Tag: Economy & Trade

The Year of Inflation Exposes Dogma and Class Bias — Global Issues

  • Opinion by Anis Chowdhury (sydney)
  • Inter Press Service

SYDNEY, Jan 17 (IPS) – Inflation worries topped Ipsos’s What Worries the World survey in 2022 overtaking COVID concerns. The return of inflation caught major central banks, e.g., the US Federal Reserve (Fed), Bank of England, European Central Bank “off guard”. The persistence of inflation also surprised the International Monetary Fund (IMF). The return of inflation and its persistence exposed the poverty of the economics profession, unable to agree on its causes and required policy responses. It also exposed the profession’s anti-working class biases.

Anis Chowdhury

Inflation goof

Almost all major central banks as well as the IMF dismally failed to see the coming of inflation. In December 2020, the US Fed forecast that prices would rise by less than 2% in 2021 and 2022. It failed spectacularly when in December 2021, it estimated that inflation in 2022 would be just 2.6% even though prices were already rising by more than 5% a year.

The US Fed was not alone in failing to see inflation coming. The Governor of Australia’s central bank – the Reserve Bank of Australia (RBA) – was so confident of low inflation that he declared in March 2021 that the interest rate would remain at a historic low until at least 2024. Inflation in advanced economies during 2021 exceeded the average of forecasters’ expectations by around 5–8 percentage points. The IMF’s forecasts have badly and repeatedly undershot inflation.

There was a widespread view among most central bankers and leading economists that the price increases (or inflation) that began in mid-2021 were temporary, and price increases would slow or inflation would drift downwards in 2022. Some, of course, insisted otherwise, and wanted immediate anti-inflationary measures. Thus, policy confusion ruled.

Inflation phobia and dogma

Soon inflation phobia overtook and central banks were advised to act decisively with interest rate hikes even if it meant slowing the economy or a rise in unemployment. Exaggerated claims were made without evidence that not acting now would be more costly later.

References to rare episodes of hyperinflation were made to justify tough policy stances.

The dogmatic inflation hawks ignored the fact that, in most cases, inflation does not accelerate to become harmful hyperinflation, but remains moderate. They also ignored their own neo-classical macroeconomic model, which suggests small welfare loss from moderate inflation.

Notwithstanding the IMF’s Article IV preamble which provides that economic policies should aim to foster “orderly economic growth with reasonable price stability, with due regard to circumstances”, a one-size-fits-all policy of steep interest rate hikes became the only medicine to be applied to achieve a universal inflation target of 2%, a figure plucked from thin air. Yet, central bankers and mainstream economists boast their credibility!

Inflation excuse for class war

Inflation is primarily an expression and outcome of conflicting claims over the distribution of national output and income, e.g., firms’ profit mark-ups vis-à-vis workers’ wages. Thus, no sooner inflation spiked early in the year due to slow adjustment of COVID-induced supply shortages to pent-up demand, exacerbated by war and sanctions, leading central bankers and mainstream economists found an excuse to weaponise economic policies against the working class.

Stoking the fear of wage-price spirals, they advocate the use of an interest rate sledgehammer to create unemployment and, in turn, discipline labour. This is despite research within the IMF and the Reserve Bank of Australia which found no evidence of wage-price spirals since the 1980s due to declines in labour’s bargaining power. Thus, Bloomberg headlined, “Fattest Profits Since 1950 Debunk Wage-Inflation Story of CEOs”.

Research conducted by the IMF also found increases in firms’ or corporations’ market power, resulting in higher prices and profit margins. Yet, the IMF does not think such factors “are contributing in any sizeable way to the current inflationary environment”. Instead, it justifies such fattening of profits on the ground that “they provide flexible buffers between general wage and general price increases” and that it is only a catching-up “after taking a hit in 2020”!

But no such compassion is extended to the working people who have lost their lives and livelihoods. The calls for “front-loaded interest rate hikes simply got louder. The Bank for International Settlements (BIS) warned, “With the prospect of higher wages as workers look to make up for the purchasing power they lost, inflation could be high for long”.

Labour a clear loser

Labour is a clear loser. Labour’s income share in the GDP has been in decline since the early 1970s. Casualisation, off-shoring, anti-union legislation and technological progress have greatly reduced labour’s bargaining power, while privatisation and dilution of anti-monopoly legislation hugely strengthened corporate power and their collusive anti-competitive behaviour. Meanwhile, CEO compensation packages swelled to obnoxious levels, rising 940% since 1978 in the US as opposed to a 12% rise for workers during that period. Profiting from the pandemic, CEO pay increased by 16% in 2020 when workers suffered, and to a record level in 2021.

Leading central bankers and mainstream economists conveniently created a dogma around a 2% inflation target to justify their anti-labour stance. The 2% inflation target has become a global norm akin to the law of gravity, even though it has no theoretical or empirical basis. The law of gravity differs depending on altitude, but the 2% target is said to be universal regardless of circumstances!

Collateral damage

Meanwhile, the advanced countries’ inflation fight is causing adverse spillover into developing countries. Higher interest rates have slowed the world economy, and triggered capital outflows from developing countries, thereby depreciating their currencies and lowering their export earnings.

Together, these are causing devastating debt crises in many developing countries, similar to what happened in the 1980s. The rating agency S&P estimates that central bank rate rises could land global borrowers with US$8.6t in extra debt servicing costs in the coming years.

Instead of providing genuine debt-relief, the G20 kicked the can down the road. As wealthy nations failed the poor countries during the pandemic, the IMF is moving to debt-distressed countries with conditionality-laden one-size-fits-all austerity packages. Thus, a Foreign Policy op-ed asked, “The International Monetary Fund: Holy Grail or Poisoned Chalice?”

Meanwhile, the chiefs of the World Bank and the BIS urged “supply-side” policies professed to increase labour force participation and investment. These are code words for further labour market deregulation, privatisation and liberalisation.

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Africas Vast Arable Land Underutilized for Both Cash and Food Crops — Global Issues

A new conversation is needed about food production in Africa. Credit: Joyce Chimbi/IPS
  • by Joyce Chimbi (nairobi)
  • Inter Press Service

NAIROBI, Jan 16 (IPS) – Concerns are rife that while Africa is growing more crops, these are not for food and that on the current trajectory, present food import costs into Africa, now estimated at 55 billion US dollars a year, could double by 2030.

Three crop species-maize, wheat and rice meet an estimated 50 percent of the global requirements for proteins and calories, according to the UN’s Food and Agriculture Organization (FAO).

Yet despite Africa’s expensive agricultural sector, the continent’s maize, rice, and wheat account for 7, 5, and 4 percent of the world’s production, respectively. But experts say pitting food crops against cash crops is not the right conversation to have.

“The most productive conversation should be firmly centered on how to support farmers to produce more food for everyone and to export even more as this will improve the farmer’s quality of life and get themselves out of poverty,” says Hafez Ghanem, former regional Vice President of the World Bank Group and a current nonresident senior fellow in the Global Economy and Development Program at the Brookings Institution.

He tells IPS the mistake many countries made after independence was to try to ensure cheap food for people in the cities by keeping farmgate prices low and by trying to coerce farmers into producing certain food crops. The result was that the farmer became poor. If the farmer is poor, they cannot produce, and in the long run, everybody becomes poor and hungry.

“No country can produce all the foods that it needs. We will have to export some and produce some. If we start increasing yields for cereals, for instance, through increased use of quality seeds, fertilizer, and irrigation, farmers can produce more food crops without interfering with cash crops production, and the farmer will be richer.”

