Category Archives: Latest Developments

A daily summary of news and analysis pertaining to global inequality.

Latest Developments, January 11

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In the latest news and analysis…

Rio+20 leak
The Guardian reports a leaked agenda for June’s Rio+20 conference suggests countries will be called upon to agree to 10 new sustainable development goals but overall, the meeting promises to be much less ambitious than the original earth summit.
“Unlike the 1992 earth summit when over 190 heads of state set in motion several legally binding environment agreements, leaders this time will not be asked to sign any document that would legally commit their countries to meeting any particular targets or timetables. Instead, they will be asked to set their own targets and work voluntarily towards establishing a global green economy which the UN believes will reduce poverty and slow consumption.”

Transforming governance
The Inter Press Service reports on growing calls for radical changes in global governance in order to address issues such as poverty and environmental destruction.
“ ‘We need to have a “constitutional moment” in world politics, akin to the major transformative shift in governance after 1945 that led to the establishment of the United Nations and numerous other international organisations,’ said Frank Biermann of VU University Amsterdam and director of the Earth System Governance Project.
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Transforming international governance will be challenging since nation-states are almost entirely concerned with their own short-term interests, [Biermann] acknowledges. However, countries give up some of their power when they join the World Trade Organisation.
‘We ought to be able to do this for the protection of the planet and act as a community of nations,’ he said.”

Guardians of the future
The University of East Anglia’s Rupert Read argues that true democracy must take into account the interests of future generations, and to that end, he proposes the integration of  “guardians” into Britain’s existing parliamentary system.
“The members of this body would be selected by sortition, as is current practice for jury service, in order to ensure independence from present-day party political interests.
The Guardians would have a power of veto over legislation that were likely to have substantial negative effects for society in the future, the right to review major administrative decisions which substantially affected future people and the power to initiate legislation to preserve the basic needs and interests of future people.”

Immigration assistance
The Center for Global Development’s Michael Clemens argues the US, by tweaking its immigration policies, could provide significant assistance to earthquake-ravaged Haiti without spending any money or increasing the number of immigrants coming to its shores.
“First, the administration could reverse the current ban on Haitian participation in the U.S.’s largest employment-based visa program, the H-2 temporary low-skill work visa. All Haitians are currently ineligible to receive these visas. If even a few thousand Haitians at a time participated in that program over the next decade, it would generate more money for Haitian families than the entire U.S. infrastructure reconstruction allocation for Haiti. Fiscal cost: zero. It would even generate net positive U.S. tax revenue. Effect on Americans’ jobs: none. Removing the ban on Haiti would simply allow employers already seeking laborers to draw from Haiti instead of being limited to the 53 currently-eligible countries like Guatemala and Mexico.”

Acting together
Norwegian development and environment minister Erik Solheim argues “poverty is about politics” and its solutions lie beyond aid.
“As Norway’s minister for both the environment and development since 2007, I meet with other countries’ ministers with both portfolios, and it has come as a shock to see how the two groups lead such separate lives. Each has its own important agenda, its own analysis of the challenges ahead, its own strategic plans, and literally its own language. While each recognizes the importance of the other’s agenda, unless they talk and act together, neither group’s goals will be achieved.
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We must be careful not to fool ourselves into believing that the MDGs can be achieved through development aid alone. The wider politics of poverty must be placed at the top of the international agenda, along with the three factors most critical to development: climate, conflict, and capital.”

Western corruption
Inuka Kenya Trust’s John Githongo argues rich countries have fallen behind their “developing” counterparts in terms of awareness of and mobilization against high-level corruption.
“We live in an increasingly multipolar world where graft is concerned. It’s the turn of the developing world to watch how the west handles fraud and corruption at the highest levels in their corporate and other sectors. I would like to argue that the organic youth-heavy movements in the west, such as Occupy Wall Street, are part of this shift, except the “c” word isn’t being used – yet. This is a pointer to what I predict the fight against corruption will look like in 2012.”

