Africa

Credit: United Nations

By Guillaume Baggio and Manzoor Qadir
HAMILTON, Canada, Oct 20 2022 (IPS)

Global progress has been staggeringly inadequate against Sustainable Development Goal 6, “clean water and sanitation for all.”

According to the latest SDGs progress assessment, 2 billion people still lack safely managed drinking water, 3.6 billion lack sanitation services, and 3 billion lack basic hygiene services.

Waterborne diseases continue to take a heavy toll on the global community, with hotspots in developing countries most acutely affected.

To address this crisis, the United Nations launched the SDG 6 Global Acceleration Framework in 2020 to fast-track progress. The framework is a roadmap for aligning national policies and financial resources and scaling up action at all levels, but it has two fundamental flaws that need to be addressed.

Impacts of the COVID-19 pandemic

First, the Framework largely overlooks the impacts of the COVID-19 pandemic on the means by which safe drinking water, sanitation, and hygiene services will be provided where needed.

The pandemic badly affected and continues to affect the financial, political, and institutional structures and the social fabric of countries. Debt and inflation in many countries are rising while foreign investment declined by 35 per cent from 2019 to 2021.

The ability to make critical capital improvements has also been drastically affected during the pandemic, causing a delay in completing planned water and sanitation infrastructure and further enfeebling already underfunded services in developing countries.

Global and national financial, political, and institutional structures need to be reshaped, and the social fabric repaired as part of a truly transformative sustainability agenda.

Undervaluing SDGs interlinkages

Second, the SDG 6 Global Acceleration Framework undervalues the potential of strengthening interlinkages across SDGs. While it recognizes the importance of SDG 6 interlinkages, it does not call for systematic change in traditional forms of decision-making in the water and sanitation sector.

The risks of addressing SDGs individually without considering their interlinkages was the subject of warnings early in this global process. Moreover, SDG interlinkages are context-specific and depend on several factors, such as geography, governance, or socio-economic conditions.

The current economic slowdown could push another 263 million people into extreme poverty in 2022 — a number roughly equal to the combined populations of Germany, France, the UK and Spain — further compounding challenges across critical dimensions of sustainable development, such as health, education, gender, and water and sanitation.

Policy coherence is indispensable to sustainable development. A post-pandemic framework for sustainability requires policies that are mutually supportive across multiple sectors. Countries must move on from merely identifying interlinkages between SDGs to strengthening and acting on them.

Two actions to bridge the gaps

The impacts of the COVID-19 pandemic clearly necessitate better coordinated multi-sectoral policies. Next year, UN Member States meet at the UN 2023 Water Conference for the midterm review of the Water Action Decade 2018-2028, an effort to galvanize social, economic, and environmental action.

National decision-makers and development actors need to act on the following recommendations:

1. Prioritizing critical SDG 6 targets in the post-pandemic context. This means reshaping and strengthening today’s inadequate means of implementation and coming to the UN 2023 Water Conference with bold pledges, concentrating resources on bringing drinking water, sanitation, and hygiene services to the most vulnerable people — women and girls, migrants, the urban poor, schools, and hospitals, by 2030.

2. Harnessing the potential of SDGs interlinkages in policies and implementation plans at all levels. Accelerating the achievement of SDG 6 supports many other SDGs, particularly those related to health, education, food, gender equality, energy, and climate change. In the context of scarce financial resources and insufficient capacity, countries can prioritize strongly interlinked SDGs to yield achievements across multiple sectors.

We have seen and heard continuous global commitments to support the necessary conditions for sustainable development. In the post-pandemic context, progress in the water and sanitation sector has a new multifaceted purpose offering a wealth of benefits. It is time to realize them.

Guillaume Baggio is a Research Assistant at the Department of Physical and Environmental Sciences, University of Toronto, and Manzoor Qadir is Assistant Director at the United Nations University Institute for Water, Environment and Health.

UNU-INWEH is supported by the Government of Canada and hosted by McMaster University.

IPS UN Bureau

 

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Images of nights skies show power supplies disappearing in Ethiopia as a humanitarian crisis bites.

The start of Sierra Leone's first ever national women's football league is described as "beautiful history" by President Julius Maada Bio.

World Cup debutants Tanzania are now setting their targets even higher at the ongoing U17 women's tournament in India.

Anti-trafficking street play being stages in a tea house. Trafficking survivors often find it difficult to access compensation in India, and traffickers often escape justice. Credit: Rina Mukherji/IPS

By Rina Mukherji
Pune, Oct 19 2022 (IPS)

Fourteen-year-old Priti Pyne was returning from school in Basra village in South 24 Parganas, West Bengal, when she and a friend came across a cold-drink seller selling an attractive-looking drink. The moment the girls sipped it, however, they felt dizzy. When they woke up, it was on a Delhi-bound train at Sealdah station in Kolkata. With the help of other passengers, the girls managed to get off the train.

“We had been briefed in school about how people traffic youngsters, and so we got in touch with the stationmaster and rang up the non-governmental organisation (NGO) – Goran Bose Gram Vikas Kendra – working in our village. The NGO office-bearers immediately came over and arranged for our return home.” However, her father, who works as a labourer in a bag factory, and her homemaker mother did not want to lodge an FIR (case), and she has not been able to access the compensation as a survivor of trafficking.

“I was a minor then; my parents took all decisions on my behalf. Now that I am an adult, it is too late to pursue it,” she laments.

Shelly Shome and Molina Guin from Bagda, both from North 24 Parganas, got entrapped by love affairs and ended up trafficked. Shelly’s trafficker took her to Malda and locked her up in an “intermediate” lodging for a week on the way to a brothel, where police rescued her.

Molina escaped on her own from a brothel in Nagpur (Maharashtra), where she had been sold, but she had spent six months there.

“Since I did not know any Hindi, it was difficult. Ultimately, some Bengali boys who lived nearby helped me return home.” Although FIRs were lodged in both cases, neither Shelly nor Molina could access the compensation due to them. Worse, the traffickers are yet to be caught.

Sunil Lahiri’s family were unable to repay a loan. So, his parents, uncle and siblings, who originally lived in Champa, had to seek employment in a brick kiln at Rohtak in Haryana. They were roped in by a labour contractor with big promises of good accommodation, pay and food. But once there, the family realised they had been trafficked, along with 20 other desperate neighbours in a similar situation. An adolescent then, Sunil had to work 12-14 hours a day and survive on meagre rations. No accommodation was provided, and they lived in a thatched hovel for shelter. Any attempt to escape was met with relentless torture and assault. After a couple of months, Sunil and his uncle made good their escape under cover of darkness to the nearest police station, from where they made their way home. However, in the absence of an appropriate FIR, he has not been able to claim the victim’s compensation.

Lalita lives in Erode in Tamil Nadu and found herself trafficked for labour to a garment factory in Coimbatore, in the same state, when she was around 15. But once there, she found herself trapped in a hostile environment with many others and had to labour for 14-16 hours a day without a break. Housed in dirty dormitories, the girls were administered tablets to stop their periods lest they demand time off, resulting in many medical problems. She ultimately excused herself one day and sneaked home by claiming the death of a relative. Since she lodged no FIR, Janaki has been deprived of compensation too.

Human Trafficking

Trafficking in India is generally for sexual exploitation and cheap labour.

The common thread that connects all victims of trafficking is poverty and lack of awareness. Poverty and unemployment drive people to migrate in search of work. Traffickers’ agents cash in on the plight of these individuals and whisk them away to be exploited for sex or cheap labour. This is often done across inter-state borders so escaping back home is difficult.