According to the Africa Agriculture Status Report 2022, “for Africa, accelerating the transformation of our food systems is more vital than ever. Africa has a few other incentives for transforming its food system; with one of the most degraded agricultural soils in the world and increasing droughts, Africa will face significant exposure to water-related climate risks in the future.

At least 90 percent of sub-Saharan Africa’s rural population depends on agriculture as its primary source of income. More than 95 percent of agriculture is reliant on rainfall, according to the report.

The report finds that the consequences of unpredictable rainfall, rising temperatures, extreme drought, and low soil carbon will further lower crop yields exposing Africa’s poorest communities to increasingly intense climate- and water-related hazards with disastrous results.

Ghanem does not believe that the issue of food security in Africa is a consequence of producing too many cash crops. The real issue, he says, is two-fold.

“The first part of the issue is that, in general, the productivity of land under cultivation for both cash and food crops is low. We need to increase land yields for both cash and food crops. The solution, I do not believe, is to stop exporting cash crops to produce more food,” he explains.

The second part of the issue, he says, is the challenge presented by climate change, and “we need to do much more to make agriculture more resilient to climate change.”

He says that concerns that there is the prioritization of cash crops over food crops are misplaced, “think about the profile of farmers in Africa. We are talking about very smallholder farmers. In countries such as Cote d’Ivoire and Ghana, farmers are making much more profits producing cocoa or coffee than producing rice, for example.“We cannot ask our farmers to produce crops that are lower yielding and therefore less profitable.”

Any solution that we propose for food security, he cautions, has to bear in mind that the most food insecure and poorest people in Africa are in the rural areas.

Against this backdrop, experts such as Ghanem see no conflict between the production of food and cash crops, saying that Africa has vast lands to produce both. Outside of countries such as Egypt and other countries in North Africa, he says the rest of the continent has vast and available arable land.

Data by FAO shows Africa is home to an estimated 60 percent of the world’s uncultivated arable land. Ghanem, therefore, says the solution is to facilitate farmers to irrigate their lands and access high-quality seeds and fertilizer.

Africa needs about $40 to $70 billion in investment from the public sector and another $80 billion from the private sector annually to sustain food production on the continent, according to Africa Agriculture Status Report.

Ghanem says investing in technology that can produce critical inputs such as fertilizer and climate-resilient high-quality seeds will prove highly productive in the future.

Take, for instance, fertilizer which is expensive because it is imported. He lauds the establishment of some of the world’s largest fertilizer-producing companies in Nigeria and Morocco, calling for such investments in other parts of the continent.

Ghanem says subsidies for farm inputs such as fertilizer are not the solution and that producing inputs that farmers need in-country or at least on the continent will set the agricultural sector on a resilience path to greater productivity, enough food for all, and profitability.

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More Austerity in 2023 Will Fuel Protests — Global Issues

Anti-Austerity protests in 2006-2020. Credit: World Protests Platform
  • Opinion by Isabel Ortiz, Sara Burke (new york)
  • Inter Press Service

NEW YORK, Jan 13 (IPS) – This week world leaders meet in Davos to discuss cooperation to address multiple crises, from COVID-19 and escalating inflation to slowing economic growth, debt distress and climate shocks.

Only three months earlier, finance ministers had gathered in Washington DC for the same reason. The mood was grim. The need for ambitious actions could not be greater; however, there were no agreements, evidencing the fragility of multilateralism and international cooperation.

Isabel Ortiz

Worse, policy makers -advised by the International Monetary Fund- are resorting to old, failed and regressive policies, such as austerity (now called “fiscal restraint” or “fiscal consolidation”), instead of much needed corporate/wealth taxation and debt reduction initiatives, to ensure an equitable recovery for all.

A recent global report alerts of the dangers of a post-pandemic wave of austerity, far more premature and severe than the one that followed the global financial crisis a decade ago. While governments started cutting public expenditures in 2021, a tsunami of budget cuts is expected in 143 countries in 2023, which will impact more than 6.7 billion people or 85% of the world population.

Analysis of the austerity measures considered or already implemented by governments worldwide shows their significant negative impacts on people, harming women in particular. These austerity policies are:

  • targeting social protection, excluding vulnerable populations in need of support by cutting programs for families, the elderly and persons with disabilities (in 120 countries);
  • cutting or capping the public sector wage bill, this is, reducing the number and salaries of civil servants, including frontline workers like teachers and health workers (in 91 countries);
  • eliminating subsidies (in 80 countries);
  • privatizing public services or reforming state-owned enterprises (SOEs) in areas such as public transport, energy, water;
  • reforming hard-earned pensions by adjusting benefits and parameters, resulting in lower incomes for retirees (in 74 countries);
  • (6) labor flexibilization reforms (in 60 countries);
  • reducing employers’ social security contributions, making social security unsustainable (in 47 countries);
  • and even cutting health expenditures despite COVID-19 is not over.
Sara Burke

Austerity and all the human suffering it causes is evitable, there are alternatives. There are at least nine financing options, available even in the poorest countries, fully endorsed by the UN and international financial institutions, from increasing progressive taxation to reducing debt. Policymakers must urgently look into these. Many countries have already implemented them.

In recent years, citizens have protested austerity all around the world. A recent study on world protests shows that nearly 1,500 protests in the period 2006-2020 were against austerity. Citizens demand better public services, social protection, jobs with decent wages, tax and fiscal justice, equitable land distribution, and better living standards, among others. Protests against pension reforms, and high food and energy prices have also been very prevalent. Recently, the jobs and cost-of-living crises have been accentuated by the COVID-19 pandemic, resulting in more protests despite lockdowns.

The majority of global protests against austerity and for economic justice have manifested people’s indignation at gross inequalities. The idea of the “1% versus the 99%,” that emerged a decade ago during protests over the 2008 financial crisis, has spread around the world, feeding grievances against elites and corporations manipulating public policies in their favor, while the majority of citizens continue to endure low living standards, aggravated by austerity cuts.

Let’s remember that trillions of dollars have been used to support corporations during the pandemic and to support military spending. Now people are being asked to endure austerity cuts, at a time when they are suffering a cost-of-living crisis. The 2023 meetings in Davos are being faced with new protests and demands to tax the rich.

Unless policymakers change course, we shouldn’t be surprised to see increasing waves of protests all over the world. Clashes in the street are likely to intensify if governments continue to fail to respond to people’s demands and persist in implementing harmful austerity policies.

Governments need to listen to the demands of citizens that are legitimately protesting the denial of social, economic and civil rights. From jobs, public services and social security to tax and climate justice, the majority of protesters’ demands are in full accordance with United Nations proposals and the Universal Declaration of Human Rights. Leaders and policymakers will only generate further unrest if they fail to act on these legitimate demands.

Isabel Ortiz is Director of the Global Social Justice Program at Joseph Stiglitz’s Initiative for Policy Dialogue at Columbia University, former Director at the International Labour Organization (ILO) and UNICEF.

Sara Burke is Senior Policy Analyst at Friedrich-Ebert-Stiftung (FES) New York

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Security Policy is more than Defence with Weapons — Global Issues

  • Opinion by Herbert Wulf (duisburg, germany)
  • Inter Press Service

DUISBURG, Germany, Jan 11 (IPS) – If our societies are to become resilient and sustainable, our priorities must change towards de-escalation, including in diplomacy and economy.

Putin’s war against Ukraine has not only damaged the international cooperative security architecture, it has permanently destroyed it. The Helsinki Act of 1975, the Charter of Paris of 1990 and the NATO-Russia Founding Act of 1997 created a basis for security cooperation in Europe – even ‘a new era of democracy, peace and unity’, as the Charter of Paris was euphorically titled. At least, that is how the heads of state saw it in the decade after the end of the Cold War.

