A group of Farmacoop workers stand in the courtyard of their plant in Buenos Aires. Members of the Argentine cooperative proudly say that theirs is the first laboratory in the world to be recovered by its workers. CREDIT: Courtesy of Pedro Pérez/Tiempo Argentino.
by Daniel Gutman (buenos aires)
Inter Press Service
BUENOS AIRES, May 24 (IPS) – “All we ever wanted was to keep working. And although we have not gotten to where we would like to be, we know that we can,” says Edith Pereira, a short energetic woman, as she walks through the corridors of Farmacoop, in the south of the Argentine capital. She proudly says it is “the first pharmaceutical laboratory in the world recovered by its workers.”
Pereira began to work in what used to be the Roux Ocefa laboratory in Buenos Aires in 1983. At its height it had more than 400 employees working two nine-hour shifts, as she recalls in a conversation with IPS.
But in 2016 the laboratory fell into a crisis that first manifested itself in delays in the payment of wages and a short time later led to the owners removing the machinery, and emptying and abandoning the company.
The workers faced up to the disaster with a struggle that included taking over the plant for several months and culminated in 2019 with the creation of Farmacoop, a cooperative of more than 100 members, which today is getting the laboratory back on its feet.
In fact, during the worst period of the pandemic, Farmacoop developed rapid antigen tests to detect COVID-19, in partnership with scientists from the government’s National Council for Scientific and Technical Research (Conicet), the leading organization in the sector.
Farmacoop is part of a powerful movement in Argentina, as recognized by the government, which earlier this month launched the first National Registry of Recovered Companies (ReNacER), with the aim of gaining detailed knowledge of a sector that, according to official estimates, comprises more than 400 companies and some 18,000 jobs.
The presentation of the new Registry took place at an oil cooperative that processes soybeans and sunflower seeds on the outskirts of Buenos Aires, built on what was left of a company that filed for bankruptcy in 2016 and laid off its 126 workers without severance pay.
Edith Pereira (seated) and Blácida Benitez, two of the members of Farmacoop, a laboratory recovered by its workers in Buenos Aires, are seen here in the production area. This is the former Roux Ocefa laboratory, which went bankrupt in the capital of Argentina and was left owing a large amount of back wages to its workers. CREDIT: Daniel Gutman/IPS
The event was led by President Alberto Fernández, who said that he intends to “convince Argentina that the popular economy exists, that it is here to stay, that it is valuable and that it must be given the tools to continue growing.”
Fernández said on that occasion that the movement of worker-recuperated companies was born in the country in 2001, as a result of the brutal economic and social crisis that toppled the presidency of Fernando de la Rúa.
“One out of four Argentines was out of work, poverty had reached 60 percent and one of the difficulties was that companies were collapsing, the owners disappeared and the people working in those companies wanted to continue producing,” he said.
“That’s when the cooperatives began to emerge, so that those who were becoming unemployed could get together and continue working, sometimes in the companies abandoned by their owners, sometimes on the street,” the president added.
Two technicians package products at the Farmacoop laboratory, a cooperative with which some of the workers of the former bankrupt company undertook its recovery through self-management, a formula that is growing in Argentina in the face of company closures during successive economic crises. CREDIT: Courtesy of Farmacoop
A complex social reality
More than 20 years later, this South American country of 45 million people finds itself once again in a social situation as severe or even more so than back then.
The new century began with a decade of growth, but today Argentines have experienced more than 10 years of economic stagnation, which has left its mark.
Poverty, according to official data, stands at 37 percent of the population, in a context of 60 percent annual inflation, which is steadily undermining people’s incomes and hitting the most vulnerable especially hard.
The latest statistics from the Ministry of Labor, Employment and Social Security indicate that 12.43 million people are formally employed, which in real terms – due to the increase of the population – is less than the 12.37 million jobs that were formally registered in January 2018.
“I would say that in Argentina we have been seeing the destruction of employment and industry for 40 years, regardless of the orientation of the governments. That is why we understand that worker-recovered companies, as a mechanism for defending jobs, will continue to exist,” says Bruno Di Mauro, the president of the Farmacoop cooperative.
“It is a form of resistance in the face of the condemnation of exclusion from the labor system that we workers suffer,” he adds to IPS.
“He who abandons gets no prize” reads the banner with which part of the members of the Farmacoop cooperative were demonstrating in the Plaza de Mayo in downtown Buenos Aires, during the long labor dispute with the former owners who drove the pharmaceutical company into bankruptcy. The workers managed to recover it in 2019. CREDIT: Courtesy of Bruno Di Mauro/Farmacoop.
Today Farmacoop has three active production lines, including Aqualane brand moisturizing cream, used for decades by Argentines for sunburn. The cooperative is currently in the cumbersome process of seeking authorizations from the health authority for other products.
“When I look back, I think that we decided to form the cooperative and recover the company without really understanding what we were getting into. It was a very difficult process, in which we had colleagues who fell into depression, who saw pre-existing illnesses worsen and who died,” Di Mauro says.
“But we learned that we workers can take charge of any company, no matter how difficult the challenge. We are not incapable just because we are part of the working class,” he adds.
Farmacoop’s workers currently receive a “social wage” paid by the State, which also provided subsidies for the purchase of machinery.
The plant, now under self-management, is a gigantic old 8,000-square-meter building with meeting rooms, laboratories and warehouse areas where about 40 people work today, but which was the workplace of several hundred workers in its heyday.
It is located between the neighborhoods of Villa Lugano and Mataderos, in an area of factories and low-income housing mixed with old housing projects, where the rigors of the successive economic crises can be felt on almost every street, with waste pickers trying to eke out a living.
Edith Pereira shows the Aqualane brand moisturizing cream, well known in Argentina, that today is produced by the workers of the Farmacoop cooperative, which has two industrial plants in Buenos Aires, recovered and managed by the workers. CREDIT: Daniel Gutman/IPS
“When we entered the plant in 2019, everything was destroyed. There were only cardboard and paper that we sold to earn our first pesos,” says Blácida Martínez.
She used to work in the reception and security section of the company and has found a spot in the cooperative for her 24-year-old son, who is about to graduate as a laboratory technician and works in product quality control.
A new law is needed
Silvia Ayala is the president of the Mielcitas Argentinas cooperative, which brings together 88 workers, mostly women, who run a candy and sweets factory on the outskirts of Buenos Aires, where they lost their jobs in mid-2019.
“Today we are grateful that thanks to the cooperative we can put food on our families’ tables,” she says. “There was no other option but to resist, because reinserting ourselves in the labor market is very difficult. Every time a job is offered in Argentina, you see lines of hundreds of people.”
Ayala is also one of the leaders of the National Movement of Recovered Companies, active throughout the country, which is promoting a bill in Congress to regulate employee-run companies, presented in April by the governing Frente de Todos.
“A law would be very important, because when owners abandon their companies we need the recovery to be fast, and we need the collaboration of the State; this is a reality that is here to stay,” says Ayala.
Argentine President Alberto Fernández stands with workers of the Cooperativa Aceitera La Matanza on May 5, when the government presented the Registry of Recovered Companies, which aims to formalize worker-run companies. CREDIT: Casa Rosada
The Ministry of Social Development states that the creation of the Registry is aimed at designing specific public policies and tools to strengthen the production and commercialization of the sector, as well as to formalize workers.
The government defines “recovered” companies as those economic, productive or service units that were originally privately managed and are currently run collectively by their former employees.
Although the presentation was made this month, the Registry began operating in March and has already listed 103 recovered companies, of which 64 belong to the production sector and 35 to the services sector.
The first data provide an indication of the diversity of the companies in terms of size, with the smallest having six workers and the largest 177.
Opinion by Jomo Kwame Sundaram, Anis Chowdhury (sydney and kuala lumpur)
Inter Press Service
SYDNEY and KUALA LUMPUR, May 24 (IPS) – A class war is being waged in the name of fighting inflation. All too many central bankers are raising interest rates at the expense of working people’s families, supposedly to check price increases.
Forced to cope with rising credit costs, people are spending less, thus slowing the economy. But it does not have to be so. There are much less onerous alternative approaches to tackle inflation and other contemporary economic ills.
Short-term pain for long-term gain?
Central bankers are agreed inflation is now their biggest challenge, but also admit having no control over factors underlying the current inflationary surge. Many are increasingly alarmed by a possible “double-whammy” of inflation and recession.
Nonetheless, they defend raising interest rates as necessary “preemptive strikes”. These supposedly prevent “second-round effects” of workers demanding more wages to cope with rising living costs, triggering “wage-price spirals”.
They insist the resulting job and output losses are only short-term – temporary sacrifices for long-term prosperity. Remember: central bankers are never punished for causing recessions, no matter how deep, protracted or painful.
But raising interest rates only makes recessions worse, especially when not caused by surging demand. The latest inflationary surge is clearly due to supply disruptions because of the pandemic, war and sanctions.
Raising interest rates only reduces spending and economic activity without mitigating ‘imported’ inflation, e.g., rising food and fuel prices. Recessions will further disrupt supplies, aggravating inflation and worsening stagflation.
Wage-price spirals?
Some central bankers claim recent instances of wage increases signal “de-anchored” inflationary expectations, and threaten ‘wage-price spirals’. But this paranoia ignores changed industrial relations and pandemic effects on workers.
With real wages stagnant for decades, the ‘wage-price spiral’ threat is grossly exaggerated. Over recent decades, most workers have lost bargaining power with deregulation, outsourcing, globalization and labour-saving technologies. Hence, labour shares of national income have declined in most countries since the 1980s.
Labour market recovery, even tightening in some sectors, obscures adverse overall pandemic impacts on workers. Meanwhile, millions of workers have gone into informal self-employment – now celebrated as ‘gig work’ – increasing their vulnerability.