Victims of both kinds of trafficking are entitled to compensation, but different laws deal with individual crimes. While victims trafficked for sexual exploitation are primarily dealt with under the Immoral Trafficking (Prevention) Act of 1956, different laws deal with those trafficked for labour since they may be subject to bonded labour. In India, bonded labour had long been prohibited by the Constitution, but laws specific to it, such as the Bonded Labour System (Abolition) Act, 1976, the Contract Labour ( Regulation and Abolition) Act, 1970, and the Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 are comparatively recent.

Victim Compensation Laws

In India, compensation was initially meant only for victims of motor accidents. It was only in 2008 that the Supreme Court modified Section 357 A of the Criminal Procedure Code ( CrPC) to compensate victims of criminal offences.

While Sec 357A (1) provides for compensation to be given to either the victim or their legal heirs, Sec 357A (2) and 357 A (3) deal with the granting of compensation and its quantum by the District legal services authority (DLSA), and the District or Trial courts’ and Sec 357A (4) deals with the right to compensation for damages suffered by the victim before identification of the culprit and the starting of court proceedings.

Following these directions of the Supreme Court, all Indian states came up with schemes to compensate victims of crimes such as acid attacks, rape, and the like.

In 2010, as per the recommendations of the United Nations Office for Drugs and Crime (UNODC), the government provided for the setting up of Anti-Human Trafficking Units (AHTUs) in all states of the country to investigate and address trafficking. In 2013, in a related development, Section 370 of the Indian Penal Code ( IPC) was amended by widening its scope to include all sexual and physical exploitation forms.

Why Victims Are Denied Compensation

Despite all these measures, victims seldom get access to compensation. This is because claiming compensation depends on filing FIRs, as advocate Kaushik Gupta points out. Lack of sensitisation and training often prevents the police from filing FIRs that clearly state whether a victim is trafficked or not. This limits avenues for compensation.

Another reason is that victims are ignorant of the law or fear stigma, preventing them from pursuing compensation. Worse, the paperwork involved may be overwhelming, getting victims and their guardians to step away.

Although a victim or their legal guardian, as per law, can file an FIR anywhere, that is, either where they are rescued or once the victim reaches home, filing the FIR later can pose a problem. Activist Baitali Ganguly, who heads the NGO Jabala Action Research Organisation, points out, “If the FIR is filed on reaching home, it is difficult to prove that a person is a victim/survivor of trafficking. Proof of having been trafficked is an important factor when claiming victim compensation.”

When a trafficked person is not rescued but escapes surreptitiously, filing the FIR may be scary since an organised mafia is involved. Moreover, with the rate of conviction being as low as 16 percent in 2021 (as per statistics furnished by the National Crime Records Bureau), victims remain in mortal fear for their lives and fear registering FIRs.

The Anti-Human Trafficking Units (AHTUs) have failed to deliver in most cases. A study conducted by the NGO, Sanjog as part of its Tafteesh Project found that Anti-Human Trafficking Units (AHTUs) were non-operational in many districts in India. In several states, the composition of AHTUs did not follow the mandatory mix of legal professionals, doctors, and police officials. Even when functional, cases of trafficking were not handed over to them for investigation.

The problem, activists opine, “is that victim compensation is lowest in terms of priority for the authorities. Moreover, with no dedicated fund to compensate victims of trafficking, money often falls short.” At times “the money is sanctioned but does not reach the victim’s bank account for months on end,” Suresh Kumar, who heads the NGO Centre Direct, points out.

The Long Road to Rehabilitation

Getting compensated, though, is not enough. Baitali Ganguly tells me, “We helped some survivors claim compensation. But they were in no mental state to embark on entrepreneurial ventures. Psycho-social help is what they largely need to begin life anew. Hence, we have been imparting their skills and helping them get employed as security guards, housekeepers and the like.”

Psychologist and researcher Pompi Banerjee also stresses the need for counselling and medical assistance for survivors for thorough rehabilitation.

Taking all these aspects into account, the National Legal Services Authority (NALSA) drew a draft bill for a comprehensive law to check human trafficking. With necessary amendments as of today, the Trafficking of Persons (Prevention, Care and Rehabilitation) Bill, 2021, is the first attempt at victim-oriented legislation, and makes provision for forfeiture, confiscation, and attachment of property of traffickers, witness protection and guaranteed compensation for victims out of the property of traffickers.

It also provides interim relief to survivors, for stringent punishment to traffickers extending up to life imprisonment, and in the case of repeat offences, even death. The Bill also provides a dedicated rehabilitation fund for survivors of trafficking.

However, survivors of trafficking who have grouped themselves under the Indian Leadership Forum Against Trafficking (ILFAT) are unhappy about rehabilitating victims through “protection homes”, which they see as nothing better than prisons.

Instead, they feel “community-based rehabilitation wherein job-oriented skills are imparted” is needed. Survivor Sunil Lahiri, who is now studying, and conducting awareness sessions in schools for Tafteesh/Sanjog, stresses the need to register and regulate placement agencies. “People in our villages have to migrate without employment opportunities. The authorities must ensure that they do not get exploited.”

Survivors also feel the need for fast-track courts to handle cases of trafficking so that justice is swift.

Although passed by the Lower House of India’s Parliament, the Trafficking of Persons (Prevention, Care & Rehabilitation) Bill 2021 awaits the nod of the Upper House to become an Act. One hopes that further improvements will be incorporated before the Bill is passed into law. A well-drafted law can well prove the first step in wiping out human trafficking altogether in India.

IPS UN Bureau Report

 

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Installation of a solar panel on the roof of an isolated rural house in the southern province of Chubut, during the winter in Argentina's Patagonia region. Renewable sources provide energy to isolated communities that previously could only be supplied by diesel engines, which are more expensive, less efficient and generate greenhouse gas emissions. CREDIT: Permer

By Daniel Gutman
BUENOS AIRES, Oct 19 2022 (IPS)

When asked about the impact of incorporating solar energy at the school he runs in Atraico, a remote rural area in the Patagonian steppe in southern Argentina, Claudio Amaya Gatica is unequivocal: “Life has changed, not only for the school but for the whole community.”

The Atraico rural school has been one of the beneficiaries of the Renewable Energy in Rural Markets Project (Permer), a government initiative that for more than 20 years has been supplying electricity to rural communities and towns that are far from the national grid."Electricity means independence for people. Especially for women, who usually take care of the goats. With the solar-powered electric fences for goat pastures, women can have more time to devote to themselves or their children." -- Graciela Leguizamón

Only about 20 families live in Atraico, which in the Mapuche indigenous language means “Water behind the stone”, and is located in the municipality of Ingeniero Jacobacci, in the southern province of Río Negro.

The scarcity of water is precisely the main underlying factor of life there, where the villagers raise goats and sheep. Few take the risk of raising cows, which require more and better pastures – not abundant due to the lack of rainfall.

The Atraico school used to have intermittent electricity from a gas generator. Since 2021, when solar panels with batteries began to operate, it has had 24-hour electric power, which also allows it to sustain internet connectivity, benefiting the entire community.

“Of our 15 students, nine are boarders because they can’t go home and come back every day, since they live far from the school,” Amaya Gatica tells IPS from Ingeniero Jacobacci, the municipal capital city, some 35 kilometers from Atraico, where he lives. “Now we can have a refrigerator and washing machine. And the kids can go to the bathroom at night and turn on the light by pressing a switch, which is a new sensation for them.”

“The neighbors come to use the internet. It is nice to see the local residents on horseback sending messages with their cell phones that until recently were sent by radio or by little notes that someone took to the addressees,” he adds.