Today, the war in Ukraine casts a long shadow over European and global security. Cooperation and collaboration have been replaced by military confrontation. Economic cooperation has been shattered, fear of dependency in the energy sector has led to a turning point and the concept of the positive effect of economic interdependence (‘change through trade’) has proven to be a misperception not only in the case of Russia but also with respect to the relationship of the USA and its Asian and European allies against China.

On the contrary, the turn towards confrontational, essentially military-based defence policies can be felt all over the world. Global military spending is at an all-time high of over two trillion US dollars.

Given the budget announcements for the next few years, this sum will continue to rise rapidly in the future. Nuclear weapons have come back into focus. After Russia’s surprising attack, which was hardly considered possible, it is understandable that now – as a first reflex – arms are being upgraded, that economic dependencies are being reduced and, of course, there are concerns about critical infrastructure.

It is not only about traditional military threats. The boundaries between war and peace have become blurred. Hybrid warfare, the use of mercenaries, cyber warfare, destruction of critical infrastructure, undermining social cohesion with disinformation campaigns and election interference, sanctions and other measures of economic warfare have become the standard of international conflict.

De-escalation on three levels

Is there a way out of the constant political, economic and above all military escalation? Despite the apparent hopelessness of an end to the power struggle with Putin, despite the escalated situation in East Asia, despite the many now less noticed wars and conflicts – be it Yemen, Syria, Afghanistan or Mali – it is necessary to think about the possible end of these wars. This should happen in parallel on three levels: security, diplomacy and economy.

With all understanding for the hectic procurement of new weapons now being commissioned in the sign of the turn of the times, it should be noted that security policy is more than defence with weapons. Even if there is currently no path in sight for a negotiated solution to the Ukraine war, such a solution should still be considered.

Ultimately, this war can only be ended through agreements at the negotiating table. Even though Russia started the war in Ukraine in violation of international law and is obviously committing war crimes, in the long term there can be no peace in Europe without Russia and certainly not against Russia.

Respect for Russian security interests, however difficult this may be because of Russian aggression and Putin’s fantasy ideas of Russia, is a prerequisite for de-escalation and serious negotiations.

Geopolitics that maximises only one’s own advantages leads to a dangerous dead end: the clash is pre-programmed.

Many countries rely on a militarily supported geostrategic foreign policy. China’s assertive military, foreign and economic policies are rightly viewed with concern. But the EU also wants to become militarily autonomous.

The US is trying to find partners for its policy conducted in competition with China. Other powers such as Australia, Japan or India are also positioning themselves in rivalry to China.

Instead of focusing on geopolitics, it is necessary to focus on values (democracy, human rights) and binding rules (international law), even if Putin is blatantly violating international law and ‘democracy’ is a foreign word in China. It is necessary to change the narrative significantly.

‘The West’, which demands rule of law and democracy with rigour, has all too often emphasised these values and principles in a know-it-all manner – ‘the West against the rest’. Often enough, double standards were applied and these values were not observed by ‘the West’ itself, such as in the so-called war on terror and the war in Iraq.

If these principles and projects for democracy and against autocracy are to be convincing, then one must completely abandon the concept of ‘the West’ and try to cultivate partnership-based – and not Euro-centric (or ‘Westro-centric’) – relations with democratic countries. In short, geopolitics that maximises only one’s own advantages leads to a dangerous dead end: the clash is pre-programmed.

Is the sole answer of ‘the West’ to keep the upper hand in the geopolitical competition by military means? Economically, it makes sense to reduce dependencies and diversify supply chains. This cannot be done through radical decoupling, but must be done gradually.

Obviously, the shock of the pandemic, but above all Russia’s possibilities to blackmail by stopping energy deliveries, have changed the priorities a little. But by no means all priorities. At no time since the early 1990s has the military burden on global income been as high as it is today: well over two per cent with a trend towards further increases.

The need for timely disarmament

Should the new era (Zeitenwende) consist only of a return to old-fashioned patterns of the military-supported use of force? Arms control is not taking place at the moment. The United Nations and other arms control forums have been pushed to the side. But arms control and de-escalation must already now be considered, even if the Kremlin is still opposed to them and the Chinese leadership is hardly responsive to them at present.

The continuation of the current course leads globally to a situation that is becoming more dangerous than the confrontation in the heyday of the Cold War, since the world is now also seriously endangered by the climate crisis.

Almost all arms exports are accounted for by the G20 and 98 per cent of nuclear warheads are stored in their arsenals.

Although the risks of climate change and armament are well known, there is currently no reversal of this trend in sight. The two crises are heading towards a seemingly unavoidable catastrophe. After the old-world order – with a halfway functioning multilateralism, compromises and give-and-take – was replaced by nationalist aspirations, which then led to a breach of international law in the case of Russia, by an emphasis on nuclear weapons and by the pursuit of supposed self-interest, the goals of the climate agreements are being missed and arms control treaties are being ground down.

Geopolitically ambitious powers such as China, India, Turkey, Brazil, South Africa or Saudi Arabia must be integrated into arms control efforts. Almost ‘naturally’, the G20 summits offer themselves as a forum for this.

The G20 initially focused their talks primarily on macroeconomic issues, but have since also negotiated on sustainable development, energy, the environment and climate change – but not seriously on global security policy.

However, the G20 member countries are responsible for 82 per cent of global military spending. Almost all arms exports are accounted for by the G20 and 98 per cent of nuclear warheads are stored in their arsenals. Today’s military-based arms efforts are concentrated in the G20.

Since the members of this exclusive G20 club are also the main perpetrators of climate change, they bear the main responsibility for the two current catastrophic trends.

Moreover, there are links between climate and arms policy that are most clearly reflected in the wars and violent conflicts of the last decades, the movements of refugees, migrant flows and corresponding counter-reactions.

If our societies are to become more resilient and more ecologically sustainable, then priorities must be changed, and then such a large share of resources cannot be permanently poured into the military – without any prospect of de-escalation. Our current shift must therefore contain more than the present rearmament.

Since the members of this exclusive G20 club are also the main perpetrators of climate change, they bear the main responsibility for the two current catastrophic trends. So, it is time to remind them of their responsibility and urge them to turn back. Perhaps the fact that India is chairing the G20 this year can be used to put security policy prominently on the forum’s agenda.

After all, India has refused to adopt Western sanctions against Russia, citing its own interests. In doing so, the government in Delhi – similar to some other countries in the G20 group (Brazil, South Africa and Turkey) – has kept an open door for potential talks. In order to enable a turning point towards a global security order and cooperation in the climate crisis, more is needed than the current clear military positioning of ‘the West’ in confrontation with Russia.

It is to be hoped that the leading powers of the Global South will strive for a rules-based, multilateral world order within the framework of the G20 talks. That there are possibilities for a security order that looks beyond Europe, as hinted at by Indian Foreign Minister Jaishankar, when he confidently stated: ‘Europe’s problems are the world’s problems, but the world’s problems are not Europe’s.’

Herbert Wulf, Director of the Bonn International Center for Conversion (BICC) from its foundation in 1994 until 2001, is currently a Senior Fellow at BICC and an Adjunct Senior Researcher at the Institute for Development and Peace, University of Duisburg/Essen where he was previously a Deputy Director.

Source: Source: International Politics and Society (IPS)-Journal published by the International Political Analysis Unit of the Friedrich-Ebert-Stiftung, Hiroshimastrasse 28, D-10785 Berlin

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Why U.S.-Africa Relations and Africa Matter More Now Than Ever — Global Issues

To achieve a strong partnership with Africa, the U.S. administration will need to demonstrate that it is interested in Africa because the continent itself matters, not merely to address other U.S. international objectives. Djibouti Port. Credit: James Jeffrey/IPS
  • Opinion by Philippe Benoit (washington dc)
  • Inter Press Service

A strong Africa working in partnership with the U.S. is an important and all too often overlooked element of a robust U.S. geopolitical strategy. But to achieve this strong partnership, the U.S. administration will need to demonstrate that it is interested in Africa because the continent itself matters, not merely to address other U.S. international objectives.

