Latest Developments, February 8

In the latest news and analysis…

Fortress Europe
Agence France-Presse reports the European Commission has rejected a Greek request for funds to help build a fence along the Turkish border in order to stem illegal immigration. “ ‘The commission has decided not to follow up the Greek request because it considers it pointless,’ Michele Cercone, a European Commission spokesman, told a news briefing. ‘Fences and walls are short term measures that do not solve migration management issues in a structural way.’ It is up to EU states to decide how to secure their borders, but they have to take into account ‘international obligations including the respect of migrants, human rights,’ Cercone said.”

Give me your tired, your poor…
Yahoo! News reports that increasingly harsh American immigration laws, such as Alabama’s controversial HB 56 which prohibits “business transactions” between undocumented migrants and the state, are impacting people’s ability to obtain food.
“Last month, Kansas kicked more than 1,000 mixed-status families off its food stamp program when it joined three other states in adopting a stricter food stamp eligibility policy. A low-income family of five made up of two undocumented parents and three citizen children now has to show that its income is close to the poverty level for a family of three–not a family of five–in order to access food stamps. This is intended to prevent illegal immigrants from benefiting from food stamps, but immigration advocates say it will leave citizen kids hungry.”

Mining audit
Reuters reports that Zambia plans to audit all the country’s mining projects in search of back taxes it estimates at between $500 million and $1 billion.
“According to UK charity Christian Aid, more than half of the copper Zambia exported in 2008 was destined for Switzerland, but according to Swiss import data almost none of this arrived and [mines minister Wylbur] Simuusa said this trend continued.
This raises a number of transparency issues and activists say copper exported to Switzerland on paper often fetches a lower price than it would if it was exported elsewhere.
‘Once it leaves, where does it go? We don’t have a clue,’ he said.”

World Bank and tax havens
The Task Force on Financial Integrity and Economic Development’s María José Romero writes about revelations that the majority of clients of the World Bank’s private sector arm, the International Finance Corporation (IFC), are using tax havens.
“According to a recent report by Danish NGOs DanWatch and IBIS, ‘57 per cent of the companies analysed in the IFC’s extrac­tives portfolio from 2010 have channelled their investment in developing countries through an intermediate hold­ing company in a tax haven.’ Additionally, ‘more than a third of the countries hosting [the] IFC’s extractive projects have no specific policies on thin capitalisation,’ which means that IFC’s extractive-industry clients can minimise tax payments in developing countries by injecting as much debt and as little equity as possible into their operating subsidiaries.

Civil society organisations have demanded changes in the IFC policy in order to ensure that investing in private sector companies has a positive impact on development.  According to Alvin Mosioma from Tax Justice Network, ‘the IFC should stop channelling public funds to companies using secrecy jurisdictions.’ To make effective and measurable progress towards financial transparency, the DanWatch report also recommends that ‘companies supported by IFC should present their annual accounts on a country-by-country and project-by-project basis, which would en­able host governments and civil society to iden­tify tax avoidance and evasion.’ ”

Resource scramble
A new Global Witness report suggests corruption and instability could worsen in Africa unless there is more transparency in the oil, gas and mining industries.
“Firstly, all companies involved in bidding rounds for oil licences, or that hold oil licences should fully disclose their ultimate beneficial owners. This level of transparency provides government and the public with the opportunity to begin to dispel suspicions that government officials may be benefitting illicitly from the allocation of oil licences. Additionally, the terms of all licences and contracts should be published to make it easier for the appropriate authorities and the public to determine that the terms of a contract are not unduly favourable to a company.”

Cynical aid
MiningWatch’s Catherine Coumans argues the Canadian International Development Agency’s decision to fund corporate social responsibility projects near mine sites is “intended to help Canadian mining companies compete for access to lucrative ore bodies in developing countries” where local opposition to mining is growing.
“Subsidizing the CSR projects of well-endowed multinationals is an irresponsible use of public funds by CIDA, particularly as these CSR projects mask rather than address the serious local- and national-level development deficits caused by mining.
If the Canadian government were interested in addressing the negative impacts of mining on development it would have implemented the recommendations of the parliamentary report of 2005 and the CSR Roundtables of 2007.”

Planning ahead
The Inter Press Service reports the Sierra Leone Conference on Development and Transformation has drafted a 50-year plan for the West African nation and intends to submit it to the country’s parliament.
“Many of the communiqué’s recommendations for improving the economy differ from the growing push towards increased foreign investment in mining, instead focusing on the long-term benefits of health, education and infrastructure. In fact, it suggests that no new mineral extraction agreements should be made by the government without first conducting a public comprehensive analysis of the quantity and amount of the resources to be exploited.
‘We’ve had a system that was not set up for a rapidly growing economy that would be prosperous, it was a system set up to ensure we have a quite country where resources could be extracted with us saying very little,’ said [the conference’s national coordinator Herbert] McLeod. ‘The exploitation of these resources could continue to have dangerous consequences if they are not managed well. You could have an already unequal society become more unequal as the benefits accrue to only a small section of the population.’ ”

Pot and kettle
The Overseas Development Institute’s Jonathan Glennie argues that for all the Western criticism of China’s activities in Africa, Chinese behaviour is “more or less” the same as that of other major donors.
“All in all, Chinese aid to Africa is going to come with all sorts of strings attached, despite the ‘no-conditionality’ rhetoric, and it is a huge power play, despite the proclamations of ‘south-south co-operation’. There will be problems, but no more or less than with the more traditional donors; just different, on account of different attitudes and modalities.”

