Latest Developments, August 16

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German Chancellor Angela Merkel and French President Nicolas Sarkozy met to discuss a way out of the financial crisis currently spreading across Europe. While they spoke of greater integration, they dismissed as premature the idea of euro bonds that would make all members jointly responsible for the debt of each member. The two leaders did, however, propose a tax on financial transactions both to generate revenue and to discourage speculation, but it is far from certain they will have the support necessary to implement it: “Both Merkel and Sarkozy have mentioned the prospect in the past, but resistance from the US and UK — and promises that firms will pull up stakes and do business elsewhere — has held back efforts by any one jurisdiction from pressing ahead,” according to the Wall Street Journal.

While Europe and America struggle with taming massive public debt, Cote d’Ivoire is opting to skip debt payments even though it has sufficient funds to meet its obligations. Perhaps surprisingly, the International Monetary Fund appears to approve of the decision: “I think that [investors] would be happier with a government that missed a few [payments] and made it up later and had a strong recovery, than a government which met its debt service in a timely manner but failed to relaunch the economy,” the organization’s local director told Reuters.

The UN’s World Food Programme acknowledges that some of its aid to Somalia has disappeared but calls the scale of theft recently reported by the Associated Press “implausible.” Calling the food crisis in the Horn of Africa “man-made,” a World Bank economist says controls on local markets are to blame for high food prices that are exacerbating widespread hunger. “Maize is cheaper in the United States and in Germany than it is in eastern Africa,” according to Wolfgang Fengler. Cambridge University’s David Nally agrees the current humanitarian disaster is not a purely natural one but unlike Fengler, believes the world’s powerful countries must share in the blame for what he considers violence: “The portrayal of the passive victim enables NGOs and Western governments to assume the role of rescuer without having to ask uncomfortable questions about their own complicity in the suffering that is unfolding.” Although he stresses that there is no “clearly identifiable agent” responsible for the famine, he believes the global economy and its priorities play a substantial role. Nally concludes by arguing “the more it’s shown that “the sort of thing which happens in that place” is partly an outcome of policies designed in this place, the more responsibility we have to do something about it. When viewing images of starving children or reading about deaths from malnutrition in the daily newspapers, we ought to consider critically the architecture of violence behind the picture or story, not merely the sad abjection of the victim. There is a need, as Susan Sontag once said, to put privilege and suffering on the same map.”

The Associated Press’s Jonathan Fahey writes that the “golden decade” of America’s defense industry has ended and its companies’ shares are likely to continue their downward trend. But one area that may prosper, given the financial and human resources advantages it offers, is the development and manufacture of drones: “The era of manned airplanes should be seen as over,” according to the Brookings Institution’s Michael O’Hanlon. The latest in drone technology is on display in Washington, DC this week at the Association of Unmanned Vehicle Systems International annual convention. And far away from the showroom floor, a US drone strike has reportedly killed four people in Pakistan.

The US pursued 3.5 foreign bribery cases for every one undertaken by the rest of the world during the last decade, according to the new Global Enforcement Report released by Trace International. In other corporate accountability news, the back-and-forth continues following last week’s New York Times op-ed that claimed a piece of American legislation aimed at preventing minerals from fuelling conflicts is actually having a devastating effect on the Democratic Republic of Congo. In a letter to that same paper’s editor, Margot Wallstrom, UN special representative of the secretary general for sexual violence in conflict, argues “the United States government should be commended for its leadership in trying to regulate “conflict minerals” and to starve rebels of the resources and weapons they need to kill and rape.”

The Center for Global Development’s Kimberly Ann Elliott makes a case for imposing so-called Deterrence of Illegitimate Resource Transfers (DIRT) sanctions on Syria. To impose such sanctions would mean to “declare that any new loans to the Syrian government, and new contracts with the state-owned oil industry, are illegitimate and need not be honored by a democratic successor government.” As with normal sanctions, the DIRT variety would aim to diminish the resources of a leader deemed undesirable by the international community (in whole or in part) and to motivate said leader to change his or her ways. But these specialized sanctions would also “spare a future, legitimate government and its people from having to repay an “odious debt” or abide by contracts tainted by corruption” while allowing it to “still retain access to international credit markets.”

