Tag: Trade & Investment

It’s Time to Move Away from Public-Private Partnerships & Build a Future That is Public — Global Issues

Protesters in Mulhouse, France warn of the dangers of privatisation. The sign reads ‘when everything is privatised, we will be deprived of everything. Credit: NeydtStock / Shutterstock.com
  • Opinion by Oceane Blavot – Rodolfo Bejarano – Mae Buenaventura (brussels / lima / manila)
  • Inter Press Service

BRUSSELS / LIMA / MANILA, Feb 02 (IPS) – Last month, we joined more than 1000 representatives from all sectors of civil society who came together in Santiago de Chile to debate the future of – and threats to – public services the world over.

Participants discussed the chronic underfunding which continues to drive economic inequality, injustice and austerity, and the neocolonial policies that maintain the status quo.

Today those debates have resulted in the launch of “Our Future is Public: The Santiago Declaration for Public Services” – a momentous agreement signed by more than 200 organisations vowing to work to “transform our systems, valuing human rights and ecological sustainability over GDP growth and narrowly defined economic gains.”

One of the most damaging initiatives that has deeply affected the delivery of public services and infrastructure projects on all continents is the rise of public-private partnerships, or PPPs.

They have long been promoted by institutions such as the World Bank as a silver bullet to close the so-called gap to finance investments in services and infrastructure. The premise is that the private sector can deliver these services more efficiently and to a higher standard than the public sector, despite extensive evidence to the contrary.

We lay the pitfalls of PPPs bare in our new report History RePPPeated II: Why public-private partnerships are not the solution – the second in a series of investigations documenting the impacts of PPPs across Africa, Asia, Latin America and Europe.

Launched at the Santiago conference with some of the partners responsible for investigating and authoring the case studies, the report not only highlights negative impacts of PPPs, but sets out recommendations for how to better finance infrastructure and public services in the face of false solutions that have been proposed given the context of the current polycrisis.

These narratives wholly reflect red flags that are raised in the Santiago Declaration.

Through these investigations, we discovered failures on multiple levels in PPPs covering infrastructure such as roads and water supplies, as well as vital public services like healthcare and education.

From escalating costs for the stretched public sector to environmental and social impacts, we found time and again that communities had been ignored, displaced, and had their basic rights violated by thoughtless projects designed and implemented in the pursuit of profit.

A prime example is that of the the Melamchi Water Supply Project (MWSP) in Nepal. First announced nearly a quarter of a century ago, the project’s aim was to deliver clean, reliable and affordable water to 1.5 million people in Kathmandu.

And yet, 24 years later, residents are still waiting, while communities at the Melamchi water source are facing scarcity of water and eroded livelihoods. Instead of safe, clean drinking water – an internationally recognised human right – they have witnessed an extraordinary revolving door of private companies and institutional funders, including the World Bank, who have each failed to deliver.

To add to the MWSP’s colossal failure, 80 hectares of farmland have been lost to the project, a heavy blow to local residents, and up to 80 households have been forcibly displaced due to construction.

Who owns and controls our resources and public services became even more vitally important with the outbreak of the Covid pandemic in March 2020. Market-based models cannot be relied upon to deliver on human rights or the fight against inequalities as they are accountable only to their shareholders and not to their users.

This resulting focus on profit is overwhelmingly apparent in our case study from Liberia. Here, US firm Bridge International Academies (now NewGlobe) ‘abandoned’ its students and teachers during the height of the Covid-19 pandemic, shutting down schools and cutting teachers’ salaries by 80-90 per cent, despite being paid by the government.

And yet, in 2021 the Liberian government indefinitely extended the project, effectively subsidising a US for-profit firm at a cost that is at least double government spending on public schools.

In Peru, the Expressway Yellow Line has emerged as one of the most controversial projects ever carried out. This toll road was supposed to ease congestion issues in the capital city Lima, but instead toll rates have been unreasonably increased on at least eight occasions.

This generated almost $23 million for the private company involved and transpired with the complicity of public officials. Meanwhile, the Peruvian state suffered economic damages of US$1.2 million due to under the table negotiations between public officials and the private company, which led to the incorrect implementation and improper modifications of the contract years after it was initially signed.

Today, questions regarding the project and conflicts surrounding its implementation remain, while Lima residents’ expectations of quality road infrastructure to improve living conditions for those who have been most affected, continue to go unmet.

The human cost of the PPP projects showcased by History RePPPeated II is self-evident, but they are far from the exception. Rather they serve to illustrate common failures with the PPP model that risk compromising fundamental human rights and that undermine the fight against climate change and inequalities.