Pandemic infections, deaths, mental health, education and other impacts, including migrant worker restrictions, have all hurt many. Contagion has especially hurt vulnerable workers, including youth, migrants and women.
Workers’ share of national income, 1970-2015
Ideological central bankers
Economic policies by supposedly independent and knowledgeable technocrats are presumed to be better. But such naïve faith ignores ostensibly academic, ideological beliefs.
Typically biased, albeit in unstated ways, policy choices inevitably support some interests over – even against – others. Thus, for example, an anti-inflation policy emphasis favours financial asset owners.
Politicians like the notion of central bank independence. It enables them to conveniently blame central banks for inflation and other ills – even “sleeping at the wheel” – and for unpopular policy responses.
Of course, central bankers deny their own role and responsibility, instead blaming other economic policies, especially fiscal measures. But politicians blaming central bankers after empowering them is simply shirking responsibility.
In the rich West, governments long bent on fiscal austerity left the heavy lifting for recovery after the 2008-2009 global financial crisis (GFC) to central bankers. Their ‘unconventional monetary policies’ involved keeping policy interest rates very low, enabling corporate shenanigans and zombie business longevity.
This enabled unprecedented increases in most debt, including private credit for speculation and sustaining ‘zombie’ businesses. Hence, recent monetary tightening – including raising interest rates – will trigger more insolvencies and recessions.
The German Collective Bargaining Act does not oblige ‘social partners’ to enter into negotiations. The timing and frequency of such negotiations are also left to them. Such flexible arrangements are said to have helped SMEs.
Although Germany’s ‘social market economy’ has no national tripartite social dialogue institution, labour unions, business associations and government did not hesitate to democratically debate crisis measures and policy responses to stabilize the economy and safeguard employment, e.g., during the GFC.
Dialogue down under
A similar ‘social dialogue’ approach was developed by Australian Labor Prime Minister Bob Hawke from 1983. This contrasted with the more confrontational approaches pursued in Margaret Thatcher’s UK and Ronald Reagan’s USA – where punishing interest rates inflicted long recessions.
Although Hawke had been a successful trade union leader, he began by convening a national summit of workers, businesses and other stakeholders. The resulting Prices and Incomes Accord between the government and unions moderated wage demands in return for ‘social wage’ improvements.
This consisted of better public health provisioning, pension and unemployment benefit improvements, tax cuts and ‘superannuation’ – involving required employees’ income shares and matching employer contributions to a workers’ retirement fund.
Although business groups were not formally party to the Accord, Hawke brought big businesses into other new initiatives such as the Economic Planning Advisory Council. This consensual approach helped reduce both unemployment and inflation.
Such consultations have also enabled difficult reforms – including floating exchange rates and reducing import tariffs. They also contributed to the developed world’s longest uninterrupted economic growth streak – without a recession for nearly three decades, ending in 2020 with the pandemic.
Social partnerships
A variety of such approaches exist. For example, Norway’s kombiniert oppgjior, from 1976, involved not only industrial wages, but also taxes, salaries, pensions, food prices, child support payments, farm support prices, and more.
‘Social partnerships’ have also been important in Austria and Sweden. A series of political understandings – or ‘bargains’ – between successive governments and major interest groups enabled national wage agreements from 1952 until the mid-1970s.
Consensual approaches undoubtedly underpinned post-Second World War reconstruction and progress, of the so-called Keynesian ‘Golden Age’. But it is also claimed they have created rigidities inimical to further progress, especially with rapid technological change.
Economic liberalization in response has involved deregulation to achieve more market flexibilities. But this approach has also produced more economic insecurity, inequalities and crises, besides stagnating productivity.
Such changes have also undermined democratic states, and enabled more authoritarian, even ethno-populist regimes. Meanwhile, rising inequalities and more frequent recessions have strained social trust, jeopardizing security and progress.
Policymakers should consult all major stakeholders to develop appropriate policies involving fair burden sharing. The real need then is to design alternative policy tools through social dialogue and complementary arrangements to address economic challenges in more equitably cooperative ways.
Farmer José Antonio Sosa, known as Ché, stresses the importance of taking into account the direction of the land for planting, and the use of live or dead barriers to prevent rains from washing away the topsoil to lower areas, thus combating soil degradation in Cuba. CREDIT: Jorge Luis Baños/IPS
by Luis Brizuela (havana)
Inter Press Service
HAVANA, May 23 (IPS) – Thorny bushes and barren soil made it look like a bad bet, but Cuban farmer José Antonio Sosa ignored other people’s objections about the land and gave life to what is now the thriving La Villa farm on the outskirts of Havana.
“The land was a mess, covered with sweet acacia (Vachellia farnesiana) and sickle bush (Dichrostachys cinérea), with little vegetation and many stones. People asked me how I was going to deal with it. With an axe and machete I gradually cleared the undergrowth, in sections,” Sosa told IPS.
Now there are plots of different varieties of fruit trees, vegetables and tubers on the 14 hectares that this farmer received from the State in usufruct in 2010, as part of a government policy to reduce unproductive land and boost food production.
The crops feed his family, while contributing to social programs and sales to the community, after part of the produce is delivered to the Juan Oramas Credit and Services Cooperative, to which the farm located in the municipality of Guanabacoa, one of the 15 municipalities of the Cuban capital, belongs.
On the farm, where he works with his family and an assistant, Sosa produces cow and goat milk, raises pigs and poultry, and is dreaming of farming freshwater fish in a small pond in the not too distant future.
La Villa is in the process of receiving “sustainably managed farm” certification. The farm and Sosa represent a growing effort by small Cuban farmers to recuperate degraded land and use environmentally friendly techniques.
The restoration of unproductive and/or degraded lands is also connected to the need to increase domestic food security, in a country highly dependent on food imports, whose rising prices mean a domestic market with unsatisfied needs and cycles of shortages such as the current one.
At the end of 2021, Cuba had 226,597 farms, 1202 of which had agroecological status while 64 percent of the total – some 146,000 – were working towards gaining agroecological certification, according to official statistics.
Sosa, who has been known as “Che” since he was a child, said the use of natural fertilizers and animal manure has made a difference in the recovery and transformation of the soil.
“It is also important to pay attention to the way crops are cultivated or harvested, to avoid compaction,” the farmer said.
Studies show that changes in land use, inadequate agricultural practices (including the intensive use of agricultural machinery and irrigation), the increase in human settlements and infrastructure and the effects of climate change are factors that are accelerating desertification and soil degradation in this Caribbean island nation of 11.2 million people.
Sosa stressed the importance of paying attention to the direction of the land for planting, and the use of living or dead barriers “to prevent the water from carrying the topsoil to lower areas when it rains.”
These cucumbers were grown using agroecological techniques on the La Villa farm, located in the municipality of Guanabacoa, one of the 15 that make up Havana, Cuba. CREDIT: Jorge Luis Baños/IPS
Drought and climate change
In this archipelago covering 109,884 square kilometers, 77 percent of the soils are classified as not very productive.
They are affected by one or more adverse factors such as erosion, salinity, acidity, poor drainage, low fertility and organic matter content, or poor moisture retention.
The most recent statistics show that 35 percent of the soil in Cuba presents some degree of degradation.
But at 71 years of age, Sosa, who has worked in the countryside all his life, has no doubt that climate change is hurting the soil.
“The rain cycles have changed,” Sosa said. “When I was young, in the early 1960s, my father would plant taro (Colocasia esculenta, a tuber that is widely consumed locally) in March, around the 10th or so, and by the 15th it would be raining heavily. That is no longer the case. This April was very dry, especially at the end of the month, and so was early May.”
He also referred to the decrease in crop yields and quality, “as soils become hotter and water is scarcer.”
Several studies have corroborated important changes in Cuba’s climate in recent years, related to the increase in the average annual temperature, the decrease in cloud cover and stronger droughts, among other phenomena.
According to forecasts, the country’s climate will tend towards less precipitation and longer periods without rain, and by 2100 the availability of water potential could be reduced by more than 35 percent.
But more intense hurricanes are also expected, atmospheric phenomena that can discharge in 48 hours half of the average annual rainfall, with the consequent stress and severe soil erosion.
Although the least productive lands are located in the east, and Cuba’s so-called semi-desert is limited to parts of the southern coast of Guantánamo, the easternmost of the 15 provinces, forecasts indicate that the semi-arid zones could expand towards the west of the island.
Gloria Gómez (right), director of Natural Resources, Prioritized Ecosystems and Climate Change, and Jessica Fernández, head of the Climate Change Department of the General Directorate of Environment of Cuba’s Ministry of Science, Technology and Environment, confirm the government’s intention to promote the use of credits, insurance and taxes as incentives for farmers to improve soils. CREDIT: Luis Brizuela/IPS
Goals
In addition to being a State Party to the United Nations Convention to Combat Desertification, since 2008 Cuba has been promoting the Program for Country Partnership, also known as the National Action Program to Combat Desertification and Drought; Sustainable Land Management.
Likewise, the Cuban government is committed to the 2030 Agenda and its 17 Sustainable Development Goals (SDGs), agreed within the United Nations in 2015.
In SDG 15, which involves life on land, target 15.3 states that “By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land degradation-neutral world.”
According to Sosa, the increase in soil degrading factors requires more efforts to restructure its physical and chemical characteristics.
In addition, he said, mechanisms should be sought to prioritize irrigation, taking into account that many sources are drying up or shrinking due to climate variability.
“In my case, I irrigate the lower part of the farm with a small system connected to the pond. But in the higher areas of the farm I depend on rainfall,” he said.
The construction of tanks or ponds to collect rainwater, in addition to the traditional reservoirs, are ideal alternatives for this Caribbean country with short, low-flow rivers and highly dependent on rainfall, which is more abundant during the May to October rainy season.
But farmers like Sosa require greater incentives: there is a need for more training on the importance of sustainable management techniques, and for economic returns, as well as financial and tax support, in order to make agroecological practices more widespread.