Latest Developments, August 15

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With Switzerland’s currency looking like a safe bet to investors and getting stronger by the day, there is growing concern the franc could become a threat to the Alpine nation’s economy: “It’s the curse of the diligent student,” Bank Sarasin’s Ursina Kubli told the Globe and Mail. “It’s being punished for doing its homework very nicely in recent years.” But Global Financial Integrity sees Switzerland in a less flattering light, as an important part of a worldwide network of tax-friendly regimes where individuals stash “US$12 trillion of assets in jurisdictions other than their own countries of residence that are not declared in their own countries of residence; the lost tax revenue annually from such undeclared assets is estimated at US$255 billion,” in addition to avoidance by corporations and other organizations. The Washington-based financial transparency advocates argue the recent tax deal Switzerland has made with Germany and another anticipated one with the UK involves “handing over money and some account information without making substantive changes to a system that puts tax collection and law enforcement officials at a disadvantage.” The solution, as GFI sees it, is a global agreement “to end tax haven secrecy.”

A deal has been struck to end a dispute in Gaza between Hamas and the US Agency for International Development that looked like a role reversal from aid-threatening rows elsewhere that saw Somalia’s Al Shabab – and Sudan’s government before them – accusing Western aid agencies of political interference. This time around, it was USAID who decided to stop humanitarian assistance because of perceived meddling by the host government.

The World Health Organization is looking into the emergence of a mysterious non-fatal illness that seems to be striking Angolan schoolchildren: “Although the cause of these outbreaks still remains unknown, this may be related to exposure to irritant chemicals.” Angola’s economy has grown rapidly since a decades-long civil war ended in 2002, due mainly to oil and supporting industries that account for roughly 85% of GDP. But it remains mired near the bottom of the UN’s Human Development Index rankings, behind Haiti and Uganda.

The UN is calling for investigation of possible war crimes in Sudan’s Southern Kordofan state, which sits on the border of newly independent South Sudan. But a Guardian editorial entitled “United Nations: Weak leaders wanted” strongly criticizes current secretary Ban Ki-moon for, among other things, his seemingly selective attention to evidence of serious human rights violations: “The myopia of powerful governments is clearly shown in their preference for weak candidates for UN secretary-general. Occasionally they misjudge their man, with interesting results. With Dag Hammarskjöld, it was peacekeeping. Kofi Annan’s staff devised the millennium development goals. This time – with the quiet reappointment of secretary-general Ban Ki-moon this summer – they got what they wanted. Mr Ban presides over the slow decay of the UN secretariat, an institution that should be working, as Hammarskjöld said, on the edge of progress.”

New York University economist Nouriel Roubini writes that global capitalism as currently practiced is doomed: “To enable market-oriented economies to operate as they should and can, we need to return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of laissez-faire and voodoo economics and the continental European model of deficit-driven welfare states. Both are broken.” Among his prescriptions are “stricter supervision and regulation of a financial system run amok.”

James Lindsay of the Council on Foreign Relations is “depressed” to see Western pre-eminence slipping to the point where countries that are home to over 80 percent of the world’s population could soon account for half its wealth. But while the Globe and Mail’s John Ibbitson concedes “it’s natural for people to worry about their daughter or son finding a good job in a depressed Western economy, and for them not to care that billions of people have been lifted out of the very worst poverty as a result,” he is a firm believer in linear human progress and sees the rise of the world’s most populous countries as another big step in the right direction. “The more wealthy countries there are, the more wealth they will make together, which in turn will lift more people out of poverty and make them more free, reducing the chances of great wars, the kind that kill tens of millions, possibly including your daughter or son, or you.” And the Economist happily announces the BRIC countries are embarking on a path that could fundamentally alter the world of aid: “The establishment donors’ aid monopoly is finished.”

