By Kulsum Ahmed
Feb 22 2017 (Dawn, Pakistan)
Karachi’s air is more polluted than Beijing. Think about it. All the clues have been there for many years — my mother-in-law constantly on oxygen or using an inhaler in Karachi, my children using inhalers or taking anti-allergy tablets. But as a scientist, my light bulb moment only happened when I saw a graph in the International Energy Agency (IEA)’s Global Outlook report for 2016, which showed Karachi next to Beijing, but higher on the pollution scale. The IEA’s report was on air pollution because, as the report’s foreword notes, “energy production and use is the most important source of air pollution coming from human activity.” I cannot get that graph out of my head.
Poor air quality increases the risk of stroke, heart disease, lung cancer, and both chronic and acute respiratory diseases, including asthma. Air pollution kills about eight million people annually, and is the fourth leading risk factor for premature deaths worldwide, costing the global economy about $225 billion in lost labour income in 2013, according to the World Bank. Even greater is the cost of illness, resulting in health costs and loss of productivity due to days off work. The highest cost is the agony of watching our children or parents suffer from diseases such as asthma and the loss of pride associated with living in a dirty city.
To tackle the pollution in our cities, we need to first acknowledge that we have an air quality problem.
However, many cities and countries have successfully addressed this problem. Mexico City made huge improvements by acting on vehicular pollution and Bogota by improving fuel quality. Others succeeded temporarily until investments were made that locked in a development path that did not take into account future pollution. In China’s case, it is the coal power plants that are a major source of air pollution. Therefore, in 2012, the Chinese government sought to remedy this by tightening emissions standards for their coal power plants ahead of many countries, including the EU. Thus, they were able to respond to their energy needs and protect the health of their citizens.
In order to tackle the pollution in our cities, we need to first acknowledge that we have an air quality problem and begin to share data regularly on air quality and emissions sources with citizens. Indeed, the right to a clean environment is already enshrined in our Constitution and confirmed by the Supreme Court.
Secondly, we need to identify the sources of pollution in each of our major cities using a fairly simple test where air is passed through a filter paper and the pollution sources analysed. These results are validated by comparing them with the outcomes of computer models that take into account emission source inventories and meteorological effects. Past analyses suggest that in the case of Karachi, industrial emissions (including from poor quality fuel oil), vehicular emissions, fossil fuel combustion, burning trash, and dust from construction, street cleaning, agricultural residues, and sea salt are important sources.
Third, we need to address as many of these sources as possible. In fact, it’s not that difficult. Just procuring diesel and fuel/furnace oil with lower sulphur content, reducing industrial emissions through use of cleaner technology, covering our construction sites, or putting in place a better waste management system so the burning of trash is avoided can make a huge difference.
Finally, we need to systematically think about future sources of pollution and put in place frameworks to manage these from now. Take the planned increase in coal power plants as an example. Recognising this as a future source of pollution, the federal environment protection agency could introduce new emissions standards for PM2.5 (which do not even exist currently in Pakistan) for coal power plants and adjust other emissions standards, learning from China. This will help to ensure that clean technology is used right from the start in these coal plants, reducing the risk of new plants worsening our air quality. Putting these standards in early will also help to ensure that investors do not have to face additional costs later for retrofitting these plants or even closing them down altogether.
As a concerned Pakistani, who has helped many other cities and countries address this problem, it really pains me to see the path that we are unwittingly following on air quality. We need to wake up. We should be defining our own future, a future where each Pakistani not only has the right to breathe clean air, but can actually do so. We can neither tolerate nor afford anything less, if nothing else for our children and our parents’ sake.
The writer was practice manager for the Environment and Natural Resources Global Practice and the senior-most Pakistani at the World Bank when she retired in October 2016.
Published in Dawn, February 20th, 2017
This story was originally published by Dawn, Pakistan
By IPS World Desk
ROME, Feb 22 2017 (IPS)
Mankind’s future ability to feed itself is in jeopardy due to intensifying pressures on natural resources, mounting inequality, and the fallout from a changing climate, warns a new United Nations’ report.
Though very real and significant progress in reducing global hunger has been achieved over the past 30 years, “expanding food production and economic growth have often come at a heavy cost to the natural environment,” says the UN Food and Agriculture Organization (FAO) report The Future of Food and Agriculture: Trends and Challenges, issued on Feb. 22, 2017.
“Almost one half of the forests that once covered the Earth are now gone. Groundwater sources are being depleted rapidly. Biodiversity has been deeply eroded.”
As a result, “planetary boundaries may well be surpassed, if current trends continue,” cautions FAO Director-General José Graziano da Silva in his introduction to the report.
By 2050 humanity’s ranks will likely have grown to nearly 10 billion people. In a scenario with moderate economic growth, this population increase will push up global demand for agricultural products by 50 per cent over present levels, intensifying pressures on already-strained natural resources, The Future of Food and Agriculture projects.
At the same time, the report continues, greater numbers of people will be eating fewer cereals and larger amounts of meat, fruits, vegetables and processed food — a result of an ongoing global dietary transition that will further add to those pressures, driving more deforestation, land degradation, and greenhouse gas emissions.
Alongside these trends, the planet’s changing climate will throw up additional hurdles. “Climate change will affect every aspect of food production,” the report says. These include greater variability of precipitation and increases in the frequency of droughts and floods.
The core question raised by the new FAO report is whether, looking ahead, the world’s agriculture and food systems are capable of sustainably meeting the needs of a burgeoning global population.
The short answer? Yes, FAO says, the planet’s food systems are capable of producing enough food to do so, and in a sustainable way, but unlocking that potential – and ensuring that all of humanity benefits – will require “major transformations.”
According to the report, without a push to invest in and retool food systems, far too many people will still be hungry in 2030 — the year by which the new Sustainable Development Goals (SDG) agenda has targeted the eradication of chronic food insecurity and malnutrition, the report warns.
“Without additional efforts to promote pro-poor development, reduce inequalities and protect vulnerable people, more than 600 million people would still be undernourished in 2030,” it says. In fact, the current rate of progress would not even be enough to eradicate hunger by 2050.
Where Will Our Food Come From?
Given the limited scope for expanding agriculture’s use of more land and water resources, the production increases needed to meet rising food demand will have to come mainly from improvements in productivity and resource-use efficiency, says FAO.
However there are worrying signs that yield growth is leveling off for major crops. Since the 1990s, average increases in the yields of maize, rice, and wheat at the global level generally run just over 1 percent per annum, the report notes.
To tackle these and the other challenges outlined in the report, “business-as-usual” is not an option, The Future of Food and Agriculture argues.
“Major transformations in agricultural systems, rural economies and natural resource management will be needed if we are to meet the multiple challenges before us and realize the full potential of food and agriculture to ensure a secure and healthy future for all people and the entire planet,” it says.
“High-input, resource-intensive farming systems, which have caused massive deforestation, water scarcities, soil depletion and high levels of greenhouse gas emissions, cannot deliver sustainable food and agricultural production,” adds the report.
More With Less
The core challenge is to produce more with less, while preserving and enhancing the livelihoods of small-scale and family farmers, and ensuring access to food by the most vulnerable.
“For this, a twin-track approach is needed which combines investment in social protection, to immediately tackle undernourishment, and pro-poor investments in productive activities — especially agriculture and in rural economies — to sustainably increase income-earning opportunities of the poor. “
According to the UN body, the world will need to shift to more sustainable food systems which make more efficient use of land, water and other inputs and sharply reduce their use of fossil fuels, leading to a drastic cut of agricultural green-house gas emissions, greater conservation of biodiversity, and a reduction of waste.
This will necessitate more investment in agriculture and agri-food systems, as well as greater spending on research and development, the report says, to promote innovation, support sustainable production increases, and find better ways to cope with issues like water scarcity and climate change, it underlines.
Along with boosting production and resilience, equally critical will be creating food supply chains that better connect farmers in low- and middle-income countries to urban markets — along with measures which ensure access for consumers to nutritious and safe food at affordable prices, such as such as pricing policies and social protection programs, it says.
On this, Kostas Stamoulis, FAO Assistant Director General for Economics and Social Development, said a media briefing, when asked about the most important challenge of tomorrow regarding food and agriculture, said that it is climate change. “This demands change in practice of agriculture and developing agriculture that is more adaptable to climate change.”
Kostas Stamoulis and the other two authors of the report, Rob Vos, Director of the Agriculture Economics Development Division, and Lorenzo Bellu, Team Leader, Global Perspective Studies, organised on Feb. 21, a briefing session for the media to explain the key issues the new document incudes.
Top Trends and Challenges
The FAO report identifies 15 trends and 10 challenges affecting the world’s food systems:
• _A rapidly increasing world population marked by growth “hot spots,” urbanization, and aging
• _Diverse trends in economic growth, family incomes, agricultural investment, and economic inequality.
• _Greatly increased competition for natural resources
• _Climate change
• _Plateauing agricultural productivity
• _Increased conflicts, crises and natural disasters
• _Persistent poverty, inequality and food insecurity
• _Dietary transition affecting nutrition and health
• _Structural changes in economic systems and employment implications
• _Increased migration
• _Changing food systems and resulting impacts on farmers livelihoods
• _Persisting food losses and waste
• _New international governance mechanisms for responding to food and nutrition security issues
• _Changes in international financing for development.
• _Sustainably improving agricultural productivity to meet increasing demand
• _Ensuring a sustainable natural resource base
• _Addressing climate change and intensification of natural hazards
• _Eradicating extreme poverty and reducing inequality
• _Ending hunger and all forms of malnutrition
• _Making food systems more efficient, inclusive and resilient
• _Improving income earning opportunities in rural areas and addressing the root causes of migration
• _Building resilience to protracted crises, disasters and conflicts
• _Preventing trans-boundary and emerging agriculture and food system threats
• _Addressing the need for coherent and effective national and international governance
By Kitty Stapp
SRINAGAR, Feb 22 2017 (IPS)
Mudasir Ahmad says that two decades ago, his father made a prophecy that the lake would vanish after the fish in its waters started dying. Three years ago, he found dead fish floating on the surface, making him worried about its fate.
Like his father, Ahmad, 27, is a boatman on Kashmir’s famed Nigeen Lake, located north of Kashmir’s capital, Srinagar. He says the lake has provided a livelihood to his family for generations, but now things are taking an “ugly turn”.“The floods of September 2014 wreaked havoc and caused heavy loss to property and human lives. That was the first signal of how vulnerable have we become to natural disasters due to environmental degradation." --Researcher Aabid Ahmad
The gradual algae bloom in the lake, otherwise known for its pristine beauty, led to oxygen depletion. Fish began to die. Environmentalists termed the development the first visible signs of environmental stress in the lake.
But no one was more worried than Mudasir himself. “We have been rowing boats on the lake for centuries. My grandfather and my father have been fed by this lake. I also have grown up here and my livelihood is directly dependent on the lake,” Ahmad told IPS.
He believes the emergence of rust-coloured waters is the sign of the lake dying a silent death, and he holds everyone responsible. “We have built houses in an unprecedented way around its banks. The drainage from the households directly drifts into the lake, making it more polluted than ever,” Ahmad said.
Blessed with over 1,000 small and large water bodies, the landlocked Kashmir Valley, located northern India, is known as the land of lakes and mountains. However, due to large scale urbanization and unprecedented deforestation, most of the water bodies in the region have disappeared.
A recent study by Kashmir’s renowned environmentalists Gowher Naseem and Humayun Rashid found that 50 percent of lakes and wetlands in the region’s capital have been lost to other land use/land cover categories. During the last century, deforestation led to excessive siltation and subsequent human activity brought about sustained land use changes in these assets of high ecological value.
The study concludes that the loss of water bodies in Kashmir can be attributed to heavy population pressures.
Research fellow at Kashmir University, Aijaz Hassan, says the Kashmir Valley was always prone to floods but several water bodies in the region used to save the local population from getting marooned.
“All the valley’s lakes and the vast associated swamps played an important role in maintaining the uniformity of flows in the rivers. In the past, during the peak summers, whenever the rivers would flow high, these lakes and swamps used to act as places for storage of excessive water and thereby prevented large areas of the valley from floods,” Hassan said.
India’s largest freshwater lake, Wullar Lake, is located in North Kashmir’s Bandipora area. It too is witnessing severe degradation due to large-scale human intervention. Wullar Lake, which claimed an area of 217.8 sq. km in 1911, has been reduced to about 80 sq. km today, with only 24 sq. km of open water remaining.
Environmentalist Majid Farooq says large areas of the lake have been converted for rice cultivation and tree plantations. According to him, pollution from fertilizers and animal waste, hunting pressure on waterfowl and migratory birds, and weed infestation are other factors contributing to the loss of Wullar Lake’s natural beauty. The fish population in the lake has witnessed a sharp decline due to depletion of oxygen and ingress of pollutants.
Another famed lake known as Dal Lake has shrunk by 24.49 per cent in the past 155 years and its waters are becoming increasingly polluted.
The lake, according to research by the University of Kashmir’s Earth Science Department, is witnessing “multiple pressures” from unplanned urbanisation, high population growth and nutrient load from intensive agriculture and tourism.