Social cohesion
Oxfam’s Duncan Green issues a “fuzzword alert” over social cohesion and critiques the treatment given to the term in a new Organisation for Economic Co-operation and Development report.
“Whenever a new idea becomes popular like this, the danger is that instead of looking afresh at what it contributes to our understanding of development, we just recycle our existing set of ideas and say ‘because of complexity/ social cohesion/ climate change, you should do exactly what we’ve being saying all along’. I think the OECD is in danger of going down that road in this report – building social capital, supporting social mobility, and promoting social inclusion are fine, but they were standard demands long before anyone started talking about cohesion. The more interesting question is what we should be doing that’s additional or different because of a social cohesion ‘lens’, and I didn’t find that here.”

Southeast Asian exceptionalism
Alpha International Consulting’s Seth Kaplan uses the example of Southeast Asia to question orthodox thinking on the prerequisites for economic development.
“Indonesia, for instance, reduced poverty from 60 percent in 1970 to 22 percent in 1984. Vietnam reduced it from 58 percent in 1993 to 14 percent in 2008.
Yet, the region does not meet the standard model for economic success, at least as defined by the World Bank and the rest of the Western development community. Governments have historically not been held in check by elections. Corruption is widespread. Governance has rated low on most indicators.”

Latest Developments, December 21

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Corporate liability
Lawfare reports the Obama administration has filed a brief with the US Supreme Court supporting Nigerian plaintiffs in the Kiobel lawsuit against oil-giant Shell, arguing corporations can be held liable under federal law for abuses committed abroad.  
“The brief –signed by State Department Legal Adviser Harold Koh and (somewhat surprisingly) by Commerce General Counsel Cameron Kerry in addition to Solicitor General Don Verrilli – argues that the question of corporate liability under the Alien Tort Statute is governed by federal common law, not by international law, although international law “informs” the issue.  And the brief goes on to argue that under federal common law, corporations may be held liable for violations of both domestic and international law: “[C]orporations have been subject to suit for centuries, and the concept of corporate liability is a well-settled part of our ‘legal culture.’”  The brief states that the United States is not aware of any international law “norm” that would prohibit corporations from being sued for violations of international law.”

Nationalization
Agence France-Presse reports a provincial branch of South Africa’s ruling African National Congress party has voted in favour of a resolution calling for land expropriation and mine nationalization. 
“ ‘All productive land must be nationalised. Compensation must not be paid on the land itself but on improvements. The price must be determined by the state through the state evaluator,’ the party’s Limpopo provincial chairman Soviet Lekganyane was shown as saying by the eNews channel.
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‘We reiterate our call for nationalisation of mines and other key strategic sectors like Sasol and ArcelorMittal,’ Lekganyane was quoted as saying by the Sapa news agency, referring to major oil and steel activities.”

Air battle
The Associated Press reports that an EU court has upheld a law charging airlines flying to Europe for their carbon emissions but a US trade group, Airlines for America, is vowing to continue fighting the “unilateral” and “counterproductive” measures. 
“The European Court of Justice in Luxembourg dismissed arguments that imposing the European Union’s cap-and-trade carbon credits program on flights to and from European airports infringes on national sovereignty or violates international aviation treaties. U.S. and other non-European airlines had sued the EU, arguing that they were exempt from the law.”

Selling development
The Institute of Development Studies’ Spencer Henson raises some concerns over NGO efforts to “sell development” by promoting the idea that buying certain products will benefit poor people half a world away.
“First, it is very much based on the notion of benevolence of the (powerful) rich towards the (powerless) poor. UK consumers can decide how to spend their money at Christmas whereas the poor have little money to spend on anything. Further, as a wealthy donor the consumer can decide who is ‘deserving’ of their charity, however they might judge this.
Second, and more importantly, efforts to sell development do little or nothing to challenge the very reasons that people are poor…and the need for benevolence by the rich in the first place. Thus, how is it that such global inequality exists, and what can be done about it? The act of buying a goat, a charity Christmas card or a handicraft fails to challenge the status quo. Some would even argue that buying development perpetuates the very systems that make people poor in the first place.”

