of the minerals used in their products. They have urged the SEC to implement the plan over time, and also to give relief to companies that use trace amounts of the minerals in question.
But lawmakers, human rights groups and some socially conscious investors have decried the delay in the SEC’s rulemaking process.”

Resource caution
In the midst of all the excitement about Africa’s current rate of economic growth, Oxford economist Paul Collier warns of the dangers of relying on revenues from resource exports.
“The meltdown in commodity prices over the last two months perfectly illustrates the volatility inherent in these global markets. Resource-rich low-income countries are typically highly dependent upon the tax receipts from resource exports for government revenue. The rents on commodity extraction are highly geared on the price and so are even more volatile than prices. Since taxes are designed to capture the rents, government revenue is thus deeply unpredictable.”

Remittance curse
Economist and mathematician David Ellerman suggests remittances can represent a curse in the same way as resource wealth is often thought to do.
“Like the discovery of oil, the flow of remittances back to the sending country will increase income levels but that itself does not amount to economic development. In fact, it may have the opposite effect. Many of the resource-curse arguments apply to the ‘oil wells’ of remittances. The pressure on the governments to facilitate job creation in the sending countries is much reduced when they can export their unemployment problem and even receive a sizable inflow of hard currency in return.”

Intimidating investigation
Oxfam is reporting that people who complained to the NGO of being forcibly evicted to make way for the Ugandan operations of UK-based New Forests Company – as highlighted in an Oxfam report on land grabs released last month – now say they are being intimidated by employees of the company which had promised an independent investigation in the original allegations.
“We have heard from many people in these communities that they are feeling intimidated by the recent actions of NFC, which are totally at odds with the principles of an independent and transparent investigation,” according to Oxfam’s Vicky Rateau. “They have already lost their homes and land and many have been subjected to violent behavior. They need a credible investigation not further pressure.”

Malaria vaccine
The Guardian’s Sarah Boseley reports on a possible new malaria vaccine that has roughly halved the incidence of the disease in trials to this point.
“The arguments over value for money will be starting even now. Donors will want to figure out whether bednets or artimisinin drugs are a better investment than a vaccine that will reduce the number of malaria cases but not stop the disease in its tracks.
Price will be a critical factor in these considerations. [GlaxoSmithKline’s Andrew] Witty says they will do everything they can to get it down. He is looking at the costs involved in manufacturing and supply – even at the price of the vial. He is prepared to offer licences to get the vaccine produced cheaply in India or in Africa itself.”

Feminist development
The Overseas Development Institute’s Jonathan Glennie argues for the reassertion of feminism as the “theoretical underpinning” for women’s rights around the world but cautions against the imposition of cultural values.
“The certainty that has typified feminist struggle in the west, and has been one of the reasons for its great successes, does not often work cross-culturally. Certainty can only arise indigenously – and there are plenty of national feminist organisations across the world that are leading the fight in their own countries, in their own way (see the debate about the Gisele Bündchen adverts in Brazil, for example). In the international sphere, certainty must be replaced with humility about what the answers are and, crucially, a profound openness to learning from other cultures.”

Rejecting happiness
The Center for Global Development’s Charles Kenny thinks the recent craze among politicians to develop happiness measures as policy-making tools is misguided.
“This isn’t to say that politicians shouldn’t care whether their people are happy. But life is complicated and so is what makes up a good one. It is time to give up looking for a single indicator to capture how we’re doing at it.”

Latest Developments, September 14

In the latest news and analysis…

Moving beyond aid
In a speech entitled “Beyond Aid,” World Bank President Robert Zoellick argued wealthy countries have not yet adapted to a rapidly emerging multipolar world and continue to take a “do what I say, not what I do” approach to international relations.
“In a world Beyond Aid, sound G7 economic policies would be as important as aid as a percentage of GDP. In a world Beyond Aid, G-20 agreements on imbalances, on structural reforms, or on fossil fuel subsidies and food security, would be as important as aid as a percentage of GDP.”

Self-interested aid
Looking into the Canadian International Development Agency’s near future, the McLeod Group’s Stephen Brown and Ian Smillie see funding cuts and shifting priorities that have little to do with improving the lives of the poor in other countries.
“For instance, as Canada winds down its military involvement in Afghanistan, the Canadian International Development Agency will be “normalizing” aid to a level comparable to its 19 other “countries of focus.” This confirms a poorly-kept secret: aid to Afghanistan was always more about Canadians, candy and Kandahar than about sustainable long-term development.”

Resource curse
ECONorthwest’s Ann Hollingshead says the so-called resource curse is too often seen as a problem for the countries with said resources to resolve on their own.
“Above, I said the resource curse is “seemingly” an issue of national jurisdiction. That deserves some explanation. Governance itself is an issue of national jurisdiction, but the extractive industry that drives the supply of these resources is not. Most of these companies are, in fact, American and European and—therefore—are accountable to the governments of America and Europe. It is these companies, with their corrupt practices and lack of accountability, that facilitate the embezzlement and revenue misappropriation, which directly contribute to the resource curse.”