Following up on his recent rejection of the view “that history is something to be left to historians,” the Overseas Development Institute’s Jonathan Glennie looks at the recent history of measuring poverty. Concerning the World Bank’s practice of dividing countries into low-, medium- and high-income countries (LICs, MICs and HICs) and the apparent trend towards upward mobility, he cautions against a too-linear view, pointing out that “of the 26 countries that went from LIC to MIC status in the last decade, 18 had been MICs in the past but had relapsed to LIC status, mostly in the early 1990s.” On the other hand, membership in the UN’s Least Developed Country club has been depressingly stable.

Focusing mainly on Oprah Winfrey’s philanthropic activities, Cambridge University’s Priyamvada Gopal writes about “how billionaire benevolence is closely tied to the big neoliberal political manoeuvres of our time.” While Gopal stresses she does not question the sincerity underlying what she terms “humanitarian privatisation,” she worries about the combination of ignorance and “missionary zeal” the mega philanthropists display: “The billionaire “humanitarianism” of Winfrey, Gates and Murdoch is deeply compromised not only by its failure to acknowledge the causal relationship between extreme wealth and great poverty but by participating in an ideological assault on the welfare state. It posits itself as the only way to change the world – from above and with a wealthy few firmly in control.”

Latest Developments, August 11

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British Prime Minister David Cameron has said he would consider limiting social networking services such as Twitter and Blackberry Messenger in situations like the recent riots, a measure, as Reuters puts it, “widely condemned as repressive when used by other countries.” The Globe and Mail’s Ivor Tossell conveys a similar sentiment: “Cracking down on citizens’ communications in times of crisis would put Mr. Cameron in the company of a large and unsavoury bunch of autocrats.” Earlier this year, the UN’s top expert on freedom of expression, Frank La Rue called for “as little restriction as possible to the flow of information via the Internet” but warned: “Governments are using increasingly sophisticated technologies to block content, and to monitor and identify activists and critics.”

In other technology news, the US military test launched its Falcon Hypersonic Technology Vehicle 2 (HTV-2). The unmanned manoeuvrable aircraft, built to travel at 20 times the speed of sound, is part of the Pentagon’s Prompt Global Strike efforts that have involved “working for nearly a decade on an audacious plan to strike anywhere on the planet in less than an hour.” But for the second time this year, the device lost contact with ground stations and disappeared into the Pacific, a result described by the program manager as “vexing.”

Piracy is reportedly starting to become an issue off the west coast of Africa: “Piracy in the Gulf of Guinea has over the last eight months escalated from low-level armed robberies to hijackings, cargo thefts and large-scale robberies,” the Associated Press reports, citing Denmark’s Risk Intelligence. Over on the continent’s east side, piracy is old news but the Guardian’s Mark Tran reports it has become another factor complicating aid delivery to those affected by the Horn of Africa’s food shortage. To recap then, the list of problems cited since a state of famine was declared in parts of Somalia include lack of money (less than half of what the UN says it needs), lack of organization, uncooperative rebels, a government/AU offensive against said rebels, high food prices, draconian US anti-terrorism laws and a weak dollar. US Secretary of State Hillary Rodham Clinton announced an additional $17 million in emergency funding, of which $12 million will go to Somalia. Also heading from the US to Somalia is Richard “Colonel Sanders” Rouget, whom Wired describes as a “mercenary with a criminal record and possible ties to several African coups and at least one murder.” In the name of counterinsurgency, “America has endorsed, however indirectly, a man who for years has allegedly fought against stability, justice and self-governance in Africa,” according to Wired’s David Axe.

Fifteen years after Pfizer drug trials during the course of which 11 Nigerian children died, the first compensation cheques have been issued, with the families of four of the deceased each receiving $175,000. A Wikileaks document revealed Pfizer tried to dig up dirt on the attorney general in order to make him drop the case before finally agreeing in 2009 to a $75 million settlement.