Their continuing promotion is one of the many reasons why we support the Santiago Declaration. Together with all its signatories, we will strengthen resistance to PPPs with their focus on private-led interests and promote public-public or public-common partnerships for a future that is public.

Océane Blavot is Senior Campaign and Outreach Coordinator, Development Finance, European Network on Debt and Development; Rodolfo Bejarano is Economist and Analyst – New Financial Architecture, Latin American Network for Economic and Social Justice; Mae Buenaventura is Debt Justice Programme, Team Manager, Asian People’s Movement on Debt and Development

The Santiago Declaration on Public Services, is a global manifesto signed by more than 300 organisations from around the world, and which was launched at the end of last week. The Declaration signals the start of an international movement to move away from the privatisation of public services and towards a future that is publicly funded and controlled. It is also the outcome of a 4-day conference during which several CSOs from around the world launched a report containing a series of investigations highlighting the failures of the PPP model in projects around the world, titled History RePPPeated II.

This OpEd is authored by three of the report’s authors.

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the Biden Administration can Provide it — Global Issues

US-Africa Leaders Summit. Credit: Wikimedia Commons
  • Opinion by Pauline Muchina, Emira Woods (nairobi, kenya)
  • Inter Press Service

NAIROBI, Kenya, Jan 19 (IPS) – United States Treasury Secretary Janet Yellen is traveling to South Africa, Zambia, and Senegal this week in the hopes of strengthening U.S.-Africa relations at a time of waning U.S. influence on the continent — the first in a series of Biden administration trips announced at last month’s U.S.-Africa Leaders Summit.

As African women leaders working for peace and climate justice, we welcome this renewed engagement with a region that is too often sidelined. But meetings and photo-ops are not enough.

If the United States wants the trust of the African people, we need more than words. We need tangible action to materially improve the lives of communities across the continent.

There are two steps the Biden administration could take today to do just that: supporting a new issuance of Special Drawing Rights (SDRs) for cost-free, debt-free crisis relief, and providing additional financial support for the Loss and Damage Fund agreed to at COP27, the most recent UN Climate Conference.

Three years since the COVID-19 outbreak, under one-third of Africans have received a single vaccination dose. Economic growth in Africa slowed “sharply” in 2022, due to a worldwide economic slump, inflation, and an ongoing series of shocks.

The World Bank is warning of a “sharp, long-lasting slowdown” in 2023 that will “hit developing countries hard.” One-fifth of Africa’s population faces chronic hunger—double the world average—and the climate crisis is only deepening these stark statistics.

For perspective: Driven by climate and conflict, half of Somalia’s population faces acute food insecurity. Trekking for weeks to refugee camps for food, many Somalis are forced to bury starved loved ones in shallow graves.

Against such challenges, the 2021 issuance of $650 billion in SDRs by the International Monetary Fund provided a lifeline for millions of Africans. SDRs are a reserve asset that can be issued in times of crisis at no cost to the U.S. or any other country. Developing countries can then use these SDRs to pay debts, stabilize currencies, or fund critical purchases like vaccines and food supplies.

Since the 2021 issuance, over 100 low- and middle-income countries have used their SDRs for often life-saving care for their citizens. African countries used SDRs more than any other region, with 47 of 54 African nations using some or all of their allocation.

Though last year’s SDR issuance was impactful, it was not enough. That’s why African leaders like African Union Chair Macky Sall and finance ministers across the continent are calling for a new SDR issuance of at least the same size.

The UN Global Crisis Response Group on Food, Energy, and Finance; dozens of US lawmakers; the International Chamber of Commerce; and nearly 150 civil society organizations worldwide also support the proposal.

Additionally, African countries must be compensated for the harms caused by a climate crisis for which they bear little responsibility. Despite having contributed the least of any continent to greenhouse gas emissions, Africa remains the most vulnerable to climate change.

Nineteen million Africans have been affected by extreme weather events in 2022 alone, and cyclones and droughts wrought havoc on infrastructure, agriculture, and domestic economies.

In the words of the Pan-African Climate Justice Alliance, “you cannot set fire on someone’s house and sell them the fire extinguisher, or worse still, loan them money to rebuild it.” The Loss and Damage Fund will provide climate reparations through financial support to nations most vulnerable to climate shocks.

The Fund’s impact, however, will only be as strong as the world’s commitment. While nations like Germany and Belgium have made symbolic pledges to the fund, current contributions fail to address the existential magnitude of the crisis. Increased U.S. financial backing will pave the way for additional support from other high-income countries.

Naysayers may balk at the cost of these proposals, or suggest they do not align with U.S. national interests. However, a new SDR issuance, while costing nothing to U.S. taxpayers, would foster global economic—and therefore political—stability, while proving U.S. responsiveness to African needs.