IFI reform
PIMCO’s Mohamed El-Erian argues the economic convergence that is changing the previously Western-dominated global order is unpredictable and requires “deep reform of the multilateral system” and its institutions.
“Multilateral institutions, particularly the IMF, have responded by pumping an unfathomable amount of financing into Europe. But, instead of reversing the disorderly deleveraging and encouraging new private investments, this official financing has merely shifted liabilities from the private sector to the public sector. Moreover, many emerging-market countries have noted that the policy conditionality attached to the tens of billions of dollars that have been shipped to Europe pales in comparison with what was imposed on them in the 1990’s and early 2000’s.”

Food speculation
The Guardian speaks to a food expert whose research predicted the Arab Spring and forecasts high food prices will trigger global riots and revolutions in the next two years unless something is done to rein in speculation. 
“[The New England Complex Systems Institute’s Yaneer Bar-Yam] believes the time has come for global regulators to step in and manage the global market. Their first task would be to guarantee transparency and make public information previously shrouded in secrecy – such as who holds the biggest stakes in global commodities. Transparent accounting practices would have made the disappearance of $1.2 bn worth of customer money from the books of MF Global less a matter of sleight of hand and more a matter of international crime.
The second part of the speculation solution hinges on a return to traditional position limits in commodities, limits enforced by international laws geared to stop bankers, hedge funds and sovereign wealth funds from going long on the world’s food supply and, in effect, gambling on hunger.”

Charter cities
Oxfam’s Duncan Green expresses concern over the life-size radical experiment with charter cities Honduras is about to undertake. 
“On the basis of the Economist piece, at least, the Trujillo charter city looks like a mess. The government is going to bypass constitution, laws etc, outsource the lot to private interests and rely for good governance on a commission of overstretched VIPs. If the hyperactive [Center for Global Development president Nancy] Birdsall is typical, they will have so many other commitments that they really are not going to be able to invest the time to micromanage a potentially chaotic period of institution-building. I emailed Nancy about this and she replied that yes, there are big risks, but the world needs more experiments like this not least because ‘we don’t know in the development community how to ‘produce’ good governance’. She points out that there are resources, e.g. to pay at least one aide per member of the transparency board. But that still seems like a pretty skeletal arrangement and many of the criticisms I quoted in my original post apply in this case too. Got a bad feeling about this one.” 

Latest Developments, December 20

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Canada’s third world
The UN News Centre reports that a UN human rights expert has waded into the controversy over living conditions in the northern Canadian community of Attawapiskat, expressing “deep concern” over the socio-economic situation of Canada’s aboriginal population.
“ ‘The social and economic situation of the Attawapiskat seems to represent the condition of many First Nation communities living on reserves throughout Canada, which is allegedly akin to Third World conditions,’ [James Anaya, the Special Rapporteur on the rights of indigenous peoples] stated.
‘Yet, this situation is not representative of non-aboriginal communities in Canada, a country with overall human rights indicators scoring among the top of all countries of the world.
‘Aboriginal communities face vastly higher poverty rights, and poorer health, education, employment rates as compared to non-aboriginal people,’ said the expert.”

Apple blasts
The Associated Press reports that, for the second time this year, an explosion has rocked a factory run by Chinese suppliers to computer giant Apple, this time resulting in 61 people injured.
“Critics have taken Cupertino, California-based Apple to task for alleged violations of labor and environmental standards by its China-based suppliers, and the company has said it is working to resolve such problems.
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A similar explosion occurred in May at a factory of electronics maker Foxconn Technology Group. Three people died and 15 were hurt due to what Foxconn said was ‘an explosion of combustible dust in a duct’ at the plant in the southwestern city of Chengdu.”

Migrant rights
UN Human Rights chief Navi Pillay has called on member countries to extend what are supposed to be universal rights to migrants, whether they have arrived legally or not.
“More than 20 years ago, States recognized that migrants needed specific protection and brought the [International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families] into existence… it is high time that these same States now unblock the political will to ratify and effectively implement this important treaty,” Pillay said.
“Human rights are not a matter of charity,” she said. “Nor are they a reward for obeying immigration rules. Human rights are inalienable entitlements of every human being, wherever they are and whatever their status.”