Analysis of the demographic data indicated that the human population within the lake areas had shown “more than double the national growth rate.”
Shakil Ahmad Ramshoo, head of Department of Earth Sciences at University of Kashmir, told IPS that the water quality of the lake is deteriorating and no more than 20 percent of the lake’s water is potable.
“As the population increased, all the household sewage, storm runoff goes into the Dal Lake without any treatment — or even if there is treatment done, it is very insufficient. This has increased the pollutant load of the Dal Lake,” he said.
According to Ramshoo, when the study compared the past water quality of the lake with the present, it found ingress of the pollutants has increased and the lake water quality has deteriorated significantly.
According to the region’s tourism department, over one million tourists visit Dal Lake annually and around 300,000 people are directly and indirectly dependent on the lake for their livelihood. The multimillion-dollar handicrafts industry of Kashmir, which gives employment to over 200,000 people, is also heavily dependent upon the arrival of tourists in the region.
A study on the Impact of Tourism Industry on Economic Development of Jammu and Kashmir says that almost 50-60 percent of the total population of Jammu and Kashmir is directly or indirectly engaged in tourism related activities. The industry contributes 15 percent to the state’s GDP.
However, Mudasir Ahmad, whose livelihood is directly dependent on the lake, says every time he takes tourists to explore the lake in his Shikara (a boat), he is asked about the murkier water quality.
“My grandfather and even my father used to drink from this lake. The present situation is worrisome and if this goes unabated, tourists would cease to come. Who would spend money to see cesspools?” Ahmad said.
Fayaz Ahmad Khanday, a fisherman living on Wullar Lake, says the fish production has fallen drastically in the last three years, affecting both him and hundreds of other fishermen.
“Fish used to be present in abundance in the lake but now the scarcity of the species is taking toll. Every day we see dead fish floating on the lake’s waters. We really are concerned about our livelihood and the fate of the lake as well,” Khanday lamented.
The fisherman holds unplanned construction around the lake responsible for its pollution. Aabid Ahmad, a research scholar in Environmental Studies, says Kashmir has become vulnerable to natural disasters as region’s most of the water bodies have either disappeared or are shrinking.
“The floods of September 2014 wreaked havoc and caused heavy loss to property and human lives. That was the first signal of how vulnerable have we become to natural disasters due to environmental degradation,” Ahmad told IPS.
But, for Shakeel Ramshoo, it is still possible to restore the lakes and water bodies of Kashmir.
“Don’t move the people living on these water bodies out. You just allow them to stay in the lake. We have to control the haphazard constructions that are taking toll around these water bodies,” he said.
“Hutments in the water bodies should be densified with STPs (Sewage Treatment Plants) installed in every household. Land mass can be removed and the area of the water bodies would increase. Also, the sewage treatment mechanism should be better so that the ingress of pollutants is ceased,” Ramshoo said.Related Articles
By Roberto Savio
ROME, Feb 21 2017 (IPS)
Let us stop debating what newly-elected US President Trump is doing or might do and look at him in terms of historical importance. Put simply, Trump marks the end of an American cycle!
The United States emerged from the Second World War as the main winner and founder of what became the major international institutions – from the United Nations to the World Bank and the International Monetary Fund (IMF) – with Europe reduced to the role of follower. In fact, under the Marshall Plan, the United States became the force behind the post-war reconstruction of Europe.
As winner, the main interest of the United States was to establish a ‘world order’ based on its values and acting as guarantor of the ‘order’.
Thus the United Nations was created with a Security Council in which it could veto any resolution, and the World Bank was created with the US dollar as the world’s currency, not with a real world currency as British economist and delegate John Maynard Keynes had proposed. The creation of the North Atlantic Treaty Organisation (NATO) – as a response to any threat from the Soviet Union – was an entirely American idea.
The lexicon of international relations was largely based on Anglo-Saxon words, and often difficult to translate into other languages – terms such as accountability, gender mainstreaming, sustainable development, and so on. French and German disappeared as international languages, and lifestyle became the ubiquitous American export – from music to food, films and clothes. All this helped to reinforce American myths.
The United States thrust itself forward as the “model for democracy” throughout the world, based on the implied assertion that what was good for the United States was certainly good for all other countries. The United States saw itself as having an exceptional destiny based on its history, its success and its special relationship with God. Only US presidents could speak on behalf of the interests of humankind and invoke God.
The economic success of the United States was merely confirmation of its exceptional destiny – but the much touted American dream that anyone could become rich was unknown elsewhere.
The first phase of US policy after the Second World War was based on multilateralism, international cooperation and respect for international law and free trade – a system which assured the centrality and supremacy of the United States, reinforced by its military might,
The United Nations, which grew from its original 51 countries in 1945 to nearly 150 in just a few decades, was the forum for establishing international cooperation based on the values of universal democracy, social justice and equal participation.
In 1974, the UN General Assembly unanimously adopted the Charter of Economic Rights and Duties of States – the first (and only) plan for global governance – which called for a plan of action to reduce world inequalities and redistribute wealth and economic production. But this quickly became to be seen by the United States as a straitjacket.
The arrival of Ronald Reagan at the White House in in1981 marked an abrupt change in this phase of American policy based on multilateralism and shared international cooperation. A few months before taking office, Reagan had attended the North-South Economic Summit in Cancun, Mexico, where the 22 most important heads of state (with China as the only socialist country) had met to discuss implementation of the General Assembly resolution.
Reagan, who met up with enthusiastic British Prime Minister Margaret Thatcher, stopped the plan for global governance dead in its tracks. I was there and saw how, to my dismay, the world went from multilateralism to the old policy of power in just two days. The United State simply refused to see its destiny being decided by others – and that was the start of the decline of the United Nations, with the United States refusing to sign any international treaty or obligation.
America’s dream and its exceptional destiny were strengthened by the rhetoric of Reagan who even went as far as slogan sing “God is American”.
It is important to note that, following Reagan’s example, all the other major powers were happy to be freed of multilateralism. The Reagan administration, allied with that of Thatcher, provided an unprecedented example of how to destroy the values and practices of international relations and the fact that Reagan has probably been the most popular president in his country’s history shows the scarce significance that the average American citizen gives to international cooperation.
Under Reagan, three major simultaneous events shaped our world. The first was deregulation of the financial system in 1982, later reinforced by US President Bill Clinton in 1999, which has led to the supremacy of finance, the results of which are glaringly evident today.
The second was the creation in 1989 of an economic vision based on the supremacy of the market as the force underpinning societies and international relations – the so-called Washington Consensus – thus opening the door for neoliberalism as the undisputed economic doctrine.
Third, also in 1989, came the collapse of the Berlin Wall and the end of the “threat” posed by the Soviet bloc.
It was at this point that the term “globalisation” became the buzzword, and that the United States was once again going to be the centre of its governance. With its economic superiority, together with the international financial institution which it basically controlled, plus the fact that the Soviet “threat” had now disappeared, the United States was once again placing itself at the centre of the world.
As Henry Kissinger, Secretary of State under presidents Richard Nixon and Gerald Ford, once said, “Globalisation is another term for U.S. domination.”
This phase ran from 1982 until the financial crisis of 2008, when the collapse of American banks, followed by contagion in Europe, forced the system to question the Washington Consensus as an undisputable theory.
Doubts were also being voiced loudly through the growing mobilisation of civil society /the World Social Forum, for example, had been created in 1981) and by the offensive of many economists who had previously remained in silence.
The latter began insisting that macroeconomics – the preferred instrument of globalisation – looked only at the big figures. If microeconomics was used instead, they argued, it would become clear that there was very unequal distribution of growth (not to be confused with development) and that delocalisation and other measures which ignored the social impact of globalisation, were having disastrous consequences.
The disasters created by three centuries of geed as the main value of the “new economy” were becoming evident through figures showing an unprecedented concentration of wealth in a few hands, with many victims – especially among the younger generation.
All this was accompanied by two new threats: the explosion of Islamic terrorism, widely recognised as a result of the invasion of Iraq in 2003, and the phenomenon of mass migration, which largely came after the Iraq war but multiplied after the interventions in Syria and Libya in 2011, and for which the United States and the European Union bear full responsibility.
Overnight, the world passed from greed to fear – the two motors of historical change in the view of many historians.
And this is brings us to Mr. Trump. From the above historical excursion, it is easy to understand how he is simply the product of American reality.
Globalisation, initially an American instrument of supremacy, has meant that everyone can use the market to compete, with China the most obvious example. Under globalisation, many new emerging markets entered the scene, from Latin America to Asia. The United States, along with Europe, have become the victims of the globalisation which both perceived as an elite-led phenomenon.
Let us not forget that, after the collapse of the Berlin Wall, ideologies were thrown by the wayside. Politics became mere administrative competition, devoid of vision and values. Corruption increased, citizens stopped participating, political parties became self-referential, politicians turned into a professional caste, and elite global finance became isolated in fiscal paradises.
Young people looked forward to a future of unemployment or, at best temporary jobs, at the same time as they watched over four trillion dollars being spent in a few years to save the banking system.
The clarion call from those in power was, by and large, let us go back to yesterday, but to an even better yesterday – against any law of history. Then came Brexit and Trump.
We are now witnessing the conclusion of Pax Americana and the return to a nationalist and isolationist America. It will take some time for Trump voters to realise that what he is doing does not match his promises, that the measures he is putting in place favour the financial and economic elites and not their interests.
We are now facing a series of real questions.
Will the ideologue who helped Trump be elected – Stephen Bannon, chief executive officer of Trump’s presidential campaign – have the time to destroy the world both have inherited Will the world will be able to establish a world order without the United States at its centre? How many of the values that built modern democracy will be able to survive and become the bases for global governance?
A new international order cannot be built without common values, just on nationalism and xenophobia.
Bannon is organising a new international alliance of populists, xenophobes and nationalists – made up of thee likes of Nicholas Farage (United Kingdom), Matteo Salvini and Beppe Grillo (Italy), Marine Le Pen (France) and Geert Wilders (Netherlands) – with Washington as their point of reference.
After the elections in the Netherlands, France and Germany this year, will know how this alliance will fare, but one thing is clear – if, beyond its national agenda, the Trump administration succeeds in creating a new international order based on illiberal democracy, we should start to worry because war will not be far away.
By Jomo Kwame Sundaram
KUALA LAMPUR, Feb 21 2017 (IPS)
Unlike Wikileaks and other exposes, the Panama revelations were carefully managed, if not edited, quite selective, and hence targeted, at least initially. Most observers attribute this to the political agendas of its main sponsors. Nevertheless, the revelations have highlighted some problems associated with illicit financial flows, as well as tax evasion and avoidance, including the role of enabling governments, legislation, legal and accounting firms as well as shell companies.
The Panama Papers help us understand how shell companies and trusts operate. The documents, from the law firm Mossack Fonseca, involved 210,000 legal entities. The Panama-based law firm has worked with some of the world’s biggest banks — including HSBC, Société Générale, Credit Suisse, UBS and Commerzbank — to set up thousands of offshore companies to circumvent tax and law enforcement authorities worldwide.
The accounts enabled by just one law firm in Panama is the tip of a massive iceberg still hidden from public view as many other such firms in different locations provide similar services. High net-worth individuals and corporations have a far greater ability to evade taxes by paying tax advisers, lawyers and accountants, and by opening undeclared companies and financial accounts in low-tax jurisdictions. The expose shows that the firm aided public officials, their cronies and large corporations to avoid taxes.
Not surprisingly, Mossack Fonseca claims it has never been accused or charged in connection with criminal wrongdoing. This only underscores the fact that Panama’s financial regulators, police, judiciary and political system are very much part of the system. Similarly, many clients believe that they have not violated national and international regulations.
‘Offshore’ tax havens
Total global wealth was estimated, by a 2012 Tax Justice Network (TJN) USA report, entitled The Price of Offshore Revisited, at US$231 trillion in mid-2011; this was roughly 3.5 times the global GDP of US$65 trillion in 2011. It conservatively estimated that, of this, US$21 to US$32 trillion of hidden and stolen wealth has been stashed secretly, ‘virtually tax-free’, in and ‘through’ more than 80 secret jurisdictions.
According to Oxfam, at least US$18.5 trillion is hidden in undeclared and untaxed tax havens worldwide, with two thirds in the European Union, and a third in UK-linked sites. After the Panama Papers leak, Oxfam revealed that the top 50 US companies have stashed US$1.38 trillion offshore to minimize US tax exposure. The 50 companies are estimated to have earned some US$4 trillion in profits across the world between 2008 and 2014, but have only paid 26.5 per cent of it in US tax.
In a 5 April 2016 speech, following the US Treasury’s crackdown on corporate tax ‘inversions’, US President Obama criticized ‘poorly designed’ laws for allowing illicit money transfers worldwide. He noted that “Tax avoidance is a big, global problem…a lot of it is legal, but that’s exactly the problem”.
It was also estimated that this costs poor countries over US$100 billion in lost tax revenues every year. Oxfam also found that tax dodging by transnational corporations alone costs the developing world between US$100 to US$160 billion yearly. If ‘profit shifting’ is taken into account, about US$250 to US$300 billion is lost. After all, many countries and institutions actively enable—and profit handsomely from—the theft of massive funds from developing countries.