Following the passage of the highest-ever Pentagon budget, the Biden Administration should recall their own analysis that climate change exacerbates global security challenges.

Instead of paying massive sums for weapons of war, often in the name of debunked strategies to counter terrorism, the U.S. should invest in measures that address the root causes of violent conflict in places like Somalia and the Sahel.

During last month’s U.S.-Africa Leaders Summit, 60 organizations, including Partners In Health, Africans Rising, and Friends of the Earth US, called on President Biden to support these two urgent proposals. At the time, he failed to do so.

As Secretary Yellen travels to our continent, the administration has another opportunity to move beyond rhetoric and toward action to improve the lives of Africa’s 1.2 billion people.

Supporting a new SDR issuance and contributing funding for the Loss and Damage Fund would go a long way toward salving the ever-present economic wounds of colonialism, addressing the climate crisis, and bolstering opportunities for Africans to chart their own course in the 21st century and beyond.

Pauline Muchina comes from the Rift Valley in Kenya, where her family still resides. She is the Policy, Education and Advocacy Coordinator for Africa for the American Friends Service Committee in Washington, DC, and the Chair of the COVID-19 Working Group of the Advocacy Network for Africa.

Emira Woods, originally from Liberia, is the Executive Director of Green Leadership Trust and an ambassador for Africans Rising for Justice, Peace, and Dignity, a network of African social movements on the continent and the diaspora.

IPS UN Bureau

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The Value of Strong Multilateral Cooperation in a Fractured World — Global Issues

  • Opinion by Ulrika Modeer, Tsegaye Lemma (united nations)
  • Inter Press Service

UNITED NATIONS, Jan 18 (IPS) – The multilateral system, even in the face of heightened geopolitical tension and big power rivalry, remains the uniquely inclusive vehicle for managing mutual interdependencies in ways that enhance national and global welfare. The complex challenges of a global pandemic, climate emergency, inequality and the risk of nuclear conflict cannot be dealt with by one country or one region alone. Coordinated collective action is required.

Without coordinated and timely collective global action in recent years to respond to the COVID-19 pandemic, global suffering would have been far greater.

Initiatives such as COVAX and the UN’s socio-economic response to COVID-19 not only helped mitigate the public health emergency, but also help decision-makers look beyond recovery towards 2030, managing complexity and uncertainty.

The devastating war in Ukraine has been a colossal blow to multilateral efforts by the international community to maintain peace and prevent major wars. However, multilateral cooperation cannot be declared obsolete – it is crucial in efforts to put human dignity and planetary health at the heart of cross-border cooperation.

The recent Black Sea Grain Initiative agreement represents a key testament to the value of multilateral cooperation working even in the most difficult circumstances, ensuring the protection of those that are most vulnerable to global shocks.

Without this agreement, global food prices would have risen even further, and vulnerable countries pushed further into hunger and political unrest.

The multilateral system is faced with the ostensible imbalance in matching humanitarian and development needs with Official Development Assistance (ODA) commitments. Despite some donors’ efforts to maintain – and even increase – their ODA commitments, others are faced with increasing politicization of aid – and it is part of the political calculus.

With the war in Ukraine still raging, there is real possibility that several donors will tap into ODA budget to cover the partial or entire cost of hosting Ukrainian refugees and rebuilding the devastated Ukrainian infrastructure and economy.

The UN system, a core part of the rule-based international order, is funded dominantly by voluntary earmarked contributions. Ultimately, this gives donor countries influence over the objectives of global public good creation.

Funding patterns tend to be unpredictable, making it hard to strategize and plan for the long term. Although earmarked funding allows the system to deliver solutions to specific issues with scale, the system’s lack of quality funding support risks eroding its multilateral character, strategic independence, universal presence, and development effectiveness.

The recently launched report by the Dag Hammarskjöld Foundation and the UN’s Multi-Partner Trust Fund Office showed that more than 70 percent of funding to the UN development system is earmarked, compared to 24 percent for the World Bank Group and IMF, and only 3 percent for the EU.

As the world faces daunting development finance prospects in 2022-2023, investments should focus on protecting a strong and effective multilateral system; the system that remains trusted by countries and partners for its reliable delivery of services.

It has also proven to complement bilateral, south-south and other forms of cooperation – beyond the traditional development narrative. An ODI study showed that the multilateral channel, when compared with bilateral channel, remains less-politicized, more demand-driven, more selective in terms of poverty criteria and a good conduit for global public goods.

Notwithstanding the institutional and bureaucratic challenges that the multilateral system faces, which must be addressed head-on, a retreat from a shared system of rules and norms that has served the world for seven decades is the wrong response.