Sweatshop nation
The Inter Press Service carries a report from Haiti Grassroots Watch on the development of a new industrial park in Haiti, which the government and the international community say will provide jobs and growth but which critics say will cause social and environmental problems.
“Putting an industrial park – which will attract between 20,000 and 200,000 new residents – in the midst of a fertile area [as recommended by US-based Koios Associates] is not necessarily going to contribute to Haiti’s ‘sustainable development’, despite government claims to the contrary, economist [Camille] Chalmers notes. Haiti has gone from virtual food self-sufficiency three decades ago to importing over 60 percent of its food. Taking more land out of production will only increase that figure.
‘Before 1992, 90 percent of our cereal needs were met here in Haiti. That’s all changed. The country has become more dependent,’ Chalmers told HGW. “That means food has become more expensive as salaries have gotten lower. You get paid in gourdes, and you consume in U.S. dollars. That is terrible for the country… it is sinking us deeper into dependency.’ ”

Food fight
Oxfam’s Duncan Green examines the strong words exchanged on the subject of food security by World Trade Organization head Pascal Lamy and UN food rights expert Oliver de Schutter, quoting the latter at length.
“We must ensure that the debate starts from the correct premise. This premise must acknowledge the dangers for poor countries in relying excessively on trade. We must also assess the compatibility of WTO disciplines and the Doha agenda with the food security agenda. Without such a fundamental reassessment, we will remain wedded to food systems where the most efficient producers with the biggest economies of scale are relied upon to feed food-deficit regions, and where the divide only gets bigger.
This may look like food security on paper, but it is an approach that has failed spectacularly. The reality on the ground is that vulnerable populations are consigned to endemic hunger and poverty.”

Living in truth
Columbia University’s Jeffrey Sachs reflects on the life of Vaclav Havel and the lessons it can teach us for resisting injustice in its latest forms.
“Today’s reality is of a world in which wealth translates into power, and power is abused in order to augment personal wealth, at the expense of the poor and the natural environment. As those in power destroy the environment, launch wars on false pretexts, foment social unrest, and ignore the plight of the poor, they seem unaware that they and their children will also pay a heavy price.
Moral leaders nowadays should build on the foundations laid by Havel. Many people, of course, now despair about the possibilities for constructive change. Yet the battles that we face – against powerful corporate lobbies, relentless public-relations spin, and our governments’ incessant lies – are a shadow of what Havel, Michnik, Sakharov, and others faced when taking on brutal Soviet-backed regimes.”

True democracy
Former IMF chief economist Simon Johnson warns of the dangers of concentrated economic wealth and criticizes government policies towards banks in both Europe and the US.
“The protesters of ‘Occupy Albany’ issued a powerful consensus statement recently, which reads in part:
‘The interests of those who purchase influence are rewarded at the expense of the People, from whom the government’s just power is derived. We believe that this failure in our system is at the core of many interconnected issues we face as a society, and its resolution is key to a just future. We therefore demand true democracy, decoupled from the corrosive influence of concentrated economic power, and we call all who share in this common goal to stand with us and take action toward this end.’ ”

Latest Developments, December 19

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Dividend arbitrage
The Bureau of Investigative Journalism says it has uncovered a “huge tax avoidance trade” run by some of London’s biggest banks, which may be costing European governments nearly $800 million per year.
“Markus Meinzer, applied researcher and analyst at the Tax Justice Network, said: ‘This issue highlights a structural flaw in our current international financial system. Governments refuse to institute robust transparency and cooperation mechanisms in view of aggressive financial sector lobbying and because of the bizarre, yet largely unchallenged view of alleged benefits flowing from competition between states.’ ”