A small livestock farmer in the municipality of La Cumbre, in the Argentine province of Córdoba, checks the small solar panel on his solar-powered electric cattle fence. Electrification allows better management of domestic animals and pastures. CREDIT: Permer

Guaranteeing a right

The first phase of the Permer program ran from 2000 to 2015. The second, thanks to a 170 million dollar loan from the World Bank, was to run from 2015 to 2020.

As the government acknowledged, implementation of the program lagged between 2016 and 2019, when only 15 percent of the credit was spent. As a result, it was about to collapse in 2020, when the energy ministry renegotiated with the World Bank and obtained an extension until 2022.

Since then, the awarding of tenders for works in different communities has picked up speed, with the two-pronged objective of improving the quality of life of the dispersed rural population and reducing environmental impacts with the promotion of renewable energies.

According to data from the energy ministry, investments for 163 million dollars have already been made, are in progress or are in the bidding stage. Between the renewable energy generating equipment already installed and the projects under implementation, Permer has reached 41,510 homes and 681 schools, benefiting a total of 345,712 people, according to official figures.

“The program serves a part of the population that lives in remote areas of Argentina and not only lacks electricity from the grid, but also has other needs. The arrival of electric power opens up another panorama for these populations,” Permer’s general coordinator, Luciano Gilardón, told IPS.

The official said that due to the size of Argentina, which with a territory of 2,780,000 square kilometers is the eighth largest country in the world, it is not economically feasible for the national power grid to reach the smallest and most remote communities, so on-site isolated generation is the only possible solution.

“Traditionally, small diesel-fueled engines were installed, which performed poorly. Since 2000, renewable energies started to become cheaper and then they became viable not only for more efficient generation, but also to contribute to a reduction in greenhouse gas emissions,” adds Gilardón in Buenos Aires.

A family poses in front of their home equipped with a solar panel in Potrero de Uriburu, an isolated rural area in the northwestern Argentine province of Salta. The Renewable Energy in Rural Markets Project provides electricity to homes, schools and public offices in remote areas not reached by the national grid. CREDIT: Permer

Energy that brings independence

In addition to homes and schools, Permer beneficiaries include remote public institutions such as primary health care centers, border posts and shelters in national parks.

The program has also been used for agriculture and livestock by small farming and indigenous communities, in the form of solar pumps to extract water from wells and solar-powered electric fence energizers for pastures.

There are 1,500 solar-powered electric cattle pastures in operation and this month the energy ministry awarded a company the supply and installation of another 2,633, in 11 provinces. Fencing the pastures is intended to improve and increase grazing land, reduce losses, protect crops and protect livestock from poaching.

The National Institute of Agricultural Technology (Inta), a public research institution active in rural areas throughout the country, participates in the identification of beneficiaries, the distribution of equipment for productive uses and training in its use.

Graciela Leguizamón, an agricultural engineer and Inta researcher in the province of Santiago del Estero, explains that in many areas of this province in the northern region of Chaco it is very difficult to think of massive public policies for access to electricity and drinking water, since there are rural families whose nearest neighbor is up to four kilometers away.

“Life is rough in those places. Sometimes people travel 15 or 20 kilometers to charge their cell phone batteries. Electricity makes life more friendly, allows children and young people to study, and makes people want to stay in the countryside,” Leguizamón tells IPS from Quimilí, a town in that province.

“Electricity means independence for people. Especially for women, who usually take care of the goats. With the solar-powered electric fences for goat pastures, women can have more time to devote to themselves or their children,” she adds.

Electricity for indigenous peoples

The largest project that Permer has undertaken is in the Luracatao valley, located in the Puna ecoregion in the northwest of Argentina, at an altitude of 2,700 meters above sea level. Some 350 indigenous families of the Diaguita and Calchaquí peoples live there, dispersed in nine communities that use candles or kerosene lanterns at night.

A solar park is under construction in the valley that will have an installed capacity of 1.25 MW, with batteries to store the electricity, plus the infrastructure for distributing the electric power because the communities are spread out along 42 kilometers. There are also plans to install a diesel engine for when weather conditions do not permit the generation of solar energy.

The budget, according to information from the government of the province of Salta, is 6.5 million dollars.

“It is a project that, because of its cost, is impossible for a municipality to undertake, and the national and Salta provincial governments have been promising this since the 1980s,” says Mauricio Abán, the mayor of Seclantás, a municipality in the Luracatao valley.

“In recent years, different possibilities for generating electricity with renewable sources were studied, including hydroelectric, thanks to a river in the valley. But in the end it was decided that the best option was solar, because the radiation is very good all year round,” he tells IPS from his home town.

“Today we see the columns and cables being installed and that a project that seemed like it would never arrive is starting to become reality,” he adds.

Rich countries have the resources to end the debt crisis, which has deteriorated rapidly in part as a consequence of their own domestic policies. October 2022. Credit: UNDP

By Lars Jensen and George Gray Molina
UNITED NATIONS, Oct 19 2022 (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

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

IPS UN Bureau

 

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Horrific accounts from a brutal war in Ethiopia that has left tens of thousands dead.

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Travelers await the Laos-China Railway. Credit: Bridget Dooley/IPS

By Bridget Dooley
VIENTIANE, Laos, Oct 18 2022 (IPS)

Mountainous terrain in northern Laos has until now restricted chances for farmers and producers in much of the nation to export their goods, limiting them primarily to subsistence farming and also curbing development, education and poverty reduction in their communities.

But as infrastructure and transportation in the “land of a million elephants” grows, the southeast Asian nation is moving from landlocked to land-linked. The Laos-China Railway is the most notable of these transformations, creating a high-speed means of bringing people and products through some of the most remote provinces, particularly in the north, and giving farmers access to new markets to sell their goods.

Living in a fertile and relatively large country with a small population, Laotian farmers are primed to move “beyond feeding themselves, from subsistence farming to enterprise farming, - Because farmers tend to plough their profits into their families and communities, supporting their earning potential directly benefits communities

Nasar Hayat, FAO Country Representative

It’s still too soon to gauge the economic impact of the railway, which opened in December 2021, on nearby communities. Through the Hand in Hand Initiative (HiH), the United Nations Food and Agriculture Organization (FAO) aims to harness the potential of this blank slate to benefit Laotian farmers by attracting investors who will support the development of a green economic corridor along the track to sustainably empower the local communities that act as stewards of the land.

HiH is an evidence-based, country-owned and led initiative of the FAO to accelerate agricultural transformation, with the goal of eradicating poverty, ending hunger and malnutrition, and reducing inequalities. The initiative was supporting 52 countries in Africa, Asia, Europe, Latin America, and the Middle East as of May 2022.

 

Small markets limit production

Investment in Laos via the HIH has the power to expand market options for producers and also improve their collective bargaining power and earning potential. Currently many of these farmers yield small harvests not because of natural circumstances but because of the lack of buyers, processers and exporters of their crops and livestock.

Living in a fertile and relatively large country with a small population, Laotian farmers are primed to move “beyond feeding themselves, from subsistence farming to enterprise farming,” says FAO Country Representative Nasar Hayat. Because farmers tend to plough their profits into their families and communities, supporting their earning potential directly benefits communities, he added in an interview with IPS.

“When a farmer earns, they put that money into homes, into their children’s nutrition and education, into local businesses. They don’t take a trip to Europe and drain the funds from their communities.”

In order to tap into this earning potential, Hayat says that Laotian farmers must work collectively and be supported through market accessibility, scientific training, and research and development, all of which can be supported by investors. These advances can pave the way for positive long-term development, he added.

While the fertile southern and central plains of Laos have historically been seen as the country’s breadbasket, the initiative aims to increase the capacity of the mountainous north. As a result, tea (which grows in the mountain forests) cassava (which can be cultivated on slopes) and livestock (which can be raised in any terrain) are the commodities included in the HiH.