Unfortunately, there is skepticism within Africa, founded in historical precedent, as to U.S. intentions. For many years, as European powers withdrew from Africa following the decolonization of the continent, the U.S. and Soviet Union stepped in seeking to install “friendly” regimes.

Africa was an area of interest more because of its importance to the U.S./Soviet Union Cold War than on its own merits. The result was often misguided policies focused on political alignment rather than promoting improvements on the continent. As the Cold War waned, arguably so did some of the U.S. interest in Africa.

2008 saw the election of an American president of African descent, Barack Obama, generating excitement across the continent. In 2014, President Obama convened the inaugural U.S.-Africa Leaders Summit, the largest gathering at that time of U.S. and African leaders.

Unfortunately, there followed a general sense of disappointment as the summit failed to translate into strong action. Interestingly, the U.S. president at times most often praised for his support to Africa is President George W. Bush, who launched PEPFAR, the large-scale effort to fight AIDS focused on Africa that is also considered by some historians to be his greatest achievement.   

Last month’s summit took place on a complex international and geopolitical backdrop for the U.S., marked by the growing competition with an emerging China and, more recently, Russia’s invasion of Ukraine. For some American commentators, the summit provided an opportunity to draw Africa closer to the U.S. in countering these challenges following a period of inactivity.

But Africa’s leaders have signaled that they don’t want to be viewed as mere tools for other geopolitical dynamics — including tensions with China and Russia — they want their concerns addressed on their merits. And the Biden administration was careful to not present last month’s summit as China/Russia-oriented. As explained by a CNN commentator: “In previewing this … summit, American officials have been careful to avoid framing Africa as a pawn in a larger geopolitical strategy.”

This represents a wise strategy, especially as Africa has grown substantially both economically and politically over the last several decades and is poised for further growth. The GDP of Sub-Saharan Africa has grown five-fold from $400 billion 20 years ago to nearly $2 trillion today, and Africa’s total GDP now reaches nearly $3 trillion when North Africa is included. Similarly, a Brookings report estimates that the middle class of Sub-Saharan Africa will grow from 114 million in 2015 to 212 million in 2030. It is also the region where the largest growth in population is expected going forward: by 2050, an estimated quarter of the world’s people will be African.

African leaders themselves are not oblivious to the growing strategic importance of their own countries. Rich in agriculture, mineral and energy resources, and with a growing diaspora that funneled over $83 billion in remittances back to Africa in 2020 (far more than the $65 billion the continent received in official development assistance that same year), Africa has become an attractive destination for the astute investor. 

Newly empowered by the growth potential of their countries, many African leaders are demanding a stronger voice and greater respect internationally — and they’re getting it from China whose presence in Africa is ubiquitous. Similarly, Japan is re-asserting its engagement with Africa.

Last month’s U.S.-Africa Leaders Summit is a welcome effort in this context and there is much room for strengthening ties. For example, Africa accounts for only 1 percent of U.S. foreign trade, most of which is in petroleum imports from two countries. But African governments, for their part, will need to demonstrate their openness to advancing inclusive growth and political rights domestically.

Just as Asia has dominated the growth story of the last 50 years, will Africa be the emerging engine of growth for the next 50? This is something that analysts are contemplating. The recent analysis of the continent by the International Energy Agency posits a possible high growth “Africa Case” scenario in which the continent is able to exploit effectively its potential. 

Arguably, the U.S. and other advanced economies were caught off-guard by the rapid economic growth that took place in Asia. They were slow to anticipate it, recognize it and integrate its implications into their strategies. This is not to predict when it comes to Africa that it will inevitably replicate what Asia has done; however, the reality is: “maybe, who knows?” That’s a potential outcome that the U.S. should prepare for, and even nurture. 

What might Africa look like 20 years from now? A real possibility is a 2.4 billion-person continent with significantly diminished poverty and a large and growing middle class that can provide a vibrant economic partner for the U.S. To achieve this, a strong partnership between the U.S. and Africa is key and in the interest of both their peoples.

Philippe Benoit has over 25 years of experience working on international development, including previous positions at the World Bank where he focused on Africa.  He is currently research director for Global Infrastructure Analytics and Sustainability 2050. 

Bayo Oyewole, CEO of BayZx Global Strategic Solutions, currently provides independent advisory services to the African Development Bank. He previously held senior positions at the World Bank and the International Finance Corporation, including in the office of the Executive Director representing several African countries on the World Bank Board.

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Money Laundering & Corruption Risks in Latin America — Global Issues

  • Opinion by Lakshmi Kumar (washington dc)
  • Inter Press Service

WASHINGTON DC, Jan 03 (IPS) – The writer is the Policy Director at Global Financial Integrity (GFI), a Washington, D.C.-based think tank specializing in research, advocacy, and advisory services.Over the last decades, the private investment fund sector has grown into a multi trillion-dollar industry. Private investment funds are vulnerable to money laundering because they contain a variety of structural risk factors that help camouflage illicit behavior.

A 2020 leaked bulletin from the Federal Bureau of Investigation (FBI) found that criminals were using “private placement funds including investments offered by private equity firms and hedge funds, to circumvent the anti-money laundering (AML) programs of other financial institutions and launder money.”

The new Global Financial Integrity (GFI) report Private Investment Funds in Latin America: Money Laundering & Corruption Risks examines the money laundering risk factors associated with these private investment funds in Latin America.

It analyzes the ring of actors and facilitators involved, the methods of contact used by perpetrators and the channels utilized to move illicit money. The report provides a series of case studies and analyzes AML regulation of private investment funds in four countries; Brazil, Mexico, Chile and Argentina.

“Despite the scale of wealth under management, ‘family offices’ have little to no regulatory oversight in most parts of the world,” noted Tom Cardamone, President and CEO at GFI. “This is especially concerning given the close nexus between wealth and corruption in many parts of the world. The unregulated nature of these funds makes them a particularly useful vehicle to mask proceeds of corruption or money laundering.”

Additionally, Private Investment Funds in Latin America uses a series of case studies to highlight how money laundering, corruption and organized crime risks exist in private investment funds in Latin America.

The risk factors include a customer base often composed of wealthy individuals, including politically-exposed persons; a close relationship between fund managers and their clients (i.e. investors); the use of shell companies and trusts to manage investments; outsourcing operations and risk management; weak transparency around source of wealth and source of funds; and investment structures which may include multiple accounts in different jurisdictions, including secrecy and tax havens, with funds moving through a concentration account.

GFI in this report offers the following key recommendations:

    • The Brazilian government, which has the largest assets under management in the region, should be the first to adopt AML regulations that will address future risks when they arise. As well as regulators pay closer attention to family office architecture and undertake a risk assessment of the sector
    • Latin American authorities should look to regulate intermediaries and enabler professions for AML/CFT due diligence as they are critical in allowing illicit money to move through the financial system within the region but also to be invested in private investment funds overseas.
    • The United States, Switzerland, the Cayman Islands, Malta, and other countries within the EU should conduct a robust money laundering risk assessment of their private investment fund sectors.
    • Latin American law enforcement authorities involved in corruption, drug trafficking, and organized crime investigations should be provided training on the complexities of private investment funds and the manner in which they can be used to hide illicit assets.