Those of us in the multilateral system, especially in the UN development system, must recognize the difficult work that lies ahead. We must continue to demonstrate that each tax dollar is spent judiciously and show traceable results, while upholding the highest standards set out in the UN charter.

Improved transparency on how and where we spend the funds entrusted to us by our key partners and the IATI standard have long been adopted as key requirement outlined in the funding compact.

The Multilateral Organisation Performance Assessment Network and other donor assessments have recognized the systems’ value for money and confirmed that partnerships with other UN entities improve programmes and effectively integrates multiple sources of expertise.

Of course, the system must continue to build on successes and lessons to prove to our partners that we remain worthy of their trust and drive our collective agenda.

However, the true value of multilateral cooperation can only be fully realized with strong political commitment by partners matched with the necessary financial investment.

Ulrika Modéer is UN Assistant Secretary-General and Director of the Bureau of External Relations and Advocacy, UNDP; Tsegaye Lemma is Team Leader, Strategic Analysis and Corporate Engagement, Bureau of External Relations and Advocacy, UNDP.

Source: UNDP

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In search of energy alternatives

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

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

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

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

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

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

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

Hydroelectric damage

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Oil wealth, route to the Caribbean

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

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

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

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

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

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

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

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

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Needed Global Financial Reforms Foregone yet Again — Global Issues

  • Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
  • Inter Press Service

KUALA LUMPUR, Malaysia, Dec 13 (IPS) – Calls for more government regulation and intervention are common during crises. But once the crises subside, pressures to reform quickly evaporate and the government is told to withdraw. New financial fads and opportunities are then touted, instead of long needed reforms.

Global financial crisis

The 2007-2009 global financial crisis (GFC) began in the US housing market. Collateralized debt obligations (CDOs), credit default swaps (CDSs) and other related contracts, many quite ‘novel’, spread the risk worldwide, far beyond US mortgage markets.

Jomo Kwame Sundaram

Transnational financial ‘neural-like’ networks ensured vulnerability quickly spread to other economies and sectors, despite government efforts to limit contagion. As these were only partially successful, deleveraging – reducing the debt level by hastily selling assets – became inevitable, with all its dire consequences.

The GFC also exposed massive resource misallocations due to financial liberalization with minimal regulation of supposedly efficient markets. With growing arbitrage of interest rate differentials, achieving balanced equilibria has become impossible except in mainstream economic models.

Financialization has meant much greater debt and risk exposure as well as vulnerability for many households and firms, e.g., due to ‘term’ (duration) and currency ‘mismatches’, resulting in greater overall financial system fragility.

This has worsened global imbalances, reflected in larger trade and current account deficits and surpluses. In unfavourable circumstances, exposure of firms and households to risky assets and liabilities has been enough to trigger defaults.

Bold fiscal efforts succeeded in inducing modest economic recoveries before they were nipped in the bud soon after the ‘green shoots of recovery’ appeared. Instead, the US Fed initiated ‘unconventional’ monetary policies, offering easy credit with ‘quantitative easing’.

Currencies in flux

The seemingly coordinated rise of various, apparently unconnected asset prices cannot be explained by conventional economics. Thus, speculation in commodity, currency and stock markets has been grudgingly acknowledged as worsening the GFC.

The exchange rates of many currencies have also come under greater pressure as residents borrowed in low interest rate currencies such as the Japanese yen. In turn, they have typically bought financial assets promising higher returns.

Thus, higher interest rates attract capital inflows, raising most domestic asset prices. Exchange rate movements are supposed to reflect comparative national economic strengths, but rarely do so. But conventional monetary responses worsen, rather than mitigate, contractionary tendencies.

Globalization of trade and finance has generated contradictory pressures. All countries are under pressure to generate trade or current account surpluses. But this, of course, is impossible as not all economies can run surpluses simultaneously.

Many try to do so by devaluing their currencies or cutting costs by other means. But only the US can use its ‘exorbitant privilege’ to maintain both budgetary and current account deficits by simply issuing Treasury bonds.

Currency markets can also undermine such efforts by enabling arbitrage on interest rate differentials. International imbalances have worsened, as seen in larger current account deficits and surpluses.

Contrary to mainstream economics, currency speculation does not equilibrate national, let alone international markets. It does not reflect economic fundamentals, ensuring exchange rate volatility, to damaging effect.

Commodity speculation

Thanks to currency mismatches, many companies and households face greater risk. Exchange rate fluctuations, in turn, exacerbate price volatility and its harmful consequences, which vary with circumstances.

Changes in ‘fundamentals’ no longer explain commodity price volatility. Meanwhile, more commodity speculation has resulted in greater price volatility and higher prices for food, oil, metals and other raw materials.