 

The owner of Nam Phu Vieng farm, Mrs. Vanheung Duanglasy, poses with her cattle outside of Vientiane, Laos. Credit: FAO

 

Only one tea factory

In the misty, mountainous northern province of Oudomxay, in the village of Ban Phouhong (population 270), members of the Khmu ethnic group have been earning their livelihoods by picking tea in traditional ways for the last eight years. Plucking the leaves takes skill and dexterity and the leaves are potentially highly valuable, but pickers in Ban Phouhong have unfortunately seen their profits limited by a meagre market: only one factory is accessible, giving its owner a de facto monopoly over the area’s tea.

As a result, the factory owner has kept the prices he pays growers low, not at all in step with inflation rates and the rising cost of living. Picked tea earns just 15,000-20,000 Lao Kip per kilo (US$1.20), a rate which has stayed steady while food and gasoline prices have soared.

The limited market also means that only two-thirds of the trees’ valuable leaves are being picked, because these older leaves are the only ones purchased and processed by the nearby factory. Meanwhile, the tea buds, which can be the most valuable part of the plant, are left unpicked. Investment in Ban Phouhong could give pickers access to their own means of processing these valuable buds.

Also, while the workers have been trained in picking, they lack the knowledge necessary to grow their own enterprises: “We want to plant more seedlings, but we don’t know how. Only one family knows how to plant seedlings, and they have not been here for years,” said one picker. With investment, the villagers hope to get the scientific training they need to take control of their own growing potential.

Outside of the capital Vientiane, in May Park Ngum, a group of cassava farmers has been wasting up to 15 metric tonnes of cassava per day of harvest, amounting to about 100 metric tonnes of wasted cassava each year, because of the limits of their local cassava market.

The story of these farmers highlights how the potential benefits of Laos’ new connectivity are not limited to rural, remote provinces. After one export middleman failed to pay the May Park Ngum growers for their cassava – a debt amounting to about $1,200 per family – the farmers have been reticent to accept anything but cash for their crops. As a result, they have reduced their growing area by half and have also been stockpiling unsold cassava, much of which they have had to throw away because it has gone bad.

 

Livestock workers on Nam Phou Vieng farm. Credit: Bridget Dooley/IPS

 

Growers turn to pesticides

As a result of this loss, the farmers have unfortunately begun looking for less environmentally-friendly ways of boosting their profits, even as they are unsure of who would buy those crops. “We’ve been experimenting with pesticides on a small portion of our land. We found this could increase our yield from three metric tonnes of cassava per hectare per year to five metric tonnes of cassava per hectare per year,” said one grower.

However, with more reliable buyers, the farmers could maintain their current organic growing methods while doubling their growing potential, in turn doubling the earnings of their 50 hourly workers and, most importantly, ensuring their crops are not wasted.

Taking full advantage of the railway’s market-expanding power depends on following strict export regulations. For livestock, export requires vaccination to prevent the spread of transboundary diseases. While initial vaccination is costly, it pays for itself several times over through profits.

The owner and operator of Nam Phu Vieng farm in Vientiane Province, Vanheung Duanglasy, says that the high cost of vaccinating against lumpy skin disease prevents her from selling more of her animals, despite the fact that she has the capacity to raise far more. While she has contacts with reliable buyers in Vietnam, vaccination costs about $45 per cow every three months, significantly limiting how many cows she is able to raise for sale.

Like the cassava farmers, the owner of Nam Phu Vieng says that with investment and more buyers her farm could produce far more, expanding her profits and allowing her to hire more workers from her local community.

Bruno Fernando, the only Angolan to ever play in the NBA, thinks it is a matter of time before his footsteps are followed.

How will the incoming Egyptian presidency step up to the challenge? And how too will the new UN climate chief, Simon Stiell, approach this major meeting? Credit: United Nations

By Felix Dodds and Chris Spence
NEW YORK, Oct 18 2022 (IPS)

Next month, the latest annual United Nations climate extravaganza, COP27, will take place in Sharm el-Sheikh, Egypt. Last year it was in Glasgow. Next year it will be held in (drum roll please) … Dubai!

These big climate events have been around a long time. Since 1995, there has been a climate COP (short for “Conference of the Parties”) every year except 2020, when it was postponed due to the Covid pandemic. Over the years, the COP roadshow has traveled far and wide. From Berlin to Buenos Aires, Kyoto to Cancun, and Bali to Marrakesh, the COPs have criss-crossed the globe with the aim of finessing new agreements to see off the specter of climate change.

The United Nations climate process has definitely moved the needle when it comes to our response to climate change. When the UN climate treaty was first signed in 1992, it triggered a wave of national laws, policies, and regulations that have rippled out across every country on earth. This process has started to shift almost every aspect of our modern economic system away from 200 years of reliance on fossil fuels

These annual summits generate a lot of interest. The most recent in Glasgow attracted tens of thousands of participants. World leaders and celebrities often jet in and join the throng, while the global media reports every move in the corridors of power and concerned citizens protest outside. And yet the COPs are only the tip of the proverbial iceberg when it comes to UN-sponsored climate meetings.

If you add the several preparatory meetings in the lead-up to the COPs, plus a host of workshops and other events by various expert technical groups, you’re easily looking at several dozen gatherings every year.

Each event is supposed to help us move the needle on climate change, keeping our warming world within the 1.5o Celsius threshold beyond which we face potentially catastrophic consequences. But what, exactly, do all of these many meetings accomplish? Are they really worth all this time and effort?

 

The climate bandwagon: Roll up for the never-ending world tour!

There are plenty of arguments against letting the climate circus continue its endless circuit. For a start, science tells us that in spite of all the many meetings held, we’re still on a dangerous path. Groups like Carbon Action Tracker estimate that we’re currently on track for somewhere between 1.8-2.7 oC, with the lower number representing their most optimistic—and least likely—scenario. This is clearly well above where we need to be.

Another common complaint is that UN climate COPs are mostly just talking shops; in Greta Thunberg’s words, too much “blah, blah, blah” and not enough action. For all the millions, even billions, of words uttered at these events, they can often end in acrimony with little of substance agreed. Surely, the money used to hold these summits could be better spent on something else?

Even when agreement is reached, say the critics, there is no guarantee governments and other stakeholders will keep their pledges. History is littered with broken promises and diplomatic treaties that aren’t worth the paper they’re written on.

These arguments are all credible and we don’t disagree with any of them. But here’s the thing. For all their weaknesses and flaws, these summits actually matter a lot.

 

Like a rolling stone …

First, the United Nations climate process has definitely moved the needle when it comes to our response to climate change. When the UN climate treaty was first signed in 1992, it triggered a wave of national laws, policies, and regulations that have rippled out across every country on earth. This process has started to shift almost every aspect of our modern economic system away from 200 years of reliance on fossil fuels.

Take our global energy systems, for instance. From being a niche market in the 1990s that could not compete on cost with coal, oil and gas-generated electricity, in 2020 solar power became the cheapest source of electricity in history. The technology behind both solar and wind have moved on in leaps and bounds since the 1990s, thanks in large part to the flow-on effects of international lawmaking.

The much-maligned Kyoto Protocol of 1997, now largely superseded by the 2015 Paris Agreement, brought the private sector firmly into the equation, launching carbon markets and spurring private sector investment that has begun to reshape our global economy away from its reliance on fossil fuels.

From electric vehicles to power generation to building design, the number of changes catalyzed by our international work on climate change are too many too list. Probably the best metric for judging the UN climate summits, however, is their impact on long-term global warming.