The US Supreme Court may examine the question of corporate liability for overseas human rights abuses later this year in light of recent contradictory interpretations of the Alien Tort Statute by federal appeals court judges. Human rights lawyers say the majority of the rulings support their position, but US Chamber of Commerce lawyers argue international law “establishes liability for states and individuals, and not for corporations.”

Oxfam’s Emily Greenspan writes about the new social and environmental policies of the International Finance Corporation, which is “the private sector lending arm of the World Bank Group.” The new rules include a “precedent-setting requirement” that corporations looking to work on indigenous lands obtain “free prior and informed consent” from local communites, and an obligation for oil, gas and mining companies to disclose their contracts with host governments. It does not appear, however, that companies have to reveal their profits, as called for by Christian Aid’s Joseph Stead in order to discourage corporate tax avoidance as well as government corruption. Nevertheless, Greenspan hopes the new requirements “will set in motion a ripple effect among other international financial institutions, export credit agencies, companies, and governments, helping to reduce social conflict and increase transparency around large-scale development projects globally.”

Over the last week or so, there have been a number of articles describing last year’s passage of the Dodd-Frank Act – a piece of American legislation that includes a requirement for companies to prove the minerals they use have not exacerbated conflict in their country of origin – as a disaster  for the Democratic Republic of Congo, the very place it was ostensibly meant to help. A Businessweek article talks of a 90 percent drop in legal mineral exports over the last year and a David Aronson op-ed in the New York Times says: “Rarely do local miners, high-level traders, mining companies and civil society leaders agree on an issue. But in eastern Congo, they were unanimous in condemning Dodd-Frank.” But the Institute of Human Rights and Business’s Salil Tripathi calls these arguments “simplistic and wrong.” He says those who pushed for the kinds of measures contained in Dodd-Frank realized there would be some adverse short-term economic impacts but they see ending a protracted conflict as the ultimate goal: “Restrictions on conflict minerals alone won’t end unrest in the DRC. But not having any restrictions on products known to fuel conflict, ostensibly to preserve livelihoods for the country’s people, won’t make matters better, either.”

Given the current economic crises on both sides of the North Atlantic, UC Berkeley economist Barry Eichengreen asks: “Isn’t this a once-in-a-lifetime opportunity to move away from a world where the US Federal Reserve and the European Central Bank hold the supply of international liquidity in thrall?” He proposes “a global-GDP-linked bond, the returns on which would vary with global growth rates.”

 

Latest Developments, August 10

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British Prime Minister David Cameron has attributed the UK’s rioting to “a lack of proper parenting,” but Reuters journalist Mohammed Abbas relates another side of the story: “They were not your typical hoodlums out there. There were working people, angry people. They’ve raised rates, cut child benefit. Everyone just used it as a chance to vent,” one man told him. A Futurismic map of London suggests a link between the locations of the violence and levels of deprivation. The map uses the British government’s latest English Indices of Deprivation, which provide an aggregate of seven variables: income deprivation, employment deprivation, health deprivation and disability, education skills and training deprivation, barriers to housing and services, living environment deprivation, and crime.

The UN says high food prices are making the Horn of Africa crisis worse, with grain and milk prices at record highs across the region. The US has given its support to a movement to impose international sanctions on Eritrea, which is also affected by East Africa’s severe drought, for allegedly attempting to destabilize its neighbours. US ambassador to the UN Susan Rice called the Ethiopian-led effort “timely” but added any sanctions “would not go in any way to harm the people of Eritrea, who are suffering enough as it is.”

The US has also imposed new sanctions on Syria, targeting its largest bank and biggest telecom company. Washington has little direct economic leverage because there are few American companies operating in Syria. It hopes, however, to influence European governments to take measures against the country’s oil and gas sector, a move that does not appear to be imminent. But a “group of social investment firms plans an e-mail campaign to urge 11 oil companies to either stop operations in Syria or communicate their condemnation of the violent crackdown on protesters to the government,” according to Pensions and Investments.