Fighting dependency
The Guardian reports Nigeria is looking to reduce its dependence on foreign food, such as wheat and rice imports, and to rely more on locally grown cassava in an effort to boost the nation’s agriculture sector.
“Billed as a central part of the new administration’s ‘transformation’ agenda – a sign of how badly Nigeria needs fixing – proposals in a preliminary budget to slash a $68bn import bill include a 100% levy on rice and wheat imports next year. Wheat costs the government a staggering $3.9bn annually, while Nigeria is the world’s largest rice importer – at a cost of $6.25m a day – even though its climate is ideal for rice growing.
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According to the UN’s Food and Agriculture Organisation, Africa has more than doubled cereal imports over the past three decades, a trend some countries have begun trying to reverse through proactive policies. In Uganda, for instance, rice output more than doubled in the space of four years after a 75% tax was imposed on imports. The duty also spurred the construction of new mills, lowering the price of locally refined rice. Malawi, meanwhile, one of Africa’s poorest countries, reversed its food deficit in just two years through a targeted subsidy programme that helped finance fertiliser for farmers.”

Drug tests
The Inter Press Service reports on the current state of international protections for human subjects of medical research.
“Fourteen patients died during the trials, which were conducted [by French and US pharmaceutical companies in a Bhopal hospital without the informed consent of the subjects] between 2007 and 2010. Drugs and treatments resulting from those trials have since been approved for sale in Europe and the U.S., according to a report in the Independent.
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European law states that drugs tested in violations of protections guidelines such as the Declaration of Helsinki should not be granted market authorisation in Europe. [Annelies] Den Boer said [clinical trials watchdog] Wemos, with support of members of the European parliament, hopes to push the [European Medical Association] to block unethically tested drugs from the European market.
The U.S. Food and Drug Administration (FDA) abandoned the Declaration of Helsinki in 2008.”

Undeclared money
The Indian Express reports India is considering legal action against HSBC for allegedly encouraging customers to move undeclared money to its branch in Geneva.
“No prosecution or court cases have been filed. Reason: despite an official communication being sent by the [Central Board of Direct Taxes], HSBC Bank in Geneva has given no official acknowlegement of the data handed over by French authorities and without this endorsement from the Swiss or detailed banking transactions, officials feel the cases may collapse in economic offence courts.
But with the account-holders revealing that their Geneva accounts were being ‘operated’ from New Delhi by bank officials — both for deposits and withdrawals — and the balances were not reflected in their tax returns, a fit case for filing a prosecution against the bank itself may be made out.”

Brandeis tipping point
Yale University’s Ian Ayres and UC Berkeley’s Aaron Edlin argue the level of inequality in the US – the latest statistics show “the average 1-percenter” earns 36 times more than the median household – must be capped for the sake of the country’s democracy.
“Enough is enough. Congress should reform our tax law to put the brakes on further inequality. Specifically, we propose an automatic extra tax on the income of the top 1 percent of earners — a tax that would limit the after-tax incomes of this club to 36 times the median household income.
Importantly, our Brandeis tax does not target excessive income per se; it only caps inequality. Billionaires could double their current income without the tax kicking in — as long as the median income also doubles. The sky is the limit for the rich as long as the “rising tide lifts all boats.” Indeed, the tax gives job creators an extra reason to make sure that corporate wealth does in fact trickle down.”

The ‘trust me’ concept
The Washington Post reports the Obama administration’s increasing reliance on drone strikes may have resulted in 2,250 deaths in Pakistan over the last three years, but there is precious little information about the strategy or its results.
“Even outside experts who believe the program is legal find the secrecy increasingly untenable. ‘I believe this is the right policy, but I don’t think [the administration] understands the degree to which it looks way too discretionary,’ said American University law professor Kenneth Anderson.
‘They’ve based it on the personal legitimacy of [President] Obama — the “trust me” concept,’ Anderson said. ‘That’s not a viable concept for a president going forward.’ ”

Cost of doing business
Drawing on new information concerning the killing of 24 Iraqis by US troops, the Guardian’s Gary Younge issues a call to fight Iraq War revisionism that downplays the invaded country’s suffering.
“When he heard the news, Major General Steve Johnson, the American commander in Anbar province at the time, saw no cause for further examination. ‘It happened all the time … throughout the whole country. So you know, maybe, if I was sitting here [in Virginia] and heard that 15 civilians were killed I would have been surprised and shocked and done more to look into it. But at that point in time I felt that it was just a cost of doing business on that particular engagement.’ ”