Latest Developments, October 26

In the latest news and analysis…

License to bribe
Main Justice reports that a co-author of a US Chamber of Commerce proposal to water down the Foreign Corrupt Practices Act has just become the FBI’s general counsel.
“In its report ‘Restoring Balance: Proposed Amendments to the Foreign Corrupt Practices Act’ the Chamber said that the FCPA is a costly burden to business and ‘there is also reason to believe that the FCPA has made U.S. businesses less competitive than their foreign counterparts who do not have significant FCPA exposure.’ The paper called for five specific reforms including limiting a company’s ‘successor liability’ for the prior actions of a firm it has acquired and giving a clear definition of ‘foreign official’ under the statute.
The Open Society Foundation, a George Soros-funded organization issued a report, charging that [Andrew] Weissmann’s plan would ‘significantly reduce the scope and efficacy of the FCPA while substantially undermining more than 30 years of successful U.S. leadership in promoting global anti-corruption standards.’ ‘[T]he Chamber’s proposal looks more like a license to commit pervasive and intentional bribery than a modest attempt to eliminate the risk of prosecutorial over-reach,’ the report said.”

Proposed EU legislation I: A victory for transparency
Tearfund’s Jonathan Spencer welcomes proposed EU legislation that would require extractive industry companies listed in Europe and operating abroad to disclose what they pay to host governments on a project-by-project basis.
“[This information] will play a key role in releasing resources for development, improving transparency and engaging citizens with their governments. Evidence from other countries has shown that where details of budgets and projected expenditure is published, the money is much more likely to reach its intended destination and support development.”

Proposed EU legislation II: Bad for business
But a number of the companies – including Anglo American, Rio Tinto, Shell and Total – that would be subject to the proposed legislation have argued in a letter to the European Commission that such regulations are misguided and would be bad for business.
“One example is oil or gas fields which cross borders, where governments are understandably careful to safeguard the confidentiality of the terms they offer to investors,” said the letter.
“Further damage to competitiveness will be caused by the additional cost and administrative burden of project-level reporting.”

Proposed EU legislation III: No legal teeth
On the other hand, France’s Citizen Forum for Social and Environmental Responsibility argues the European Commission’s proposal lacks legal teeth.
“In fact, notwithstanding progress in certain areas such as reporting obligation, the [European Commission’s] statement on social and environmental responsibility does not address other crucial questions. The proposal lacks concrete measures to improve the legal responsibility between the parent company and its subsidiaries: companies based in Europe cannot, therefore, be considered responsible for violations perpetrated by their subsidiaries and subcontractors in the South. Nor does the statement spell out the legal avenues that would guarantee real access to justice for all victims of violations.” (Translated from the French.)

South-South cooperation
The Guardian has reproduced part of an IRIN series on how countries like Brazil, India, China and South Africa are changing the world of aid as they become increasingly significant donors.
“Many are not new at all – India, Brazil and China have been giving aid for decades – but what is new is that a group of non-western donors is giving more humanitarian and development aid year on year, and reporting it more consistently to official trackers, such as the UN’s Financial Tracking System (127 donors reported aid in 2010).
As they “emerge”, the traditional hegemony held by western donors over how and where aid is dispersed is starting to be dismantled.”

South-South colonization
While many within the development industry speak of the growing importance of South-South cooperation, Al Jazeera uses the issue of African land grabs to raise the question of possible South-South colonization.
“What would Gandhi say today were he to know that Indians, who were only freed from the shackles of colonialism in recent history, were now at the forefront of this “land-grabbing” as part of the race for foreign control over African land and resources; currently being called the Neo-Colonialism of Africa?,” ask the Ethiopian authors of an open letter to the people of India.

One-step solutions
The University of Ottawa’s Rita Abrahamsen argues that attempts to rein in trading of “conflict minerals” are well-intentioned but may not be particularly helpful for ending African conflicts.
“The danger is that by making illegal mining the only story about the conflict in eastern Congo, other causes—requiring more complex solutions—will be ignored. Meanwhile, the international community will invest vast sums in cumbersome tracking procedures that may be easily avoided in an environment of weak institutional capacities and porous borders.
Ultimately, then, the campaign against conflict minerals might do more to restore Canada’s image abroad and make Canadians feel like ‘good global citizens’ than it does to bring peace to the DRC.”