The use of natural fertilizers and animal manure is one of the keys to the restoration and transformation of the once degraded soils covered with thorny bushes of what is now La Villa farm, in the municipality of Guanabacoa, Havana, Cuba. CREDIT: Jorge Luis Baños/IPS
In 2019, Cuba approved the National Land Degradation Neutrality Target Setting Program.
“The guideline foresees implementing new financial economic instruments or improving existing ones by 2030 in order to achieve neutrality in land degradation,” Jessica Fernández, head of the Climate Change department of the Ministry of Science, Technology and Environment, told IPS.
The plan is to enhance the use of credits, insurance and taxes as economic incentives for farmers, based on soil improvement and conservation, and to account for the current expenses destined to environmental solutions to determine the total expenses for soil conservation, the official added.
“We are in talks and studies with the Central Bank of Cuba to gradually introduce green banking,” Gloria Gómez, director of natural resources, prioritized ecosystems and climate change at the ministry, told IPS.
“This service will seek to promote and finance projects that provide solutions to environmental problems through loans with lower interest rates, longer repayment periods, incentives for green products and services, or eco-labeling,” she said.
Since 2000, the Ministry of Agriculture has been developing the National Program for Soil Improvement and Conservation, and in January the Policy for Soil Conservation, Improvement and Sustainable Management and Fertilizer Use came into effect.
At the same time, the Cuban State’s plan to combat climate change, better known as Tarea Vida, in force since 2017, also includes actions to mitigate soil vulnerabilities.
In the last five years, the principles of Sustainable Land Management (SLM) were applied to more than 2525 hectares, while one million of the more than six million hectares of agricultural land in the country received some type of benefit, statistics show.
Other national priorities are related to increasing the forested area to 33 percent, extending the areas under SLM by 150,000 hectares and improving 65 percent of agricultural land by the end of the current decade.
Women in Nigeria collect food vouchers as part of a programme to support families struggling under the COVID-19 lockdown. Credit: WFP/Damilola Onafuwa
by Thalif Deen (united nations)
Inter Press Service
UNITED NATIONS, May 23 (IPS) – Michael Bloomberg, the three-term Mayor of New York city and a billionaire philanthropist, was once quoted as saying that by the time he dies, he would have given away all his wealth to charity – so that his cheque to the funeral undertaker will bounce for lack of funds in his bank account.
Sounds altruistic – even as the number of billionaires keep rising while the poorest of the world’s poor keep multiplying.
The latest brief by Oxfam International, titled “Profiting from Pain” and released May 23, shows that 573 people became new billionaires during the two-and-a half-year Covid 19 pandemic —while the world’s poverty stricken continued to increase.
“We expect this year that 263 million more people will crash into extreme poverty, at a rate of a million people every 33 hours,” Oxfam said.
Billionaires’ wealth has risen more in the first 24 months of COVID-19 than in 23 years combined. The total wealth of the world’s billionaires is now equivalent to 13.9 percent of global GDP. This is a three-fold increase (up from 4.4 percent) in 2000, according to the study.
Asked about the philanthropic gestures, Gabriela Bucher, Executive Director of Oxfam International, told IPS wealthy individuals who use their money to help others should be congratulated.
“But charitable giving is no substitute for wealthy people and companies paying their fair share of tax or ensuring their workers are paid a decent wage. And it does not justify them using their power and connections to lobby for unfair advantages over others,” she declared.
Oxfam’s new research also reveals that corporations in the energy, food and pharmaceutical sectors —where monopolies are especially common— are posting record-high profits, even as wages have barely budged and workers struggle with decades-high prices amid COVID-19.
The fortunes of food and energy billionaires have risen by $453 billion in the last two years, equivalent to $1 billion every two days, says Oxfam.
Five of the largest energy companies (BP, Shell, Total Energies, Exxon and Chevron) are together making $2,600 profit every second, and there are now 62 new food billionaires.
Currently, the world’s total population is around 7.8 billion, and according to the UN, more than 736 million people live below the international poverty line.
A World Bank report last year said extreme poverty is set to rise, for the first time in more than two decades, and the impact of the spreading virus is expected to push up to 115 million more people into poverty, while the pandemic is compounding the forces of conflict and climate change, that has already been slowing poverty reduction.
By 2021, as many as 150 million more people could be living in extreme poverty.
Yasmeen Hassan, Global Executive Director at Equality Now, told IPS Oxfam’s report demonstrates systemic failings in the discriminatory nature of countries’ economies and underscores the urgent need for financial systems to be restructured so that they benefit the 99%, not the 1%.
“As with any crisis, Equality Now foresaw that gender would influence how individuals and communities experienced the pandemic, but even we were shocked at how exceptionally and intensely pre-existing inequalities and sex-based discrimination has been exacerbated”, she said.
While billionaires — the vast majority of whom are men — continue to amass vast sums of wealth, women around the world remain trapped in poverty. Wealthy elites are profiting off women’s labor, much of which is underappreciated, underpaid, and uncompensated, she pointed out.
“Economic hardship and inadequate policy responses to the pandemic have eroded many of the hard-won gains that have been achieved over recent years for women and girls. From increases in child marriage, sexual exploitation and human trafficking, to landlords demanding sex from female tenants who have lost their job, and domestic workers trapped inside with abusive employers, women and girls around the world have borne the brunt of the pandemic,” Hassan declared.
The Oxfam study has been released to coincide with the World Economic Forum’s (WEF) annual meeting—which includes the presence of the rich and the superrich—taking place in Davos-Klosters, Switzerland from 22-26 May. The meeting, whose theme is ‘Working Together, Restoring Trust’, will be the first global in-person leadership event since the outbreak of the COVID-19 pandemic in early 2020
“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic, and now the steep increases in food and energy prices have, simply put, been a bonanza for them. Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive,” said Oxfam’s Bucher.
She said billionaires’ fortunes have not increased because they are now smarter or working harder. But it is really the workers who are working harder, for less pay and in worse conditions.
The super-rich, she argued, have rigged the system with impunity for decades and they are now reaping the benefits. They have seized a shocking amount of the world’s wealth as a result of privatization and monopolies, gutting regulation and workers’ rights while stashing their cash in tax havens — all with the complicity of governments.”
“Meanwhile, millions of others are skipping meals, turning off the heating, falling behind on bills and wondering what they can possibly do next to survive. Across East Africa, one person is likely dying every minute from hunger. This grotesque inequality is breaking the bonds that hold us together as humanity. It is divisive, corrosive and dangerous. This is inequality that literally kills.”
Elaborating further, Hassan of Equality Now said women are more likely to be informally employed, low-wage earners, and this disadvantaged position has resulted in higher rates of women losing their jobs, particularly in sectors that were not prioritized in government relief packages.
“Women are also more likely to be primary caretaker and many have had to absorb increases in unpaid duties while schools and nurseries shut down. As a consequence, some women have been forced out of jobs as they found it impossible to juggle full-time work while also providing full-time childcare. This loss of income has been especially catastrophic for women in poverty and has made them more vulnerable to a range of human rights violations.”
She said world leaders must stop pursuing policy agendas that benefit the rich and hurt the poor.
“Instead, we urgently need a committed and coordinated response from governments and policymakers to reduce inequality and poverty, and address discrimination that is holding women and girls back while allowing the super-rich to get richer still,” she added.
The Oxfam study also says the pandemic has created 40 new pharma billionaires.
Pharmaceutical corporations like Moderna and Pfizer are making $1,000 profit every second just from their monopoly control of the COVID-19 vaccine, despite its development having been supported by billions of dollars in public investments.
“They are charging governments up to 24 times more than the potential cost of generic production. 87 percent of people in low-income countries have still not been fully vaccinated.”
“The extremely rich and powerful are profiting from pain and suffering. This is unconscionable. Some have grown rich by denying billions of people access to vaccines, others by exploiting rising food and energy prices. They are paying out massive bonuses and dividends while paying as little tax as possible. This rising wealth and rising poverty are two sides of the same coin, proof that our economic system is functioning exactly how the rich and powerful designed it to do,” said Bucher.
Oxfam recommends that governments urgently:
Introduce one-off solidarity taxes on billionaires’ pandemic windfalls to fund support for people facing rising food and energy costs and a fair and sustainable recovery from COVID-19. Argentina adopted a one-off special levy dubbed the ‘millionaire’s tax’ and is now considering introducing a windfall tax on energy profits as well as a tax on undeclared assets held overseas to repay IMF debt. The super-rich have stashed nearly $8 trillion in tax havens.
End crisis profiteering by introducing a temporary excess profit tax of 90 percent to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.
Introduce permanent wealth taxes to rein in extreme wealth and monopoly power, as well as the outsized carbon emissions of the super-rich. An annual wealth tax on millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $2.52 trillion a year —enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.
As India grows and develops, its economic production and energy consumption will increase. | Picture courtesy: Flickr/CC BY-NC-ND 2.0
Opinion by R R Rashmi (new delhi)
Inter Press Service
NEW DELHI, May 20 (IPS) – The recent IPCC report that came out in the month of March 2022 says that, by the end of the century, the temperature rise is likely to be 2 to 3.7 degrees if global emissions, as they stand today, are not curtailed. In fact, according to the report, carbon dioxide (CO2) emissions need to come down by 45 percent globally (compared with 2005) by the end of 2030.
And current trends show that the reduction is falling quite short, as the total impact of all the nationally determined contributions put together is still not more than 11 percent. So, there is a vast gap between what we need to be doing and where we are currently.
First, let us understand the global context
The urgency of curtailing emissions is not lost on the political class. However, what continues to be a fraught matter is the share of responsibility that different countries are willing to accept when it comes to minimising their CO2 emissions.