In recent years, projections for the expected long-term warming have fallen from as much as 4-6C before the Paris Agreement was inked, to around 1.8-2.7C now, assuming we implement pledges made at UN summits. And while anything above 1.5C is still very, very bad and the need for more action remains urgent, it’s not as unimaginably catastrophic as those higher numbers would be.

 

The worst approach … except for all the others

That’s not to say the UN climate process can’t be improved. Some people would like to see them shrunk back to their size in the early days, when just a couple of thousand people—key negotiators and a smaller number of other stakeholders—met in person. This, they say, would render it more manageable, reduce the carbon footprint, and make it less of a “circus.”

There are arguments on both sides here. While on the one hand it is true that arguably only a few hundred diplomats could handle the haggling over the official UN documents under negotiation, it is worth noting the impact those other participants can have.

For a start, many new pledges and promises are emerging on the sidelines of the official negotiations; “coalitions of the willing” wishing to make progress in specific sectors like, say, green investment, electric vehicles, reducing methane emissions or halting deforestation.

These alliances of governments, private companies and other stakeholders are able to make advances in specific sectors where the official UN negotiations—which require consensus among more than 190 governments—cannot. The groups involved in such coalitions choose to network, negotiate, and announce their plans during the COPs because of the public interest in these events.

Attend just one of these COPs and you will soon notice how many connections are made, partnerships are formed, and ideas generated, by participants not involved in the formal UN business of treatymaking. The benefits of these meetings and collaborations are hard to measure, but certainly considerable.

UN negotiations can often feel glacial. With the scientific community—and the daily news of extreme weather events around the world—reminding us of the need for urgency, it can feel like the discussions are going far too slowly. Obviously, there is much more to be done in a short space of time given that we are still hurtling towards some pretty frightening outcomes without more progress. Still, the UN process has made a difference and started to move the needle, even if is not yet happening fast enough.

And what are the alternatives? No single country or private entity stands a chance of dealing with this threat alone. Neither Amazon nor Google can conjure up an online answer to this type of problem. The US or China can’t “go it alone” and no coalition of governments has been able to deliver what’s needed. It is clear, therefore, that a multilateral, global process involving all governments and stakeholders presents our only chance of containing such a global threat.

Winston Churchill once described democracy as the worst form of government except for all the others. The same applies to multilateralism and climate change. It is flawed, frustrating and at times agonizingly slow. But it is still without doubt our last best hope of success.

 

Stepping up

So what needs to happen at COP27 in Egypt? Many are describing it as the “implementation COP” where we begin to turn pledges and well-laid plans into action. There will be pressure for countries to come with bolder measures to reduce their national emissions and for wealthier nations to bring more money to the table when it comes to supporting the developing world. In particular, more support for adaptation, as well as financial help dealing with the loss and damage already wrought by climate change, will need to be addressed promptly.

We will also need to see inspired leadership. In our new book, Heroes of Environmental Diplomacy, we argue that dedicated and committed individuals can make a significant difference at these events. Examples from the recent past, such as the dedication of a handful of scientists and diplomats who helped create the Montreal Protocol and save the ozone layer, show that we can all play our part in turning the tide.

More recently Christiana Figueres, the former head of the UN climate office and one of the architects of the Paris Agreement, is an example of the type of leadership that will be required at the next COP. Figueres is an advocate of “stubborn optimism” and the need to blend urgency with action. We agree. Persistence, combined with a belief that there is still time to make a difference, should be our guiding light during this critical time.

Currently, the UK as hosts of COP26 still hold the climate presidency, which they will hand over officially to Egypt at the start of COP27 in November. Glasgow exceeded many insiders’ expectations, with Alok Sharma delivering a poised performance in spite of the UK’s recent domestic political turmoil. How will the incoming Egyptian presidency step up to the challenge? And how too will the new UN climate chief, Simon Stiell, approach this major meeting?

As we look to COP27 and beyond, we wonder who the heroes of tomorrow might be? With time running out, we need environmental champions now more than ever.

 

Prof. Felix Dodds and Chris Spence have participated in UN environmental negotiations since the 1990s. They co-edited Heroes of Environmental Diplomacy: Profiles in Courage (Routledge, 2022).

Excerpt:

The 27th annual UN climate summit is taking place in November. Will it be worth all the time and effort? Professor Felix Dodds and Chris Spence—who have attended many of them—share what they’ve learned.

Maldives Minister for Gender, Family, and Social Services, Aishath Mohamed Didi, in her keynote address said her island country faced unique development challenges and is vulnerable to economic shocks and climate change.

By Cecilia Russell
Johannesburg, Oct 18 2022 (IPS)

An aging population needn’t be a burden, experts told Parliamentarians at a conference co-hosted by UNFPA Asia Pacific Regional Office and the Asian Population and Development Association (APDA).

Two National Transfer Account (NTA) experts told the session that with good planning and policy, it was possible to change the trajectory so that those in retirement were not only reliant on the state.

NTAs provide a coherent accounting framework of economic flows from one age group or generation to another.

UNFPA’s short video outlined the impact of an aging population in Thailand. Currently, adults take care of three elders and two children, but with the aging population in 2025, this will increase to four elders and three children, but by 2035, the number of dependents will increase to six elders and three children.

Professor Sang-Hyop Lee of the East-West Center and the University of Hawaii, succinctly in an “elevator pitch,” explained his interests in population. These included “looking at how a changing population structure affects society and economy, current and future,” and “what public policies could be pursued to influence the outcome.”

Lee said that using NTA tools with disaggregated data, including consumption (both private and public sector) and other variables like income and savings, could assist with policy development.

By 2080, he said, the whole Asia Pacific region would have an aging population – and public policy could change the outcomes by including evidence and knowledge-based policy to influence labor patterns of the female, youth, and elderly labor force; increasing productivity through effective education, health investments, training and finally to improve the work-to-retirement transition.

Eduardo Klein, Regional Representative of HelpAge International, who chaired the session, commented that the key takeaway was that the NTAs were a crucial tool for developing strategies to adapt to population aging.

In her keynote address, Maldives Minister for Gender, Family, and Social Services, Aishath Mohamed Didi, said that her country, which was a small island state the country, faced “unique development challenges and is vulnerable to economic shocks and climate change.”

The population is about 500 000 people, 70% of whom are Maldivians and the rest foreigners; 64% are working age, and more than 37% are under 25; those 65 and older account for 3.4% of the population.

“The Maldives entered the window of opportunity in 2010 when the majority of the population was working, and it’s estimated that the democratic transition will be completed by 2030,” Didi said. “Due to a rapid fertility decline and increased life expectancy, it’s estimated it will become an aging population by 2030.”

She outlined various policy changes in the Maldives, including addressing the investment in children, which was lower than in other economies with similar fertility or development levels. The country had included free basic education from ages four to 16 and also spent US$ 30 million supporting 15,000 students to achieve their first degrees. This has been expanded to include zero-interest rate loans. In the past two to three years, the Maldives had spent over US$ 64 million to support about 2000 students studying abroad in 31 countries. Other efforts to improve education included investing in technical and vocational education and providing skill development opportunities for youth, including apprenticeship programmes, particularly in the outer regions away from the capital or the central areas.

Didi said the Maldives depended highly on tourism, but foreign workers (primarily men) comprised 60% of the workforce. Women only play a small role in the industry and hold the most informal sector jobs.

“Young people are required to become skilled and equipped to compete with foreign workers in the domestic economy,” Didi said, adding that the demographic dividend transition was expected to create both opportunities and challenges. “The aggregate public spending on healthcare and other social protection needs to grow by more than 2 percent per year until 2050 to maintain the same level of service enjoyed by the population in 2022 – even with per capita benefits, the government’s budget needs to grow substantially.”