The World Bank has suspended lending to Cambodia over mass evictions of residents to make way for a luxury development on land around a lake in the capital Phnom Penh. “Until an agreement is reached with the residents of Boeung Kak Lake, we do not expect to provide any new lending to Cambodia,” the World Bank’s Annette Dixon said. Evictions have been the source of friction with foreign donors for some time but according to Reuters: “Land ownership is a complex subject in the impoverished Southeast Asian country, where legal documents were destroyed and state institutions collapsed under the Khmer Rouge regime of the 1970s and the civil war that followed.”

In the wake of Libyan accusations that a NATO air strike caused the “massacre” of 85 people earlier this week, Amnesty International is calling on the military alliance to investigate all alleged civilian killings: “NATO continues to stress its commitment to protect civilians,” the human rights group’s Hassiba Hadj Sahraoui said in a statement. “To that effect, it should thoroughly investigate this and all other recent incidents in which civilians were reportedly killed in western Libya as a result of air strikes.”

Canadian immigration minister Jason Kenney has struck back hard at Amnesty International for its criticism of his government’s plan to deport 30 men it alleges have committed war crimes or crimes against humanity. In addition to writing a scathing open letter of response, he told the Toronto Star the rights group is wrongly using “its voice and scarce resources to focus on criticizing what is probably the fairest immigration system in the world.” Last month, Amnesty had called on the Canadian government to try these individuals rather than deport them. But it was hardly alone in questioning an operation that involved publishing the pictures and names of the alleged criminals on a government website and led some experts to suggest the Canadian government was “conflating immigration and criminal law.” The Canadian Centre for International Justice’s Jayne Stoyles told Embassy Magazine: “The label of war criminals kind of implies that someone has been through a criminal process. But they haven’t. And they’re not even being investigated through a criminal process.”

Exxon Mobil is disputing a US Court of Appeals ruling that it can be held liable under the Alien Tort Statute for human rights abuses committed in Indonesia. In a petition for a rehearing, the company’s lawyers argue the decision’s “incorrect expansion of ATS liability threatens to unleash a flood of litigation in U.S. courts for actions lacking any salient connection to the United States” and called on the court to “reject the notion that the ATS can be used as a vehicle to bring suit in U.S. courts for alleged misconduct that occurred abroad.” And lawyers for alleged victims of human rights abuses surrounding a Guatemalan mine say Canada’s HudBay Minerals “cannot avoid liability for their past actions by selling the project.”

The Guardian’s John Vidal argues last week’s UN report on oil pollution in Nigeria’s Ogoniland region means “the conspiracy of silence between governments and oil companies has at last been broken.” While Kenya’s Business Daily carries the headline: “Multinationals, not corrupt politicians are the biggest source of dirty money flows.”

The University of the West of England, Bristol’s Diana Jeater reports on perceptions among Zimbabweans of international NGOs and aid agencies that “are mistrusted not least because they are perceived as part of the political strategies of donor governments.” She says there is also much “frustration at how the external agendas are introduced without proper research into local conditions and history” and a widespread “sense that the aid agencies are employers not helpers, who probably do more harm than good.” Jeater then concludes with a friend’s assessment of aid agencies operating in Zimbabwe: “They spend millions but they make no constructive difference. They just meet their funders’ benchmarks and get paid. They are parasites on the poor.”

Latest Developments, August 9

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While London’s riots may not really seem like Beyond Aid material, commentators such as Laurie Penny have highlighted common ground through their accounts of how difficult it is for a society to provide thoughtful analysis of its own culture’s uglier aspects: “The violence on the streets is being dismissed as “pure criminality”, as the work of a “violent minority”, as “opportunism”. This is madly insufficient. It is no way to talk about viral civil unrest.” Similarly, Daniel Hind writes in an Al Jazeera piece it is a mistake to view the riots as apolitical: “We should perhaps ask [the young rioters] what they were thinking before reaching for phrases like “mindless violence“. We might actually learn something.” In the meantime, while stressing he does not wish to “draw a straight line from the decision to bail out the banks to what’s going on now in London,” he provides an assessment of his own: “Those who want to see law and order restored must turn their attention to a menace that no amount of riot police will disperse; a social and political order that rewards vandalism and the looting of public property, so long as the perpetrators are sufficiently rich and powerful.”