Developed nations, which have contributed the most to the CO2 concentration in the atmosphere and have the resources and capability to curtail emissions, are unwilling to take on the greater share of this responsibility going forward.
Most developing nations feel that this is unfair, given that they have contributed less (or minimally) to the problem and are still being forced to contribute equally. Moreover, fast-growing economies like Brazil, China, and India have ever-expanding energy needs, considering the stage of development they are at.
Their reliance on fossil fuels at this time will naturally be higher. The fundamental problem remains one of apportioning the responsibility or ownership of future efforts, as the available carbon space in the atmosphere needs to be vacated (by developed nations) for those who need it (many countries in the Global South), but that is not happening.
Against the backdrop of this global competition for capturing carbon space, at the COP 26 summit in Glasgow last year, Prime Minister Narendra Modi announced that India will achieve net-zero status by 2070.
The focus for India will now be on increasing the share of renewable energy in energy production and generation both in relative terms and absolute volume so as to eventually phase down consumption of coal and fossil fuels taking place in the economy across various sectors, and improving the carbon sink.
Increasing the uptake of renewable energy in India
There will likely be a large degree of government mobilisation towards solar and wind energy as well as biomass. Each of these has a role to play in India’s energy transition. However, given our climate, solar will receive the largest push.
The prime minister has announced that, by 2030, India will create 500 gigawatts of solar capacity. Currently, the national peak demand for electricity is around 203 gigawatts, whereas we have a capacity of around 400 gigawatts, including the renewables already in place.
So, by creating 500 gigawatts of solar electricity capacity, we should be able to meet a large share of our electricity demand even as it continues to increase. The prime minister wanted this to be in the range of 50 percent, meaning 50 percent of the electricity needs would be met from renewables by 2030. But, in actual fact, this may need a still higher quantum of renewables electricity capacity to be created.
The difficulty is that the efficiency of renewables is low, which is why the actual uptake of solar energy in the energy system is not more than 10 percent. In other words, we are only able to use approximately 10 percent of the electricity capacity that is created with renewables.
Even if we include the generation from nuclear or large hydro power in the small renewables, the share of renewable energy in the total electricity generation is still at about 21–22 percent, as compared to 78 percent with coal, oil, and gas.
So the question before us, as we try to make an energy transition, is: How do we enhance the uptake of renewables in the electricity system and how do we stabilise the grid? And where will the funding come from?
Even if India is able to produce intermittent renewable energy at a low variable cost, there are other systemic fixed costs that need to be factored in. These include the need for meeting the baseload in the grid (that is, the minimum level of electricity demand over 24 hours), transmitting the energy, transporting it across different states and regions, and, in the case of solar, making it available when the sun is not shining.
All of these require considerable investment in infrastructure and systems. And today our domestic financial system alone is not capable of mobilising finance at this scale.
So, the primary problem in making this energy transition is twofold. First, India needs to create technology for energy storage, which can meet the baseload in the grid and stabilise it when solar or wind energy is not available.
And, second, we need to mobilise the finance at a scale that can help us create a capacity of 500 gigawatts of renewable energy by 2030, and more as we go along. Every single gigawatt of renewable energy is going to cost approximately INR 6 crore. And not only in terms of financial cost, this kind of investment in renewables requires a lot of land as well.
So, the question is: Can we really mobilise these funds and resources at this scale and overcome the technology hump of renewable energy storage?
There is another challenge that lies ahead. Certain industrial sectors in the economy—for instance, petrochemicals, steel, and cement—are extremely inflexible in terms of the kind of technology and energy that they need.
So, even if we are able to reduce the emissions intensity of our GDP by improving energy efficiency and the proportion of renewable energy in our energy system, it is not going to be enough. As India grows and develops, its economic production and energy consumption will increase.
And, for these sectors, replacing carbon will not be possible without the availability of alternative fuels, which are necessary for certain industrial production and processes. Such fuels are necessary for transport and cement and steel production, which are likely to grow by three times.
Therefore, to make the transition, we need heavy investment in alternate low-carbon fuels such as hydrogen and natural gas. We also require tech innovation at scale to bring down the cost of these fuels and enable the production of steel and cement at an affordable and competitive rate.
In summary, India’s mitigation efforts must revolve largely around mobilising funds and investing in tech innovation at scale.
What India needs to focus on when it comes to adaptation
Enhancing climate resilience is going to be critical for a country like ours. Given that many states face unique kinds of climate threats, each of them must have a climate resilience strategy, so that the productivity of the economic system does not get compromised in the process of addressing climate change.
While we focus on making changes to our energy system, we need to take simultaneous measures to ensure that agricultural productivity remains stable, water does not become scarce, coastal communities are not threatened by the rise in sea level, and so on.
One way to do this is by increasing the capacities of the communities to address climate change. Managing water resources is going to be the key to adaptation efforts, given that close to 80 percent of the water in India is consumed in agriculture.
At the same time, we need to insulate communities from climate disasters like floods, droughts, cyclones, and extreme heatwaves, which requires investment in infrastructure, for instance, roads and telecom structures.
Here, the challenge is that there are very few entities coming forward to make the kind of investments we need. In the case of mitigation efforts, there are business models that can generate returns for the investors. But, in the case of adaptation and resilient infrastructure, there are no financial returns, and it is only the government budget or public resources that we have to fall back on.
There is reason to be hopeful
While the task ahead of us entails massive systemic changes that may seem daunting, we should not lose hope.
The intensity of global discussions has permeated into national strategies, such as India’s. The successful execution of our strategies depends on political commitment, which already exists at the national and state level. State MPs and MLAs are now thinking and talking about climate change—this was not the case 10 years ago.
What we need now is for state climate action plans (many of which exist) to incorporate a framework for mobilising investments and measuring benefits and outcomes. Once this is done, it’s only a matter of time before a climate lens is fully integrated into our development policies too.
Corporate India has also woken up to their contributions to worsening climate change, and are beginning to shift their priorities accordingly. Many industry majors such as the Tatas, Mahindra & Mahindra, Wipro, Shell India, and Dalmia have announced net-zero targets by 2040 or 2050.
The SEBI has mandated 1,000 top companies listed on the stock exchange to follow a mandatory framework of business sustainability and responsibility reporting and make disclosures on some of the key environmental parameters. This is a step in the right direction, and once we develop a robust disclosure system that includes penalties and rewards for actions taken, we will begin to see a lot more movement in this area.
When it comes to citizens, there are a few things that can be done. The first is to build our own awareness, and that of those around us, when it comes to climate change impacts. We must integrate the environmental consciousness into our education system.
Doing this can help build community action against policies and actions that have adverse consequences for the environment. This is difficult but not impossible to do, given that young people today are much more environmentally conscious than the previous generations.
The second course, of action, is to develop a deeper understanding of our own resource efficiency—how much we are consuming, recycling, or restoring. Earlier we would talk about three Rs (Reduce, Reuse, Recycle); now there are six Rs (Rethink, Refuse, Reduce, Reuse, Recycle, Repair).
We need to move towards a circular economy, which will require participation from all citizens as well as industry. India has a head start here, given that traditionally we have had a culture of recycling and reusing. Industry needs to move in this direction too and follow the norms for extended producers’ responsibility. Improving resource efficiency, even in our own homes, will go a long way in making a difference to how climate change progresses in the coming years.
Rajani Ranjan Rashmi is a Distinguished Fellow at the Centre for Global Environmental Research, TERI, where he works on climate change, mitigation and adaptation strategies, carbon markets, and related issues
A mountainous landscape in the area of the headwaters of the Velhas River, where “barraginhas”, the Portuguese name for holes dug like lunar craters in the hills and slopes, prevent erosion by swallowing a large amount of soil that sediments the upper reaches of the river, in the southeastern Brazilian state of Minas Gerais. CREDIT: Mario Osava/IPS
by Mario Osava (belo horizonte/itabirito, brazil)
Inter Press Service
BELO HORIZONTE/ITABIRITO, Brazil, May 19 (IPS) – The southeastern Brazilian state of Minas Gerais owes its name to the main economic activity throughout its history: mining – of gold since the 17th century and later iron ore, which took on an industrial scale with massive exports in the 20th century.
The so-called Iron Quadrangle, a mountainous area of some 7,000 square kilometers in the center of the state, concentrates the state’s minerals and mining activity, long questioned by environmentalists, who have been impotent in the face of the industry’s economic clout.
But the threat of water shortages in Greater Belo Horizonte, population six million, along with two horrific mining accidents, reduced the disparity of forces between the two sides. Now environmentalists can refer to actual statistics and events, not just ecological arguments.
Belo Horizonte, the capital of the state, experienced an unprecedented water crisis in 2014 and 2015, during a drought that affected the entire southeast of Brazil.
“For the first time we experienced shortages here that only the semi-arid north of the state was familiar with,” said Marcelo da Fonseca, general director of the Mining Institute of Water Management (Igam).
On Jan. 25, 2019, a tailings dam broke in Brumadinho, 35 kilometers from Belo Horizonte as the crow flies. The tragedy killed 270 people and toxic sludge contaminated more than 300 kilometers of the Paraopeba River, which provided 15 percent of the water for the Greater Belo Horizonte region (known as RMBH), whose supply has not yet recovered.
On Nov. 5, 2015, a similar accident had claimed 19 lives in Mariana, 75 kilometers from Belo Horizonte, and silted up more than 600 kilometers of the Doce River on its way to the Atlantic Ocean. (The river, whose waters run eastward, do not supply the RMBH.)
Two years of drought, in 2014 and 2015, frightened the population of Greater Belo Horizonte, the capital of the state of Minas Gerais in southeastern Brazil. For the first time the threat of water shortages was felt, said the director general of the Minas Gerais Water Management Institute, Marcelo da Fonseca. CREDIT: Mario Osava/IPS
Mining hazards
Minas Gerais has more than 700 mining tailings dams. The latest data from the State Environmental Foundation (Feam) show 33 in different degrees of emergency, four of which are at level three – high risk and mandatory evacuation of endangered residents – and nine at level 2 – recommended evacuation.