More so now than ever before, the term ‘offshore’ for tax havens refers less to physical locations than to virtual ones, often involving “networks of legal and quasi-legal entities and arrangements”. Private banking ‘money managers’ provide all needed services — including financial, economic, legal, accounting and insurance services — to facilitate such practices, making fortunes for themselves by doing so. Thousands of shell banks and insurers, 3.5 million paper companies, more than half the world’s registered commercial ships over 100 tons, and tens of thousands of ‘shell’ subsidiaries of giant global banks, accounting firms and various other companies operate from such locations.
Reforming tax havens?
In recent years, amid increased public scrutiny, the global tax haven landscape has changed. The Organization of Economic Cooperation and Development (OECD), the Paris-based club of rich nations, has been developing a global transparency initiative to crack down on tax haven secrecy. But Panama is refusing to participate seriously, with the OECD tax chief calling it a jurisdiction “that welcomes crooks and money launderers”.
To qualify for the OECD’s ‘white list’ of approved jurisdictions, almost 100 countries and other jurisdictions have agreed, since 2014, to impose new modest disclosure requirements for international customers. Hence, the Swiss government has now relaxed confidentiality-cum-secrecy provisions, allowing information sharing about illegal or unauthorized deposits with other countries, subject to certain conditions. Consequently, the world of illegal and unaccounted cash has moved in response.
Facilitating tax evasion
Only a handful of nations have declined to sign on. The most prominent is the US. Another is Panama. As Panama has dodged, delayed and diluted compliance with OECD regulations, many accounts moved to Panama from other signatory tax havens. As Bloomberg noted earlier in 2016, “Panama and the U.S. have at least one thing in common: Neither has agreed to new international standards to make it harder for tax evaders and money launderers to hide their money.”
Rothschild, the centuries-old European financial institution, is now moving the fortunes of wealthy foreign clients out of offshore havens subject to the new international disclosure requirements, to Rothschild-run trusts in Nevada, which are exempt.
It has acknowledged that the US itself is the world’s single greatest tax haven, while the UK plays a disproportionately greater role as a tax haven, considering the smaller size of its population and economy. A TJN study found that the US continues to facilitate financial secrecy and tax evasion. “Due to lax requirements…, it is far easier to set up an anonymous shell company in the US than it is in well-known tax havens”, according to the Financial Transparency Coalition.
The US does not accept a lot of international standards, and can get away with it because of its economic and political clout, but is probably the only country that can continue to do that. It has taken steps to keep track of American assets abroad, but not of foreign assets in the US.
By Dr. Hanif Hassan Al Qassim
GENEVA, Feb 21 2017 (IPS)
The distressing images of desperate people making the treacherous journey across the Mediterranean Sea and the Balkans to escape armed conflict, social tensions, discrimination and poverty harm the preconditions to achieve social harmony.
What remains today of the peace and its dividends that were supposed to accrue to the poorer countries as a consequence of the ending of the East-West conflict?
The proliferation of armed conflicts, particularly in the Middle East, further undermine the well-being of societies.
According to the United Nations High Commissioner for Refugees (UNHCR), more than 4 million people have left Syria owing to the continued violence in the country. The majority of them live now in shelters and camps as internally displaced persons scattered throughout the region in countries such as Turkey, Lebanon and Jordan.
The world has not witnessed mass exodus of this proportion since the end of World War II.
As the Chairman of the Geneva Centre for Human Rights Advancement and Global Dialogue (Geneva Center), I participated as a panel member in a side-event that was held 06 December 2016 by the Geneva Centre in relation to the 30th anniversary of the adoption of the 1986 Declaration on the Right to Development.
During our panel deliberation, I observed that structural violence and the ongoing-armed conflicts and displacement were in contradiction with the vision expressed by the Declaration on the Right to Development.
The negative impact of violence tramples both human rights to life and to development.
Widening income equality also gives rise to social tensions that destabilize societies. Lack of employment opportunities stifle economic growth and result in poverty, which give rise to unemployment and social tensions.
Addressing social tensions requires adopting measures to eradicate poverty, ensure the promotion of employment and decent work, and eliminate the root-causes of inequality. By inequality, one should refer to both inequality in access to public goods, to income and gender inequality.
The realization of the Sustainable Development Goals (SDGs) is a good starting-point. SDG 10 stipulates the need to reduce inequality between and within countries. SDG 8 similarly reminds the world of the importance of promoting sustained, inclusive and sustainable economic growth to eradicate inequality. Lastly, SDG 5 specifies the need to achieve gender equality and empower all women and girls through the elimination of violence and discrimination.
The 2030 Agenda is a bold roadmap for states to foster social cohesion and social harmony.
Another cause of social tension is the application of universal coercive measures. Such measures are discriminatory and hinder the capacity of governments to execute their functions in the interest of their citizens, and very often target the vulnerable segments of populations rather than the elites.
The denial of access to technology, food and patented medicines negatively affects the enjoyment of basic human rights.
Indeed, social development is central to the needs and aspirations of people throughout the world. The aim is to live in a peaceful, just and equitable society that ensures the fair distribution of income, access to resources and equality of opportunities for all.
We need to seize the opportunity to address the causes of social instability and economic backsliding. People must be empowered so as to enable them to realize their potential and take ownership of their destinies.
Identifying, addressing and eradicating the root-causes of social injustice will enable us to promote a more equitable development that puts the human being at the centre, and creates synergies between societal development and human security.
Addressing social injustice is in our common interest to promote a more sustainable international order.
I would like to end this statement by sharing a quote from Martin Luther King Jr:
“Injustice anywhere is a threat to justice everywhere.”
By Renu Kshetry
KATHMANDU, Feb 21 2017 (IPS)
Juna Bhujel of Sindupalchowk District, 85 kilometres northeast of Nepal’s capital Kathmandu, lost her daughter-in-law in the Apr. 25, 2015 earthquake. Fortunately, she managed to rescue her two-year-old grandson, who was trapped between her mother’s body and the rubble.
Soon after the devastating earthquake, her son, the family’s sole bread-winner, left for Malaysia to seek work, taking out a loan with high interest rates to fund his trip. He has neither returned, nor sent any money back home.“Since 65 percent of the total income of Nepali people goes to food consumption, these programs should be linked with food security." --Janak Raj Joshi, former vice chairman of the Poverty Alleviation Fund
Bhujel, a member of the Mankha Village Development Committee (VDC), now lives in a makeshift dwelling with a family of five. Their only source of income is when her husband gets menial work in home construction. To make matters worse, she has not received any money from the government to build a house.
“I was already poor, with a small plot of land that produced enough food for only three months, and now I don’t even have a house,” said Bhujel, 55. “If my government does not support me, then who will?”
Bhujel is just one of tens of thousands of earthquake victims who lost their family members and homes, but are still waiting to be formally identified as “poor” by the government.
Nepal has set a target of reducing poverty to five percent by 2030, per the U.N.’s Sustainable Development Goals. In this central Himalayan country, 25.2 percent of the population now lives below the national poverty line.
The government is planning to distribute Poor Identity Cards to 395,000 families in 25 districts starting in April, providing social security entitlements and benefits with the aim of achieving the targets.
Hriday Ram Thani, Minister for Cooperatives and Poverty Alleviation, told IPS that with this new identity card, the government will be able to implement more concentrated programs. The ministry is planning to expand the distribution of identity cards to 50 more districts. Nepal has 75 districts.
But the government’s ambitious plans to alleviate poverty face the challenge of weak programming, planning and coordination between various line ministries to successfully implement the proposed programs.
Nepal already has 44 programs to alleviate poverty run by various ministries. For example, the Poverty Alleviation Constituency Development Program run by the Ministry of Federal Affairs and Local Development has a budget of Rs one billion (9.29 million dollars), and the 9,290,000.00 USD 9,290,000.00 USDPoverty Alleviation Fund under the Prime Minister’s office has a Rs 3.82 billion (2.6 million) budget for this year.
The Youth Employment Fund under the Finance Ministry has Rs 90 million (836,100 dollars), and the Poor with Bishweswor program under the Ministry of Local Development has Rs 160 million (1.486 million) for this year with the mandate to run programs in 483 VDCs in 75 districts.
While the Youth Council Program aims to provide one industry per 10 youth under the Ministry of Youth and Sports, the Rural Independent Fund run by Nepal Rastra Bank under the Ministry of Agriculture and Livestock also has a similar aim to reduce poverty.
Minister Thani said that in order to achieve the target and make it more results-oriented, he has already asked Prime Minister Pushpa Kamal Dahal to integrate all these poverty-related projects so that the outcome can be measured — or else to close down the ministry.
“Apart from results documented in reports from any of these ministries, the impact cannot be observed in any of their target areas,” he said.
He added that there is a need to establish a high-level poverty alleviation board under the chairmanship of the prime minister and the Poverty Alleviation Ministry should be the focal ministry that links all the projects under various ministries. “There is a need for an internal expert team within the ministry with 3-5 subject group experts,” he said.
While the Poverty Ministry is complaining about a lack of programs and projects, high-level officials at National Planning Commission said that since poverty is a cross-cutting issue, all the ministries are running their own programs and discussions are being held with the Poverty Ministry on how to integrate these programs.
Apart from these initiatives, about two to three percent of the government budget is spent on nine categories of Social Security Entitlements each year for 8 percent of the total population.
Janak Raj Joshi, former vice chairman of the Poverty Alleviation Fund, said that it is sad that the government’s programs have been expanding but failed to go deeper and lack sustainability. He also blamed various international organisations for launching time-bound poverty alleviation projects.
“Since 65 percent of the total income of Nepali people goes to food consumption, these programs should be linked with food security,” he said. “The government lacks a vision of proper distribution of resources and the programs have failed to address the core issues. Each program should directly link to the people living under the poverty line.”
Around two-thirds of Nepalis rely on agriculture for their livelihood, according to the U.N. Food and Agriculture Organisation (FAO). The National Planning Commission (NPC) aims to introduce various programs to help improve the overall development of agriculture from this year.
Mahesh Kharel, Under-Secretary of the NPC’s Poverty Alleviation Division, said that they have planned an Agriculture Development Strategy from this year. He said that under the prime minister’s chairmanship, the project will focus on agriculture, infrastructure, local development and agricultural roads, livestock and irrigation to promote marketing of agricultural goods.
The government has allotted Rs 58 billion (541 million dollars) for the project. Similarly, the government has also allotted Rs six billion (56 million) to focus on an Agriculture Modernization Project. The program has already started in Kailali, Jhapa and Bara districts, where super zones of wheat, rice and fish have been announced.
Kharel agreed that poverty alleviation needs an integrated approach with some focused programs that directly affect the poor and bring positive changes to their lives. “By making improvements in the agriculture sector, we can help improve the living standards of people living under the poverty line,” he said.Related Articles
By Editor, UNESCO
PARIS, Feb 20 2017 (UNESCO)
Irina Bokova, the Director-General of UNESCO, will name Iraqi composer and oud virtuoso Naseer Shamma as a UNESCO Artist for Peace in a ceremony at UNESCO Headquarters on 23 February (6.30 pm).
Mr Shamma is appointed “in recognition of his commitment to support the musical education of young people in Iraq and beyond, his unfailing efforts to promote the message of peace through his performances and his dedication to the universal ideals and aims of the Organization”.
In his capacity as a UNESCO Artist for Peace, Mr Shamma will support UNESCO’s work on education for peace among young people as well as the safeguarding of cultural heritage in Iraq and in the region.
Born in El Koute (Iraq) in 1963, Naseer Shamma is celebrated both as an oud performer and as a composer of music for film, television and the theatre. A graduate of the Baghdad Music Academy, Mr Shamma heads the Arab Oud House in Cairo, which he founded in 1999.
Through his numerous tours, discs and publications, Mr Shamma has won appreciation for the oud and for the rich repertoire of Arabic music well beyond the Arab world. He has also worked in association with leading western artists such as US jazz musician Wynton Marsalis.
Naseer Shamma is also renowned for his commitment to peace, a theme he promotes during musical performances, particularly with young audiences. He has created humanitarian associations such as “The Flower Road” and Ahlma to help children and displaced people. Since 2012, he has organized many concerts in Baghdad, particularly during the International Day of Peace celebrated on 21 September.
UNESCO Artists for Peace are internationally renowned personalities who use their influence, charisma and prestige to help promote UNESCO’s message and programmes. UNESCO works with these distinguished personalities to heighten the public’s awareness of key development issues and inform it of the Organization’s action in these fields.
By Thalif Deen
UNITED NATIONS, Feb 20 2017 (IPS)
Pointing out an example of the hierarchy of political power at the United Nations, a former Nigerian ambassador once told a group of reporters of an encounter at an international gathering in Africa when he ran into one of his friends who had returned from a visit to New York.
When his friend explained that he really meant the UN Secretary-General (SG) whom he had met during his visit to the UN, the envoy shot back: “He is not my boss. I am his boss.”
And the Nigerian envoy was dead on target.
But most outsiders, however, do not realise the limitations and restrictions under which a Secretary-General operates.