Global Financial Integrity is a Washington, D.C.-based think tank, producing high-caliber analyses of illicit financial flows, advising developing country governments on effective policy solutions and promoting pragmatic transparency measures in the financial system to promote global development and security.

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Living Another Year Dangerously — Global Issues

  • Opinion by Anis Chowdhury (sydney)
  • Inter Press Service

SYDNEY, Jan 02 (IPS) – 2022 has been a year of great uncertainty when it seemed the world perilously reached the brink of self-destruction – be it human-induced climate change or military conflict. Welcoming 2022, we had enough reasons to be optimistic; but it was another ‘year of living dangerously’ – Tahun vivere pericoloso in the words of Soekarno, or an annus horribilis in the words of the late Queen Elizabeth.

Anis Chowdhury

No end to Covid-19

The joy of the COVID vaccine discovery quickly vanished as the ‘vaccine apartheid‘ blatantly prioritised lives in rich nations, especially of the wealthy, over the ‘wretched of the earth’, and corporate profit triumphed over people’s lives. Meanwhile, Dr Anthony Fauci’s sober warning of a more dangerous COVID variant emerging this winter may come to be true as China, the country of 1.4 billion, struggles to deal with the surge in cases since it has largely abandoned its unpopular ‘zero COVID’ policy.

New cold war turns into proxy war

Whereas the global pandemic required extraordinary global unity, unfortunately, a ‘new cold war’ quickly turned into a ‘hot war’, bringing the world to the verge of a devastating nuclear war for the first time since the 1962 Cuban missile crisis. Russia, finding itself cornered by an expanding NATO, decided most foolishly to invade Ukraine, believing it could overrun the country without any resistance. While the heroic Ukrainians continue to defend their motherland, Russia seems to have become bogged down in a proxy war with NATO.

If the proxy war with Russia was not enough, the US is recklessly provoking China towards another ‘hot war’, following Trump’s trade war. Clearly the monopoly capital of the US and its military-industrial complex are pushing the US to a ‘Thucydides Trap‘. More than 60 years ago, President Eisenhower, in his farewell address to the nation, warned about the military-industrial complex, a formidable union of defence contractors and the armed forces. Eisenhower, a retired five-star Army general, who led the allies on D-Day, saw the military-industrial complex as a threat to democratic government and global peace. Alas, his dire warning fell on deaf ears.

Western hypocrisy exposed

The Russian invasion of Ukraine exposed Western pretence. The Western mainstream media unashamedly declared the dislocation of Ukrainians intolerable because the victims are blue-eyed, blond-haired Europeans, not “uncivilized” third world inhabitants or “barbaric” Arabs. Western duplicity is nowhere as blatant as it is in the case of the Palestinian plight. To them, Russia’s occupation and annexation of parts of Ukraine is illegal; but Israel’s occupation and annexation of Palestinian land as well as gross human rights violations are justified on various professed grounds, e.g., right to protection from “terrorist acts”.

Leadership vacuum

The world now needs Eisenhower to resist the military-industrial complex; it needs Teddy Roosevelt to break monopoly capital’s stranglehold and to protect consumers, workers and the environment; it needs Franklin Roosevelt to promote multilateralism and social justice; it needs Kennedy to defuse crises. At the height of the ‘old cold war’, Kennedy ate humble pie by quietly removing the security threat to the USSR posed by offensive weapons (Jupiter MRBMs) deployed in Turkey, and publicly pledging that the US would never invade Cuba or attempt another Bay of Pigs operation. Eisenhower was magnanimous enough to bear the lion’s share of financing the USSR’s proposal for global efforts to eradicate smallpox – the leading cause of death and blindness then.

Alas, we see no such signs in a world of Trump, Biden, Johnson, Marcon and Scholz. Even ‘out of touch‘, billionaire Sunak does not inspire any hope, despite being the first coloured person of colonial descent to occupy the 10 Downing Street. Sunak will probably try to prove himself holier than the Pope, instead of promoting the interest of former colonies or descendants of colonial subjects or downtrodden.

No better leadership in the South

The South is also devoid of visionaries, such as Nkrumah or Nehru who promoted non-alignment and Southern unity. Nehru’s land is now overtaken by Modi’s Hindutva movement, openly promoting violence against minorities. Unsurprisingly, Modi was in sync with Trump; but he equally cosies up to Biden professing to promote democracy and human rights. Sadly, Mandela’s South Africa is mired in scandal after scandal.

Although many, including myself, eagerly looked forward to Lula’s victory in Brazil, neither his return to power nor the so-called ‘second pink tide’ in Latin America should make one overly joyous. The Left has demonstrated its propensity to fracture or implode easily, e.g., contributing to Correa’s defeat in Ecuador, or aiding the Right to strike back in Peru. In Colombia, Finance capital, mining giants and the elite have already ganged up on Petro’s vow to tackle inequality with tax and land reforms and his proposed ban on new oil and gas exploration. Chile’s Boric has faced setbacks including the rejection of a new constitution, forcing his concessions to the Centre-Right. Constitutional coup is a common strategy of the established vested interest.

Some inspirations down under

Down under, the Australians soundly defeated an increasingly autocratic and unaccountable conservative government in May. It was the government that implemented inhumane off-shore detention centres for people seeking to escape persecution and starvation in their own countries (about to be emulated by the UK Tory Govt.). It also was cruel enough to pursue vulnerable people on social security payments with a robotic program whilst cutting taxes for the wealthy and letting them evade tax. It was the government which created plumb jobs for the boys. It was the government which continued to deny climate science and refused to act.

Finally, the Australians got rid of it. Labor showed extraordinary discipline in opposition, and in government, it stood up to big business and vested interests. It has quickly moved to put in place the processes to:

  • set up an independent anti-corruption body with real teeth;
  • recognise the voice of First Nations people;
  • respect human rights of asylum seekers languishing in detention centres;
  • address environmental degradation & achieve 43% emissions reduction target by 2030;
  • restore labour rights, fair and decent wages;
  • review RBA’s performance to ensure monetary policy serves broader national interest, not the finance; and
  • balance geo-political alliances.

Its progressive agenda is quite long. Let me end here, wishing the Australian Labor Government success to inspire other nations – large and small, developed and developing; and with best wishes for you to be safe and remain healthy, even if not quite bright-eyed and bushy-tailed.

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Generation and Self-Consumption, the Path to Clean Energy in Argentina — Global Issues

Aerial view of the 5000 square meter roof full of solar panels, in one of the pavilions of La Rural, the busiest fair and exhibition center in Buenos Aires. It is the largest private solar park in the capital of Argentina and required an investment of almost one million dollars. CREDIT: Courtesy of La Rural
  • by Daniel Gutman (buenos aires)
  • Inter Press Service

BUENOS AIRES, Dec 23 (IPS) – With large projects held back by the economic crisis and lack of infrastructure, Argentina seems to be looking at an alternative path towards a more sustainable energy mix involving small renewable energy projects, promoted by environmentally aware industries, businesses and private users.

The initiatives are aimed at covering their own consumption, sometimes with the addition of so-called distributed generation, in which user-generators who have a surplus of electricity can inject it into the national power grid and thus generate a tariff credit.

Distributed generation initiatives have just surpassed 1,000 projects already in operation, according to the latest official data.

At the same time, this month saw the inauguration of the largest private solar energy park in the city of Buenos Aires, an initiative of the Argentine Rural Society (SRA), the traditional business chamber of agricultural producers.

The park was installed in the exhibition center the SRA owns in the capital of this South American country, to supply part of its consumption with an investment of almost one million dollars and more than 1,000 solar panels.