Population
The Overseas Development Institute’s Claire Melamed takes exception to arguments pinning poverty, hunger and climate change on population growth.
“Climate change is not a population problem.  It’s a consumption problem.  People in rich countries, where population is static or falling, consume many hundreds of times more carbon than people in the poor countries where population is still rising.  Let’s start with the problem we have now – consumption in rich countries – rather than worrying about some hypothetical future when everyone in Mali has a washing machine and two cars.”

Drones
University of Ottawa political scientist Roland Paris calls for the establishment of clear international rules regulating the use of drones before the technology becomes widespread.
“The U.S. seems to be taking the opposite course, extending its drone campaign to countries far removed from the war zones of Iraq and Afghanistan – including Yemen and Somalia – and using rules of engagement that are, at best, obscure and, at worst, illegal.
This is a dangerously short-sighted strategy. While execution by drone may appear to be a relatively low-cost and low-risk option for dealing with America’s enemies, it legitimizes methods that other countries may be expected to follow once they acquire similar capabilities.”

Mercenaries
The UN News Centre reports a UN panel has called for tighter regulation of private military and security companies “by both host and contributor countries” in order to reduce the risk of human rights violations and to ensure accountability when abuses occur.
“The panel…noted in its report on Iraq that incidents involving private military and security companies there had dropped since the killing of 17 civilians and wounding of 20 others in Nissour Square in Baghdad by employees of the United States security company Blackwater in 2007.
But it added that Iraq continues to grapple with the grant of legal immunity extended to private security contractors by US authorities after the 2003 invasion, preventing prosecutions in Iraqi courts while the case against the alleged perpetrators is still pending in US courts.”

AfriCom
The Hill reports the head of the US military’s three year-old Africa Command thinks looming Pentagon budget cuts are the biggest, though not the only, reason not to establish physical headquarters in Africa.
“Since AfriCom was formally established in October 2008, Pentagon officials and lawmakers have floated the idea of shifting its main hub from Stuttgart, Germany, to Africa or the United States.
But U.S. officials are hesitant to have a permanent and high-profile U.S. military presence on African soil due to indigenous skepticism about such an arrangement, which has left no clear candidates for its permanent home.”

Banking secrecy
The European Network on Debt and Development’s Alex Marriage says opposition to the so-called Rubik plan, whereby Swiss banks hand over tax money to national governments in exchange for maintaining their secrecy, could scupper a recent bilateral deal with Germany.
“The [Social Democratic Party]’s financial concept note published last Monday rejects the agreement with Switzerland. It is now quite likely that the deal will be rejected by the Upper Chamber, the Bundestat. North Rhine Westphalia’s Finance Minister Walter Borjans argued that effectively giving an amnesty to tax evaders was unconstitutional. Nicolotte Kressl and  SPD finance experts in the Bundestag said the deal should be halted as not to undermine EU efforts to secure automatic exchange of information with Switzerland.”

Corporate transparency
The Wall Street Journal reports the European Parliament has adopted a report that calls for laws to enforce transparency from oil, gas and mining companies.
“The report, which was first released July 25, contains a provision that calls for the EC to “establish legally binding requirements for extractive companies to publish their revenue payments for each project and country they invest in, following the example of the U.S. Dodd-Frank bill,” it said.”

Tobacco
The Guardian reports approximately 85 percent of the world’s tobacco is produced in the global south, often through the use of children as young as five working long hours under poor health conditions.
“The tobacco giants, who all have anti-child labour policies in place, insist they abide by the rules. British American Tobacco (BAT) says on its website that it does “not employ children in any of our operations worldwide”, but admits that using intermediaries to purchase tobacco makes it difficult to trace the country from which they buy the leaf and ensure all farm owners follow the rules.”

Latest Developments, July 20

In the latest news and analysis…

As expected, the UN has officially declared a famine in southern Somalia. French agriculture minister Bruno Le Maire writes in Le Monde that hunger in this day and age is a “scandal,” and a Globe and Mail editorial decries the slow international response to the food crisis in the Horn of Africa: “When an alarm of impending famine is sounded, the whole world should be galvanized into action.” But even though USAID’s Famine Early Warning Systems Network predicted the food crisis nearly a year ago and Islamist insurgents controlling much of Somalia recently lifted their ban on foreign aid, there are still legal obstacles to large-scale US assistance.

Earlier this year, the World Food Programme also launched an emergency operation in North Korea and an EU mission recently reported “widespread consumption of grass.” As of last week, the UN had received less than a quarter of the funds it was seeking for North Korean food assistance. The Brookings Institution’s Roberta Cohen says politics have prevented South Korea and the US from helping so far. “But taking no decision is really a decision, which gives the impression that there may be no urgent or extensive food crisis in North Korea requiring immediate action.”