“We are hostages of the mining companies, they occupy the territory and make other economies unviable,” said Camila Alterthum, one of the founders and coordinators of the Cresce Institute and an activist with the Fechos, Eu Cuido movement, promoted by the Rio de las Velhas Watershed Committee.
Fechos is the name of an Ecological Station, a 603-hectare integral conservation area belonging to the municipality of Nova Lima, but bordering Belo Horizonte.
“There are mountains here that recharge the Cauê aquifer, which supplies more than 200,000 inhabitants of southern Belo Horizonte and a neighborhood in Nova Lima,” an adjoining municipality, said Alterthum, who lives in Vale do Sol, a neighborhood adjacent to Fechos.
Activist Camila Alterthum is opposed to mining, which she says is a permanent threat to the destruction of nature and water sources. She is fighting to expand the Fechos Ecological Station, whose forests contribute to the water supply for more than 200,000 inhabitants of Belo Horizonte, in southeastern Brazil. CREDIT: Mario Osava/IPS
Her movement presented to the Minas Gerais state legislature a bill to expand Fechos by 222 hectares, to provide more water and preserve local biodiversity.
But Vale, Brazil’s largest mining company, aims to expand its two local mines in that area.
In order to acquire the land, it is offering double the number of hectares for conservation, a counterproposal rejected by the movement because it would not meet the environmental objectives and most of it is an area that the company must preserve by law anyway.
A fiercer battle was unleashed by the decision of the Minas Gerais government’s State Environmental Policy Council, which has a majority of business and government representatives, to approve on Apr. 30 a project by the Taquaril company to extract iron ore from the Curral mountain range.
Forestry engineer Julio Carvalho, of the Itabirito municipal government, stands next to a “barraginha” on a private rural property, whose owners joined the municipal effort to contain soil loss and river sedimentation in this area of southeastern Brazil. CREDIT: Mario Osava/IPS
This mountain range is the most prominent landscape feature of Belo Horizonte, in addition to being important in terms of water and environmental aspects for the capital, although it is located on its border, on the side of the municipality of Nova Lima. The mining threat triggered a huge outcry from environmentalists, artists and society in general.
Droughts and erosion
There are other threats to the RMBH’s water supply. “We are very close to the springs, so we depend on the rains that fall here,” Fonseca told IPS at Igam headquarters in Belo Horizonte.
Two consecutive years of drought have seriously jeopardized the water supply.
Two basins supply the six million inhabitants of the 34 municipalities making up Greater Belo Horizonte.
The Velhas River accounts for 49 percent of the water supply and the Paraopeba River for 51 percent, according to Sergio Neves, superintendent of the Metropolitan Business Unit of the Minas Gerais Sanitation Company (Copasa), which serves most of the state.
The Paraopeba River stopped supplying water after the 2019 accident, but its basin has two important reservoirs in the tributaries. The one on the Manso River, for example, supplies 34 percent of the RMBH.
The phenomenon of “voçorocas” (gullies) is repeated in several parts of Itabirito and Ouro Preto, the municipalities where the Velhas river basin originates, in southeastern Brazil. The soil is vulnerable to erosion and measures to mitigate the damage are finally beginning to proliferate in a region dominated by iron ore mining. CREDIT: Mario Osava/IPS
The Velhas River only has a small hydroelectric power plant reservoir, with a capacity of 9.28 megawatts, but it is generating only four megawatts. It is run-of-river, that is, it does not store enough water to regulate the flow or compensate for low water levels.
In addition, sedimentation has greatly reduced its storage capacity since it began to operate in 1907. The soil upstream is vulnerable to erosion and has been affected by urban and agricultural expansion, local roads and various types of mining, not only of iron ore, which aggravate the sedimentation of the rivers, said Fonseca.
Decentralized solutions
The municipal government of Itabirito, which shares the headwaters of the Velhas basin with Ouro Preto, the gold capital in the 18th century, is promoting several actions mentioned by Fonseca to mitigate erosion and feed the aquifers that sustain the flow of the rivers.
Businessman and environmentalist Ronaldo Guerra stands on his farm where he promotes ecotourism and exhibits his proposal for a succession of small dams as a mechanism for storing water on the surface and in the water table, strengthening the forests and the hydrographic basin in a mining region of southeastern Brazil where there is growing concern about the water supply. CREDIT: Mario Osava/IPS
It is intriguing to see craters in some rural properties in Itabirito, especially on hills or gently sloping land.
They are “barraginhas”, explained Julio Carvalho, a forestry engineer and employee of the Municipal Secretariat of Environment and Sustainable Development. They are micro-dams, holes dug to slow down the runoff of rainwater that causes erosion.
This system prevents a large part of the sediment from flowing into the rivers, as well as the phenomenon of “voçorocas” (gullies, in Portuguese), products of intense erosion that abound in several parts of Itabirito and Ouro Preto, municipalities where the first tributaries of the Velhas are born.
As these are generally private lands, the municipal government obtains financing to evaluate the properties, design the interventions and put them out to bid, in agreement with the committees that oversee the watersheds, Carvalho told IPS.
The municipality of Itabirito is the “water tank” of Belo Horizonte, the capital of the state of Minas Gerais, in southeastern Brazil. The municipal government is promoting programs aimed at revitalizing the watershed that supplies nearly half of the six million inhabitants of Greater Belo Horizonte, explains Frederico Leite, environmental secretary of the municipality, which depends on mining activity. CREDIT: Mario Osava/IPS
For country roads, which generate a great deal of erosion in the undulating topography, “dry boxes” are used, as well as small holes in the banks to retain the torrents or at least curb their speed, he said.
Other “mechanical land use and conservation practices” include recovering water sources through reforestation and fencing to prevent animals from invading water sources and trampling the surrounding areas.
Itabirito is also seeking to dredge the river of the same name, which crosses the city, to reduce sedimentation, which was aggravated by flooding in January, when the water level in the river rose unusually high.
Environmental education, a program of payments for environmental services and the expansion of conservation areas, in the city as well, are the plans implemented by Felipe Leite, secretary of environment and sustainable development of Itabirito since 2019.
“We want to create a culture of environmental preservation,” partly because “Itabirito is the water tank of Belo Horizonte,” he told IPS.
The municipal government chose to cooperate with the mining industry, especially with the Ferro Puro company, which decided to pave a road and reforest it with flowers as part of a tourism project.
In São Bartolomeu, a town in the municipality of Ouro Preto, Ronald Guerra, an ecotourism entrepreneur, proposes a succession of small dams and reservoirs as a way of retaining water, feeding the water table and preventing erosion.
On his 120-hectare farm, half of which is recognized as a Private Natural Heritage Reserve –a private initiative conservation effort – he has 13 small dams and raises fish for his restaurant and sport fishing.
The son of a doctor from Belo Horizonte, he opted for rural life and agroecology from a young age. He was secretary of environment of Ouro Preto and today he is an activist in several watershed committees, non-governmental organizations and efforts for the promotion of local culture.
Opinion by Jomo Kwame Sundaram, Anis Chowdhury (sydney and kuala lumpur)
Inter Press Service
SYDNEY and KUALA LUMPUR, May 17 (IPS) – Central bank policies have often worsened economic crises instead of resolving them. By raising interest rates in response to inflation, they often exacerbate, rather than mitigate business cycles and inflation.
Anis ChowdhuryHence, decisionmakers must consider more appropriate policy tools. Rejecting ‘one size fits all’ formulas, including simply raising interest rates, anti-inflationary measures should be designed as appropriate. Instead of squelching demand by raising interest rates, supply could be enhanced.
Thus, Milton Friedman – whom many central bankers still worship – blamed the 1930s’ Great Depression on the US Fed. Instead of providing liquidity support to businesses struggling with short-term cash-flow problems, it squeezed credit, crushing economic activity.
Adverse impacts of the 1970s’ oil price shocks were worsened by the reactions of monetary policymakers, which caused stagflation. That is, US Fed and other central bank interventions caused economic stagnation without mitigating inflation.
Monetary policy for supply shocks?
Food prices surged in 2011 due to weather-related events ruining harvests in major food producing nations, such as Australia and Russia. Meanwhile, fuel prices soared with political turmoil in the Middle East.
Jomo Kwame SundaramHowever, Boston Fed head Eric Rosengren argued, “tightening monetary policy solely in response to contractionary supply shocks would likely make the impact of the shocks worse for households and businesses”.
Referring to Boston Fed research, he noted commodity price changes did not affect the long-run inflation rate. Other research has also concluded that commodity price shocks are less likely to be inflationary.
This reduced inflationary impact has been attributed to ‘structural changes’ such as workers’ diminished bargaining power due to labour market deregulation, technological innovation and globalization.
Hence, central banks are no longer expected to respond strongly to food and fuel price increases. Policymakers should not respond aggressively to supply shocks – often symptomatic of broader macroeconomic developments.
Instead, central banks should identify the deeper causes of food and fuel price rises, only responding appropriately to them. Wrong policy responses can compound, rather than mitigate problems.
Tetangco warned, “the required policy response is not… straightforward… Thus policy makers will need to make a choice between bringing down inflation and raising output growth”. He emphasized, “a real sector supply side response may be more appropriate in addressing the pressure on prices”.
Thus, instead of restricting credit indiscriminately, financing constraints on desired industries (e.g., renewable energy) should be eased. Enterprises deemed inefficient or undesirable – e.g., polluters or those engaged in speculation – should have less access to the limited financing available.
This requires designing macroeconomic policies to enable dynamic new investments, technologies and economic diversification. Instead of reacting with blunt interest rate policy tools, policymakers should know how fiscal and monetary policy tools interact and impact various economic activities.