“Small private renewable energy projects and distributed generation will be the ones to increase installed capacity in the coming years, because the electricity transmission and distribution system sets strong limits on large projects,” Mariela Beljansky, a specialist in energy and climate change issues, told IPS.

Beljansky, who was national director of Electricity Generation until early 2022, added: “Otherwise there will be no way to meet the growth targets for renewable sources set by Argentina, as part of its climate change mitigation commitments under the Paris Agreement.”

Argentina presented its National Climate Change Adaptation and Mitigation Plan, which includes 250 measures to be implemented by 2030, at the 27th Conference of the Parties (COP27) on climate change held by the United Nations in the Egyptian city of Sharm El Sheikh in November.

The National Secretariat for Climate Change estimated the total value of the plan’s implementation at 185.5 billion dollars, four times more than the debt Argentina incurred in 2018 with the International Monetary Fund (IMF), which has generated a sharp deterioration of the economy since then.

According to the data included in the plan, the energy sector is the largest generator of greenhouse gases (GHG) in the country, generating 51 percent of emissions.

Although renewable sources (with wind projects in first place and solar in second place) reached a record in October, supplying 17.8 percent of total electricity demand, the energy mix continues to be sustained basically by oil, natural gas and large hydroelectric projects.

Furthermore, the country has not decided to slow down the development of fossil fuels. The main reason is that it has large reserves of shale natural gas in the Vaca Muerta field in the south of the country, which has been attracting the interest of international investors for years. The climate change plan sets the goal of using natural gas as a transition fuel to replace oil as much as possible.

The plan also includes the objectives of developing a variety of renewable energy sources (wind, solar, small hydro, biogas and biomass) and also distributed generation, “directly at the points of consumption” and connected to the public power grid, at the residential and commercial levels.

Large renewable projects experienced strong growth between 2016 and 2019, on the back of an official plan that guaranteed the purchase of electricity at attractive prices for investors, but since then there have been virtually no new initiatives.

This truck functions as a mobile health center, travelling through towns in Patagonia, in southern Argentina. The roof of the vehicle is covered with solar panels that provide electricity to the four mobile consulting rooms and diagnostic imaging equipment. CREDIT: Courtesy of Utorak

Consumption subsidies

“In Argentina’s current situation, where there is practically no financing, and there are restrictions on importing equipment, high inflation and economic uncertainty, it is difficult to think about large renewable energy parks, and small projects become more attractive,” Marcelo Alvarez, a member of the board of the Argentine Renewable Energy Chamber (Cader), told IPS.

Alvarez pointed out that what conspires against small private and distributed generation projects are the subsidies that the Argentine government has been providing for years to energy consumption, including those families with high purchasing power that do not need them.

“Artificially cheap electricity rates and the scarcity of credit discourage the growth of renewables,” Alvarez said.

“The proof of this is that more than half of the distributed generation projects in operation are in the province of Cordoba (in the center of the country), where electricity prices are three times more expensive than in Buenos Aires and there is a special line of credit from the local bank (Bancor, which grants ‘eco-sustainable loans’) for renewable equipment,” he said.

Indeed, according to data from the Energy Secretariat, there are 1,051 user undertakings that generate their own electricity and inject their surplus into the grid and 573 of them are in the province of Cordoba.

Argentine state energy subsidies totaled 11 billion dollars in 2021 and this year, up to October, they already exceeded seven billion dollars, according to data from the Argentine Association of Budget and Public Financial Administration (Asap).

As for sources of financing, there is a line of credit endowed with 160 million dollars from the Inter-American Development Bank (IDB) and the Banco de Inversión y Comercio Exterior (Bice), financed in part by the Green Climate Fund, which is aimed at renewable sources and energy efficiency projects for small and medium-sized businesses. However, most companies are unaware of its existence.

View of photovoltaic panels in a private neighborhood in Pilar, some 50 kilometers from Buenos Aires. Solar panels have become part of the landscape in the suburbs of Argentina’s capital city. CREDIT: Courtesy of Utorak

Private ventures

On Dec. 15, the Rural Society inaugurated the largest private solar park in Buenos Aires, in the 42,000 square meter covered area where the country’s most important fairs and exhibitions are held. The investment reportedly amounted to almost one million dollars.

“We have 42,000 square meters of roofs in our pavilions. It is a very important flat surface for the placement of solar panels, so we had been thinking about it for several years. We had done a pilot project in 2019, but then everything was delayed by the pandemic, which forced us to close the venue,” Claudio Dowdall, general manager of La Rural, told IPS.

“At this stage we used 5,000 square meters of roofs, on which we placed 1,136 photovoltaic panels, with a total power of 619 kW. This is equivalent to the average consumption of 210 family homes and, for us, it is between 30 and 40 percent of the electricity we use,” he added.

Andrés Badino, founder of Utorak, a company that has been dedicated to renewable energy for families and companies for more than five years, confirms that consultations and demand are growing in the sector.

“People’s interest has been growing because of increased environmental awareness and, also, because of what can be saved on electricity bills for residential users and for educational institutions and healthcare centers as well,” Badino said.

“Argentina has a national industry for the production of solar thermal tanks, but not for the manufacture of panels, inverters or batteries, despite the fact that the country has one of the largest reserves in the world, the main component. But we are confident that international prices will go down and drive demand,” he said.

© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service

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War, Famine, Disease, Disasters 2022 a Year Staring at Apocalypse — Global Issues

  • Opinion by Farhana Haque Rahman (toronto, canada)
  • Inter Press Service

TORONTO, Canada, Dec 23 (IPS) – A year that started with Russia’s invasion of Ukraine and is ending with famine in Africa, while still spreading death and misery through an enduring pandemic and a deteriorating climate crisis — 2022 has been an apocalyptic warning of the frailty of our planet and the woeful shortcomings of humankind.

Farhana Haque RahmanBeyond the stark statistics of millions of people displaced by war and natural disasters, it has been a 12 months that tragically highlighted our global interconnections and how a confluence of events and trends can bring another year of record levels of hunger.

Tens of thousands of soldiers and civilians (numbers given by the UN and involved parties vary enormously) have been killed in Ukraine since Russia launched war on February 24. More than 7.8 million Ukrainians have fled the country. Billions of dollars have been spent on armaments.

But the impact of the war has been felt worldwide, driving up prices of basic commodities such as oil, gas, grain, sunflower oil and fertilisers. Somalia, now in the grip of the worst drought to hit the Horn of Africa in 40 years, used to import 90 per cent of its wheat from Russia and Ukraine.

Commodities have been weaponised. Countries slipped back into recession, just as they were slowly recovering from the economic distress of Covid-19 lockdowns. A deepening relationship between sanctioned Russia and an energy- hungry China exacerbated existing tensions with the US over Taiwan. The result? China broke off climate cooperation efforts with the US in the run-up to the COP27 climate conference hosted by Egypt in November with 200 countries and 35,000 people attending.

Against the backdrop of devastating floods in Pakistan and West Africa, and with 2022 on its way to becoming one of the five hottest years on record, agriculture and food security joined the COP27 agenda. Talks ran into extra time, as they tend to, and countries of the global South emerged with the landmark creation of a special fund paid by wealthier countries to address the Loss and Damage caused by climate change in the most vulnerable nations.

“After 30 contentious years, delayed tactics by wealthy countries, a renewed spirit of solidarity, empathy and cooperation prevailed, resulting in the historic establishment of a dedicated fund,” said Yamide Dagnet, director for climate justice at the Open Society Foundations, reflecting a sense of hard fought victory among developing countries.