These prices have been driven by much more speculation, often involving indexed funds trading in real assets. The resulting price volatility especially affects everyone, as food consumers, and developing countries’ agricultural producers.

Sharp increases in commodity prices since mid-2007 were largely driven by speculation, mainly involving indexed funds. With the Great Recession following the GFC, most commodity producers in developing countries faced difficulties.

Since then, nearly all commodity prices fell from the mid-2010s as the world economic slowdown showed no sign of abating until economic sanctions in 2022 pushed up food, energy, fertilizer and other prices once again.

Besides hurting export revenues, lower commodity prices and even greater volatility have accelerated depreciation of earlier investments in equipment and infrastructure following the commodity price spikes.

Integrated solutions needed

The uneven financial system meltdown following the GFC raised expectations that ‘finance-as-usual’ would never return. But lasting solutions to threats, such as currency and commodity speculation, require international cooperation and regulation.

Meanwhile, goods and financial markets have become more interconnected. Thus, a truly multilateral and cooperative approach has to be found in the complex interconnections involving international trade and finance.

In this asymmetrically interdependent world, policy reforms are urgently needed. All countries need to be able to pursue appropriate countercyclical macroeconomic policies. Also, small economies should be able to achieve exchange rate stability at affordably low cost.

Although prompt actions were undertaken in response to the GFC, the world economy experienced a protracted slowdown, the ‘Great Recession’. Myopic policymakers in most developed economies focus on perceived national risks, ignoring international ones, especially those affecting developing countries.

Contrary to widespread popular presumption, the Bretton Woods multilateral monetary and financial arrangements did not include a regulatory regime. Nor has such a regime emerged since, even after US President Nixon unilaterally ended the Bretton Woods system in 1971.

With the gagged voice of developing countries in international financial institutions and markets, the United Nations must lead, as it did in the mid-1940s.

It is the only world institution which could legitimately develop a better alternative. Thankfully, the UN Charter assigns it responsibility to lead efforts to do so.

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Can Asia and the Pacific Get on Track to Net Zero? — Global Issues

  • Opinion by Armida Salsiah Alisjahbana (bangkok, thailand)
  • Inter Press Service

BANGKOK, Thailand, Nov 29 (IPS) – The recent climate talks in Egypt have left us with a sobering reality: The window for maintaining global warming to 1.5 degrees is closing fast and what is on the table currently is insufficient to avert some of the worst potential effects of climate change. The Nationally Determined Contribution targets of Asian and Pacific countries will result in a 16 per centincrease in greenhouse gas emissions by 2030 from the 2010 levels.

Armida Salsiah Alisjahbana

The Sharm-el Sheikh Implementation Plan and the package of decisions taken at COP27 are a reaffirmation of actions that could deliver the net-zero resilient world our countries aspire to. The historic decision to establish a Loss and Damage Fund is an important step towards climate justice and building trust among countries.

But they are not enough to help us arrive at a better future without, what the UN Secretary General calls, a “giant leap on climate ambition”. Carbon neutrality needs to at the heart of national development strategies and reflected in public and private investment decisions. And it needs to cascade down to the sustainable pathways in each sector of the economy.

Accelerate energy transition

At the Economic and Social Commission for Asia and the Pacific (ESCAP), we are working with regional and national stakeholders on these transformational pathways. Moving away from the brown economy is imperative, not only because emissions are rising but also because dependence on fossil fuels has left economies struggling with price volatility and energy insecurity.

A clear road map is the needed springboard for an inclusive and just energy transition. We have been working with countries to develop scenarios for such a shift through National Roadmaps, demonstrating that a different energy future is possible and viable with the political will and sincere commitment to action of the public and private sectors.

The changeover to renewables also requires concurrent improvements in grid infrastructure, especially cross-border grids. The Regional Road Map on Power System Connectivity provides us the platform to work with member States toward an interconnected grid, including through the development of the necessary regulatory frameworks for to integrate power systems and mobilize investments in grid infrastructure. The future of energy security will be determined by the ability to develop green grids and trade renewable-generated electricity across our borders.

Green the rides

The move to net-zero carbon will not be complete without greening the transport sector. In Asia and the Pacific transport is primarily powered by fossil fuels and as a result accounted for 24 per cent of total carbon emissions by 2018.

Energy efficiency improvements and using more electric vehicles are the most effective measures to reduce carbon emissions by as much as 60 per cent in 2050 compared to 2005 levels. The Regional Action Programme for Sustainable Transport Development allows us to work with countries to implement and cooperate on priorities for low-carbon transport, including electric mobility. Our work with the Framework Agreement on Facilitation of Cross-border Paperless Trade also is helping to make commerce more efficient and climate-smart, a critical element for the transition in the energy and transport sectors.