A creature of the world body’s 193 member states, the Secretary-General is really the Chief Administrative Officer (CAO) of the United Nations and has to do the bidding of member states— particularly on politically sensitive issues and on senior appointments.
And he rarely, if ever, defies the five veto-wielding permanent members (P-5), namely the US, Britain, France, Russia and China, whose nationals traditionally hold some of the most senior positions in the UN Secretariat— jobs doled out mostly under political pressure.
The current Secretary-General Antonio Guterres, who took office in January, was a two-time Prime Minister of Portugal (1995-2002) and the first and only UN chief who was a former head of government.
And Prime Ministers, protocol-wise, are known to exercise vast political powers in their home countries – and rarely known to take orders from others.
Still, one of Guterres’ early appointments – of the former Palestinian Authority Prime Minister Salam Fayyad as the Secretary General’s Special Representative in Libya – was unceremoniously shot down by US Ambassador Nikki Haley, purely because he was a Palestinian.
A visibly disappointed Guterres told reporters last week: “I think it was a serious mistake. I think that Mr. Fayyad was the right person in the right place at the right time, and I think that those who will lose will be the Libyan people and the Libyan peace process.”
“And I believe that it is essential for everybody to understand that people serving the UN are serving in their personal capacities. They don’t represent a country or a government – they are citizens of the world representing the UN Charter and abiding by the UN Charter,” he said pointedly directing his answer at Haley.
Asked to comment on the issue of limits of power exercised by a Secretary-General, Ambassador Anwarul Chowdhury of Bangladesh, a former UN High Representative and Under-Secretary-General, told IPS that “essentially there are four main constraints to the effectiveness of the Secretary-General”.
Firstly, veto and veto-wielding members of the Security Council, which influences matters in all areas of UN system’s work; secondly, promises and commitments made by the Secretary-General as a candidate to secure his election; thirdly, aspiration to get re-elected for a second term from day one of the first term; and, fourthly, the labyrinthine UN bureaucracy, said Chowdhury, who was one of the senior UN officials in former Secretary-General Kofi Annan’s cabinet and management team.
The late Boutros Boutros-Ghali of Egypt, who had a running battle with senior US officials, and particularly with US Ambassador Madeleine Albright, was the only Secretary-General who was denied a second five-year term.
At a Security Council meeting, 14 of the 15 members voted to give him a second term. But the US cast the single veto punishing him for his defiance, and making a mockery of the concept of majority rule– and an overwhelming majority in this case– which it preaches to the rest of the world.
The right course of action for the US would have been to abstain on that vote and respect the views of the remaining 14 members. But it never did.
Martin Edwards, Associate Professor in the School of Diplomacy and International Relations at Seton Hall University, told IPS: “I think this is a learning process for Guterres in how to work with the new administration.”
The storm over Fayyad will blow over, and it’s clear that the party that loses most here isn’t Guterres, but the White House, which now looks petulant, said Edwards whose expertise includes International Organizations and International Political Economy.
He pointed out that the more intriguing development lies in the appointments announced last Tuesday.
Both Jeffrey Feltman of the US (renewed mandate as Under-Secretary-General for Political Affairs) and Jean-Pierre Lacroix of France (Under-Secretary-General for Peacekeeping Operations) are one-year appointments, setting up potential jockeying with the US and France over these offices next year.
“So these are early days as Guterres seeks to build his team,” he noted.
Asked if the nomination of Fayyad was based on consultations with all of the members of the Security Council, UN Deputy Spokesman Farhan Haq told reporters last week: “We do consult broadly in the course of make appointments, and based on the understanding he had at the time, he believed he could go forward.”
Asked if Guterres spoke personally with Ambassador Haley regarding this nomination, he said: “I can’t characterize the full range of discussions he had. Like I said, he did… he and the Secretariat did consult prior to this, and we believed we had the understandings in hand. We… but we did not.”
Clarifying further, Haq said the Security Council is consulted on all appointments having to do with senior officials who report directly to the Security Council or carry out its mandates.
“So, that is part of the standard procedure in which all of the 15 members of the Security Council have a say. Regarding where we go forward from here, the Secretary General will continue his consultations. We’ll let you know of an appointment once something is decided.”
Asked if Guterres’ power or reputation — is diminished by the Fayyad incident, and whether it was embarrassing for him personally and a blow to his credibility, Haq said: “I don’t think it should be a blow to his credibility. I think it’s really suggested there is a problem where people’s perceptions should not blind them to the actual qualifications of a person for the job.”
In a wide-ranging IPS oped piece before the election of Guterres last year Chowdhury said: “Like any leader of an organization, the UN leader’s success or absence of it depends on his team. That is another area I belief needs a total overhaul in UN. It is long overdue.”
As in the case of any new corporate Chief Executive Officer, each time the UN’s Chief Administrative Officer – that is how the S-G is described in the UN Charter – gets elected or re-elected, interested quarters wonder whether he will introduce any new guidelines on senior appointments, and will he be subject to pressure from the big powers — as it happened with his predecessors?
In that context, he said, it is strongly felt that the UN’s so-called political appointments of Assistant-Secretaries-General (ASG) and Under-Secretaries-General (USG), should be more transparent and open.
The pressures from Member States and personal favoritism have made the UN Charter objective of “securing the highest standards of efficiency, competence and integrity” (article 101.3) almost impossible to achieve, he added.
It is also to be kept in mind that for his own appointment, the incoming Secretary-General makes all kinds of deals – political, organizational, personnel and others. And those are to be honored during first years in office, said Chowdhury, a former chairman of the UN’s Administrative and Budgetary Committee that approved Kofi Annan’s first reform budget.
“That then spills over for the second occasion when he starts believing that a second term is his right, as we have seen in recent years.”
The tradition of all senior management staff submitting their resignations is only notional and window-dressing. The new Secretary-General knows full well that there is a good number of such staff who will continue to remain under the new leadership as they are backed strongly by influential governments. In the process, merit and effectiveness suffer, said Chowdury, initiator of Security Council resolution 1325 underscoring women’s equality of participation.
It is a pity that the UN system is full of appointments made under intense political pressure by Member States individually or as a group. Another aspect of this is the practice of identifying some USG posts for P-5 and big contributors to the UN budget.
“What makes this worse is that individuals to these posts are nominated by their governments, thereby violating article 100 of the UN Charter which says that “In the performance of their duties the Secretary-General and the staff shall not seek or receive instructions from any government or from any other authority external to the Organization.”
“The reality in the Secretariat does not reflect the Charter objectives – I believe it never did.”
One way to avoid that would be to stop nomination and lobbying – formally or informally – for staff appointments giving the S-G some flexibility to select senior personnel based on “competence and integrity”.
Of course, one can point out inadequacies and possible pitfalls of this idea. But, there the leadership of the S-G will determine how he can make effective use of such flexibility being made available to him.
A very negative influence on the recruitment process at the UN, not to speak of senior appointments, has been the pressure of donors – both traditional and new ones – to secure appointments of staff and consultants, mostly through extra-budgetary resources and other funding supports.
This has serious implications for the goals and objectives as well as political mission and direction of the UN in its activities, he noted.
“No Secretary-General would be willing or be supported by the rest of the UN system to undertake any drastic reform of the recruitment process for both the senior management or at other levels. Also, at the end, he has to face the Member States in the General Assembly to get their nod for his reforms,” he declared.
The writer can be contacted at email@example.com
By Tharanga Yakupitiyage
NEW YORK, Feb 20 2017 (IPS)
New restrictions on immigrants and refugees coming to the United States are also posing challenges for foreign correspondents covering news in the United States. Some have had to indefinitely postpone plans to report on conflicts in the Middle East while others have found an unfriendly reminder of their past treatment as journalists in less free countries.
U.S. President Donald Trump’s immigration executive order sent shockwaves throughout the world as citizens from seven Muslim-majority countries and all refugees were barred from entering the country for 90 days and 120 days respectively.
Though the travel ban is temporarily on hold following a court decision to reject its reinstatement, President Trump stood by his policy, calling it “common sense” and promising to keep “the wrong people” out of the U.S. Trump announced Thursday that he would sign a new Executive Order next week which will address some of the legal issues raised by the U.S. courts.
Within the millions affected by the travel ban are journalists, many of whom were caught amidst the chaos and confusion as the initial Executive Order was implemented.
In the wake of the order, BBC journalist Ali Hamedani, an Iranian-born British citizen, was detained and questioned upon his arrival at Chicago’s O’Hare airport for over two hours.“I was always dreaming to live here, to write stories here, to be able to travel to places and write whatever I wanted to write about without being persecuted,” -- Journalist Sama Dizayee.
He said his phone and computer were searched, including his social media accounts.
”It wasn’t pleasant at all. To be honest with you, I was arrested back home in Iran in 2009 because I was working for the BBC and I felt the same this time,“ he said.
Washington Post reporter Jason Rezaian, a dual American and Iranian citizen, also expressed his fear about the “major” impact of the new policy on his family, stating: “This isn’t the America I promised [my wife] when we were finally set free.”
Rezaian spent nearly two years in an Iranian prison after being arrested on charges including espionage and propaganda against the government.
CNN editor and award-winning journalist Mohammed Tawfeeq, who is an Iraqi national and legal permanent resident of the U.S., was detained in Atlanta where he was subjected to additional screening. He promptly filed a federal lawsuit challenging the executive order.
“We are concerned when policies adopted by countries restrict the access and movement of journalists…We believe that journalists should be allowed to enter countries, to report on them regardless of where those countries are,” Committee to Protect Journalists (CPJ)’s Advocacy Director Courtney Radsch told IPS.
The ban also affects foreign correspondents covering the United Nations. Although there is a specific exception for journalists traveling as part of diplomatic delegations to the United Nations, the original executive order does not directly address any other media visas given to foreign media representatives traveling to or who are already in the country.
The restrictions have also concerned journalist Sama Dizayee, an Iraqi journalist who is a green card holding legal permanent resident in the U.S.
Dizayee told IPS that she had a trip planned to London but was forced to cancel it once the travel ban was implemented.
“I wake up and [saw] all of these people that were detained, deported back to their home countries…I was like oh my god I’m a legal resident here in America and I came all the way from Iraq here to pursue journalism, a dream that I always wanted and now my freedom is threatened,” she told IPS.
The Department of Homeland Security later clarified the policy in relation to green card holders, stating that U.S. permanent residents from one of the seven countries are not automatically barred from entry and will be assessed on a case-by-case basis.
Despite this, Dizayee, who initially had refugee status before becoming a permanent resident, said she still did not want to take the risk.
“Do I really want to become subject to extra screening and hours of being held at the airport? Do I really want to be profiled as a Muslim Iraqi here in the U.S.? This is not an experience I want to remember,” she said.
Dizayee told IPS that she has always been subjected to extra screening due to her background, waiting for hours to be released.
“That really stays with you…and it has now become a law with this travel ban,” she said.
Dizayee highlighted that the stakes are particularly high for journalists whose work is now limited due to the inability to travel.
“[Journalists] go places to cover stories—they go to Iraq, to Lebanon, we travel all the time,” she said, adding that she had planned to travel to Iraq to cover the Mosul battle.
“I can’t be there now, I can’t write that story,” Dizayee continued.
CPJ issued a safety advisory for journalists, recommending that those who are from one of the seven countries with media visas in the U.S. should not leave within the time period covered by the executive order.
Radsch also advised journalists not to travel with mobile or other devices or to make sure confidential or important information is backed up rather than on their devices.
“This order is helping to highlight the importance of [digital security] for journalists,” she told IPS.
The U.S. order has already emboldened other governments to implement similar policies, including the Iraqi government which approved a “reciprocity” measure banning Americans from entering the Middle Eastern country, further restricting information flow across borders and journalists’ ability to report.
Radsch highlighted the need to get clarity on how the order is impacting journalists and what the regulations are.
She also told IPS that journalists have been subject to secondary screening and questioning at the border before this new policy, including Canadian photojournalist Ed Ou who was pulled aside and interrogated for six hours on his way to cover the Dakota Access Pipeline protests. After refusing to surrender the password to his devices, Ed Ou was denied entry into the U.S.
Dizayee expressed uncertainty and apprehension regarding the future of the new travel restrictions.
“I was always dreaming to live here, to write stories here, to be able to travel to places and write whatever I wanted to write about without being persecuted,” she told IPS.
“I am not going anywhere for the next 90 days for sure,” Dizayee continued.
The immigration executive order, initially implemented at the end of January, was denounced by several human rights groups and politicians, including the UN High Commissioner for Human Rights who said: “Discrimination on nationality alone is forbidden under human rights law. The US ban is also mean spirited, and wastes resources needed for proper counter-terrorism.”
Similarly, Iran’s foreign minister, Javad Sarif, said the Trump Administration’s decision would be recorded in history as “a great gift to extremists and their supporters” while Swedish foreign affairs minister Margot Wallström said she was “deeply concerned” by a decision that “creates mistrust between people.”
Others expressed support for the move including Australian Prime Minister Malcolm Turnbull who stated that “”it is vital that every nation is able to control who comes across its borders.”