Still unresolved however is which countries will give money and to whom. China in particular seems uneasy over which category it belongs to. However COP27 joined its 26 forerunners since 1995 in not reaching a binding agreement on cutting fossil fuel burning which has continued to rise globally, except for a brief pandemic dip. For this, many branded it a failure. “Humanity has a choice: cooperate or perish. It is either a Climate Solidarity Pact – or a Collective Suicide Pact,” UN Secretary-General Antonio Guterres told the opening plenary session. By the end, many felt the conference had concluded with the latter. Rather than falling, the latest estimates from the Global Carbon Project show that total worldwide CO2 emissions in 2022 have reached near-record levels.

Victims of devastating floods, heatwaves and forest fires, and severe drought in Central Sahel and East Africa surely needed no confirmation from the final decision text of COP27 which recognises “the fundamental priority of safeguarding food security and ending hunger” and the vulnerability of food production to climate change.

In this respect, COP27 recognised the importance of nature-based solutions – a theme driven by the International Union for Conservation of Nature (IUCN) in ringing alarm bells on the degraded soil, water sources and eco-systems caused by intensive agriculture with overuse of fertilisers and pesticides. According to FAO, more than 25 percent of arable soils worldwide are degraded, and the equivalent of a football pitch of soil is eroded every five seconds. The planet’s bio-diversity is being devastated as a result. As highlighted by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) in stressing the vital connections between Nature and people, a landmark report in July found that 50,000 wild species provide food, osmetics, shelter, clothing, medicine and inspiration. Many face extinction. As international agencies and NGOs (and media outlets) jostled and competed for funding to deal with the fallout from wars and climate emergencies, the International Fund for Agricultural Development (IFAD) which is active in the Sahel cautioned that only 1.7 per cent of all climate finance reaches small-scale producers in developing countries and as little as 8% of overseas aid goes to projects focused primarily on gender equality. Women’s empowerment has been made a major focus of ASAP+, IFAD’s new climate change financing mechanism.

Women and girls are paying “an unacceptably high price” among communities hit by severe drought in the Horn of Africa, according to the UN Population Fund (UNFPA). It launched a $113.7 million appeal to scale-up life-saving reproductive health and protection services, including establishment of mobile and static clinics in displacement sites.

Also overshadowed by wars and pandemics in 2022 were marginalised communities lacking a voice, suffering diseases such as leprosy or exploited in the form of child labour.

Yohei Sasakawa, WHO Goodwill Ambassador for Leprosy Elimination, says many issues have been sidelined because of the Covid-19 pandemic. Society has the knowledge and means to stop and cure leprosy, he says in the ‘Don’t Forget Leprosy’ campaign by the Sasakawa Leprosy Initiative.

“When people are still being discriminated against even after being cured, society has a disease. If we can cure society of this disease—discrimination—it would be truly epoch-making,” he told IPS.

A similar message was delivered by Nobel Laureate Kailash Satyarthi who told the 5th Global Conference on the Elimination of Child Labour that a mere $53 billion per annum – equivalent to 10 days of military spending – would ensure all children in all countries benefit from social protection. International Labour Organisation and UNICEF statistics from 2020 show at least 160 million children are involved in child labour, a surge of 8.4 million in four years. Children denied education became a burning issue in Afghanistan in March when the Taliban declared that girls would be banned from secondary education. The UN said 1.1 million girls were affected. The late-night reversal of a decision by Taliban authorities to allow girls from grades 7 to 12 to return to school was met with outrage and distress, inside and outside Afghanistan. Denial of human rights to girls and women has fuelled the desire of many to get out of Afghanistan and seek a better life elsewhere, adding to the millions around the world forced to flee their homes because of conflict, repression or disaster. The Ukraine conflict has displaced more than 14 million people, about a third of the population.

A UN Office on Drugs and Crime report on trafficking warns that refugees from Ukraine are at risk of including sexual exploitation, forced labour, illegal adoption and surrogacy, forced begging and forced criminality.

As they come over border crossings into Poland, refugees – including victims of rape – are greeted with posters and flyers carrying warnings about jail terms for breaking local abortion laws, images of miscarried foetuses, and a quote from Mother Theresa saying: “Abortion is the greatest threat to peace”.

UNDP, which is assisting the Ukraine government in getting access to public services for IDPs, says in its 2022 report, Turning the tide on internal displacement, that earlier and increased support to development is an essential condition for emerging from crisis in a sustainable way.

“More efforts are needed to end the marginalization of internally displaced people, who must be able to exercise their full rights as citizens including through access to vital services such as health care, education, social protection and job opportunities” said Achim Steiner, UNDP Administrator.

Nearly one million Rohingya refugees languishing in refugee camps in Bangladesh after being driven out of Myanmar in waves since 2016 would surely agree.

Asif Saleh, executive director of BRAC, said to be the world’s largest NGO and founded by Sir Fazle after the independence of Bangladesh in 1972, says work needs to “shift towards a development-like approach from a very short-term umanitarian crisis-focused approach”. But the only solution for the Rohingya refugees is their sustainable and voluntary repatriation to Myanmar. As 2022 closes, that unfortunately looks highly unlikely as the military junta that seized power in 2021 fights ethnic armed organisations on multiple fronts.

There was one seismic milestone event that happened in late 2022 although no one is quite sure exactly where and when. The few people to witness it were not aware either – not that it prevented the UN from declaring it a special day. The birth of the 8 billionth person was celebrated on November 15. The world’s population has doubled from 4 billion in 1974 and UN projections suggest we will be supporting about 9.7 billion people in 2050. Global population is forecast to peak at about 10.4 billion in the 2080s.

Inger Andersen, executive director of the UN environment programme, sent a message to the baby, and the rest of the world, as countries meet in Montreal for the COP15 biodiversity conference this month.

“We’ve just welcomed the 8 billionth member of the human race on this planet. That’s a wonderful birth of a baby, of course. But we need to understand that the more people there are, the more we put the Earth under heavy pressure,” she said.

Farhana Haque Rahman is Senior Vice President of IPS Inter Press Service and Executive Director IPS Noram; she served as the elected Director General of IPS from 2015-2019. A journalist and communications expert, she is a former senior official of the United Nations Food and Agriculture Organization and the International Fund for Agricultural Development.

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The Energy Dilemmas of Roraima, a Unique Part of Brazils Amazon Region — Global Issues

A riverside park in Boa Vista, which would probably disappear with the construction of the Bem Querer hydroelectric plant, 120 kilometers downstream on the Branco River. The projection is that the reservoir would flood part of the capital of the state of Roraima, in the extreme north of Brazil. CREDIT: Mario Osava/IPS
  • by Mario Osava (boa vista, brazil)
  • Inter Press Service

BOA VISTA, Brazil, Dec 21 (IPS) – “Roraima did not have a Caribbean character; now it does, because of its growing relations with Venezuela and Guyana,” said Haroldo Amoras, a professor of economics at the Federal University of this state in the extreme north of Brazil.

The oil that the U.S. company ExxonMobil discovered off the coast of Guyana since 2015 generates wealth that will cross borders and extend to Roraima, already linked to Venezuela by energy and migration issues, predicted the economist, the former secretary of planning in the local government from 2004 to 2014.

Roraima, Brazil’s northernmost state, which forms part of the Amazon rainforest, is unique for sharing a border with these two South American countries on the Caribbean Sea and because 19 percent of its 224,300 square kilometers of territory is covered by grasslands, in contrast to the image of the lush green Amazon jungle.

It is also the only one of Brazil’s 26 states not connected to the national power grid, SIN, which provides electricity shared by almost the entire country. This energy isolation means the power supply has been unstable and has caused uncertainty in the search for solutions in the face of sometimes clashing interests.

From 2001 to 2019 it relied on imported electricity from Venezuela, from the Guri hydroelectric plant, whose decline led to frequent blackouts until the suspension of the contract two years before it was scheduled to end.

