Has the Euro Been Saved?

Philip Arestis and Malcolm Sawyer

A number of changes have been taken or proposed as a result of the financial crisis of August 2007 and the “Great Recession” that are worth discussing in terms of the euro crisis. Most important, though, are the changes of the period between late 2011 and 2012: strict budget rules, banking oversight stripped from national governments might make the European Central Bank (ECB) become “lender of last resort.” We concentrate on the most recent ones at some length before we reach conclusions as to whether the euro has been saved from the euro crisis.

The European Union (EU) summit meeting, 28/29 June 2012, took a number of decisions: banking licence for the European Stability Mechanism (ESM) that would give access to ECB funding and thus greatly increase its firepower; banking supervision by the ECB; a “growth pact,” which would involve issuing project bonds to finance infrastructure. Two long-term solutions are proposed: one is a move towards a banking union and a single euro-area bank deposit guarantee scheme; another is the introduction of eurobonds and eurobills. Germany has resisted the latter, arguing that it would only contemplate such action only under a full-blown fiscal union; not much has been implemented in any case.

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The Deficit Disaster That Never Was

John Weeks, Guest Blogger

John Weeks is author of Economics of the 1%: How mainstream economics serves the rich, obscures reality and distorts policy, Anthem Press.

Some older readers might recall that during 2010-2013 politicians and the media manifested great anxiety over the unmanageable level of the deficit and a disastrously high public debt. Prominent among the deficit/debt Cassandras were a Republican Congressman by the name of Paul Ryan and neo-Ayn-Randian Senator Rand Paul. (Paul Ryan, Rand Paul—could they be the same person cleverly occupying the House and the Senate simultaneously? The possibility cannot be ruled out.)

Representative Ryan contemplates the fiscal cliff in 2012? (Detail from the painting “Wanderer above a sea of fog.”) Turns out there was nothing for him to see.

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Human Rights, the Global Economy, and the Arab World, Part 5

Ali Kadri

This is the final installment of a five-part series by regular Triple Crisis contributor Ali Kadri, Senior Research Fellow at the Middle East Institute, National University of Singapore, and author of Arab Development Denied: Dynamics of Accumulation by Wars of Encroachment (Anthem Press).

The series is based on an interview he granted to the Center for the Study of Human Rights at the London School of Economics (LSE). The original interview is available here. The previous parts as they appeared on Triple Crisis, with Dr. Kadri’s revisions and additions, are available here, here, here, and here.

The Laboratory for Advanced Research on the Global Economy [part of the Centre for the Study of Human Rights, London School of Economics] has as its objectives to provide a hub for creative work across disciplines and [to proceed] from theory to practice on issues central to concerns about justice under conditions of globalisation. How might the Lab’s mandate help inform your research?

The Lab anchors studies of development in the necessity to observe human rights as part of the broader picture to which societies may aspire in their day to day existence. The observance of human rights is not a luxury, but rather an obligation that states ‘must’ adhere to under international law. The overwhelming majority of states have ratified the international covenants on economic and social rights and the right to development. Yet, international law is the treaty attendant on the sovereignty of states. Sovereignty in turn is the rule and security of a dominant social class. Nations, such as those of the Arab world, whose working class security and sovereignty are voided by an alliance of international capital and their own merchant-bourgeoisie, can neither join a community of nations nor observe the application of the right to development in their favour.

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September 16, 2014 | Posted in: Uncategorized | Comments Closed

Land Degradation, Less Favored Lands and the Rural Poor: A Growing Global Problem

Edward B. Barbier

This summer, I completed with a graduate student of mine a major report for the Economics of Land Degradation Initiative, which is entitled Land Degradation, Less Favored Lands and the Rural Poor: A Spatial and Economic Analysis.  This study had three objectives:

  • To determine the spatial distribution of global rural populations on less favoured agricultural land and in less favoured agricultural areas from 2000 to 2010;
  • To determine the spatial distribution of global rural populations on degrading and improving agricultural land from 2000 to 2010;
  • To analyse how these spatial distributions affect poverty in developing countries.