Klein noted that Didi’s overview showed how the Maldives was in the demographic dividend and was investing in the future and that investment had a “return in improved health and a better educated, more productive, more engaged, and a healthier population living in a harmonious society.”

Rikiya Matsukura, Associate Professor at Nihon University, noted that opportunities arose with planning and strategic policymaking. While an aging population was “inevitable” and “wasn’t curable,” policymakers played a crucial role in changing the trajectory.

Matsukura outlined four demographic dividends: The first demographic was achieved through the expansion of the workforce. The second demographic dividend is achieved through investing in human capital – leading to higher productivity. The third demographic dividend, which he termed the “longevity dividend” or “silver dividend,” was achieved through investing in longevity and longer working life. Finally, the fourth dividend would be achieved by investing in education, especially in the STEM fields.

While people aged 55 to 70 may not be working, if they are healthy, they could work, Matsukura said, that this could create an additional workforce.

“In the case of Japan, the income generated by additional elderly workers could correspond to 3.2 to 6 percent of Japan’s real GDP,” he noted.

This elderly workforce could be assisted by technology – artificial intelligence (AI) and robotics and the economy could grow by 35% if technology could make housework easier.

Lee noted that there was no easy answer but what was required was short and long-term planning which took into account crises. This aging population issue will not go away.

Klein too, noted said future planning was complex. For example, India (among other countries) had invested in education, but because of the COVID-19 pandemic, children could not attend school for two years, which would have consequences for the future workforce. Climate change, in addition to aging, would need to be planned for in Bangladesh.

During the discussion, parliamentarians were concerned about the impact of the COVID-19 pandemic. Dr Jetn Sirathranont, an MP from Thailand, noted that policymakers needed to use the NTA tools, but post-pandemic, every country, including Thailand, was experiencing a situation where there was “less income and less revenue but high expenses.”

Sirathranont asked how one could apply NTA tools in these circumstances.

While Klein quipped that this was a million-dollar question, Lee said what was required was short and long-term planning which took into account crises like the pandemic. However, he noted, “this aging population issue will not go away.”

IPS UN Bureau Report

 

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Gabon’s Minister of Water, Forests, the Sea, and Environment, Lee White reflects on forest conservation, carbon credits and challenges with a burgeoning elephant population.

By Francis Kokutse
Libreville, Oct 18 2022 (IPS)

Over the past few years, Gabon has been successful in its forest conservation efforts. The country has also been able to work hard to achieve the goal of limiting the rise in global temperatures to the 1.5-degree target. Minister of Water, Forests, the Sea, and Environment, Lee White, talks to IPS Correspondent Francis Kokutse:

IPS: Gabon is being touted for its success story in forest conservation. When did this begin, and what are the results so far?

Minister Lee White (LW): In 1972, the late President Omar Bongo went to Stockholm for the first major political summit on the environment. On his return, he created a Ministry of Environment. After Rio in 1992. He signed Gabon’s first environmental law in 1993 and initiated a review that led to the new forestry law in 2001 – which made sustainable forestry obligatory. In 2002 at the World Summit on Sustainable Development (WSSD) Rio plus 10, he announced the creation of 13 National Parks covering 11% of Gabon. This led to the National Parks Law of 2007, which created the National Parks Agency (ANPN). In 2006/ 2007, he also created six Ramsar (wetland) sites.

In 2009, President Ali Bongo Ondimba was elected on a Gabon Green – Gabon Industrial – Services Gabon – platform: a sustainable development manifesto. He further developed his collaboration with the Prince of Wales (now King Charles III) and attended the climate COP in Copenhagen, where he represented forestry in Africa in the small group of 20 Heads of State and Government who wrote the Copenhagen Agreement. He subsequently strengthened ANPN, increasing staffing and budget levels ten times, created our Climate Council, the Climate Plan, the Plan Strategic Gabon Emergent (PSGE) sustainable economy plan, the Gabonese Agency for Space Studies and Observation (AGEOS) to monitor forests and 20 marine protected areas covering 27% of our Exclusive Economic Zone (EEZ) – extending our forest conservation and management model into the ocean. As a result, we have had five decades of deforestation below 0.1%/year (closer to 0.05%) and are the country net absorbing the most CO2, over 100 million tons annually.

IPS: The conservation efforts surely have some problems. What were these?

LW: Two types of problems – one is external – cross-border poaching, especially for ivory, by organised criminal groups; the same for illegal gold mining; illegal pirate fishing boats; illegal forestry – sometimes cross-border. So, this has to be fought with strong, motivated, professional armed rangers. Gabon has been successful – while forest elephant numbers across the region have fallen by 70%, in Gabon, they went from 60,000 in 1990 to 95,000 in 2020.

The other is internal: Human-elephant conflict (is complex, but basically, there are more elephants; poaching in remote forests drives them toward people, and climate change has resulted in less fruit in the rain forest, and even in parks (so) the elephants are thinner today than they were 30 years ago. (As a result) hungry elephants are leaving the forests to feed on crops. This is on the rise and erodes the support of the Gabonese people. Also, when the economy is tight, as it has been since 2015 – the Government is able to spend less money on the parks.

IPS: Gabon has benefitted from its efforts with increased Carbon Credits. What has this come to?

LW: We signed an agreement with Norway for results-based payments of up to 150 million US dollars, of which we have received 17 million US dollars to date. This is a modest amount of funding. But will allow us to better manage the forest and thereby generate more credits in the future. Just yesterday (October 3, 2022), we got notification from the United Nations Framework Convention on Climate Change (UNFCCC) of the validation of 187 million tons of REDD+ credits . . . which will be made official next week. All pre-Glasgow COP 26 REDD+. Carbon credits are voluntary, so there is a guarantee we will be able to sell them. We have a first offer to buy about 100,000 tons at $30 . . . so the real answer to your question is that we will see over the next 2-3 years what this will come to.

IPS: How will ordinary people benefit from all these efforts?

LW: My expectation is that in the post-Glasgow world, Gabon will generate 100 million tons of net sequestration carbon credits per year and sell them for a price of $20-30. These funds will be distributed as follows: 10% reinvested in forest management; 15% for rural communities; 25% for the Sovereign Fund to reinvest for future generations; 25% to service Gabon’s debt load; 25% in the national budget for education, health, and climate resilience . . . the funds will make our economy more viable and resilient and reduce our debt servicing payments making more money available for the Gabonese people.

IPS: Have these forest conservation efforts led to the relocation of ordinary people? If so, what was done to them?

LW: Never, no – this is not our policy. We have a small population – about 200 people – who live within the parks. We map out their traditional areas and formalize their rights in our park management plans.

IPS: The more you try to conserve the forest, the more you increase the animal population, is that not opening up the country to zoonotic diseases?

LW: No – the wildlife in the parks is in equilibrium – it is when you cut the forests and animals come into contact with people that there is a risk of cross infection – as a general rule, if nature is healthy, so are people.

IPS: Media reports say the country’s elephant population has increased dramatically. Has that also not affected farming, and what is the Government doing to save farms?

LW: I mentioned that human-elephant conflict is higher. This year we are investing about 10 million US dollars in compensation and building electric barriers to protect peoples’ crops.

IPS: With Gabon’s success so far, what is the country presenting at COP27?

LW: We will present our 187 million carbon credits to the world. We will also present our model of exploiting the forest in a sustainable manner to save the forests. In general terms, this is a Conference of Parties (COP), where negotiators are progressing. Not concluding negotiations – so the focus will be more on thematic issues.

IPS: How can other African countries learn from Gabon’s experience?

LW: I believe our forestry model – banning export to promote local jobs and the local economy can work for Congo Basin countries. Also, our national carbon accounting in different ecosystems could be applied in many African countries, not just rainforest countries, to create nature-based carbon credits in the future.