But Columbia University economist Jeffrey Sachs says responding to food shortages, such as the one currently unfolding in the Horn of Africa, is not the way to go. The focus should instead be on lifting people out of poverty permanently, dealing with climate change and reining in population growth.

A Guardian editorial says the British public’s lack of enthusiasm for the government’s pledge to increase aid to 0.7 percent of GDP is understandable, given the frustratingly predictable cycle of development policies. “Fashions in giving have come and gone, interspersed with bursts of retrospective analysis purporting to show both why previous programmes have failed and how to reshape them so that they really will work and really will add to the sum of peace and prosperity in the world.” Nevertheless, the authors encourage the Cameron government to stick to its aid promise before concluding: “If we get it right this time, the public might eventually come round.”

A major problem with foreign aid, according to Bottom Up Thinking, is an accountability deficit resulting from the fact that its “‘customers’ are not the same people as those who pay the bills and that leads to massively misaligned incentives.” But the main reason why people have such little faith in aid’s usefulness is, paradoxically, the high expectations set up by an industry obsessed with sending out positive messages: “The problem, as I see it, is that we are very rarely upfront about the risks of failure. Far too much of the conservation and development industry is extremely reluctant to admit to failure (or even just disappointing results); glossy brochures proclaim an unending procession of success stories.”

The Center for Global Development’s Wren Elhai warns that a six-word amendment to proposed US legislation would make all American assistance to Pakistan conditional on the South Asian country’s demonstration that it is committed to preventing the Taliban and other perceived undesirables from operating within its borders: “The notion that a relatively small amount of civilian aid will change the strategic calculus of the Pakistani military is simply ludicrous. Meanwhile, attempting to use civilian aid as security leverage would upset the fragile two-track strategy that has guided U.S. strategy in Pakistan for the past several years.”

In a blog post entitled “Yes, South Sudan Can,” World Bank economist Shantayanan Devarajan lays out the three keys for South Sudanese success: stimulating sustained economic growth, implementing “home-grown solutions,” and embracing information and communications technology. Drawing on Africa’s recent history for inspiration, Devarajan points to “a number of countries, such as Mozambique and Uganda, which emerged from civil conflict and sustained above-7-percent GDP growth for over a decade.” In the UN’s latest Human Development Index ranking, Mozambique sat 168th out of 172 countries and Uganda scored better than only two non-African countries: Afghanistan and Haiti.

After discussing a recent study that suggests resource extraction is more often a blessing than a curse, Michael Levi of the Council on Foreign Relations turns to the specific possibility of a Liberian oil industry, reminding us the authors’ “analysis is statistical: while it might say that on average there isn’t a resource curse, that should be little reassurance for any particular country that’s diving into extraction.” Nor does the analysis, which focuses on political freedom, take socio-economic or environmental indicators into account. Of the 12 sub-Saharan countries whose daily crude production currently exceeds 50,000 barrels per day, only Gabon, South Africa and Congo do not rank in the bottom quintile in either the UN’s Human Development Index or Yale University’s Environmental Performance Index.

Reuters correspondent Peter Apps asks if Britain is more corrupt than it thinks. According to one expert quoted in the article: “If you look at the way we talk about and measure corruption in the West, it’s either Africa or Asia which comes out worse. But we are using a distorted prism.” Apps’s question is inspired by the UK’s ongoing phone hacking scandal, but there are also new developments concerning British companies behaving badly overseas. A parliamentary committee slammed military contractor BAE Systems for misusing funds in Tanzania and not paying the penalty imposed after a plea bargain. And miner Monterrico Metals has settled out of court on charges of collusion in the detention and torture of protesters in Peru.

The European Network on Debt and Development’s Alex Marriage sees an “apparent conflict of interest” in the fact that the European Commission assigned PricewaterhouseCoopers, an international accounting firm which boasts 415 of the Fortune Global 500 among its clients, to prepare a report on how poor countries can minimize financial losses due to corporate transfer pricing.  The practice allows large multinational corporations to reduce their tax bill by creatively billing themselves for transactions between subsidiaries so as to maximize declared expenses and minimize declared profits. “Transfer pricing is the single biggest source of illicit financial flows in the world costing developing countries hundreds of billions of dollars every year,” according to Marriage. PwC claims its own 2011 report on global transfer pricing – a separate document from the EU-commissioned one – “offers practical advice on a subject where the right amount of effort can produce huge dividends in the form of a low and stable tax charge, coupled with the ability to defend a company against tax auditor attack.”

Oxfam’s Duncan Green asks why development experts pay so little attention to “how poor people ‘do’ development.” And the Center on International Cooperation’s Alex Evans points out that poor people will not get a fair share of the world’s limited resources unless “developed countries and the “global middle class” dramatically reduce their consumption levels.”