Latest Developments, November 15

In the latest news and analysis…

Vulture funds
The Guardian reports there are growing calls for the UK to close a legal loophole that allows so-called vulture funds to use Jersey courts to collect money from poor countries.
“Vulture funds legally buy up worthless debt when countries are at war or suffering from a natural disaster and defaulting on their sovereign debt. Once the country has begun to stabilise, vulture funds cash in their cheap debt deeds, at massively inflated cost to the countries.
In the case before the Jersey court, to be decided next month, FG Hemisphere, run by vulture financier Peter Grossman, is trying to collect $100m from the DRC on a debt that appeared to start out at just $3.3m. The original debt was owed to the former Yugoslav government to build power lines.”

Gibraltar tax ruling
Agence France Presse reports Europe’s highest court has ruled against a tax reform proposed by the UK for its territory of Gibraltar, on the grounds that it would constitute state aid to offshore corporations.
“The system was ‘specifically designed’ so that companies with no real physical presence could avoid taxation because it would be based on the number of employees and the size of business premises occupied in Gibraltar, the court said.
The assessment to levy the tax ‘excludes from the outset any taxation of offshore companies, since they have no employees and also do not occupy business property,’ the court said.”

Growing inequality
Euromonitor has released a new report that suggests global inequality is on the rise – “high net worth individuals” increased their wealth by nearly 10 percent in 2010 – and is likely to continue growing in the years ahead.
“It is possible for governments to help narrow the gap between rich and poor by introducing various redistribution mechanisms, such as social welfare programs, minimum wage legislation, higher taxes for the rich and better educational opportunities for the poor,” according to Euromonitor’s Gina Westbrook. “However, many governments are trying to tackle their growing debt troubles, leaving very little financial room for investing in efforts to ease the plight of the poor.”

Toxic dumping trial
Netherlands-based oil and metals trader Trafigura is back in a Dutch court appealing a million-euro fine for illegally exporting toxic waste that was subsequently dumped in Cote d’Ivoire, while the prosecution is seeking a penalty twice that large, as well as the overturn of acquittals for the city of Amsterdam and the Amsterdam Port Services.
“On July 2, 2006, toxic residues on board the Probo Koala were prevented from being offloaded for treatment in Amsterdam’s port and redirected to Abidjan, where they were dumped on city waste tips.
Trafigura, which denies any link between the waste and subsequent deaths and has an independent experts’ report backing its stance, reached out of court settlements for 33 million euros and 152 million euros in Britain and Ivory Coast that exempted it from legal proceedings.
But a United Nations report published in September 2009, found ‘strong’ evidence blaming the waste for at least 15 deaths and several hospitalisations.
The dumping caused 17 deaths and thousands of cases of poisoning, Ivorian judges said.”

Resource extraction harm reduction
The UN News Centre reports on a new book on exploitation of natural resources in post-conflict settings, which includes advice for the international community whence most extractive industry companies originate.
“The publication stresses four areas where international support can be helpful which include providing help to post-conflict countries so they secure better contracts with companies extracting natural resources, increasing transparency in payments and decision-making, supporting the monitoring of companies extracting natural resources, and encouraging strategic planning using revenues to provide immediate gains to the population.”

Reviving cluster munitions
Human Rights Watch’s Steve Goose says the US is leading the fight against the elimination of cluster munitions in negotiations, currently underway in Geneva, to establish a new draft law that would permit the “continued use, production, trade, and stockpiling” of weapons 111 countries have already agreed to ban outright.
“The [Convention on Certain Conventional Weapons] proposal would also establish a terrible precedent in international humanitarian law, adopting for the first time an instrument with weaker standards after one with stronger standards has already been embraced by most nations. The trend has been for the law to grow progressively stronger, with ever greater protections for civilians.”

Free trade opposition
Al Jazeera’s Patty Culhane blogs about the Asia-Pacific Economic Conference in Hawaii, the proposed Trans-Pacific Partnership and protesters not sold on the benefits of international free trade.
“The bottom line for these protesters is that they feel the expanding global economy means their culture is being replaced, their resources exploited and their natural wealth taken. It is true that tourism here means much of the money made goes back to the giant hotel chains. There are jobs, but is it better to be paid to clean up after tourists, or to work in a field? That isn’t really the question I’m learning. They don’t all necessarily want to go back to what they had, but they want a bigger share of what is here now.”

Arab Spring media spin
The University of Michigan’s Juan Cole contends the Western media’s coverage of the Arab Spring as a purely political protest was tactically motivated.
“If the revolutions in Tunisia, Egypt and Libya were merely about individualistic political rights – about the holding of elections and the guarantee of due process – then they could be depicted as largely irrelevant to politics in the US and Europe, where such norms already prevailed.
If, however, they centred on economic rights (as they certainly did), then clearly the discontents of North African youth when it came to plutocracy, corruption, the curbing of workers’ rights, and persistent unemployment deeply resembled those of their American counterparts.
The global protests of 2011 have been cast in the American media largely as an “Arab Spring” challenging local dictatorships – as though Spain, Chile and Israel do not exist. The constant speculation by pundits and television news anchors in the US about whether “Islam” would benefit from the Arab Spring functioned as an Orientalist way of marking events in North Africa as alien and vaguely menacing, but also as not germane to the day to day concerns of working Americans. The inhabitants of Zuccotti Park in lower Manhattan clearly feel differently.”

