Latest Developments, March 20

In the latest news and analysis….

Expendable country
Reuters reports that the European Central Bank is prepared to let Cyprus “succumb to financial meltdown” but believes it can save the eurozone:

“Cyprus propelled the 17-nation bloc into uncharted waters on Tuesday by rejecting a proposed levy on bank deposits as a condition of a 10 billion euro ($12.9 billion) EU bailout.
Without the aid, much of it to recapitalize Cypriot banks, the ECB says they will be insolvent, and it requires banks to be solvent for them to receive central bank support.

By stressing that it stands ready to provide liquidity ‘within the existing rules’, the ECB is standing firm.
The central bank is not ready to bend for Cyprus.”

Food shortage
Oxfam has blamed the French military intervention in Mali for skyrocketing food prices and shortages that are fuelling a “serious food security crisis” in the country’s north:

“A separate market survey in the same area revealed that in January 2013 the price of basic foodstuffs went up by as much as 70 per cent as a result of the military operation. By February, these abnormally high prices, far greater than the five year average, had still not stabilised. Oxfam‘s survey found that cereals like sorghum, millet and corn are no longer available on the market. While the availability of certain cereals is now improving, the continued closure of the Algerian border is preventing access to other key products in the diet of northern Malians, such as pasta, oil, sugar and rice.
Fuel shortages and rising fuels prices and conflict-related damage have also affected the water and electricity supply in the town of Gao.”

Intervention debate
The Washington Post reports that top US military commanders cannot agree on whether or not foreign intervention in Syria is advisable:

At a separate hearing held by [Senator Carl] Levin’s [Senate Armed Services] committee Tuesday, Sen. John McCain (R-Ariz.) asked NATO’s military chief, Adm. James G. Stavridis, whether it is time for the United States to ‘help the Syrian opposition in ways that would break what is a prolonged civil war.’
‘My personal opinion,’ Stavridis said, ‘is that would be helpful in breaking the deadlock and bringing down the Assad regime.’
But there is no consensus. On Monday, Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff, dismissed the role of military action during a talk at the Center for Strategic and International Studies. ‘I don’t see a military option that would create an understandable outcome, and until I do, my advice would be to proceed cautiously,’ he said.

Questionable past
Agence France-Presse reports that French police have raided the home of IMF head Christine Lagarde over events that took place during her time in ex-President Nicolas Sarkozy’s cabinet:

“The investigation concerns Lagarde’s 2007 decision to ask an arbitration panel to rule on a dispute between disgraced tycoon Bernard Tapie and the collapsed bank Credit Lyonnais.
The arbitration resulted in Tapie being awarded around 400 million euros ($499 million) – an outcome that triggered outrage among critics who insisted the state should never have taken the risk of being forced to pay money to Tapie, a convicted criminal.”

Fraying monopoly
Reuters reports that US President Barack Obama is looking to shape global guidelines on the use of drones as unmanned technology spreads to more and more countries:

“ ‘People say what’s going to happen when the Chinese and the Russians get this technology? The president is well aware of those concerns and wants to set the standard for the international community on these tools,’ said Tommy Vietor, until earlier this month a White House spokesman.

Obama’s new position is not without irony. The White House kept details of drone operations – which remain largely classified – out of public view for years when the U.S. monopoly was airtight.

Villagization inquiry needed
Human Rights Watch is calling on the World Bank to allow an investigation into its Ethiopia program, which is “shadowed by controversy” over reports of forced relocations:

“Despite the human rights risks that ‘villagization’ presents for the World Bank’s project, it has not applied its own safeguard policies. Its policy to protect indigenous people has not been applied in Ethiopia because the government does not agree that it should apply. Nor has the World Bank applied its policy on involuntary resettlement, which requires consultation and compensation when people are resettled.”

Viva Palma
The Center for Global Development’s Alex Cobham and King’s College London’s Andy Sumner make the case for the “Palma Ratio” as an alternative to the widely used Gini coefficient for measuring countries’ inequality levels:

“[Chilean economist Gabriel Palma] found that the ‘middle classes’ – more accurately the middle income groups between the ‘rich’ and the ‘poor’ (defined as the five ‘middle’ deciles, 5 to 9) – tend to capture around half of GNI – Gross National Income wherever you live and whenever you look. The other half of national income is shared between the richest 10% and the poorest 40% but the share of those two groups varies considerably across countries.
Palma suggested distributional politics is largely about the battle between the rich and poor for the other half of national income, and who the middle classes side with.
So, we’ve given this idea a name – ‘the Palma’ (brilliant eh?) or the Palma Ratio. It’s defined as the ratio of the richest 10% of the population’s share of gross national income (GNI), divided by the poorest 40% of the population’s share. We think this might be a more policy-relevant indicator than the Gini, especially when it comes to poverty reduction.

Defining aid
The Guardian reports that the Organisation for Economic Co-operation and Development has a very inclusive concept of overseas development assistance:

The Organisation for Economic Co-operation and Development’s development assistance committee (OECD-DAC) defines what counts as ODA. Only spending with “the promotion of the economic development and welfare of developing countries” is eligible. But the list of specific activities that can count as aid has grown to include administrative costs and spending on refugees in donor countries, estimated costs of students from developing countries, and programmes to raise the profile of development. Some argue this growing list has diluted the meaning of foreign aid and made it harder for the public to understand where their money is going. Both grants and loans (if they have a grant element of at least 25%) can count, and ODA can be given to developing countries or multilateral institutions such as the World Bank.

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