Used well, these can unlock supply bottlenecks, promote desired investments and enhance productivity. As no one size fits all, each policy objective will need appropriate, customized, often innovative tools.
Lessons from China
China’s central bank, the People’s Bank of China (PBOC), developed “structural monetary policy” tools and new lending programmes to help victims of COVID-19. These ensured ample interbank liquidity, supported credit growth, and strengthened domestic supply chains.
Outstanding loans to small and micro businesses rose 25% to 20.8 trillion renminbi by March 2022 from a year before. By January, the interest rate for loans to over 48 million small and medium enterprises had dropped to 4.5%, the lowest level since 1978.
The PBOC has also provided banks with loan funds for promising, innovative and creditworthy companies, e.g., involved in renewable energy and digital technologies. It thus achieves three goals: fostering growth, maintaining debt at sustainable levels, and ‘green transformation’.
Defying global trends, China’s ‘factory-gate’ (or producer price) inflation fell to a one-year low in April 2022 as the PBOC eased supply chains and stabilized commodity prices. Although consumer prices have risen with COVID-19 lockdowns, the increases have remained relatively benign so far.
In short, the PBOC has coordinated monetary policy with both fiscal and industrial policies to boost confidence, promote desired investments and achieve stable growth. It maintains financial stability and policy independence by regulating capital flows, thus avoiding sudden outflows, and interest rate hikes in response.
Improving policy coordination
Central bankers monitor aggregate indicators, such as wages growth. However, before reacting to upward wage movements, the context needs to be considered. For example, wages may have stagnated, or the labour share of income may have declined over the long-term.
Moreover, wage increases may be needed for critical sectors facing shortages to attract workers with relevant skills. Wage growth itself may not be the problem. The issue may be weak long-term productivity growth due to deficient investments.
Input-output tables can provide information about sectoral bottlenecks and productivity, while flow-of-funds information reveals what sectors are financially constrained, and which are net savers or debtors.
Such information can helpfully guide design of appropriate, complementary fiscal and monetary policy tools. Undoubtedly, pursuing heterodox policies is challenging in the face of policy fetters imposed by current orthodoxies.
Central bank independence – with dogmatic mandates for inflation targeting and capital account liberalization – precludes better coordination, e.g., between fiscal and monetary authorities. It also undercuts the policy space needed to address both demand- and supply-side inflation.
Monetary authorities are under tremendous pressure to be seen to be responding to rising prices. But experience reminds us they can easily make things worse by acting inappropriately. The answer is not greater central bank independence, but rather, improved economic policy coordination.
Children and adolescents in a Yanomami community in Parima, on the southern border with Brazil, the area where four indigenous people were shot dead and others injured when they confronted military troops last March. CREDIT: Wataniba
by Humberto Marquez (caracas)
Inter Press Service
CARACAS, May 12 (IPS) – The voracious search for gold in southern Venezuela, practiced by thousands of illegal miners under the protection of various armed groups, represents the greatest threat today to the lives of indigenous peoples, their habitat and their cultures, according to their organizations and human rights defenders.
In this part of the Amazon jungle, “mining, violence, habitat destruction, death from disease and forced migration make up a context that indigenous people are calling a silent genocide,” researcher Aimé Tillet, who has worked in the area for many years, told IPS.
At the other end of the country, along the northwest border with Colombia, indigenous people are fighting for the delimitation of their territories, which has led to clashes and deaths in their attempts to recover ancestral lands, while they are often reduced to destitution.
There are common features of life in border regions that are home to indigenous peoples, such as neglect by the government, which fails to fulfill its duties in health, education, security, provision of food, fuel and transportation, supplies, communications and consultations with native peoples regarding the use of their land and resources.
The government foments mining activity and in 2016 decreed the “Orinoco Mining Arc” on the right bank of the Orinoco river – an area of 111,844 square kilometers, larger than Bulgaria, Cuba or Portugal.
In parallel, it established an armed forces company, Camimpeg, to spearhead the mining of gold, diamonds, coltan and other conventional and rare minerals, in which the country is rich.
Opacity is a stain on the management of military companies by the authorities, according to non-governmental organizations such as Citizen Control for Security and Defense.
The local press has reported on the involvement of military and police units in the region in incidents related to mining activity that have sparked protests by indigenous people and human rights activists, ranging from deaths of native people in altercations to massacres in which “unknown groups” have killed dozens of people.
Artisanal and illegal mining, in hundreds of deforested areas and along rivers contaminated with mercury used to extract gold from ore, are often controlled by criminal gangs that call themselves “syndicates” and that traffic in gold and supplies, as well as in people who work in the mines, who are often subjected to forced labor.
According to human rights groups, for some years now another danger has been Colombian guerrillas, particularly the National Liberation Army (ELN), which is involved in mining and other illegal activities in the southern state of Amazonas, as well as dissidents of the Revolutionary Armed Forces of Colombia (FARC), which laid down its arms under a 2016 peace deal.
In the Sierra de Perijá mountains, home to three native peoples and part of the northern border between Colombia and Venezuela, the ELN has made inroads into indigenous communities, setting up camps, collecting “vacunas” – taxes or protection payment – from cattle ranchers, overseeing cattle smuggling and recruiting young people as guerrilla fighters.
A map showing the areas that are home to the main indigenous peoples of Venezuela, according to the governmental Simón Bolívar Geographic Institute. The most numerous groups are in the extreme northwest, south and east of the country. CREDIT: IGVSB
Shots in the jungle
On Mar. 20, four Yanomami Indians were shot and killed in the Sierra de Parima mountains that mark the border with Brazil in the extreme south, by Venezuelan Air Force troops after an altercation over the internet signal and a router shared by the military and members of a native community.
The Yanomami, who have lived in the jungles of southern Venezuela and northern Brazil for thousands of years – considered a living testimony to the Neolithic era who only came into contact with the rest of the world a few decades ago – have found mobile telephones a useful means of communication in their widely dispersed communities.
What happened in Parima “cannot be taken as an isolated reaction, but must be seen as the result of an accumulation of tensions and abuses, of a lack of a differentiated treatment based on the right to positive discrimination,” declared Wataniba, an organization supporting the indigenous peoples of Venezuela’s Amazon region, at the time.
“All these tensions that are experienced daily on the borders are a consequence of extractivism, coupled with abuses of power by the military, transculturation and the lack of concrete actions by the State to meet the basic needs of indigenous peoples,” the organization added.
Hundreds of informal and illegal gold mines deforest land, damage the soil, pollute the water with mercury and exploit indigenous and other workers under forms of modern slavery in Venezuela’s Amazon rainforest. CREDIT: RAISG
Undeterrable garimpeiros
In 1989, a decree law by then President Carlos Andrés Pérez (1922-2010, who governed the country from 1974-1979 and 1989-1993) banned for 50 years all mining activity in the state of Amazonas in the extreme south of the country, an area of 178,000 square kilometers of jungle with fragile soils, home to 200,000 inhabitants, more than half of them members of 20 indigenous peoples.
For decades, however, thousands of garimpeiros – the Brazilian name for informal gold prospectors, who originally came from Brazil – have made incursions into Amazonas, and in recent years on a larger scale, using airstrips and a large number of motor pumps, and imposing relations, sometimes involving trade but above all exploitation, with indigenous communities and individuals.
On Jul. 28, 2021, the Kuyujani and Kuduno indigenous organizations, as well as the Tuduma Saka court of justice of the Sanemá ethnic group (Yanomami branch) and their Ye’kuana (Carib) neighbors, denounced the presence of garimpeiros in four communities, in documents delivered to the governmental Ombudsman’s Office.
More than 400 armed garimpeiros, according to the complaint, were working with 30 machines extracting precious minerals in the Upper Orinoco area, forcing men and boys to work in mining, and enslaving and forcing women into prostitution.
The report added that the destruction of the forests has also affected the vegetable gardens of local indigenous communities, which have become dependent on food supplies from the garimpeiros.
Tillet said the incursion of guerrillas and illegal miners in the south also creates hotbeds of inter-ethnic conflict, because some indigenous people and communities desperate to find a means of survival accept the miners, while others (such as the Uwottija or Piaroas of the middle Orinoco) strongly oppose such incursions.
A view of the damage caused by uncontrolled mining in an area of southern Venezuela. CREDIT: SOS Orinoco/RAISG
Modern-day slavery
In the “currutelas” or mining villages, young men and boys work extracting gold-rich sands, while women are employed to cook, sweep, wash and clean the camps, and are exploited sexually.
This situation, seen in the hundreds of mining camps in Amazonas and the southeastern state of Bolívar, which covers some 238,000 square kilometers, is aggravated in the case of indigenous peoples, lawyer Eduardo Trujillo, director of the Andrés Bello Catholic University’s Human Rights Center, which is conducting several studies in the area, told IPS.
“Under the control of armed groups, dynamics of violence are generated, with confrontations and deaths, and conditions of modern-day slavery, where omission translates into acquiescence on the part of the Venezuelan State,” Trujillo added.
In particular, indigenous women recruited to work in the camps “are caught up in a dynamic of violence: their work is not voluntary, sometimes they are not paid, and they are subjected to risks to their health and lives,” he said.
Mining in Venezuela contributes to the figures of the International Labor Organization (ILO), according to which more than 40 million people around the world are victims of modern-day slavery, 152 million are victims of child labor and 25 million are forced laborers.
Autana hill, seen from the banks of the Cuao River, a tributary of the middle Orinoco. The Uwottija people consider it sacred and reject the presence in the area of guerrilla groups from Colombia, associated with illegal mining. CREDIT: Humberto Márquez / IPS
Adios habitat, culture and life
According to the 2011 census, at least 720,000 of Venezuela’s 28 million inhabitants are indigenous, belonging to some 40 native peoples, and close to half a million live in rural indigenous areas, mainly in border regions.