By Manoj K. Pandey, Vani S. Kulkarni and Raghav Gaiha
Canberra, Philadelphia and Manchester, Feb 20 2017 (IPS)
Old age is often characterised by poor health due to isolation, morbidities and disabilities in carrying out activities of daily living (DADLs) leading to depression.
Mental disorders—in different forms and intensities— affect most of the population in their lifetime. In most cases, people experiencing mild episodes of depression or anxiety deal with them without disrupting their productive activities. A substantial minority of the population, however, experiences more disabling conditions such as schizophrenia, bipolar disorder type I, severe recurrent depression, and severe personality disorders. While common mild disorders are amenable to self-management and relatively simple educational or support measures, severe mental illness demands complex, multi-level care that involves a longer-term engagement with the individual, and with the family. Yet, despite the considerable burden and its associated adverse human, economic, and social effects, governments and donors have failed to prioritise treatment and care of people with mental illness. Indeed, pervasive stigma and discrimination contributes to the imbalance between the burden of disease due to mental disorders, and the attention these conditions receive.
The percentage of the population aged 60 years and above in South Africa rose from 7.1% in 1996 to 8 % in 2011, an increase from 2.8 million to 4.1 million individuals. The proportion of persons 60 years and older is projected to almost double during 2000–2030 because of (i) a marked decline in fertility in the past few decades; (ii) the HIV and AIDS pandemic contributing to this change in the population structure, with a higher mortality of young adults, especially women of reproductive age; and (iii) a rise in life expectancy to 62 years in 2013-– a staggering increase of 8.5 years since the low in 2005.
Four in ten elderly persons in South Africa are poor. More than a third make an average living, and the rich constitute about 27%. Provincial variations show that rural provinces have higher proportions of poor elderly persons compared to those residing in the urban provinces. Racial differences show that elderly Whites and Indians/Asians occupied a higher socio-economic status than black Africans and Coloureds.
Ours is the first study that offers a comprehensive analysis of depression among the old (60+ years) in South Africa, using the four waves of the National Income Dynamics Study (SA-NIDS) (2008, 2010, 2012 and 2014).
A self-reported measure of depression is used. SA-NIDS gives data on not depressed in a week, depressed for 1-2 days, 3-4 days and 5-7 days. We focus on those depressed for ≥ 3 days in a week. Referring to this as a measure of severe depression, its prevalence reduced from 15.3 % among the old in 2008 to 14.5 % in 2014, with a dip to 12.6 % in 2012.
Aging is a major factor in depression. Those in early 60s are generally more depressed than older persons in their 70s and 80s.
Old women were consistently more depressed than old men, as they are subject to violence. It is associated with conflicts over the man’s drinking, the woman having more than one partner, and her not having post-school education. Another factor is that women are typically much more likely to be overweight and obese, leading to non-communicable diseases (NCDs) and subsequently higher depression . A challenging aspect of obesity prevention among black South Africans is the positive perception that both women and men attach to a large body size.
Married men and women are less depressed than others. Marriage thus serves as a barrier to loneliness and a source of support during periods of stress for old persons. However, old persons in larger households without any other old person are more prone to depression. It is not clear whether larger households result in neglect of old persons or their abuse.
Ethnicity matters. The Africans are more prone to depression than the reference group of the Whites and Coloureds. There is limited evidence suggesting that Asians/Indians/Others are less likely to be depressed.
Pensioners are less likely to be depressed despite some evidence in the literature on pooling of pensions with other household resources and denying the pensioner any financial autonomy. Although this can’t be ruled out, it is evident that the favourable effect of pensions in preventing depression is robust.
Of particular significance are the results on multimorbidity (more than one disease at a time). Two combinations of NCDs (diabetes and high BP, and cancer and heart disease) are positively associated with depression. Equally important are the associations between disabilities in activities of daily living or DADLs (e.g. difficulties in dressing,bathing, eating, walking, climbing stairs) and depression. In many cases, both sets of DADLs are positively associated with depression. The relationship between depression and body mass index or BMI categories (underweight, normal, overweight and obese) is not so robust except that in some cases overweight were less likely to be depressed than the reference category of obese.
Shock of a family member’s death (in the last 24 months) was robustly linked to higher incidence of depression. There is some evidence suggesting that this shock had stronger effects on women relative to men.
As loneliness and lack of support during a difficult situation can precipitate stress leading to depression, we experimented with measures of social capital and trust as barriers to depression, and the mediating role of preference for the same neighbourhood.
Although social capital doesn’t have a significant negative effect on depression, social trust does. Besides, the mediating role of preference for the current neighbourhood is confirmed in most cases. An exceptional case is that of the Africans for whom neither social capital nor social trust is of any consequence except the mediating role of preference for the current neighbourhood.
The burden of depression in terms of shares of depressed in total depressed has risen in the more affluent wealth quartiles-especially that of the most affluent. However, likelihood of depression remained lower among the third and fourth quartiles, implying that the likelihood of depression was higher in the poorest (or the least wealthy). It is somewhat surprising that despite marked inequalities even among the Africans, there is no wealth effect on depression.
Although older people are in worse health than those younger, older people use health services much less frequently. These patterns of utilization arise from barriers to access, a lack of appropriate services and the prioritization of services towards the acute needs of younger people.
A larger ethical issue is rationing of health care to older people on the notion that health services are scarce and must be allocated to achieve the greatest good for the greatest number of people. WHO 2015 rejects this view on two counter-arguments: older people have made the greatest contribution to socioeconomic development that created these services; and they are entitled to live a dignified and healthy life.
Mental health care continues to be under-funded and under-resourced compared to other health priorities in the country; despite the fact that neuropsychiatric disorders are ranked third in their contribution to the burden of disease in South Africa, after HIV/AIDS and other infectious diseases. In fact, mental health care is usually confined to management of medication for those with severe mental disorders, and does not include detection and treatment of other mental disorders, such as depression and anxiety disorders.
From this perspective, the proposed National Mental Health Policy Framework and Strategic Plan 2013-2020 is a bold and comprehensive initiative.
By Baher Kamal
ROME, Feb 20 2017 (IPS)
Now that President Donald Trump’s decision to ban citizens of seven Muslim majority countries from entering the United States continues to drift into legal labyrinths about its legality–or not, it may be useful to clarify some myths that often lead to an even greater confusion regarding the over-written, under-reported issue of who are Arabs and who Muslims.
To start with, it is a common belief – too often heralded by the mainstream media – that the Middle East is formed entirely of Arab countries, and that it is about the so-wrongly called Muslim, Arab World.
This is simply not accurate.
Firstly, because such an Arab World (or Arab Nation) does not actually exist as such. There is not much in common between a Mauritanian and an Omani; a Moroccan and a Yemeni; an Egyptian and a Bahraini, just to mention some examples. They all have different ethnic roots, history, original languages, traditions and religious beliefs.
Example: The Amazighs – also known as the Berbers – are an ethnic group indigenous to the North of Africa, living in lands stretching from the Atlantic cost to the Western Desert in Egypt. Historically, they spoke Berber languages.
There are around 25-30 million Berber speakers in North Africa. The total number of ethnic Berbers (including non-Berber speakers) is estimated to be far greater. They have been “Arabised” and “Islamised” since the Muslim conquest of North of Africa in the 7th century.
Secondly, because not all Muslims are Arabs, nor all Arabs are Muslims. Not to mention the very fact that not all Arabs are even Arabs. It would be more accurate to talk about “Arabised,” “Islamised” peoples or nations rather than an Arab World or Arab Nation.
Here are seven key facts about Muslims that large media, in particular the Western information tools, often neglect or ignore:
1. Not all Muslims Are Arabs
In fact, according to the most acknowledged statistics, the number of Muslims around the world amounts to an estimated 1.56 billion people, compared to estimated 2.2 billion Christians and 1.4 million Jewish.
Of this total, Arab countries are home to around 380 million people, that is only about 24 per cent of all Muslims.
2. Not all Arabs Are Muslims
While Islam is the religion of the majority of Arab population, not all Arabs are Muslims.
In fact, it is estimated that Christians represent between 15 per cent and 20 per cent of the Arab combined population. Therefore, Arab Muslims amount to just around one-fifth of all the world’s Muslims.
Arab Christians are concentrated mainly in the Palestinian Territories, Lebanon and Egypt, where they represent up to 13 per cent of the total population amounting to 95 million inhabitants according to last year’s census.
It is also estimated that there are more Muslims in the United Kingdom than in Lebanon, and more Muslims in China than in Syria.
3. Major Muslim Countries Are in Asia
According to the U.S-based Pew Research Center, this would be the percentage of major religious groups in 2012: Christianity 31.5 per cent; Islam 23.2 per cent; Hinduism 15.0 per cent, and Buddhism 7.1 per cent of the world’s total population.
Meanwhile, the Pew Research Center estimated that in 2010 there were 49 Muslim-majority countries.
South and Southeast Asia would account for around 62 per cent of the world’s Muslims.
According to these estimates, the largest Muslim population in a single country lives in Indonesia, which is home to 12.7 per cent of all world’s Muslims.
Pakistan (with 11.0 per cent of all Muslims) is the second largest Muslim-majority nation, followed by India (10.9 per cent), and Bangladesh (9.2 per cent).
The Pew Research Center estimates that about 20 per cent of Muslims live in Arab countries, and that two non-Arab countries – Turkey and Iran – are the largest Muslim-majority nations in the Middle East.
In short, a large number of Muslim majority countries are not Arabs. This is the case of Afghanistan, Bangladesh, Iran, Indonesia, Pakistan and Turkey.
3. Largest Muslim Groups
It is estimated that 75 to 90 per cent of Islam followers are Sunni, while Shii represent 10 to 20 per cent of the global Muslim population.
The sometimes armed, violent conflicts between these two groups are often due to political impositions. But this is not restricted to Arab or Muslim countries, as evidenced by the decades of armed conflict between Catholic and Protestant communities in Northern Ireland.
4. Muslims Do Not Have Their Own God
In Arabic (the language in which the sacred book, the Koran, was written and diffused) the word “table” is said “tawla;” a “tree” is called “shajarah;” and a “book” is “ketab.” In Arabic “God” is “Allah”.
In addition, Islam does not at all deny the existence of Christianity or Christ. And it does fully recognise and pay due respect to the Talmud and the Bible.
Probably the main difference is that Islam considers Christ as God’s closest and most beloved “prophet,” not his son.
5. Islamic “Traditions”
Islam landed in the 7th century in the Gulf or Arab Peninsula deserts. There, both men and women used to cover their faces and heads to protect themselves from the strong heat and sand storms. It is not, therefore, about a purely Islam religious imposition.
Meanwhile, in the Arab deserts, populations used to have nomadic life, with men travelling in caravans, while women and the elderly would handle the daily life of their families. Islamic societies were therefore actually matriarchal.
Genital mutilations are common to Islam, Judaism (male) and many other religious beliefs, in particular in Africa.
Likewise other major monotheistic religions, a number of Muslim clerics have been using faith to increase their influence and power. This is fundamentally why so many “new traditions” have been gradually imposed on Muslims. This is the case, for example, of denying the right of women to education.
As with other major monotheistic religions, some Muslim clerics used their ever-growing powers to promote inhuman, brutal actions. This is the case of “Jihad” fundamentalists.
This has not been an exclusive case of Muslims along the history of humankind. Just remember the Spanish-Portuguese invasion of Latin America, where indigenous populations were exterminated and Christianity imposed by the sword, for the sake of the glory of Kings, Emperors… and Popes.
6. The Unfinished Wars between the West and Islam (and Vice-Versa)
There is a growing belief among Arab and Muslim academicians that the on-going violent conflicts between Muslims and the West (and vice-versa) are due to the “unfinished” war between the Christian West and the Islamic Ottoman Empire, in spite of the fact that the latter was dismantled in the early 1920s.
This would explain the successive wars in the Balkans and the Middle East, for instance.
7. The “Religion” of Oil
It has become too common, and thus too given for certain, that oil producers are predominantly Arabs and Muslims. This is not accurate.
To start with, the Organization of the Petroleum Exporting Countries (OPEC) was founded in (the under British mandate) Baghdad, Iraq, in 1960 by five countries: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. These were later joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) and Angola (2007).
And here you are: OPEC full membership includes: Ecuador, Venezuela, Nigeria, Gabon and Angola. None of these is either Arab or Muslim. They are all Christian states. As for Iran and Indonesia, these are Muslim countries, but not Arab.
Then you have other major oil and gas producers and exporters outside the OPEC ranks: the United States [which produces more oil (13,973,000 barrels per day) than Saudi Arabia (11,624,000)]; Russia (10,853,000); China (4,572,000); Canada (4,383,000, more than United Arab Emirates or Iran or Iraq); Norway (1,904,000, more than Algeria) and Mexico, among others.
Again, none of these oil producers is Arab or Muslim.
In short, not all Muslims are Arabs (these are less than 20 per cent of the total); not all Arabs are Muslims, and… not all Arabs are even Arabs!Related Articles
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By Lyndal Rowlands
UNITED NATIONS, Feb 20 2017 (IPS)
Kids growing up in the Seychelles think of the ocean as their backyard, says Ronald Jean Jumeau, the Seychelles ambassador to the UN.
