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Latest Developments, December 14

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In the latest news and analysis…

Deadly weapons
Harvard University’s Dani Rodrik compares the International Monetary Fund’s view on capital flows to US lawmakers’ policy on guns:

“Guns, like capital flows, have their legitimate uses, but they can also produce catastrophic consequences when used accidentally or placed in the wrong hands. The IMF’s reluctant endorsement of capital controls resembles the attitude of gun-control opponents: policymakers should target the harmful behavior rather than bluntly restrict individual freedoms. As America’s gun lobby puts it, ‘Guns don’t kill people; people kill people.’ The implication is that we should punish offenders rather than restrict gun circulation. Similarly, policymakers should ensure that financial-market participants fully internalize the risks that they assume, rather than tax or restrict certain types of transactions.
…
Most societies control guns directly because we cannot monitor and discipline behavior perfectly, and the social costs of failure are high. Similarly, caution dictates direct regulation of cross-border flows.”

Profit sharing
In a Reuters interview, Ghana’s President John Dramani Mahama pledges to push foreign oil and mining companies to give his country a bigger share of profits from the extraction of its natural resources:

“ ‘With regards to the oil, our main problem is with income taxes,’ [Mahama] said, pointing out that Tullow’s contract allowed it to avoid income tax payments until it has recovered the costs of bringing a field into production.
‘We could use that revenue, so if we had a way of getting some payments on income taxes, on account even, that is something we would want to look at,’ he said.
…
Ghana is in the midst of discussions with gold-mining companies to improve terms. Mahama said the state was seeking to loosen up so-called ‘stability agreements’ held by some firms that lock in royalty and tax rates.
Ghana this year raised royalties on gold to five percent from three percent, a change that did not apply to miners like AngloGold Ashanti and Newmont protected by stability agreements.”

Cui bono
The Center for Global Development’s Julie Walz and Vijaya Ramachandran write that, nearly three years on from Haiti’s devastating earthquake, the vast majority of the assistance money disbursed has not gone to Haitians:

“Here is what we found from the data collected by the Office of the Special Envoy for Haiti:

  • $9.04 billion has been disbursed by both public and private donors.
  • Bilateral and multilateral donors have disbursed $6.04 billion, which is 47.8% of the $12.62 pledged in humanitarian and recovery funding.
  • Of the $6.04 billion from bilaterals and multilaterals, only 9.5% ($579 million) was channeled to the Government of Haiti (GOH) using country systems. 0.6% ($36.2 million) was channeled to Haitian NGOs and businesses.”

Killer handbags
The Guardian reports on the health impacts of luxury leather goods on those who make them in Bangladesh:

“According to the World Health Organisation, 90% of Hazaribagh’s tanning factory workers will die before they’re 50. Half – some 8,000 – have respiratory disease already. Many of the workers are children.
Thousands more Bangladeshi lives are blighted by the millions of litres of waste that pour, untreated, from the tannery district gutters, through a crowded housing area, and into Dhaka’s main river.
…
Yet the industry in the heart of Bangladesh’s capital is booming, because high-quality ‘Bengali black’ leather, much in demand by European leather goods makers, is cheap. A new Human Rights Watch (HRW) report claims that’s chiefly because of the factories’ refusal to clean up or pay decent wages, and the Bangladeshi government’s failure to step in despite repeated promises. The industry, worth half a billion pounds in exports last year, is crucial to this desperately poor country.”

Mutual responsibility
Global Financial Integrity’s Sarah Freitas writes that Zambia lost $8.8 billion in illicit financial flows (defined as “the proceeds of crime, corruption, and tax evasion”) in the last decade, a problem that no single country can tackle alone:

“These illicit outflows come on top of tremendous outflows from legal corporate tax avoidance. $2 billion is lost yearly to tax avoidance by multinational corporations operating in Zambia, according to Zambian Deputy Finance Minister Miles Sampa. Most of this tax avoidance is due to abusive transfer pricing–which is a type of quasi-legal trade misinvoicing–in the mining sector.
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Zambia has the natural resource wealth to dig (literally and figuratively) its way out of poverty, but only if the West acts at the same time. Zambia can’t do this alone. The extra money could be siphoned off to the offshore bank accounts of corrupt public officials, or companies could find new ways to legally pretend that their profits were made elsewhere. The global shadow financial system–a network of secrecy laws, tax havens, shell corporations, and banks like HSBC without real money laundering controls–facilitates both illicit financial flows and pernicious corporate tax avoidance. We need to break this system down. We can start by reforming international customs and trade protocols to detect and curtail trade misinvoicing and requiring the country-by-country reporting of sales, profits and taxes paid by multinational companies.”

Above the law
Rolling Stone’s Matt Taibbi rejects the thinking that US criminal charges against HSBC executives for laundering Mexican cartel money could have jeopardized global financial stability:

“There is no reason why the [US] Justice Department couldn’t have snatched up everybody at HSBC involved with the trafficking, prosecuted them criminally, and worked with banking regulators to make sure that the bank survived the transition to new management. As it is, HSBC has had to replace virtually all of its senior management. The guilty parties were apparently not so important to the stability of the world economy that they all had to be left at their desks.
So there is absolutely no reason they couldn’t all face criminal penalties. That they are not being prosecuted is cowardice and pure corruption, nothing else.”

Bunker mentality
Inter Press Service reports that Western countries continue to block an international conference on migration called for a UN General Assembly resolution back in 1993:

“Joseph Chamie, a former senior U.N. official and currently research director at the New York-based Centre for Migration Studies, told IPS that wealthier and more influential labour-importing industrialised countries and their allies have consistently resisted convening a global conference on international migration.
‘A conference would likely limit their sovereignty over matters relating to international migration,’ he said.
As a result, he said, the United Nations is unlikely to convene a global, intergovernmental conference on international migration in the foreseeable future.
Instead, said Chamie, the United Nations ‘will continue to resort to high-level dialogues that are voluntary, non-binding global forums to address international migration.’ ”

Latest Developments, July 24

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In the latest news and analysis…

Bad news on inequality
The Tax Justice Network has released a pair of reports on the extent and the impacts of the global offshore banking system, which together argue that the “at least $21 trillion hidden in secret tax havens” mean economic inequality is actually much worse than generally thought:

“At its simplest, our argument is that if an asset is hidden in an offshore bank account, or an offshore trust or company, and the ultimate owner or beneficiary of the income or capital cannot be identified, then this asset and the income it produces will not be counted in the inequality statistics. Almost all these hidden assets are owned by the world’s wealthiest individuals. So it follows that the inequality statistics, particularly at the top end of the scale, underestimate the scale of the problem.”

AND

“For our focus subgroup of 139 mostly low-middle income countries, traditional data shows aggregate external debts of $4.1tn at the end of 2010. But take their foreign reserves and unrecorded offshore private wealth into account, and the picture reverses: they had aggregate net debts of minus US$10.1-13.1tn. In other words, these countries are big net creditors, not debtors. Unfortunately, their assets are held by a few wealthy individuals, while their debts are shouldered by their ordinary people through their governments.”

Strings attached
The International Monetary Fund has announced it has approved a $156 million loan for Malawi, as a result of new president Joyce Banda’s policies, even though they may be exacerbating the country’s growing food crisis:

“Following the Board’s discussion of Malawi, Naoyuki Shinohara, Deputy Managing Director and Acting Chair, issued the following statement:
‘Malawi’s new administration moved swiftly to devalue the kwacha, adopt a flexible exchange rate regime and liberalize current account transactions to address the country’s chronic balance of payment problems and improve the outlook for poverty reduction and growth.’
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‘Tight control over non-priority spending will be needed to ensure that expenditures are aligned with the government’s priorities, including scaled up spending on social protection programs to mitigate the impact of adjustment measures on the poor.’ ”

Regulatory capture
The New York Times discusses a new book by Neil Barofsky, “the man whose job it was to police the $700 billion Troubled Asset Relief Program”:

“ ‘There has to be wide-scale acknowledgment that regulatory capture exists, dominates our system and needs to be eradicated,’ Mr. Barofsky said in the interview.
…
‘We need to re-educate our regulators that it’s O.K. to be adversarial, that it’s not going to hurt your career advancement to be more skeptical and more challenging,’ he said. ‘It’s implicit in so much of the regulatory structure that if you don’t make too many waves there will be a job for you elsewhere. So we have to limit those job opportunities and develop a more professional path for regulators as a career. That way, they won’t always have that siren call of Wall Street.’
Mr. Barofsky’s assessment of his former regulatory brethren is crucial for taxpayers to understand, because Congress’s financial reform act — the Dodd-Frank legislation — left so much of the heavy lifting to the weak-kneed.”

Expanding footprint
MENAFN reports that Barrick Gold subsidiary African Barrick Gold is growing its operations beyond Tanzania, where controversies involving the company’s mines have included alleged toxic spills and fatal shootings, into Kenya with newly acquired exploration assets:

“Aviva’s Kenyan assets are located in the southwest corner of Kenya, about 300 kilometers northwest of Nairobi, near the border of Uganda and on the shores of Lake Victoria, it said.
‘This acquisition represents the first step in expanding our footprint outside of Tanzania and building our future growth pipeline,’ said Chief Executive Greg Hawkins. ‘The acquisition is an attractive entry into an under explored and highly prospective land package in a country bordering our existing operations.’ ”

Democratic calculus
Responding to a Human Rights Watch report condemning the current state of human rights in Venezuela, the Overseas Development Institute’s Jonathan Glennie counters that in some instances, freedom of the press “can actually mitigate against progress for the majority poor”:

“Take the Murdoch empire, multiply it by about a thousand and you are somewhere close to how powerful the rightwing media is in Latin America. In [the Center for Economic and Policy Research’s Mark] Weisbrot’s words the ‘unelected owners [of major media outlets] and their allies use their control of information to advance the interests of the wealth and power that used to rule the country’.
It is proven beyond doubt that the rightwing media was an active and key player in the 2002 coup that briefly removed [Venezuelan President Hugo] Chávez from power (see the brilliant documentary The revolution will not be televised). In such a context, reducing the rightwing media’s room for manoeuvre may be a crucial element in any plan to radically transform a country. (In the run-up to elections in October, Chavez has accused Venezuela’s privately owned media companies of bias towards the opposition and of ignoring his government’s achievements.) Where single-issue civil rights organisations see media crackdowns, what may be happening is an elected and popular government trying to implement the will of the people in the face of powerful business interests prepared to undermine democracy if need be.”

Fatal laws
Reuters reports that Mexican President Felipe Calderon has called America’s gun laws “mistaken” and is urging the US government to change them: 

“In comments posted on his Twitter account on Saturday, Calderon offered his condolences to the United States after a gunman went on the rampage with an assault rifle at a midnight premier of the new Batman film in Aurora, Colorado.
But Mexico’s president, who has repeatedly called on Washington to tighten gun controls to stop weapons flowing from the United States into the hands of Mexican drug cartels, said U.S. weapons policy needed a rethink after the killings.”

Fostering homophobia
The Guardian reports that US-based thinktank Political Research Associates is accusing American evangelical groups of attempting a “cultural colonisation” of Africa by opening offices across the continent to promote attacks on abortion and homosexuality.

“Entitled Colonising African Values: How the US Christian Right is Transforming Sexual Politics in Africa, the study analysed data from seven African countries and employed researchers for several months in Kenya, Malawi, Zambia and Zimbabwe.
It identified three organisations it believes are aggressively targeting the continent: [televangelist Pat Robertson’s American Center for Law and Justice], the Catholic group Human Life International and Family Watch International, led by the Mormon activist Sharon Slater.
Each of these ‘frame their agendas as authentically African, in an effort to brand human rights advocacy as a new colonialism bent on destroying cultural traditions and values’, the report says.”