Adapting to a riskier future

Even with mitigation measures in place, our economy and people will not be safe without a holistic risk management system. And it needs to be one that prevents communities from being blindsided by cascading climate disasters.

We are working with partners to deepen the understanding of such cascading risks and to help develop preparedness strategies for this new reality, such as the implementation of the ASEAN Regional Plan of Action for Adaptation to Drought.

Make finance available where it matters the most

Finance and investment are uniquely placed to propel the transitions needed. The past five years have seen thematic bonds in our region grow tenfold. Private finance is slowly aligning with climate needs. The new Loss and Damage Fund and its operation present new hopes for financing the most vulnerable. However, climate finance is not happening at the speed and scale needed. It needs to be accessible to developing economies in times of need.

Innovative financing instruments need to be developed and scaled up, from debt-for-climate swaps to SDG bonds, some of which ESCAP is helping to develop in the Pacific and in Cambodia. Growing momentum in the business sector will need to be sustained. The Asia-Pacific Green Deal for Business by the ESCAP Sustainable Business Network (ESBN) is important progress. We are also working with the High-level Climate Champions to bring climate-aligned investment opportunities closer to private financiers.

Lock in higher ambition and accelerate implementation

Climate actions in Asia and the Pacific matter for global success and well-being. The past two years has been a grim reminder that conflicts in one continent create hunger in another, and that emissions somewhere push sea levels higher everywhere. Never has our prosperity been more dependent on collective actions and cooperation.

Our countries are taking note. Member States meeting at the seventh session of the Committee on Environment and Development, which opens today (29 November) are seeking consensus on the regional cooperation needed and priorities for climate action such as oceans, ecosystem and air pollution. We hope that the momentum begun at COP27 and the Committee will be continued at the seventy-ninth session of the Commission as it will hone in on the accelerators for climate action.

In this era of heightened risks and shared prosperity, only regional, multilateral solidarity and genuine ambition that match with the new climate reality unfolding around us — along with bold climate action — are the only way to secure a future where the countries of Asia and the Pacific can prosper.

Armida Salsiah Alisjahbana is an Under-Secretary-General of the United Nations and Executive Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP)

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A Looming Debt Crisis is Threatening Global Health Security. It is time to Drop the Debt — Global Issues

  • Opinion by Jaime Atienza, Charles Birungi (geneva)
  • Inter Press Service

GENEVA, Nov 21 (IPS) – In this moment of profound challenge in international relations, it was understandable that the conclusion of the G20 meeting left leaders feeling relieved that the meeting took place without a breakdown. Leaders were justifiably proud too of important steps forward they made including the launch of the new pandemics fund.

But G20 leaders did not manage to resolve the fiscal crisis that threatens many low-and middle-income countries, and which risks undermining global health security because it is driving countries to slash investments in essential health services.

As the world approaches the end of 2022, no resolution mechanism to properly resolve the debt crisis has been established by either the IMF or the G20. In 24 months, the “G20 common framework” has delivered a debt relief agreement for just one country, Chad.

UNAIDS report “A pandemic triad” shows how growing debt burdens across developing countries are impairing their ability to fight and end AIDS and COVID, and their readiness for future pandemics. Half of the low-income countries in Africa are already in debt distress or at high risk of being so.

Across the world, the 73 countries which are eligible for the Debt Service Suspension Initiative have been recorded as spending on average four times as much on debt servicing as they have been able to invest in the health of their people. Only 43 of those countries have seen even a temporary suspension – totalling less than 10% the money they continued to pay back.

Two thirds of people living with HIV are in countries that received absolutely no support from the Debt Service Suspension Initiative at all during the critical 2020-2021 period. The seven Debt Service Suspension Initiative eligible countries with the largest population of people living with HIV – Kenya, Malawi, Mozambique, Uganda, Tanzania and Zambia – saw their public debt levels grow from 29% in 2011 to 74% in 2020.

According to the World Bank, “interest payments will constrain the capacity of low-income countries to spend on health, on average by 7%, and in lower middle-income countries by 10%, in 2027.”

110 out of 177 countries will see a drop or stagnation in their health spending capacity and are not set to be able to achieve pre-COVID spending levels by 2027.

During the COVID-19 pandemic, deficits increased worldwide, and debt accumulated much faster than they did in the early years of other recessions including the Great Depression and the Global Financial Crisis. The scale is comparable only to the twentieth century’s two world wars.

Government expenditure cuts are expected to take place across 139 countries in the coming years. In the case of the 73 countries that were eligible to the Debt Service Suspension Initiative, primary expenditures are expected to decline an average of 2.8% of GDP between 2020 and 2026.