Size doesn’t matter
The UN Population Fund has released its annual State of World Population just as the number of Earth’s inhabitants is set to hit 7 billion, but its authors are more concerned with how people live than with raw numbers.
“Environmental journalist Fred Pearce echoes the view that a small proportion of the world’s population takes the majority of resources and produces the majority of its pollution.
The world’s richest half billion people— about 7 per cent of the global population— are responsible for about 50 per cent of the world’s carbon dioxide emissions, a surrogate measure of fossil fuel consumption. Meanwhile, the poorest 50 per cent are responsible for just 7 per cent of emissions, Pearce wrote in an article for Yale University’s “Environment 360” website. ‘It’s overconsumption, not population growth, that is the fundamental problem,’ Pearce argued”

Latest Developments, October 12

In the latest news and analysis…

Hunting W
Amnesty International is calling on Canada to arrest former US president George W. Bush when he visits the country next week.
“Canada is required by its international obligations to arrest and prosecute former President Bush given his responsibility for crimes under international law including torture,” according to AI’s Susan Lee.
“As the US authorities have, so far, failed to bring former President Bush to justice, the international community must step in.  A failure by Canada to take action during his visit would violate the UN Convention against Torture and demonstrate contempt for fundamental human rights.”

Enforcing neutrality
The Associated Press reports the Swiss government has proposed a new law that would impose a number of restrictions on private security companies based in the country, including preventing them from taking part in foreign conflicts.
“The bill was prompted by the decision of Aegis, one of the world’s biggest private security contractors, to set up a Swiss holding company in 2010. Such holding companies are explicitly included in the proposal, meaning Aegis would have to report its activities to Swiss authorities if the bill is passed.”

A prescription for helping Africa
The UN News Centre reports Deputy Secretary-General Asha-Rose Migiro believes that although aid is still important for Africa, the continent’s needs also include improved market access for its exports, affordable access to foreign technologies and “more policy space” for its countries to chart their own paths.
“‘However, what Africa needs most, is to be recognized as a new investment frontier – where the returns are among the highest in the world,’ she said, noting that the continent has some of the largest known reserves of mineral resources including diamonds and gold; growing oil potential as Ghana and Uganda join the list of exporters; and the largest amount of unexploited arable land, a strategic asset in a world where food crises are becoming recurrent.

The dangers of foreign capital
On the other hand, the UN Development Programme’s Selim Jahan argues that both rich and poor countries must do more to reduce the latter’s over-reliance on foreign capital in order to reduce their vulnerability to global economic shocks.
“For instance, countries can reduce their dependency on exports by recalibrating growth strategies away from a narrow range of exports and by boosting demand from domestic sources. The international community can help reduce the susceptibility of developing countries to volatile commodity prices with the development of new international commodity agreements or funds to compensate countries for the loss in income due to falling prices.”

A call for decency, if not fairness
ECONorthwest’s Ann Hollingshead resists the temptation to project her cause – global tax reform – onto the Occupy Wall Street protestors, arguing instead that they stand for something far more fundamental: decency.
“The Occupy Wall Street movement doesn’t have pithy slogans, quick sayings, or easy solutions because it isn’t about any one problem. It isn’t about offshore finance, or bailouts, or CEO pay, or tax evasion. All of these events are the symptoms of an underlying problem—the status quo. It is a status quo that allows 25% of the FTSE 100′s subsidiaries to lie in tax havens. The status quo that allows the same person to hold both positions of CEO and president of the board. That allows Warren Buffet to pay a lower tax rate than his secretary. And that allows the average American to earn 1/10,800th of the average Forbes 400 earner.”

A very low bar
The Overseas Development Institute’s Jonathan Glennie suggests, given “the west has systematically ruined Haiti’s chances of emerging from destitution,” it might be time for traditional donors to “humbly walk away” and see if other nations can do more good for a devastated country that is still in need of assistance.
“Not that there is any space for naivety about south-south solidarity. Big brothers such as Brazil, Argentina and Venezuela may well engage in the right kind of rhetoric, but there are internal pressures in these countries to act in their own interests rather than Haiti’s – especially on agricultural issues – just as the west has always done. After all, Brazil instigated Minustah in its attempt to look important enough for a permanent security council seat, although it quickly became a Washington-directed intervention. It is not, then, geography that matters, but politics and attitude.
Nevertheless, these countries have also suffered exploitation at various points in their history. They are therefore more likely to understand what is going on and less likely to engage in it. Will they do any better? They can hardly do any worse.”

Afghan minerals
Global Witness’s Eleanor Nichol calls for cautious planning regarding Afghanistan’s huge mineral wealth which has the potential to lift the country’s people out of poverty and end its dependence on foreign aid or could become “a fresh axis of conflict and instability.”
“This means embedding clear processes for the award of extractive concessions; requiring extractive companies to disclose revenue paid to the state on a project-by-project basis; setting up sound legal, regulatory and contractual frameworks that safeguard social, environmental and human rights; publishing beneficial ownership details of companies engaged in the sector; and ensuring Afghans are consulted on, and can monitor, mining activities.”

Paying taxes for selfish reasons
The European Network on Debt and Development’s Alex Marriage argues it is actually in the best interests of transnational companies to integrate tax policy into their approach to corporate social responsibility.
“Research has shown that direct investors in low income countries tend to value political stability, the rule of law and human capital more than effective tax rates when deciding whether to invest. Sufficient, predictable tax revenue is needed to foster all of these conditions. High public investment is something companies need but some are not prepared to pay for.”