Oxfam’s Duncan Green makes no mention of the riots on his blog but does suggest a distance between government priorities and those of the public with his comments on the UK Office of National Statistics’ recently published report “Measuring What Matters”: “Topline results from a big public consultation is that ‘what matters’ are health; good connections with friends and family; present and future conditions of the environment and education and training. Not much of that reflected in our leaders’ fixation on GDP.”

Libyan officials have accused NATO of the “massacre” of 85 civilians. NATO denies the charge, saying there is no such evidence and the overnight air strikes were “legitimate.” The EU has added to its existing sanctions against Libya by targeting two organizations it claims are “directly linked” to the Gadhafi regime. And the US is reportedly preparing to impose new sanctions against Syria and to tell President Bashar Assad he must go.

Self-described social entrepreneur Dermot Egan argues in the Guradian that reactionary corporate social responsibility must give way to social enterprise, which requires that a company to embrace “positive social impact” as its central purpose: “Companies cannot continue to pretend to serve society while simultaneously acting against it. Neither can they continue to give shareholder’s interest primacy above the interests of the public. No amount of investment in charitable causes or employee volunteering can change that fact. The purpose of a company will be to create shared value, where business and society achieve success together.” In the meantime, Wyoming state legislators are considering adopting new measures to combat corporate fraud, including banning the practice of appointing nominee directors which companies can use “to hide the company’s real corporate officers and to help the operators avoid responsibility for the company’s actions,” according to the Wyoming Tribune Eagle. And activists in India are outraged the organizers of the London 2012 Olympic Games have accepted Dow Chemical – the parent of Union Carbide whose pesticide plant was the source of a gas leak that killed thousands in Bhopal, India in 1984 – as a sponsor.

In a statement marking the International Day of the World’s Indigenous People, UN High Commissioner for Human Rights Navi Pillay said large numbers of the world’s indigenous people have lost or risk losing “their ancestral lands, territories and natural resources because of unfair and unjust exploitation for the sake of ‘development.’ On this day, let us ask the crucial question: who actually benefits from this so-called development, and at what cost is such development taking place?” She also called on multinational corporations involved in resource exploitation on indigenous lands to respect human rights, before concluding: “The right to development is a human right for all, and indigenous peoples have the right to define and determine their own development.”  Two of the countries Pillay singled out for their problematic handling of relations between extraction companies and indigenous populations were Canada and Brazil. During the current visit by Canada’s prime minister to Brazil, the two nations set up a committee to deepen bilateral trade,  co-chaired by the CEOs of Brazilian miner Vale and Canada’s Scotiabank which last year helped set up “the largest arms length oil and gas deal in Brazilian history.”

A new Economist Intelligence Unit report predicts the African banking industry will grow 178-248 percent by 2020 “due to huge unmet financial needs in a world largely marked by excessive debt and leverage.” On the subject of excessive debt, Jonathan Glennie argues a debt default by a wealthy European nation could be a good thing for poor countries if , as a result, it became easier for them to repudiate their own dates. He believes it is “morally bankrupt to force poor countries to pay debts while their people suffer in extreme poverty, especially if much of the debt is illegal or otherwise illegitimate.” He does not dispute that default is a difficult and painful process, but wonders if repaying massive debts and the attendant interest might not be worse over the long run. As things stand, creditors dictate repayment conditions. But Glennie would like to see debtor nations have recourse to an independent panel that “would try to ensure that the debtor emerges from the proceedings with good prospects for financial and economic stability. And lenders will know that they can no longer get away with odious or careless lending.”