“Our ocean is the first and eternal playground of our children, they don’t go to parks they go to the ocean, they go to the beach, they go to the coral reefs, and all that is just collapsing around them,” Jumeau told IPS.
The tiny country off the East Coast of Africa is one of 39 UN member states known as small island states, or as Jumeau likes to call them: “large ocean states.”
Ambassadors and delegations from these 39 countries often speak at UN headquarters in New York steadfastly sounding the alarm about the changes to the world’s environment they are witnessing first hand. Jumeau sees these island states as sentinels or guardians of the oceans. He prefers these names to being called the canary in the gold mine because, he says: “the canaries usually end up dead.”
Yet while much is known about the threats rising oceans pose to the world’s small island states, much less is known about how these large ocean states help defend everyone against the worst impacts of climate change by storing “blue carbon.”
“We are not emitting that much carbon dioxide but we are taking everyone else’s carbon dioxide into our oceans,” says Jumeau."There’s 3 billion people around the world that are primarily dependent on marine resources for their survival and so they depend on what the ocean can produce,” -- Isabella Lövin, Sweden’s deputy prime minister.
Despite decades of research, the blue carbon value of oceans and coastal regions is only beginning to be fully appreciated for its importance in the fight against climate change.
“There’s proof that mangroves, seas salt marshes and sea grasses absorb more carbon (per acre) than forests, so if you’re saying then to people don’t cut trees than we should also be saying don’t cut the underwater forests,” says Jumeau.
This is just one of the reasons why the Seychelles has banned the clearing of mangroves. The temptation to fill in mangrove forests is high, especially for a nation with so little land, but Jumeau says there are many benefits to sustaining them.
Mangroves guard against erosion and protect coral reefs. They are also provide nurseries for fish.
But its not just coastal forests that take carbon out of the atmosphere. Oceans also absorb carbon, although according to NASA their role is more like inhaling and exhaling.
The Seychelles, whose total ocean territory is 3000 times larger than its islands, is also thinking about how it can protect the oceans so they can continue to perform this vital function.
The nation plans to designate specific navigation zones within its territories to allow other parts of the ocean a chance to recover from the strains associated with shipping.
The navigation zones will “relieve the pressure on the ocean by strengthening the resilience of the oceans to absorb more carbon dioxide and ocean acidification,” says Jumeau. He acknowledges the plan will only work if all countries do the same but says you have to start somewhere.
Fortunately other countries are also beginning to recognise the importance of protecting the world’s oceans.
Isabella Lövin, Sweden’s deputy prime minister and climate minister told IPS that the world is going “in the totally wrong direction,” when it comes to achieving the goal of sustainable oceans and life below water.
“If you look at the trends right now, you see more and more overfishing, we are seeing more and more pollution, plastic litter coming into our oceans, and we’re also seeing all the stress that the ocean is under due to climate change, acidification of the water, but also the warming and sea level rises and all of this is putting a tremendous, tremendous pressure on our oceans,” said Lövin.
Together with Fiji, Sweden is convening a major UN Ocean Conference in June this year.
The conference aims to bring together not only governments but also the private sector and non-governmental organisations to create a more coordinated approach to sustaining oceans. It will look at the key role that oceans play in climate change but also other issues such as the alarming prospect that there will be more plastic in our seas than fish by the year 2050.
“There’s 3 billion people around the world that are primarily dependent on marine resources for their survival and so they depend on what the ocean can produce, so it’s about food security, it’s also about livelihoods for hundreds of millions of people that depend on small scale fisheries mostly in developing countries,” said Lövin.
Lövin also noted that rich countries need to work together with developing countries to address these issues, because the demand for fish in rich countries has put a strain on the global fish stocks that developing countries rely on.
“Rich countries … have been over-fishing with industrial methods for decades and now when they European oceans are being emptied more or less we have depleted our resources and then we import and we fish (over long distances in) developing countries’ waters.”
“We need to make sure that fish as a resource is conserved and protected for future generations.”
By Mark Olalde
CAPE TOWN, South Africa, Feb 18 2017 (IPS)
“Comrades, we have arrived. This cherry is eight years awaited. We have made it to this place,” Bishop Jo Seoka told the crowd, pausing to allow for the whistles and cheers.
Seoka, the chairman of a South African NGO called the Bench Marks Foundation, presided over the crowd of protesters that was busy verbally releasing years of frustration at the continent’s mining industry. The protest on Feb. 8 was part of the Alternative Mining Indaba (AMI) held in Cape Town.“We want transparency, we want accountability and, most importantly, we want participation of the people affected by mining." --Mandla Hadebe
The annual gathering brings together residents of mining-affected communities and civil society representatives to discuss common problems caused by the mining industry in Africa. On its third and final day, the AMI took to the streets to deliver its declaration of demands to industry and government representatives.
While police temporarily blocked the march from reaching the convention center hosting the Mining Indaba, the industry’s counterpart to the AMI, protesters were angry after years of having their side of the story largely ignored.
They marched up to the line of police and private security guarding the doors to the conference hall and demanded to speak with members of the Mining Indaba.
“As citizens and representations (sic) citizen-organisations we wish to express our willingness to work with African governments and other stakeholders in the quest to harness the continent’s vast extractive resources to underpin Africa’s socio-economic transformation and the [Africa Mining Vision] lays a foundation for this,” the declaration stated.
“I very much appreciate the willingness to engage in dialogue, and I think this is the first step towards establishing a common vision,” Tom Butler, CEO of the International Council on Mining & Metals, told the crowd before signing receipt of the declaration and handing it over for the managing director of the Mining Indaba to also sign.
While Butler came to the AMI to give a presentation on the mining industry’s behalf, few other members of government or the industry made an attempt to engage with the AMI. The Mining Indaba’s Twitter account even blocked some AMI delegates who took to social media to air their grievances.
The official Mining Indaba is a place for mining ministers, CEOs of mining houses and other industry representatives to network and strike deals. During the event, South Africa and Japan, for example, signed a bilateral agreement to boost collaboration along the mining value chain.
“This Indaba has affirmed South Africa’s status as a preferred investment destination,” Mosebenzi Zwane, the country’s minerals minister, said in a statement following the event. “As government, we are heartened by this and recommit to ensuring the necessary regulatory and policy certainty to attract even more investment into our country.”
In his opening address at the Mining Indaba, Zwane also announced that the draft of the new Mining Charter, a document guiding the country’s mining industry, would be published in March.
The AMI, however, was born as a community-level response to the fact that such decisions are usually made without consulting those most impacted by mining.
“They are going to find this huddled mass of people,” Mandla Hadebe, one of the event organizers, said of the protest’s goals in the first year. Only 40 delegates were present.
In its eighth year, the AMI has grown to about 450 participants representing 43 countries. Delegates came from across Africa – from Egypt to the Democratic Republic of the Congo and Malawi – as well as the rest of the world – from Cambodia to Bolivia and Australia – to share their stories.
“It just shows that our struggles are common and that we’ve decided to unite for a common purpose,” Hadebe said of the growth. “We want transparency, we want accountability and, most importantly, we want participation of the people affected by mining.”
A number of panels dedicated to community voices gave activists a platform to share their stories and methods of resistance. Translators in the various conference rooms translated among English, French and Portuguese, a necessity as well as a tacit nod to the ever-present effects of the same colonialism that brought mining.
“What we heard first were promises,” a woman from Peru recounted. “Thirty years passed, and now I call the second part of this process ‘the lies.’”
“We are trying to build a critical mass that is angry enough to oppose irresponsible mining,” a delegate from Kenya explained.
Some panels addressed specific issues facing Africa’s extractive industry. One discussion explained the need to move away from indirect taxes toward direct ones focused on mining houses. The presenter, a member of Tax Justice Network-Africa, said that an increase in government audits had led to a surge in tax revenue since 2009, a rare success story.
Another panel dealt with the realities of impending job loss due to widespread mechanization, while others took on the need for governments to strike better deals with international corporations.
Side events provided forums for more nuanced learning on topics such as the corruption involved with mining on communal land. At the showing of a documentary following South African land rights activist Mbhekiseni Mavuso, delegates from other countries such as Sierra Leone compared and contrasted their own forced relocations.
Mavuso said, “We are regarded as people who do not count. We have now become what we call ‘victims of development,’ and so that is also making us to become victims of democracy. We are fighting, so let us all stand up and fight.”
Occasionally, delegates took to the microphone to lament continued talk with minimal action. Much of the AMI focused on the Africa Mining Vision, a document produced by the African Union. While its goal is to make mining beneficial for all Africans, the document is a high-level policy discussion lacking a direct connection to affected communities.
The three-day conference has outgrown its ability to delve deeply into every issue impacting the represented countries, so delegates have taken the idea to their home nations. In the past year, Madagascar, Angola, Swaziland and others held their first country-specific alternative indabas.
Only a week before the AMI, South Africa hosted its first such conference in Johannesburg.
Despite many delegates expressing feelings of helplessness or anger, the march to the Mining Indaba provided a temporary sense of victory.
After finally obtaining some level of acknowledgment from industry representatives, the AMI participants danced and took selfies outside the Mining Indaba, far from the townships and rural villages adjacent to mines.
As the delegates boarded busses to depart the event, the vehicles shook from stomping and singing, and some protesters leaned out the windows to shout their last parting sentiments on behalf of mining-affected communities around the country and the continent.
*Mark Olalde’s mining reporting is financially supported by the Pulitzer Center on Crisis Reporting, the Fund for Environmental Journalism and the Fund for Investigative Journalism.Related Articles
By Emilio Godoy
KIMBILÁ, Mexico, Feb 17 2017 (IPS)
The growing number of wind and solar power projects in the southern Mexican state of Yucatán are part of a positive change in Mexico’s energy mix. But affected communities do not see it in the same way, due to the fact that they are not informed or consulted, and because of how the phenomenon changes their lives.
“We have no information. We have some doubts, some people say it’s good and some say it’s bad. We have heard what is said in other states,” small farmer Luis Miguel, a Mayan Indian, told IPS.
He lives in Kimbilá, a town in the municipality of Izmal, which is the site of an up-to-now failed private wind power venture that has been blocked by opposition from the area’s 3,600 inhabitants and in particular from the ejido or communal land where the wind farm was to be installed.“There is a lack of information going to the communities, who don’t know the scope of the contracts; (the companies and authorities) don’t explain to them the problems that are going to arise. Conflicts are generated, and manipulation is used to get the permits. Social engineering is used to divide the communities.” -- Romel González
“We fear that they will damage our crops,” said Miguel, whose father is one of the 573 members of the Kimbilá ejido, located in the Yucatán Peninsula, 1,350 km southeast of Mexico City.
The questioned project, run by the Spanish company Elecnor, includes the installation of 50 wind turbines with a capacity of 159 MW per year.
The company installed an anemometric tower in 2014, but the local population, who grow maize and garden vegetables, raise small livestock and produce honey for a living, did not find out about the project until January 2016.
Since then, the ejido has held two assemblies and cancelled another, without reaching an agreement to approve a 25-year lease on the lands needed for the wind farm.
Meanwhile, in February 2016, the members of the ejido filed a complaint against the Procuraduría Agraria – the federal agency in charge of protecting rural land – accusing it of defending the interests of the company by promoting community assemblies that were against the law.
The wind farm is to have an operating life of 30 years, including the preparatory phase, construction and operation, and it needs 77 hectares of the 5,000 in the ejido.
The company offered between five and 970 dollars per hectare, depending on the utility of the land for a wind farm, a proposition that caused unrest among the ejido members. It would also give them 1.3 per cent of the turnover for the power generated. But the electricity would not be used to meet local demand.
“We haven’t been given any information. This is not in the best interests of those who work the land. They are going to destroy the vegetation and 30 years is a long time,” beekeeper Victoriano Canmex told IPS.
This indigenous member of the ejido expressed his concern over the potential harm to the bees, “because new roadswould be opened with heavy machinery. They said that they would relocate the apiaries but they know nothing about beekeeping. It’s not fair, we are going to be left with nothing,” he said.
Canmex, who has eight apiaries,checks the beehives twice a week, together with four of his six children. He collects about 25 30-kg barrels of honey, which ends up on European tables. Yucatan honey is highly appreciated in the world, for its quality and organic nature.
Yucatán, part of the ancient Mayan empire, where a large part of the population is still indigenous, has become a new energy frontier in Mexico, due to its great potential in wind and solar power.
This state adopted the goal of using 9.3 per cent non-conventional renewable energies by 2018. In Yucatán, the incorporation per year of new generation capacity should total 1,408 MW by 2030.
Leaving out the big hydropower plants, other renewable sources account for just eight per cent of the electricity produced in Mexico. According to official figures, in December 2016, hydropower had an installed capacity of 12,092 MW, geothermal 873 MW, wind power 699 MW, and photovoltaic solar power, six MW.
According to the Mexican Wind Energy Association, which represents the industry, in Mexico there are at least 31 wind farms located in nine states, with a total installed capacity of 3,527 MW of clean energy for the northeast, west, south and southeast regions of this country of 122 million people.