Although the largest indigenous group (60 percent) is the Wayúu, an Arawak-speaking people who live on the Colombian-Venezuelan Guajira peninsula in the north, most of the native peoples are in the south of the country. Some groups have thousands of members but others only a few hundred, and their languages and ancestral knowledge are at risk of dying out.
The environmental organization Provita reports that 380,000 hectares have been deforested south of the Orinoco in the last 20 years, while the area dedicated to mining increased from 18,500 to 55,000 hectares between 2000 and 2020.
Riverbanks and headwaters have been especially affected, many in areas theoretically protected as national parks. Tillet stressed that, in addition to the environmental damage they suffer, these are areas of limited resources for subsistence, for which indigenous communities and miners are now competing.
“Because they depend on mining for an income, indigenous people are forced to abandon their traditional activities of planting, fishing and hunting, their diet deteriorates, malnutrition and diseases such as malaria increase, and they are forced to say goodbye to their land, to move and migrate,” said Tillet.
The researcher said that health services, which are the responsibility of the State, have practically disappeared, and even more so during the COVID-19 pandemic, while education has collapsed as teachers move away and migrate, with the result that “children who should be in school now work in exploitative conditions in the mines.”
In the document they presented to the Ombudsman’s Office, the Yanomami and Ye’kuana organizations said they were victims of selective killings, contamination of water with mercury, contagion from diseases and, in short, “a silent cultural genocide.”
Children from a Uwottija (Piaroa) community in the middle Orinoco region, where organizations of this native people reject the presence of guerrilla groups from neighboring Colombia, associated with illegal mining. CREDIT: Humberto Márquez / IPS
Territory, an elusive right
The current constitution, adopted in 1999, recognized the right of indigenous peoples to conserve their cultures and possess their ancestral territories, and provided for the expeditious demarcation of these areas – which has only happened for a small part of their territories.
In the case of the state of Amazonas, which is almost entirely the habitat of indigenous people, the demarcation process has been ignored, preventing indigenous peoples from laying claim to their rights, demanding the required consultation processes and consent for the exploitation of their territory, and eventually obtaining benefits from their land.
Tillet said that “demarcation is still a pending issue, for which there is no political will, but the avalanche of mining has relativized its importance, because if protected areas such as national parks or natural monuments are violated by mining, you can imagine that the same thing is true for indigenous territories.”
Examples are the 30,000-square-kilometer Canaima National Park in the southeast, rich in tepuis – steep, flat-topped mountains – and large waterfalls, and the 3,200-square-kilometer Yapacana, in the middle of Amazonas state, where mining is practiced while the authorities turn a blind eye.
On the other hand, in the northwest, the struggle for land of the Yukpa people in the center of the Sierra de Perijá continues, with episodes of violence. Like their neighbors, the Barí of Chibcha origin, and the Wayúu, they are a bi-national people, although with more members of the community on the Venezuelan side than in Colombia.
The crux of the conflict is that throughout the 20th century the indigenous people were pushed into the most inhospitable lands in the mountains, while the plains, on the western shore of Lake Maracaibo, were occupied by cattle ranchers.
Some communities have accepted plots of land – the least fertile areas – granted by the government. But a resistant group of Yukpa, led by chief Sabino Romero until he was murdered in 2013, lays claim to land occupied by cattle ranches, while combating incursions by smugglers and guerrillas in the mountains.
Sabino Romero, a Yukpa chief from the Sierra de Perijá mountains bordering Colombia, was killed in 2013 in the context of his people’s struggle to recover lands occupied by cattle ranchers throughout the 20th century. CREDIT: Homo et Natura Society
“Other members of Sabino’s family and followers of his have been killed over the years and have endured attacks by hired killers and employees of cattle ranchers, and even by the National Guard (militarized police) or the ELN,” Lusbi Portillo, leader of the environmental Homo et Natura Society, told IPS.
Ana María Fernández, a Yukpa activist in the area, said that “we are not only fighting against large landowners, police forces and the National Guard, and the State, which does not allow the demarcation of our lands. We are also attacked by Colombian guerrillas and hired killers contracted by ranchers.”
On the other hand, some Yukpa indigenous people sometimes seize cattle as a way to collect on the damages inflicted on them. Others, less combative, “charge a right of way on what used to be their lands, to earn some money to eat and survive,” said Portillo.
The activist said that one alternative is for the State to fulfill its commitments to compensate cattle ranchers whose farms must be returned to the indigenous people, and to make good on its duty to provide transportation routes for the communities’ agricultural production and health care in the face of the increase in diseases.
Ana María Fernández is an activist from a Yukpa community that is demanding the demarcation of their ancestral territories in the western Sierra de Perijá, where the best lands were occupied by cattle ranches throughout the 20th century. CREDIT: OEPV
Time to migrate
The crisis of the second decade of this century in Venezuela has forced thousands of indigenous people to migrate, as part of the diaspora of six million Venezuelans who have left the country since 2014, overwhelmingly heading to neighboring Latin American and Caribbean countries, the United States and Spain.
The largest group is the Warao, a people living in the northeastern Orinoco delta, whose southern zone is affected by mining and logging activities, and who have gone mostly to Brazil, but also to Guyana and Trinidad and Tobago.
The Warao “number less than 50,000, and the migration of at least 6,000, more than 10 percent of them, is a decrease in numbers that speaks volumes about the human rights situation of this population. In northern Brazil there are some 5,000, and Brazil already considers them to be a distinct, nomadic indigenous people in its territory,” Tillet commented.
Pablo Tapo, a member of the Baré people and coordinator of the Amazon Indigenous Human Rights Movement, compiled a report according to which more than 4,500 indigenous people from nine ethnic groups in his region crossed the border into Colombia in three years.
In both cities and rural areas, “communities are left on their own because there is no attention or services, in outpatient hospitals there are no doctors, medicines or supplies, and there is no food security,” said Tapo.
In the southwestern plains state of Apure, the armed confrontation that months ago involved Colombian guerrillas and Venezuelan military forced the flight to Colombia of indigenous groups living on the Venezuelan side of the Meta River.
In the extreme southeast, next to Brazil, the Pemón people have suffered from the drop in tourism due to the insecurity associated with mining and the pandemic, which has created an incentive to migrate. And in the northwest, for peoples such as the Wayúu, continuously crossing the border is an ageold practice that has never changed.
At the center of the indigenous people’s plight is mining, particularly the insatiable craving for gold, of which, according to a study by the Organization for Economic Cooperation and Development (OECD), this country can produce some 75 tons per year, although actual extraction, both legal and clandestine, is possibly half that.
Opinion by Jomo Kwame Sundaram, Anis Chowdhury (sydney and kuala lumpur)
Inter Press Service
SYDNEY and KUALA LUMPUR, May 10 (IPS) – The world is being pressed by financial interests to raise interest rates, ostensibly to check inflation. After the US Federal Reserve started raising interest rates, more central banks have been doing likewise.
Considering inflation’s contemporary causes, such ‘follow the leader’ central bank mimicry cannot check it except by slowing economies. Worse, this has meant taking on huge new risks, seriously damaging world economic prospects in the medium and long-term.
Anis ChowdhuryInflation bogey dangerous
Much earlier, World Bank supported research had shown moderate inflation – in the range of 15–30% – was not harmful to growth, and could “be reduced only at a substantial cost to … growth”.
Raising interest rates will derail recovery and worsen supply disruptions and shortages due to the pandemic, war and sanctions. European Central Bank (ECB) Executive Board member Fabio Panetta has noted the euro zone is “de facto stagnating” as economic growth has almost stopped.
As policymakers struggle with inflation, growth and wellbeing are being subjected to huge risks. As Panetta warns, “monetary tightening aimed at containing inflation would end up hampering growth that is already weakening”.
Interest rates rising globally
Among emerging markets and developing economies, South Africa’s central bank raised interest rates for the first time in three years in November 2021.
Jomo Kwame SundaramOn 4 May, the Reserve Bank of India raised interest rates – its first rate change in two years and first rate hike in nearly four. On 5 May, Chile’s central bank raised interest rates. Pressed by finance to curb inflation, more central bankers are tightening monetary policy.
Without evidence or reasoning, they insist higher interest rates will check inflation. Their recognized adverse effects for recovery and growth are dismissed as unavoidably necessary short-term costs for some unspecified long-term gains.
But despite facing higher inflationary expectations, tightening international monetary conditions, and Ukraine war uncertainties, the ECB and Bank of Japan have not joined the bandwagon, refusing to raise policy interest rates so far.
Interest rate – blunt tool
But central bankers’ dogmatic stances, knee-jerk responses and ‘follow the leader’ behaviour are not helpful. Even when inflation reaches dangerous levels, raising interest rates may still not be the right policy response for several reasons.
First, raising interest rates only addresses the symptoms – not the causes – of inflation. Inflation is often said to be a consequence of an economy ‘overheating’. But overheating can be due to many factors.
Higher interest rates may relieve overheating, by slowing economic activity. But a good doctor should first investigate and diagnose an ailment’s causes before prescribing appropriate treatment – which may or may not require medication.
It is widely accepted that the current inflationary surge is due to supply chain disruptions – exacerbated by war and sanctions – especially of essential goods such as food and fuel. If so, long-term solutions require increasing supplies, including by removing bottlenecks.
Higher interest rates reduce aggregate demand. But simply raising interest rates does not even address the specific causes of inflation, let alone rising prices due to supply disruptions of essential goods, such as food and fuel.
Interest rate – indiscriminate
Second, the interest rate affects all sectors, everyone. It does not even distinguish between sectors or industries needing to expand or be encouraged, and those that should be phased out, for being less productive or inefficient.
Also, raising interest rates too often, and to excessively high levels, can squeeze, or even kill productive and efficient businesses along with inefficient or less productive ones.