The closure of this source of electricity forced the state to accelerate the operation of old and new diesel, natural gas and biomass thermoelectric power plants. It also helped fuel the proliferation of solar power plants and the debate on cleaner and less expensive alternatives.

Alfredo Cruz would lose the restaurant and home he inherited from his great-grandfather, who registered the property in 1912. The Bem Querer reservoir would lead to the relocation of many riverside dwellers and would even flood part of the capital of the northern Brazilian state of Roraima, Boa Vista, 120 kilometers upriver. CREDIT: Mario Osava/IPS

In search of energy alternatives

Against this backdrop, the Roraima Alternative Energy Forum emerged, promoted by the non-governmental Socio-environmental Institute (ISA) and the Climate and Society Institute (ICS) and involving members of the business community, engineers from the Federal University of Roraima (UFRR) and individuals, indigenous leaders and other stakeholders.

The objectives range from influencing sectoral policies and stimulating renewable sources in the local market to monitoring government decisions for isolated systems, such as the one in Roraima, as well as proposing measures to reduce the costs and environmental damage of such systems.

“Not everyone (in the Forum) is opposed to the construction of the Bem Querer hydroelectric plant, but there is a consensus that there is a lack of information to evaluate its benefits for society and whether they justify the huge investment in the project,” biologist Ciro Campos, an ISA analyst and one of the Forum’s coordinators, told IPS.

Bem Querer, a power plant with the capacity to generate 650 megawatts, three times the demand of Roraima, is the solution advocated by the central government to guarantee a local power supply while providing the surplus to the rest of the country.

For this reason, the project is presented as inseparable from the transmission line between Manaus, capital of the state of Amazonas with a population of 2.2 million, and Boa Vista, the capital of Roraima, population 437,000. The line involves 721 kilometers of cables that would connect Roraima to the national grid.

Indigenous people in the northern Brazilian state of Roraima are striving to install solar plants in their villages and are studying how to take advantage of the winds in their territories, which are considered favorable for wind energy. Their aim is to prevent the construction of Bem Querer and other hydroelectric plants that would affect indigenous lands, according to Edinho Macuxi, coordinator of the Indigenous Council of Roraima. CREDIT: Mario Osava/IPS

“In its design, Bem Querer looks towards Manaus, not Roraima,” Campos complained, ruling out a necessary link between the power plant and the transmission line. “We could connect to the SIN, but with a safe and autonomous model, not dependent on the national system” and subject to negative effects for the environment and development, he argued.

Hydroelectric damage

The plant would dam the Branco River, the state’s main water source, to form a 519-square-kilometer reservoir, according to the governmental Energy Research Company (EPE). It would even flood part of Boa Vista, some 120 kilometers upstream.

The hydropower plant would both meet the goal of covering the state’s entire demand for electricity and abolish the use of fossil fuels, diesel and natural gas, which account for 79 percent of the energy consumed in the state, according to the distribution company, Roraima Energia.

But it would have severe environmental and social impacts. “It would make the riparian forests disappear,” which are almost unique in the extensive savannah area, locally called “lavrado,” of grasses and sparse trees, said Reinaldo Imbrozio, a forestry engineer with the National Institute of Amazonian Research (Inpa).

A view of the Branco River, five kilometers above where its waters would be dammed if the controversial Bem Querer hydroelectric plant is built, which would generate enough electricity to meet the entire demand of the Brazilian state of Roraima as well as a surplus for export, but would have environmental and social impacts magnified by the flatness of the basin that requires a very large reservoir. CREDIT: Mario Osava/IPS

In addition to the flooding of parts of Boa Vista, the flooding of the Branco and Cauamé rivers, which surround the city, will directly affect nine indigenous territories and will have an indirect impact on others, complained Edinho Macuxi, general coordinator of the Indigenous Council of Roraima (CIR), which represents 465 communities of 10 native peoples.

The CIR, together with ISA and the ICS, built two solar energy projects in the villages and carried out studies on the wind potential, already recognized in the indigenous territories of northern Roraima.

“The main objective of our initiatives is to prove to the central government that we don’t need Bem Querer or other hydroelectric projects…that represent less land and more confusion, more energy and less food for us,” he stressed to IPS at CIR headquarters.

“We will have to leave, said the engineers who were here for the studies of the river,” said Alfredo Cruz, owner of a restaurant on the banks of the Branco River, about five kilometers upstream from the site chosen for the dam. At that spot visitors can swim in the dry season, when the water level in the river is low.

Economics Professor Haroldo Amoras says the state of Roraima is becoming more Caribbean, because its economy is increasingly linked to its neighboring countries to the north of Brazil, Guyana and Venezuela, which, in addition to being importers, are the route to the Caribbean for Roraima’s agricultural and agro-industrial products. CREDIT: Mario Osava/IPS

The rapids there show the slight slope of the rocky riverbed. It is a flat river, without waterfalls, which means a larger reservoir. The heavy flow would be used to generate electricity in a run-of-river power plant.

Cruz inherited his restaurant and house from his great-grandfather. The title to the land dates back to 1912, he said. But they will be left under water if the hydroelectric plant is built, even though they are now located several meters above the normal level of the river, he lamented.

Riverside dwellers, fishermen and indigenous people will suffer the effects, Imbozio told IPS. The property of large landowners and people who own mansions will also be flooded, but they have been guaranteed good compensation, he added.

What the Forum’s Campos proposes is the promotion of renewable sources, without giving up diesel and natural gas thermoelectric plants for the time being, but reducing their share in the mix in the long term, and ruling out the Bem Querer dam, which he said is too costly and harmful.

Energy issues will influence the future of Roraima, according to Professor Amoras. The most environmentally viable hydroelectric plants, such as one suggested on the Cotingo River, in the northeast of the state, with a high water fall, including a canyon, are banned because they are located in indigenous territory, he said.

The participation of civil society is important for the Brazilian state of Roraima to make progress towards sustainable energy alternatives that can reduce diesel consumption, offer energy security and avoid the impacts of hydroelectric dams, according to Ciro Campos, an analyst with the non-governmental Socio-environmental Institute. CREDIT: Mario Osava/IPS

Oil wealth, route to the Caribbean

In the neighboring countries, oil wealth opens a market for Brazilian exports and, through their ports, access to the Caribbean. The Guyanese economy will grow 48 percent this year, according to the World Bank.

Roraima’s exports have grown significantly in recent years, although they reached just a few tens of millions of dollars last year.

Guyana’s small population of 790,000, the unpaved road connecting it to Roraima and the fact that the language there is English make doing business with Guyana difficult, but relations are expanding thanks to oil money.

This will pave the way to the Caribbean Community (CARICOM), whose scale does not attract transnational corporations, but will interest Roraima companies, said Fabio Martinez, deputy secretary of planning in the Roraima state government.

Venezuela expanded its imports from Roraima, of local products or from other parts of Brazil, because U.S. embargoes restricted trade via ports and thus favored sales across the land border, he said.

“The liberalization of trade with the United States and Colombia will now affect our exports, but a recovery of the Venezuelan economy and the rise of oil can compensate for the losses,” Martinez said.

Roraima is a new agricultural frontier in Brazil and its soybean production is growing rapidly. But “we want to export products with added value, to develop agribusiness,” said Martinez.

That will require more energy, which in Roraima is subsidized, costing consumers in the rest of Brazil two billion reais (380 million dollars) a year. If the state is connected to the national grid through the transmission line from Manaus, there will be “more availability, but electricity will become more expensive in Roraima,” he warned.

© Inter Press Service (2022) — All Rights ReservedOriginal source: Inter Press Service

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