Besides the lack of information, and of free, prior and informed consent, as the law and international conventions require, indigenous people complain about impacts on migratory birds, rise in temperatures in areas with solar panels and water pollution caused by leaks from wind towers.
For Romel González, a member of the non-governmental Regional Indigenous and Popular Council of Xpujil, a town in the neighboring state of Campeche, the process of energy development has legal loopholes that have to do with superficial contracts and environmental impact studies.
“There is a lack of information for the communities, who don’t know the scope of the contracts; (the companies and authorities) don’t explain to them the problems that are going to arise. Conflicts are generated, and manipulation is used to get the permits. Social engineering is used to divide the communities,” González told IPS.
He said that in the region, there are “previously untapped” natural resources that are attracting attention from those interested in stripping the communities of these resources.
The state is experiencing a clean energy boom, with plans for five solar plants, with a total capacity of 536 MW, and five wind farms, with a combined capacity of 256 MW. The concessions for the projects, which are to operate until 2030, have already been awarded to local and foreign companies.
In the first national power generation auction organised by the government in March 2016, four wind power and five solar power projects won, while in the second one, the following September, two new wind projects were chosen.
The change in the electricity mix is based on Mexico’s energy reform, in force since August 2014, which opened the industry to national and international private capital.
Local authorities project that by 2018, wind power generation will amount to 6,099 MW, including 478 from Yucatán, with the total increasing two years later to 12,823 MW, including 2,227 MW from this state.
Yucatán will draw a projected 52 million dollars in investment to this end in 2017 and 1.58 billion in 2018.
The Electricity Industry Law, in effect since 2014, stipulates that each project requires a social impact assessment. But opponents of the wind power projects have no knowledge of any assessment carried out in the state, while there is only evidence of two public consultations with affected communities, in the case of two wind farms.
“The electricity will not be for us and we don’t know what will happen later (once the wind farm is installed). That is why we have our doubts,” said Miguel.
People in Yucatán do not want to replicate the “Oaxaca model”. That is the southern state which has the largest number of wind farms, which have drawn many accusations of unfair treatment, land dispossession and lack of free, prior and informed consent.
“The authorities want to do this by all means, they are just trying to get these projects approved,” said Canmex.
González criticised the government for failing to require assessments. “We have asked for them and the government has responded that there aren’t any. The community response to the projects will depend on their level of awareness and social organisation. Some communities will react too late, when the project is already underway,” he said.Related Articles
By Martin Khor
PENANG, Feb 17 2017 (IPS)
As American lawmakers and the Trump administration prepare the ground for introducing a border adjustment tax, many controversial issues have emerged, including whether they go against the rules of the World Trade Organisation (WTO).
The border tax is part of the overhaul of the US corporate tax system proposed by Republican Congress leaders and appears to have the support of President Donald Trump.
If adopted, the tax measure is sure to attract the opposition of the United States’ trading partners, as their exports to the US will have the equivalent of a 20% tax imposed on them, whereas the exports from the US will be exempted from a 20% corporate tax.
The tax on US imports, without the same being applied to US-made products, discriminates against foreign products, and US exports being exempted from taxes is tantamount to being an export subsidy.
How will this be taken at the WTO, the guardian of the multilateral trading system?
US Congressman Kevin Brady, chairman of the House Ways and Means Committee, and the plan’s main advocate, is convinced the plan is WTO-consistent, but has yet to explain why.
On the other hand, many trade and legal experts think the plan violates the principles and rules of the WTO, although they caution that a final opinion is possible only when the language of the law is known.
Their general view is as follows: Firstly, the inability to deduct import expenses from a company’s tax (while allowing deductions for locally sourced products and services and wages) discriminates against imports vis-à-vis domestic products, and violates the national treatment principle of the WTO and the rules of the General Agreement on Tariffs and Trade (GATT) which specify that imports must be treated no less favourably than similar locally produced goods.
Secondly, the exemption of export revenues from the taxable income would be most likely assessed as a prohibited export subsidy under the WTO’s subsidies agreement.
The renowned international trade expert, Bhagirath Lal Das, says that there are two separate issues to be considered: the differential treatment of domestic and imported materials, and the differential tax treatment of income based on whether the product is domestically consumed or exported.
Says Das: “It appears that the proposal is to deduct the cost of domestic input (including wages) from a company’s income while computing the tax, whereas there is no such deduction if a like imported input is used in the production.
“If this be the case, such a provision will clearly violate the principle of national treatment contained in Article III of the GATT 1994.” Under that article, imported products must be accorded treatment no less favourable than that given to similar domestic products in respect of laws and regulations.
Added Das: “If the use of the domestic product results in tax reduction whereas the use of the like imported product does not get similar treatment, clearly the imported product will get “less favourable” treatment. And that will violate the principle of national treatment, and it can be successfully challenged in the WTO on this ground.”
On the second issue, the proposal is to differentiate between the earning from domestic sale and that from export in the matter of taxation in respect of a product.
Commented Das: “Here it would appear that the exemption of the tax is conditional on export. This practice will clearly qualify for being categorised as export subsidy which is prohibited under Article 3 of the WTO’s Subsidy Agreement.”
Das cites a case of an American company, the Domestic International Sales Corporation (DISC). A portion of its profit which was engaged in export was tax free. The EEC, the predecessor of EC, raised a dispute in the GATT in 1973. The matter was delayed for a long time until in 1999 a panel at the WTO ruled that the US practice was in fact an export subsidy and was prohibited.
“This case may not be exactly the same as the currently anticipated proposal, but it does point to the fallibility of providing government benefit contingent on export,” says Das.
Das was formerly Chairman of the General Council of GATT, Indian Ambassador to GATT, and subsequently Director of Trade in the UN Conference on Trade and Development, and has written many books on the WTO and its agreements.
According to another eminent expert on the WTO, Chakravarthi Raghavan, whether the US law is considered “legal” depends on the language of the law and its actual effects.
“There is little doubt that the “pith and substance” of the Republican border tax proposal or ideas will be in violation of Articles II and III of GATT and Article 3.1 of the Subsidies Agreement.”
Raghavan, Chief Editor Emeritus of the South-North Development Monitor, followed and analysed the negotiations of the Uruguay Round and of the WTO on a daily basis ever since.
There are many shortcomings with the WTO dispute system. Few countries have the courage or financial resources to take up cases against the US.
Countries can challenge the US at the WTO and if they succeed the US has to change its law or face retaliatory action. The winning party can block US exports to it equivalent in value to the loss of its exports to the US.
However, there are many shortcomings with the WTO dispute system. Few countries have the courage or financial resources to take up cases against the US.
If some countries do take up cases, it takes as long as three to four years for a case in the WTO to wind its way through panel hearings and to a final verdict at the Appellate Body, and for the winning Party to get the go-ahead to take retaliatory action. During that period, the US can continue with its laws and practices.
If the US loses, it need not pay any compensation to the successful Party for having suffered losses. Moreover, in the past, when it loses cases at the WTO, the US has typically not complied with the orders made on it. Even if it does comply, it needs to do so only in respect of the Parties that brought the action against it; it need not do so for other Parties.
If it does not comply, the complainant countries are allowed to take retaliatory action by blocking US goods and services from entering their markets up to an amount equivalent to the losses they have suffered. This retaliatory action can only be taken by those countries that successfully took up the cases.
Thus, the US may decide to implement the border adjustment taxes and wait two to four years before a final judgment is made at the WTO, and for retaliatory action to be allowed by the WTO. It can meanwhile reap the benefits of its border tax measures.
Another possibility is that Trump may make good his threat to leave the WTO, if important cases go against it. That would cause a major crisis for the WTO and for international trade.
With regard to the WTO process, Raghavan said: “Apart from the difficulties of taking up cases in the WTO, including costs, the lengthy process and no retrospective damages when any WTO member, raises a dispute, the onus of proving the violation is on them.
“To the best of my knowledge, in none of the rulings against US, requiring changes in law or regulations, has the US implemented them, and even major trading partners have been chary of taking retaliation action.
“Countries that are affected, could act to unilaterally deny the US some rights; but they cannot justify that this is retaliation, until there is a ruling in their favour.”
American advocates of the border adjustment tax plan have claimed that it is similar to a value added tax (VAT) which is considered by the WTO to be a legitimate measure; and thus that the border adjustment tax would also be compatible with the WTO.
Almost all major developed countries have instituted the VAT system, with the notable exception of the US. The Republican Congress leaders and Trump have argued that this places the US at a disadvantage in its trade relations because the VAT system imposes a tax on imports, whilst allowing companies to obtain a refund for taxes paid on their exports.
They claim the border tax would correct this disadvantage that the WTO should similarly recognise the border tax as legitimate.
However, several well-known economists and lawyers are of the opinion that there are important differences between the VAT and the border tax.
There are two parts of their arguments. Firstly, the VAT imposes taxes on both imports and locally produced goods and services and therefore does not discriminate against imports; whereas the border tax system imposes a tax on imports whilst excluding domestic inputs and wages from tax, which therefore discriminates against imports. Secondly, the VAT system does not subsidise exports, whereas the border tax system does.
In a 1990 paper, Martin Feldstein and Paul Krugman found that the VAT does not improved the trade competitiveness of countries using it. They said: “The point that VATs do not inherently affect international trade flows has been well recognised in the international tax literature…A VAT Is not a protectionist measure.”
Krugman, in a recent blog, reiterated that “a VAT does not give a nation any kind of competitive advantage, period.” But a destination-based cash flow tax like the border adjustment tax has a subsidy element that “would lead to expanded domestic production.”
In another paper, Reeven Avi-Yonah and Kimberly Clausing from Michigan Law School and Reed College respectively analyse the difference between the VAT and the proposed border adjustment tax and why the former is WTO-consistent whereas the latter would violate WTO rules.
They said: “U.S. trading partners are likely to be hurt in several ways. The effects of the wage deduction render the corporate cashflow tax different from a VAT, and these differences have the net effect of increasing the incentive to operate in the United States
“In addition, such a tax system would exacerbate the profit shifting problems of our trading partners, since the United States will appear like a tax haven from their perspective.”
Economists also agree that the border tax will raise the value of the US dollar but there is a debate as to how long this will take and by how much it will rise. If the dollar appreciation is significant, this may have an adverse effect on countries that hold debt in US dollars, as they would have to pay out more in their domestic currency to service their loans. This would include many developing countries with substantial dollar-denominated debts of the public or private sectors, and some of them may tip into new debt and financial crises. According to former US Treasury Secretary Lawrence Summers: “Proponents of the plan anticipate a rise in the dollar by an amount equal to the 15 to 20 per cent tax rate. This would do huge damage to dollar debtors all over the world and provoke financial crises in some emerging markets.”
This article is the second in a two-part series on the border adjustment tax, which would have the effect of taxing imports of goods and services that enter the United States, while also providing a subsidy for US exports which would be exempted from the tax. You can find Part 1 here
By James Jeffrey
HARGEISA, Somaliland, Feb 17 2017 (IPS)
Crossing African borders by land can be an intimidating process (it’s proving an increasingly intimidating process nowadays in Europe and the US also, even in airports). But crossing from Ethiopia to Somaliland at the ramshackle border town of Togo-Wuchale is a surreally pleasant experience.
Immigration officials on the Somaliland side leave aside the tough cross-examination routine, greeting you with big smiles and friendly chit chat as they whack an entry stamp on the Somaliland visa in your passport.“If you look at the happiness of Somalilanders and the challenges they are facing, it does not match.” --Khadar Husein, Operational director of the Hargeisa office of Transparency Solutions.
They’re always happy to see a foreigner’s visit providing recognition of their country that technically still doesn’t exist in the eyes of the rest of the political world, despite having proclaimed its independence from Somalia in 1991, following a civil war that killed about 50,000 in the region.
A British protectorate from 1886 until 1960 and unifying with what was then Italian Somaliland to create modern Somalia, Somaliland had got used to going on its own since that 1991 declaration, and today exhibits many of the trappings of a functioning state: its own currency, a functioning bureaucracy, trained police and military, law and order on the streets. Furthermore, since 2003 Somaliland has held a series of democratic elections resulting in orderly transfers of power.
Somaliland’s resolve is most clearly demonstrated in the capital, Hargeisa, formerly war-torn rubble in 1991 at the end of the civil war, its population living in refugee camps in neighbouring Ethiopia. An event that lives on in infamy saw the jets of military dictator Mohammed Siad Barre’s regime take off from the airport and circle back to bomb the city.
But visitors to today’s sun-blasted city of 800,000 people encounter a mishmash of impassioned traditional local markets cheek by jowl with diaspora-funded modern glass-fronted office blocks and malls, Wi-Fi enabled cafes and air-conditioned gyms, all suffused with typical Somali energy and dynamism.
“We are doing all the right things that the West preaches about but we continue to get nothing for it,” says Osman Abdillahi Sahardeed, minister for the Ministry of Information, Culture and National Guidance. “This is a resilient country that depends on each other—we’re not after a hand out but a hand up.”
Increasing levels of exasperation within Somaliland’s government and among the populace are hardly surprising. Somaliland’s apparent success story against the odds remains highly vulnerable. Its economy is perilously fragile. Non-statehood deprives it of direct large-scale international support and access to the likes of the World Bank and International Monetary Fund (I.M.F.).