IPS: What has been the response from other countries in the Congo Basin on what Gabon is doing so far?

LW: Thus far, it is probably fair to say their response is a “wait and see” response – they are interested but not yet convinced it will work. That said, Central African Economic and Monetary Community (CEMAC) countries have announced they will follow Gabon’s example and ban log exports from January 1, 2023.

What is the future of Gabon’s conservation effort?

LW: Time will tell. We are a member of the High Ambition for Nature and People Alliance, pushing for a global standard of 30% protected lands and oceans by 2030 – in Gabon, we are currently at 21% on land and 27% in the ocean.

It is my belief that if we can continue the transition in the forestry sector towards 3rd and 4th level transformation and if a global carbon market emerges to reward Gabon’s net carbon sequestration that the wise and sustainable use and conservation of natural resources in Gabon can become a sustainable model, such as is the case in Costa Rica.

IPS UN Bureau Report

 

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By Anis Chowdhury and Jomo Kwame Sundaram
SYDNEY and KUALA LUMPUR, Oct 18 2022 (IPS)

Preoccupied with enhancing their own ‘credibility’ and reputations, central banks (CBs) are again driving the world economy into recession, financial turmoil and debt crises.

Wall Street ‘cred’
Most CB governors believe ‘credibility’ is desirable and must be achieved by fighting inflation at any cost. To justify their own more harmful policies, they warn inflation is ‘damaging’.

Anis Chowdhury

They argue CBs need ‘independence’ from governments to pursue ‘credible’ monetary policy. Inflation targeting to ‘anchor’ inflation expectations is supposed to generate desired ‘confidence’. But CBs have been responsible for many costly failures.

The US Fed deepened the 1930s’ Great Depression, the 1970s’ stagflation and the early 1980s’ contraction, besides contributing to the 2008-09 global financial crisis (GFC). Hence, CB notions of ‘credibility’ and ‘independence’ need to be reconsidered.

Milton Friedman – whom many central bankers revere – blamed the 1930s’ Great Depression on US Fed actions and inactions. Instead of providing liquidity support for businesses struggling with short-term cash-flow problems, it squeezed credit and economies.

But why did the Fed behave as it did? Some economic historians insist it was “to promote the interests of commercial banks, rather than economic recovery”.

Monetary policy before and during the Great Depression “was designed to cause the failure of non-member banks, which would enhance the long-run profits of the Fed’s member banks and enlarge the [Fed’s] regulatory domain”.

Others concluded, “Federal Reserve errors seem largely attributable to the continued use of flawed policies” to defend the ‘gold standard’, and its poor understanding of monetary conditions.

Central banks contractionary
Worse, few lessons were learnt. Instead of protecting the gold standard, or being counter-cyclical, fighting inflation is the new CB preoccupation. Even worse, most CBs now commit to an arbitrarily-set inflation target of 2%, first promoted by the Reserve Bank of New Zealand over three decades ago.

Jomo Kwame Sundaram

Major CB interventions have caused both economic booms or bubbles and busts or contractions, often without mitigating inflation. Such “go-stop” monetary policy swings have caused asset price bubbles and financial fragility besides sudden contractions.

Ben Bernanke’s research team found the major damage from the 1970s’ oil price shocks was due to the “tightening of monetary policy” response. Other research attributed the 1970s’ stagflation largely to the Fed’s “go-stop” monetary policy, worsened by policymakers’ “misperceptions” and “faulty doctrine”.

Hence, “in substantial part the Great Stagflation of the 1970s could have been avoided, had the Fed not permitted major monetary expansions in the early 1970s”.

Labour pays
Likewise, Fed chair Paul Volcker sharply raised interest rates during 1979-81 “to a crushing level of nearly 20 per cent by the middle of 1981”.

This precipitated the “ensuing recession that started in July 1981 [which] became the most severe downturn since the second world war”. US unemployment reached nearly 11% in late 1982, the highest since the Great Depression.

Volcker’s actions betrayed the Fed’s dual mandate to pursue both full employment and price stability. First in the Employment Act of 1946, it was re-codified in the 1978 ‘Humphrey-Hawkins’ Full Employment and Balanced Growth Act.

Eventually, the long-term unemployed “became invisible to both the labour market and to policymakers”. Many became deskilled as others fell victim to criminality, substance abuse, and mental illness, even suicide.

The overall health of Americans became “poorer for years as a result of the deep economic recession in 1981 and 1982”.

Sending Global South south
Volcker’s actions caused developing country debt crises, with decades lost in Latin America and Africa. A recent New York Times opinion-editorial warned, “The Powell pivot to tighter money in 2021 is the equivalent of Mr. Volcker’s 1981 move”, and “the 2020s economy could resemble the 1980s”.

Yet, invoking CB credibility, many with power and influence are urging the Fed to stick to its guns with Volcker’s “courage to take out the baseball bat to slam the economy and slay inflation”!

The World Bank warns of dire developing country debt crises following policy-induced recessions. Meanwhile, the International Monetary Fund has warned developing economies with dollar-denominated debt of imminent foreign exchange crises.

Stop-go new norm
Fed, Bank of England and European Central Bank policy approaches still justify “go-stop” monetary policy reversals. Resulting booms or bubbles and busts also feature in other recent crises, e.g., the GFC.

Following the 1997 East Asian financial crises, Mexican, Russian and post-US ‘dotcom bubble’ bust, the Fed eased monetary policy too much for too long during the ‘Great Moderation’.

CBs enabled credit expansion in the 2000s, culminating in the GFC. More worryingly, the “near-consensus view” is that independent CBs have failed to achieve – let alone protect – financial stability.

Easy credit and rising stock and housing markets have involved rapid credit and loan growth worsening asset price bubbles. Regulatory oversight became increasingly lax as investors ‘chased yield’. Leverage grew, using dodgy ‘derivative’ products, making proper risk assessment difficult.

Guy Debelle, once Deputy Governor of Australia’s CB, noted, “The goal of financial stability has generally been left vague”. Hence, CBs failed to see significant build-up of financial instability”. Soon after, the Lehman Brothers’ collapse precipitated the GFC.

QE magic from bubble to bust
Governments withdrew fiscal ‘stimuli’ too soon. So, major CBs aggressively pursued ‘unconventional monetary policies’, especially ‘quantitative easing’, to keep economies afloat.

Extraordinary monetary expansion provided vital liquidity, but poor coordination also fuelled asset price bubbles. Thus, unviable enterprises survived, undermining productivity growth.

With less investment in the real economy, supply capacity is falling behind still growing demand. Pandemic, war and sanctions have also disrupted supplies.

Raising interest rates, CBs now race to reverse earlier monetary expansion. Credit contractions are squeezing economies, hitting poorer countries especially hard.

Reviewing historical data, the author of the ‘Taylor rule’ – whom many CBs profess to follow – concluded, “The classic explanation of financial crises, going back hundreds of years, is that they are caused by excesses – frequently monetary excesses – which lead to a boom and an inevitable bust”.

Independence for what?
CB independence (CBI) advocates often claim low inflation during the Great Moderation was due to CB credibility. But inflation in most countries declined from the mid-1990s, with or without CBI.

The alleged causation has been much exaggerated, and is certainly not as strong as argued. Claiming CBI ensures low inflation also denies other relevant variables, e.g., labour market casualization and globalization.

Debelle observed, “How much [low inflation] can be attributable to central bank independence or the inflation target is difficult to disentangle …[Favourable] assessment mostly relies on assertion, rather than empirical proof”.