US bankruptcies had soared in the early 1980s after US Fed chair Volcker’s legendary interest rate spike. “Thousands of businesses that took out bank loans could fail”, warned a leading UK tax advisory firm recently.
Third, interest rates do not distinguish among households and businesses. Higher interest rates may discourage household expenditure, but also dampen all kinds of spending – for both consumption and investment.
Hence, overall demand may shrink – discouraging investment in new technology, plant, equipment and skills. Thus, higher interest rates adversely affect long-term productive capacities and technological progress of economies.
Debt, recessions and financial crises
Fourth, higher interest rates raise debt servicing costs for governments, businesses and households. With the exceptionally low interest rates previously available after the 2008-09 global financial crisis (GFC), debt burdens rose in most countries.
These undoubtedly encouraged risky, speculative behaviour as well as unproductive share buybacks, increased dividends, and mergers & acquisitions. Interest rate hikes have triggered many recessions and financial crises. Thus, raising interest rates now will likely trigger a new, albeit different era of stagflation.
The pandemic has pushed public debt to historic new highs. Forty-four per cent of low-income and least developed countries were at high risk of, or already in external debt distress in 2020.
Fifth, paradoxically, higher interest rates raise debt-servicing expenses, especially mortgage payments, for indebted households. Costs of living also rise if businesses pass higher interest costs on to consumers by raising prices.
Hence, the main beneficiaries of low inflation and higher interest rates are the holders of financial assets who fear the relative diminution of their value.
Developing countries vulnerable
Developing countries are particularly vulnerable. Higher interest rates in developed countries – particularly the US – trigger capital outflows from developing countries – causing exchange rate depreciations and inflationary pressures.
Higher interest rates and weaker exchange rates will aggravate already high debt service burdens – as happened in Latin America in the early 1980s after US Fed chair Volcker greatly increased US interest rates.
To discourage sudden capital outflows and prevent large currency depreciations, developing countries raise interest rates sharply. This may lead to economic collapse – as in Indonesia during the 1997-98 Asian financial crisis.
Although pandemic response measures – such as debt moratoria – provided some relief, business failures rose nearly 60% in 2020 from 2019. Middle- and low-income countries saw more business failures.
The World Bank’s Pulse Enterprise Survey – of 24 middle- and low-income countries – found 40% of businesses surveyed in January 2021 expected to be in arrears within six months.
This included more than 70% of firms in Nepal and the Philippines, and over 60% in Turkey and South Africa. Business failures of such scale can trigger banking crises as non-performing loans suddenly soar.
Instead of checking contemporary inflation, raising interest rates is likely to greatly damage recovery and medium-term growth prospects. Hence, it is imperative for developing countries to innovatively develop appropriate means to better address the economic dilemmas they face.
Lack of disclosure of contracts, payments and socio-environmental impacts characterize Mexico’s coal industry. The picture shows workers at the Nueva Rosita coal mine in the northern state of Coahuila. CREDIT: Courtesy of Cristóbal Trejo
by Emilio Godoy (mexico city)
Inter Press Service
MEXICO CITY, May 09 (IPS) – In the northern Mexican state of Coahuila the current situation of coal, used mainly to generate electricity, is opaque.
A veil surrounds the industry in terms of production, consumption, inspections, pollution, contracts and the state of the mines that supply coal to two power plants belonging to the governmental Federal Electricity Commission (CFE).
In the southern state of Guerrero, another power plant uses coal from Australia and Colombia.
Cristina Auerbach, director of the non-governmental organization Familia Pasta de Conchos, said there is a veil of mystery surrounding the industry in Mexico.
“The system is not transparent. Sometimes the issue goes unnoticed, because at a global level coal in Mexico is insignificant. But it is so problematic that they can’t make it transparent because they can’t order transparency” in the country, she told IPS.
Her organization was created in 2006, following an explosion caused by methane accumulation that year at the Pasta de Conchos mine in Coahuila, which left 65 workers dead, 63 of whom were buried in the explosion and whose bodies have never been recovered.
Coal is mined in Coahuila and Tamaulipas, in the north of this Latin American country. In December 2020, according to official figures, Mexico produced 459,414 tons of coal, which is highly polluting and harmful to human health.
But to meet domestic demand, the country imports about nine million tons per year.
Last March, coal-fired generation contributed more than 2,000 megawatts of electricity, three percent of the national total. In Coahuila, there are some 40 underground coal mines.
EITI, created in 2003, brings together more than 50 countries and promotes open and accountable management of oil, gas and mineral resources. Mexico joined EITI in 2017 and is currently undergoing the first review of its compliance with the standards, a process that began last August and whose results are to be published in the coming months.
In Latin America, Colombia, a producer of hydrocarbons and coal, has the most advanced status, receiving a rating of “satisfactory progress” in implementing the EITI standards. The South American nation practices proactive transparency, issuing a biannual report.
Peru, another oil and gas producer, has made “significant progress,” according to the global transparency standard.
Argentina, Ecuador and Trinidad and Tobago are other hydrocarbon producers in the region that are also under evaluation, while Brazil and Venezuela do not belong to EITI.
The José López Portillo thermoelectric plant, owned by the governmental Federal Electricity Commission and located in the northern state of Coahuila, burns coal to generate energy in Mexico. CREDIT: CFE
OGP, founded in 2011, groups 78 nations and hundreds of civil society organizations. In Mexico, the 4th National Action Plan 2019-2021 revolves around 13 topics, including transparency in final beneficiaries of companies in the hydrocarbon and mining sector.
Transparency can help strengthen accountability, the fight against corruption, the evaluation of public policies and informed decision-making by stakeholders, such as local communities.
“There is no effective access to information” in the state-owned oil giant Petróleos Mexicanos (Pemex), she told IPS.
“With regard to the issue of coal, the picture is very similar,” she added. “There is no national registry of how many pits there are. There have been complaints about illegal coal mining. The final results are quite poor. We don’t know if it is lack of commitment, or a lack of interest in promoting transparency.”
The report, prepared by organizations participating in EITI, exposed phenomena such as the partial existence of data on royalty payments for the exploitation or use of national waters and the lack of complete files on environmental matters.
Another case addresses the unavailability of geo-referenced oil well locations.
The document found that out of 49 hydrocarbon contracts of EITI companies, only 10 include social impact assessments, while only two contain an environmental impact analysis.
Mexico ranks 12th in the world in oil production, 17th in gas extraction, 20th in proven crude oil reserves and 41st in proven natural gas deposits. But its position in the oil industry is declining due to the scarcity of easily extractable hydrocarbons.
Since 2020, hydrocarbon production has been dropping. In February 2020 oil extraction totaled 1.73 million barrels per day; the following year, 1.67 million; and last February, 1.63 million, according to the government’s National Hydrocarbons Commission.
Gas has followed a similar trajectory, with production totaling 4.93 billion cubic feet per day in February 2020; 4.838 billion cubic feet per day 12 months later; and 4.673 billion cubic feet per day last February.
The lack of sufficient domestic gas makes imports necessary, especially from the United States, which have been on the rise since 2020, after a drop between 2018 and 2019.
Imports of gas grew six percent between 2020 and 2021 – from 853 million cubic feet to 904.6 million. Last February, imports totaled 640 million, more than half the volume of the entire previous year.
View of a service station of the state oil giant Pemex in Mexico City. The company’s activities suffer from a lack of transparency and access to information, despite commitments in this regard made by the Mexican government. CREDIT: Emilio Godoy/IPS
Empty promises
For its part, OGP includes the development of a National Action Plan to drive beneficial ownership transparency and initiate the publication of such data from hydrocarbon and mining companies, with the aim of building a corporate Beneficial Ownership Register by 2023.
Actions included the preparation of a diagnosis of final beneficiaries in Mexico and a pilot project for the dissemination of information, which have been completed.
These examples show how little importance the Mexican government attaches to access to public information and transparency in the extractive sector.
In addition, they highlight the challenges ahead for the government in implementing the regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean, in force since April 2021 and known as the Escazú Agreement.
In 2020, CFE purchased 1.58 million tons of coal through 60 direct contracts awarded to producers in the Coahuila coal region, without environmental and social impact assessments, as revealed last November by the non-governmental organization México Evalúa.
Although the country evolved in the Resource Governance Index, developed by the non-governmental Natural Resource Governance Institute, between 2019 and 2021, issues such as governance of social and environmental impacts still need to be improved.
“Governance of local impacts is poor, mainly due to opacity in the disclosure of environmental mitigation plans, which the government considers confidential,” the paper states.
Increased pressure
In 2021 and 2022, EITI priorities in Mexico include providing information about the energy transition, supporting open data, providing information on investment decisions, strengthening revenue mobilization, addressing corruption risks, and measuring impact.
In the design of OGP’s new action plan, which is to be ready in August, civil society wants to include a commitment to transparency in hydrocarbons, mining and electric energy.
Auerbach, the activist, complained that communities have become “sacrifice zones” in exchange for mining.
“They don’t care if we are informed or not, if we protest or not, it changes absolutely nothing,” she said. “There are environmental liabilities from 50 years ago, from 30 years ago or from last week. And that is not included. Whatever the CFE and Pemex say is fine and the rest just go along with it. Under this government, they are untouchable. The Ministry of the Environment says that it is going to review how the area will end up when they finish exploiting the concessions in 50 years.”
EITI’s alternative report suggested publishing information on environmental impact mitigation in priority maritime areas for biodiversity conservation that host oil projects and payments for environmental licenses, environmental taxes, non-compliance with regulations or environmental impacts.
Pérez said the Escazú Agreement offers an opportunity to promote transparency and access to information.
“The ideal conditions don’t exist, but Escazú is an opportunity. On the environmental issue, the lack of information is well identified. The lack of public commitment is worrisome. We can link EITI and Escazú,” she said.
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