As a result, the government has a tiny budget of about 250 million dollars, with about 60 percent spent on police and security forces to maintain what the country views as one of its greatest assets and reasons for recognition: continuing peace and stability. Also, it relies heavily on the support of local clan elders—it is hard for any government to prove its legitimacy when essential services need the help of international humanitarian organizations, local NGOs and the private sector.
Indeed, Somaliland survives to a large extent on money sent by its diaspora—estimated to range from $400 million to at least double that annually—and by selling prodigious quantities of livestock to Arab countries.
All the while, poverty remains widespread and swathes of men on streets sipping sweet Somali tea and chewing the stimulating plant khat throughout the day testify to chronic unemployment rates.
“About 70 percent of the population are younger than 30, and they have no future without recognition,” says Jama Musse, a former mathematics professor who left Italy to return to Somaliland to run the Red Sea Cultural Foundation center, which offers cultural and artistic opportunities for Hargeisa’s youth. “The world can’t close its eyes—it should deal with Somaliland.”
For now, Somaliland’s peace holds admirably well.
“If you look at the happiness of Somalilanders and the challenges they are facing it does not match,” says Khadar Husein, operational director of the Hargeisa office of Transparency Solutions, a UK-based consultancy focused on civil society capacity building in Somaliland and Somalia. “They are happy because of their values and religion.”
But others speak of the risks of encroaching Wahhabism, a far more fundamental version of Islam compared to Somaliland’s conservative though relatively moderate religiousness, and a particular concern in a volatile part of the world.
“Young men are a ready-made pool of rudderless youth from which militant extremists with an agenda can recruit,” says Rakiya Omaar, a lawyer and Chair of Horizon Institute, a Somaliland consultancy firm helping communities transition from underdevelopment to stability.
Almost everyone acknowledges the country’s present means of sustainment—heavily reliant on the private sector and diaspora—must diversity. Somaliland needs greater income to develop and survive.
For many, the key to Somaliland’s much needed economic renaissance lies in tapping into the far stronger economy next door: Ethiopia, Africa’s second most populous country and its fastest growing economy, according to the I.M.F.
Crucial to achieving this is Berbera, a name conjuring images of tropical quays and fiery sunsets. Once an ancient nexus of maritime trade, Berbera has long been eclipsed by Djibouti’s ports to the north. But Berbera Port is now on the brink of a major expansion that could transform and return it to a regional transportation hub, and also help fund Somaliland’s nation-building dreams.
In May 2016, Dubai-based DP World was awarded the concession to manage and expand Berbera for 30 years, a project valued at about 442 million dollars, including expanding the port and refurbishing the 268-kilometer route from the port to the border with Ethiopia.
Landlocked Ethiopia has long been looking to diversify its access to the sea, an issue of immense strategic anxiety. Currently 90 percent of its trade goes through Djibouti, a tiny country with an expanding network of ports that scoops at least 1 billion dollars in port fees from Ethiopia every year.
Somaliland would like about 30 percent of that trade through Berbera, and Ethiopia is more than happy with that, allocating such a proportion in its latest Growth and Transformation Plan that sets economic policy until 2020.
Ethiopia and Somaliland had already signed a Memorandum Of Understanding (MOU) covering trade, security, health and education in 2014, before in March 2016 signing a trade agreement on using Berbera Port. And Ethiopia could just be the start.
“It would be a gateway to Africa, not just Ethiopia,” says Sharmarke Jama, a trade and economic adviser for the Somaliland government during negotiations on the port concession. “The multiplying benefits for Somaliland’s economy could be endless.”
Somaliland officials hope increased trade at the port will enable greater self-sufficiency to develop the country, while also chipping away at the international community’s resistance over recognition.
“As our economic interests align with the region and we become more economically integrated, that can only help with recognition,” Sharmarke says.
Perhaps. The political odds are stacked against Somaliland due to concerns that recognizing Somaliland would undermine decades of international efforts to patch up Somalia, and open a Pandora ’s Box of separatist claims in the region and further afield around Africa.
But greater self-sufficiency would undoubtedly result from a resurgent Berbera, and without this crucial infrastructure revival Somaliland’s economic potential will remain untapped, trapping its people in endless cycles of dependence, leaving those idle youth on street corners.
On April 13, 2016, up to 500 migrants died after a boat capsized crossing the Mediterranean. Most media reported that a large portion of those who died were from Somalia. But in Hargeisa following the tragedy, locals noted how many of those who died were more specifically Somalilanders.
“Why are they leaving? Unemployment,” says Abdillahi Duhe, former Foreign Minister of Somaliland and now a consultant in the Ethiopian capital, Addis Ababa. “Now is a very important time: we’ve passed the stage of recovery, we have peace—but many hindrances remain.”Related Articles
By Martin Khor
PENANG, Feb 17 2017 (IPS)
A new and deadly form of protectionism is being considered by Congress leaders and the President of the United States that could have devastating effect on the exports and investments of American trading partners, especially the developing countries.
The plan, known as a border adjustment tax, would have the effect of taxing imports of goods and services that enter the United States, while also providing a subsidy for US exports which would be exempted from the tax.
The aim is to improve the competitiveness of US products, drastically reduce the country’s imports while promoting its exports, and thus reduce the huge US trade deficit.
On the other hand, if adopted, it would significantly reduce the competitiveness or viability of goods and services of countries presently exporting to the US. The prices of these exports will have to rise due to the tax effect, depressing their demand and in some cases make them unsalable.
And companies from the US or other countries that have invested in developing countries because of cheaper costs and then export their products to the US will be adversely affected because of the new US import tax.
Some firms will relocate to the US. Potential investors will be discouraged from opening new factories in the developing countries. In fact this is one of the main aims of the plan – to get companies return to the US.
The plan is a key part of the America First strategy of US President Donald Trump, with his subsidiary policies of “Buy American” and “Hire Americans.”
The border adjustment tax is part of a tax reform blueprint “A Better Way” whose chief advocates are Republican leaders Paul Ryan, speaker of the House of Representatives and Kevin Brady, Chairman of the House Ways and Means Committee.
President Trump originally called the plan “too complicated” but is now considering it seriously. In a recent address to congressional Republicans, Trump said: “We’re working on a tax reform bill that will reduce our trade deficits, increase American exports and will generate revenue from Mexico that will pay for the (border) wall.”
The proposal has however generated a tremendous controversy in the US, with opposition coming from some Congress members (including Republicans), many economists and American companies whose business is import-intensive.
It however has the strong support of Republican Congress leaders and some version of it could be tabled as a bill.
Trump had earlier threatened to impose high tariffs on imports from countries having a trade surplus with the US, especially China and Mexico.
This might be a more simple measure, but is so blatantly protectionist that it would be sure to trigger swift retaliation, and would also almost certainly be found to violate the rules of the World Trade Organisation (WTO).
The tax adjustment plan may have a similar effect in discouraging imports and moreover would promote exports, but it is more complex and thus difficult to understand.
The advocates hope that because of the complexity and confusion, the measure may not attract such a strong response from US trading partners. Moreover they claim it is permitted by the WTO are presumably willing to put it to the test.
In the tax reform plan, the corporate tax rate would be reduced from the present 35% to 20%. The border adjustment aspect of the plan has two main components. Firstly, the expenses of a company on imported goods and services can no longer be deducted from a company’s taxable income. Wages and domestically produced inputs purchased by the company can be deducted.
The effect is that a 20% tax would be applied to the companies’ imports.
This would especially hit companies that rely on imports such as automobiles, electronic products, clothing, toys and the retail and oil refining sectors.
The Wall Street Journal gives the example of a firm with a revenue of $10,000 and with $5,000 imports, $2 000 wage costs and $3,000 profit. Under the present system, where the $5,000 imports plus the $2,000 wages can be deducted, and with a 35% tax rate, the company’s taxable total would be $3,000, tax would be $1,050 and after-tax profit would be $1,950.
Under the new plan, the $5,000 imports cannot be deducted and would form part of the new taxable total of $8,000. With a 20% tax rate, the tax would be $1,600 and the after-tax profit $1,400.
Given this scenario, if the company wants to retain his profit margin, it would have to raise its price and revenue significantly, but this in turn would reduce the volume of demand for the imported goods.
For firms that are more import-dependent, or with lower profit margin, the situation may be even more dire, as some may not be financially viable anymore.
Take the example of a company with $10,000 revenue, $7,000 imports, $2,000 wages and $1,000 profit. With the new plan, the taxable total is $8,000 and the tax is $1,600, so after tax it has a loss of $600 instead of a profit of $1,000.
The company, to stay alive, would have to raise its prices very significantly, but that might make its imported product much less competitive. In the worst case, it would close, and the imports would cease.
The economist Larry Summers, a former Treasury Secretary, gives a similar example of a retailer who imports goods for 60 cents, incurs 30 cents in labour and interest costs and then earns a 5 cent margin. With 20% tax, and no ability to deduct import or interest costs, the taxes will substantially exceed 100% of profits even if there is some offset from a stronger dollar.
On the other hand, the new plan allows a firm to deduct revenue from its exports from its taxable income. This would allow the firm to increase its after-tax profit.
The Wall Street Journal article gives the example of a firm which presently has export sales of $10,000, cost of inputs $5,000, wages $2,000 and profit $3,000. With the 35% corporate tax rate, the tax is $1,050 and after-tax profit is $1,950.
Perhaps the most vulnerable country is Mexico, where many factories were established to take advantage of tariff-free entry to the US market under the North American Free Trade Agreement. President Trump has warned American as well as German and Japanese auto companies that if they make new investments in Mexico, their products would face high taxes or tariffs on entry, and called on them to invest in the US instead.
Under the new plan, the export sales of $10,000 is exempt from tax, so the company has zero tax. Its profit after tax is thus $3,000. The company can cut its export prices, demand for its product increases and the company can expand its sales and export revenues.
At the macro level, with imports reduced and exports increased, the US can cut its trade deficit, which is a major aim of the plan.
On the other hand, the US is a major export market for many developing countries, so the tax plan if implemented will have serious adverse effects on them.
The countries range from China and Mexico, which sell hundreds of billions of dollars of manufactured products to the US; to Brazil and Argentina which are major agricultural exporters; to Malaysia, Indonesia and Vietnam which sell commodities like palm oil and timber and also manufactured goods such as electronic products and components and textiles, Arab countries that export oil, and African countries that export oil, minerals and other commodities, and countries like India which provide services such as call services and accountancy services to US companies.
American industrial companies are also investors in many developing countries. The tax plan if implemented would reduce the incentives for some of these companies to be located abroad as the low-cost advantage of the foreign countries would be offset by the inability of the parent company to claim tax deductions for the goods imported from their subsidiary companies abroad.
Perhaps the most vulnerable country is Mexico, where many factories were established to take advantage of tariff-free entry to the US market under the North American Free Trade Agreement. President Trump has warned American as well as German and Japanese auto companies that if they make new investments in Mexico, their products would face high taxes or tariffs on entry, and called on them to invest in the US instead.
After the implications of the border adjustment plan are understood, it is bound to generate concern and outrage from the United States’ trading partners, in both South and North, if implemented. They can be expected to consider immediate retaliatory measures.
A former undersecretary for international business negotiations of Mexico (2000-2006), Luis de la Calle, said in a media interview: “If the US wants to move to this new border tax approach, Mexico and Canada would have to do the same….We have to prepare for that scenario.”
In any case, it can be expected that countries will take up complaints against the US at the WTO. The proponents claim the tax plan will be designed in a way that is compatible with the WTO rules.
But many international trade law experts believe the tax plan’s measures will violate several of the WTO’s principles and agreements, and that the US will lose if other countries take up cases against it in the WTO dispute settlement system.
This prospect may however not decisively deter Trump from championing the Republicans’ tax blueprint and signing it into law, should Congress decide to adopt it.
The President and some of his trade advisors have criticised the WTO’s rules and have mentioned the option of leaving the organisation if it prevents or impedes the new America First strategy from being implemented. If the US leaves the WTO, it would of course cause a major crisis for international trade and trade relations.
There are many critics of the plan. Lawrence Summers, a former US Treasury Secretary, warns that the tax change will worsen inequality, place punitive burdens on import-intensive sectors and companies, and harm the global economy.
The tax plan is expected to cause a 15-20% rise in the US dollar. “This would do huge damage to dollar debtors all over the world and provoke financial crises in some emerging markets,” according to Summers.
While export-oriented US companies are supporters, other US companies including giants Walmart and Apple are strongly against the border tax plan, and an influential Republican, Steven Forbes, owner of Forbes magazine, has called the plan “insane.”
It is not yet clear what Trump’s final position will be. If he finds it too difficult to use the proposed border tax, because of the effect on some American companies and sectors, he might opt for the simpler use of tariffs.
In any case, whether tariffs or border taxes, policy makers and companies and employees especially in developing countries should pay attention to the trade policies being cooked up in Washington, and to voice their opinions.
Otherwise they may wake up to a world where their products are blocked from the US, the world’s largest market, and where the companies that were once so happy to make money in their countries suddenly pack up and return home.