This comes at a moment when economic forecasts have been downgraded by the IMF for a fourth time in a year. Austerity will mean dangerous reductions in health expenditure. To even restrain the damage will require a systemic reprioritization of public resources towards health systems.

There is a direct correlation between deepening fiscal problems and worsening health outcomes.

The COVID-19 crisis is dragging on. The impacts of the war in Ukraine on the global economy are making things worse. The HIV response is in danger, with the promise to end AIDS by 2030 under threat.

The world is not prepared today for the pandemics of to come. The international response to resolve the health financing crisis is nowhere close enough. Even as developing countries struggle with the debt crisis, the Ukraine war has led several donors to cut aid.

But there is a way out. With bold action, the health and development financing crisis can be overcome. Barbados Prime Minister Mia Mottley’s Bridgetown Agenda for action on debt, expansion of multilateral finance and effective SDR reallocation sets out the order of magnitude of response required.

There is an urgent need for debt cancellation for countries in fiscal distress, and for an effective and fast mechanism to deal with debt restructuring at scale. Health and education must be central considerations in debt negotiations.

Vital too is an expansion of the use of existing Special Drawing Rights (SDRs) from high income countries for investments in lower income countries of at least twice the 100 billion committed.

The G20 leaders’ work has not ended in Bali. The consequences of an unresolved debt crisis, and the lack of additional resources, would be disastrous for lives, livelihoods and health security. We don’t have time. No one is safe until everyone is safe.

Jaime Atienza is the Director of Equitable Financing at UNAIDS. Charles Birungi is the Senior HIV Economics, Finance and Policy Advisor.

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G20 Summit, a Missed Opportunity to Tackle Global Cost of Living Crisis — Global Issues

  • Opinion by Matti Kohonen (london)
  • Inter Press Service

The G20 summit motto was “Recovering Together, Recovering Stronger” yet the Joint Declaration failed to deliver any alternatives to the wave of austerity engulfing the world. It ignored the option of raising enough tax revenues from large corporations, taxing the wealthy and tacking illicit financial flows and tax abuses which alone accounts for over US$200 billion of tax revenue lost per year due to profit shifting in the global South.

For one, the summit blocked any progress towards the negotiations of a UN Tax Convention that would address the issues of corporate tax abuses and illicit financial flows, as denounced in an open letter from the Asian People’s Movement on Debt and Development (APMDD).

In an open letter denouncing this inaction to tackle corporate tax abuses and IFFs, delivered to embassies of Indonesia, India and Brazil, Lidy Nacpil from the Asian People’s Movement on Debt and Development (APMDD) said that the summit blocked “any progress towards the negotiations of a UN Tax Convention that would address the issues of corporate tax abuses and illicit financial flows,” but there was no reaction.

Making matters worse, the Organisation for Economic Co-operation and Development (OECD) failed to deliver on mandates to publish country-by-country reporting before the summit. This would have allowed to monitor the performance of mechanisms to prevent for example multinational companies shifting profits to tax havens and avoid paying taxes.

The data was only published on 17 November, a day after the summit, which was too late to hold the G20 leaders accountable. According to Alex Cobham, Director at the Tax Justice Network, “without the transparency data, neither the Tax Justice Network nor any other independent research can evaluate how much each government is losing to multinationals’ corporate tax abuse, or any progress made to curb tax losses in recent years.”

But that is not everything since the summit did not confront the hidden offshore wealth and kleptocracy problem. Maira Martini from Transparency International said that the G20 members “in recent years have dragged their feet, unable to agree on key measures and failing to implement even those to which they had already committed. In the meantime, the corrupt have consolidated wealth and power, allowing them to attack everything from sustainable development to global security to democracy.”

In an open letter released ahead of the Bali summit, Transparency International representatives from across G20 countries called on their governments to take immediate action against cross-border corruption. The Joint Declaration stated its support towards implementing Financial Action Task Force (FATF) recommendations for improved financial transparency, but does not say that beneficial ownership registries should be public, a critical element to enable stakeholders and the authorities to uncover hidden assets.

Also the declaration included regional efforts related to signing of the Asia Initiative Declaration in July 2022 on tax and financial transparency in Asia. However, it did not specify whether this initiative would create a stronger standard than the current OECD transparency standard, or simply implement an OECD standard in the Asian regional context.

Positively, the Bali Joint Declaration made a link between increased beneficial ownership information and tackling natural resource crimes, but offered no specific proposals to address this issue. Indonesia loses an estimated US$4 billion in Illicit Financial Flows (IFFs) each year due to illegal, unregulated and underreported (IUU) fishing alone, while Africa loses an estimated US$11.5 billion to this illicit activity. It would be vital that beneficial ownership information on all vessels and fishing companies is collected on a public registry, to hold those responsible for illicit fishing activities accountable.