Milton Friedman argued crisis responses involve inherently political decisions, best not left to the unelected. A modern CB’s “responsibilities overlap with other government functions”. So, CBs must be subject to political authority while maintaining operational independence.

CBI fetishism has also allowed central bankers to ignore distributional consequences of monetary policies. This has often enabled financial asset owners, speculators and creditors. CBI has also meant neglecting development responsibilities.

Emphasizing CBI also implies “a very narrow view of central bank functions”. This has made economies more prone to financial instability and crisis. Clearly, CBI is no harmless ‘elixir’ ensuring low inflation.

IPS UN Bureau

 

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Al-Masjid an-Nabawi, known in English as The Prophet's Mosque, in the city of Medina in the Al Madinah Province of Saudi Arabia. Credit: Unsplash/Yasmine Arfaoui
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Meanwhile, regardless of the intensity of the current conflict between the Biden administration and Saudi Arabia, their long history of military alliance and shared concerns over regional stability will certainly override their conflicting interests, especially at this juncture of international tension in the wake of the war in the Ukraine.

By Alon Ben-Meir
NEW YORK, Oct 18 2022 (IPS)

The recent conflict between the United States and Saudi Arabia over Riyadh’s decision to cut its oil production by 2 million barrels a day should be addressed in the context of their long and extensive relationship.

For more than 70 years, the two countries have cooperated and collaborated on many levels, including the massive sale of US military hardware, collaboration on national security, joint economic development, and transfer of sensitive US technology, along with intelligence sharing.

The current conflict is not the first that has occurred between the two countries; in fact, in 1973 the Saudis imposed an oil boycott on the US as retribution for its aid to Israel during the Yom Kippur War, and in 2001 after the attack on the World Trade Center on September 11, relations became strained again due to (still unproven) allegations about the possible involvement of Saudi Arabia in the attack, as 15 of the 19 terrorists were Saudi citizens.

These two major incidents certainly disrupted the relationship to a great extent; nevertheless, each time they restored the spirit and the practical dimension of their relationship because their shared interests on so many levels overrode their conflicting positions. I believe that this recent conflict will not change, as with previous conflicts, their bilateral relationship in any fundamental way.

President Biden stated that “… when the House and the Senate comes back, there’s going to be some consequences for what [Saudi Arabia has] done with Russia.” Congressional Democrats went as far as demanding taking unprecedented countermeasures against Saudi Arabia, including the cessation of all aspects of cooperation with Riyadh.

What precipitated this stern reaction by Biden and leading Democrats is attributed to several factors. The Saudi action was seen as an affront to Biden personally, especially given his recent visit to Saudi Arabia, with the purpose of reducing the tension between the two countries and persuading the Saudis to increase oil production.

Riyadh’s action is further seen as a barefaced anti-American move and as collusion with Russia against the US. Moreover, Biden and many Democrats view the Saudis’ decision as one that would worsen global inflation and undermine US efforts to bring down the price of gas, especially now just before the mid-term elections, while helping Putin in his war against Ukraine.

To be sure, they feel that the Saudis are ungrateful and unworthy of the US’ consistent defense assistance, which leads them to conclude that the Saudis are no longer a reliable ally.

The Saudi action appears to be as if they are taking revenge against the US, specifically because Biden, from the time he was running for president, called Saudi Arabia a “pariah,” whose leadership had “very little redeeming value.”

He accused Crown Prince Mohammed bin Salman (MBS) of orchestrating the murder of the journalist Jamal Khashoggi and swore to never speak with him, and criticized the kingdom for its indiscriminate bombing in Yemen and its human rights violations. Finally, Saudi has been public in its opposition to Biden’s efforts to renew the Iran deal.

In a conversation I had a couple of days ago with David Rundell, former Chief of Mission in the American embassy in Riyadh, author of “Vision or Mirage,” and one of America’s foremost experts on Saudi Arabia, he emphasized that the conflict has a significant emotional component for the Saudis which the Biden administration failed to appreciate.

As Rundell stated, “The president did, I think that the only term you can use is insult, Mohammed bin Salman several times. He made it very clear that he did not like Mohammed bin Salman…The White House made it very clear that they were not going to see Mohammed bin Salman…Then the president refuses to shake his hand.”

Rundell further commented on the Saudis’ pride and independence which they hold high, and cautioned that “the Saudis acted in what they thought was their own self-interest. They will do so again. If the United States wants to try to isolate them or punish them, it will simply drive them closer to China and Russia, which is already happening.”

Although it is necessary to reevaluate the US-Saudi relationship in the wake of what happened, I concur with Rundell that it will be a mistake for the Biden administration to take any significant punitive measures against the Saudis which will only worsen their bilateral relationship at an extremely sensitive time. As Secretary of State Anthony Blinken stated last year, the idea is “not to rupture the [US-Saudi] relationship, but to recalibrate [it].”

I believe that some Democratic senators, like Senate Foreign Relations Committee Chairman Robert Menendez, who said that he will propose a halt to “any cooperation with Riyadh until the Kingdom reassess its position with respect to the war in the Ukraine,” adding, “enough is enough,” and others, including Senator Richard Blumenthal and Rep. Ro Khanna who introduced a bill to “immediately pause all US arms sale to Saudi Arabia,” are going far beyond the pale of what needs to be done.

Other Democrats are calling for milder measures, including withholding intelligence, refusing the sale of certain weapons, restricting access to financial markets, and curtailing some elements of military training, along with slowing down major development projects.

This may seem necessary to send Saudi Arabia a message about the US’ displeasure, but it will be still the wrong message.

Indeed, given that both countries must take into full consideration the importance of their bilateral relationship and its overall regional security implications, they should not engage in a tit for tat which can only benefit Russia and China.

It should be noted that although Saudi Arabia depends on the US for much of its military hardware and national security guarantees, the Saudis feel that they have been all along reciprocating by helping to maintain regional stability, making considerable efforts to resolve the Israeli-Palestinian conflict, joining hands with the US in fighting terrorism, and allowing the US to continue to have a military presence on their soil.

Furthermore, the Saudis have promoted a more tolerant version of Islam, and continue to trade oil with dollar, which strengthens the American currency.

The Saudis also fundamentally disagree with the US about their motivation to cut down their oil production. As they see it, their action was strictly motivated by business considerations.

They wanted to reduce oil production in order to increase prices, and insist that even with the cut of 2 million barrels a day, the price will remain in the vicinity of $80-90 per barrel of oil which is still far less than $130 per barrel, the high of the past few years.

The Saudis see it as a business decision, nothing to do with politics. Regardless of how disingenuous this may sound, there is a financial benefit which they can reap; it is the timing of the cut that troubled many American officials.

My position is that the Biden administration should not take any punitive counter-action against Saudi Arabia, certainly not before the midterm election, which allows for a cooling off period. Following that, the Biden administration should establish contact behind-the-scenes in an effort to mitigate their differences.

Given the critical importance of their bilateral relationship especially at this juncture, both sides must avoid any public recrimination which can only aggravate the relationship.

Indeed, the continuing discord between the US and Saudi Arabia will further encourage Russia and China to do everything they can to create a schism between the two allies, especially now when Biden has just declared that China and Russia are adversaries of the US.

This may sound like an appeasement of the Saudis, but it is not. Indeed, regardless of who is right and who is wrong—and in this case, both have their share of blame—any dispute between allies must be resolved through dialogue and honest discussion.

This is the time when Saudi Arabia and the US must demonstrate that given their long friendship and constructive relationship for more than seven decades, their alliance can and will stand the test of time.

Dr. Alon Ben-Meir is a retired professor of international relations at the Center for Global Affairs at New York University (NYU). He taught courses on international negotiation and Middle Eastern studies for over 20 years.

IPS UN Bureau

 

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