The table below summarizes our findings over 2000 to 2010 for the distribution of rural populations on less favoured agricultural land (LFAL), in less favoured agricultural areas (LFAA), degrading agricultural land and improving agricultural land.

A sizable proportion of the rural population in developing countries is concentrated on LFAL, which are subject to low productivity and degradation due to steep slopes, poor soil quality or limited rainfall.   In 2000, over 1.3 billion rural people in developing countries, representing almost 36 per cent of the rural population, were located on these lands, and their numbers increased to 1.5 billion in 2010 (35% of the rural population).

Summary of spatial distribution of global rural population, 2000 to 2010

Developing countries are all low and middle-income economies with 2012 per capita income of US$12,615 or less (World Bank 2014).

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September 15, 2014 | Posted in: Uncategorized | Comments Closed

Sovereign Debt Restructuring: UN Takes a Big Step Forward

Bodo Ellmers, Guest Blogger

Bodo Ellmers is a Policy and Advocacy Manager at the European Network on Debt and Development (Eurodad).

The UN General Assembly has passed a landmark resolution that mandates the UN to create a “multilateral legal framework for sovereign debt restructuring.” Promoted by the G77 countries and triggered by the aggressive “vulture funds” lawsuits against Argentina, this resolution could be a game changer for the way future debt crises are managed. First and foremost, it has shifted the forum for political debate away from the International Monetary Fund (IMF) towards the UN.  However, shamefully, the EU’s vote was split over this crucial decision.

The path towards a real debt restructuring regime

It is certainly not news that the lack of a legal framework for sovereign debt restructuring—a state insolvency regime—has been a gaping hole in the international financial architecture. Prominent economists such as Joseph Stiglitz, senior officials such as the IMF’s former Deputy Director Anne O. Krueger, and civil society campaigners have pointed again and again to this lack.

However, governments from both debtor and creditor countries have so far been reluctant to put their political weight behind any meaningful initiative. The most relevant political commitment is probably the Monterrey Consensus’ vague commitment to “consider” new debt-workout mechanisms. The most relevant practical work, on the other hand, was the IMF’s concept for a Sovereign Debt Restructuring Mechanism, which was shelved 11 years ago when it faced a political deadlock in the U.S.- and EU-dominated IMF Executive Board.

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Green Clearance Test for India’s NDA Government

Sunita Narain

Environmentalists are rightly alarmed that the National Democratic Alliance (NDA) government is busy dismantling the environmental regulatory system in the country. Over the past two months, the media has reported that clearances for projects, from mining to roads, have been fast-tracked. While the website of the Ministry of Environment and Forests (MOEF) has not been updated in August, in the two months till July end, forest clearance was granted to over 92 projects, which will divert some 1,600 hectares of forest. More recently, it was reported that the National Board for Wildlife has processed many projects located near or in sanctuaries and national parks.

Additionally, rules are being changed, purportedly to speed up the process. This is being done in mainly two ways. One, as much as possible, MOEF is pushing decision-making to the states in the name of streamlining the process. The Environmental Impact Assessment (EIA) notification has been amended to delegate powers to clear certain projects to the state-level EIA authorities. This is being done with the full knowledge that the state agencies lack capacity and accountability. So, the effort is not to take informed decisions about adverse impacts of projects. The effort is to get rid of the clearance system or at least to push it as far away as possible.

Two, wherever possible the provision of holding public hearings or taking gram sabhas’ [village meeting] consent is being diluted or even removed. For example, small coal mines—classified as producing 8 million tonnes annually—have been allowed to double their capacity without holding the mandatory public hearing. Other changes are also in the offing that will further chip away at this condition, which makes it necessary to get the consent of the affected communities or at least to hear and heed their concerns. Clearly, listening to people is not convenient for industry.