Latest Developments, October 14

In the latest news and analysis…

Responding to Occupy Wall Street
The University of Manitoba’s Hari Bapuji and the University of Massachusetts’s Suhaib Riaz examine the nature of the Occupy Wall Street protests and advise US business leaders on how best to respond.
“So if Occupy Wall Street is leaderless and unfocused, why isn’t it going away? The persistence of the ‘occupations’ is a signal that there is authentic, deep-seated unhappiness with the failings of the U.S. economic system. It’s an indicator that economic inequality is perceived as an important issue — one requiring business’s immediate attention.
The demonstrators are asserting that they are stakeholders in American business, and they’re correct — they are stakeholders, as consumers, as employees, and as citizens affected by the financial system in general. Businesses would do well to accept that fact and engage with the protesters, rather than trying to demonize or dismiss them.”

Constructive criticism
The Globe and Mail reports Mark Carney, the governor of Canada’s central bank and a potential chairman of the Financial Stability Board tasked with reforming international banking rules, has called the Occupy Wall Street and related protests “entirely constructive.”
“In a television interview, Mr. Carney acknowledged that the movement is an understandable product of the ‘increase in inequality’ – particularly in the United States – that started with globalization and was thrust into sharp relief by the worst downturn since the Great Depression, which hit the less well-educated and blue-collar segments of the population hardest.”

International media bias
The Institute for Security Studies’ Arthur Chatora accuses the international media of uneven and perhaps agenda-driven coverage of human rights abuses in the Libyan conflict.
“This biased media coverage raises questions about the credibility of media organisations and their agenda. Is it because the presence of widespread evidence of racially motivated human rights abuses committed by the TNC forces raises moral and ethical questions that challenge the validity of the notion of a “humanitarian war”? The responsibility assumed by NATO and the TNC forces to protect civilian lives from abuse by Gaddafi forces is also questionable, as it appears this mandate does not seem to extend to the protection of black Libyans and African immigrants.”

International legal bias
The International Institute for Environment and Development’s Lorenzo Cotula argues the current international legal regime encourages land grabs in Africa.
“National and international legal developments have strengthened the protection of companies against adverse action by the host government. But much less progress has been made to strengthen the rights of local people. As a result, the ‘shadow’ that the law casts on interactions between large companies and local villagers presents different shades of grey: those already benefiting from greater access to capital, expertise and influence also enjoy stronger rights.”

Tax agreement inequality reports that not everyone is convinced Switzerland’s new tax agreement with India – one of 70 negotiated by the European country since its government pledged to reduce its famous banking secrecy in 2009 – is much more than window dressing.
“‘As seen by the recent cases of Germany and the United Kingdom, a good [double tax agreement] is not enough. These powerful neighbours have already negotiated new agreements which provide easier access to tax information. The Indian government got the maximum it could as an emerging market but influential industrial countries can get more information,’ [according to Alliance Sud’s Mark Herkenrath].
The Alliance Sud specialist said it would be extremely difficult for India to get the tax information it needs via a DTA and the Indian government would have to request an additional agreement for a withholding tax and special information disclosure clauses.”

Intellectual property vs access to medicines
Daniele Dionisio, a member of the European Parliament Working Group on Innovation, Access to Medicines and Poverty-Related Diseases, voices concern about a new plan introduced by the US during last month’s Trans-Pacific Partnership negotiations.
“Taken together, the non-transparent dynamics bound up with TEAM [Trade Enhancing Access to Medicines] compound fear that this initiative would be something that backs big pharma rather than making headway on non-discriminatory access to medicines in developing countries. This is particularly worrying owing to the fact that TEAM will probably play as the basis for future agreements between the US and other developing and developed countries. This concern seemingly harmonizes with a swipe taken by the US rep on 14 September at the WTO trade policy review of India, maintaining that India’s IP trade policy is out of sync with international best practices.”

The business of corruption
ECONorthwest’s Ann Hollingshead uses some real-world examples to take on the US Chamber of Commerce’s contention that the Foreign Corrupt Practices Act is a threat to American business.
“Has an American company never lost a contract in the history of the FCPA because its officers were not allowed to bribe? No. But does the FCPA provide a systematic impediment to American business competitiveness abroad? No. When an American businessman refuses to pay a bribe, it doesn’t mean the official necessarily goes looking elsewhere. As in Mexico, often the FCPA allows for a shift in the business dynamics, changing the playing field for everyone involved. Moreover, as the Argentine case shows, many businesses welcome this assurance and can use it to their benefit.”

Race to the bottom
The Economist looks at the growing movement against tax havens and the relative ineffectiveness of regulations to this point in stopping the race to the bottom.
“One avenue for reform is to place a greater duty on companies to explain what profits they make where. That would help prevent the worst abuses of transfer pricing scams, in which tax havens play a handy role. The muddled Dodd-Frank reforms, passed by Congress in America and now being implemented by regulators, supposedly go some way towards this; so does legislation being drafted in the EU.”