Between 75 and 95 million people are expected to be thrown into extreme poverty this year as a result of the pandemic and the effects of rising inflation and the war in Ukraine, according to the UN. Many other are struggling to make a living and feed themselves as governments around the world are resorting to painful austerity measures.

The G20 had an opportunity to offer solutions to these crises and a lifeline to struggling nations. Unfortunately for all of us, they have failed.

Matti Kohonen is executive director, Financial Transparency Coalition.

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Time is Running Out for Decisions on Debt Relief as Countries Face Escalating Development Crisis — Global Issues

  • Opinion by Lars Jensen, George Gray Molina (united nations)
  • Inter Press Service

UNITED NATIONS, Oct 19 (IPS) – Developing low- and middle-income economies are taking hard hits from global economic developments outside their control. Monetary tightening in advanced economies coupled with increasing fears of a global recession have weakened currencies, sent interest rates soaring, and investors fleeing.

All of which is contributing to a rapid deterioration of an already damaging debt crisis which is, as ever, hitting the most vulnerable the hardest.

In new research released by the United Nations Development Programme (UNDP), 54 developing (low- and middle-income) economies are identified as suffering from severe debt problems, equal to 40 percent of all developing economies. 1

Providing this group of countries with the debt relief they need should be a manageable task for the international economy as the group only accounts for little more than 3% of the world economy. Failing to do so, however, could result in catastrophic development setbacks as the group of 54 accounts for more than 50 percent of the world’s extreme poor and 28 of the world’s top-50 most climate vulnerable countries.

Countries are stuck between a rock and a hard place. They cannot spend what is required to protect their citizens and safeguard their development prospects while continuing to also service their fast-rising debt burdens.

Time is running out. Without an urgent step-up of debt relief efforts from the international community, many more defaults will follow, and the debt crisis will turn into an entrenched development crisis as history has taught us.

Contrary to the advice given in the early stages of the COVID-19 pandemic, in the face of high interest rates, inflation, and debt levels, the International Monetary Fund is now urging countries to reign in fiscal spending while providing targeted and time-bound support to vulnerable populations.

But many developing economies cannot easily shift to effective and targeted social transfers or quickly increase tax revenues, – as the administrative capacity to do so takes years to build up.

Without a viable alternative in the form of access to orderly and comprehensive debt restructuring, and additional liquidity support from the international community, countries will have to choose between a string of messy and costly defaults and/or abrupt spending cuts with disastrous consequences for low-income and vulnerable populations and development prospects at large.

Furthermore, both options greatly increase the risk of political and social unrest threatening further setbacks and a deepening crisis.

We must also remember that these things are happening against the backdrop of an intensifying climate crisis which we can only combat together as a global community. Without a rethink on debt relief the global climate transition will be delayed, the economic costs of the transition will rise, and developing economies, who have contributed the least to the problem, will continue to bear a disproportionate size of the costs.

Developing economies must be allowed sufficient fiscal space to undertake ambitious sustainable development plans – including the undertaking of much-needed climate adaptation and mitigation investments.

Debt relief is one of several crucial components of providing it. The G20’s Common Framework for Debt Treatments, under which countries with debt distress can seek a restructuring, will have to be reformed, including a shift in focus towards comprehensive debt restructurings in return for sustainable development objectives.

This will require a change in attitude and sense of urgency, especially among major official creditors, as well as full debt transparency from both debtors and creditors. In our latest paper we discuss possible ways forward for the Common Framework focusing on country eligibility, debt sustainability analyses, official creditor coordination, private creditor participation, policy conditionalities and the use of debt clauses that target future economic and fiscal resilience.

Decisions on debt relief can no longer wait.

Nineteen developing economies – more than one-third of developing economies issuing dollar debt in international markets – have now lost markets access on account of skyrocketing interest rates, more than doubling from 9 countries at the beginning of 2022.

Similarly, credit ratings have been sliding with 27 countries – close to one-third of credit-rated developing economies – rated either ‘substantial risk, extremely speculative, or default’, up from 10 countries at the beginning of 2020.

Hard-won development gains achieved in the global south over decades are now being eroded by the intertwined cost-of-living and debt crises. Not only will a deepening development crisis result in great human suffering, but the cost of regaining whatever development gains are lost will increase substantially the longer we wait.

It is inconceivable, both morally and economically, that we would allow a development crisis to escalate when the international community has the resources needed to stop it now.

Lars Jensen is Economist at UNDP Strategic Policy Engagement Unit.; George Gray Molina is Head of Strategic Engagement and Chief Economist at UNDP

1https://www.undp.org/publications/avoiding-too-little-too-late-international-debt-relief

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