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September 10, 2014 | Posted in: Uncategorized | Comments Closed

Green Clearance Test for India's NDA Government

Sunita Narain

Environmentalists are rightly alarmed that the National Democratic Alliance (NDA) government is busy dismantling the environmental regulatory system in the country. Over the past two months, the media has reported that clearances for projects, from mining to roads, have been fast-tracked. While the website of the Ministry of Environment and Forests (MOEF) has not been updated in August, in the two months till July end, forest clearance was granted to over 92 projects, which will divert some 1,600 hectares of forest. More recently, it was reported that the National Board for Wildlife has processed many projects located near or in sanctuaries and national parks.

Additionally, rules are being changed, purportedly to speed up the process. This is being done in mainly two ways. One, as much as possible, MOEF is pushing decision-making to the states in the name of streamlining the process. The Environmental Impact Assessment (EIA) notification has been amended to delegate powers to clear certain projects to the state-level EIA authorities. This is being done with the full knowledge that the state agencies lack capacity and accountability. So, the effort is not to take informed decisions about adverse impacts of projects. The effort is to get rid of the clearance system or at least to push it as far away as possible.

Two, wherever possible the provision of holding public hearings or taking gram sabhas’ [village meeting] consent is being diluted or even removed. For example, small coal mines—classified as producing 8 million tonnes annually—have been allowed to double their capacity without holding the mandatory public hearing. Other changes are also in the offing that will further chip away at this condition, which makes it necessary to get the consent of the affected communities or at least to hear and heed their concerns. Clearly, listening to people is not convenient for industry.

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Food, Trade, India, and the World

Deepankar Basu and Debarshi Das, Guest Bloggers

Deepankar Basu is Assistant Professor in the Department of Economics, University of Massachusetts-Amherst. Debarshi Das is Associate Professor in the Department of Humanities & Social Sciences, Indian Institute of Technology, Guwahati. A slightly different version of this article appeared in The Hindu on Sept. 4, 2014.

Two important items  adopted at the Ninth World Trade Organization (WTO) Ministerial Conference in Bali in December 2013 are the decisions on the Agreement on Trade Facilitation (TF) and on Public Stock Holding for Food Security Purposes. The former relates to the reduction of administrative barriers to trade—like dealing with custom barriers, documentation and transparency. The latter concerns the procurement and storage of food grains by state agencies for public distribution.

The attention of the world was recently focused on these two items as India, in a statement to the General Council of the WTO on July 25, argued that the adoption of the protocol on trade facilitation be postponed until a permanent solution on public stock holding for food security had been worked out. Despite intense pressure from developed countries, including the United States, India maintained its stance even as the deadline for adopting the protocol on TF approached and passed (on July 31).

Even though developing countries have generally supported measures to enhance food security, support for India’s position was not easy to come by this time around. Only three countries—Cuba, Bolivia and Venezuela—stood with India at the WTO. Later, the UN’s International Fund for Agricultural Development came out in support of India’s position. Not only were most members of the G-33 not with India, but even the other members of the BRICS group looked askance. Many countries have openly criticized India for intransigence. Is India’s stand unreasonable?

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In Defence of Merdeka (Independence)

Martin Khor

Independence has been achieved, yet has to be constantly defended, continuously renewed and expanded as the process of de-colonisation is on-going and new threats arise.

This week marks the beginning of our 58th year of Independence [in Malaysia]. Much has been done to entrench sovereignty and independence on our land. But much more needs to be done.

Colonialism did a comprehensive uprooting of traditional systems and replanted them with new ways, methods and systems to produce a chaotic and confusing amalgam of people, social patterns and economic modes. We are still shaking off the vestiges of that colonialism, whose shadows still fall large. We are still in the process of building independent policies, structures and systems. This is so in post-colonial developing countries in general. As the leaders of the Group of 77 and China stated in their summit held in Bolivia recently, the process of de-colonisation is incomplete and on-going, even decades af­ter the winning of Independence.

That is a good reminder. In particular, the structures and levers of the global economy are still under the domination of the rich developed countries. The former colonial masters may have let go of formal control of the colonies but they made sure to set up a system in which they could continue to control the important components of world finance, trade and economy.

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