How to discredit a financial regulator: the strange case of Iceland

Robert Wade and Silla Sigurgeirsdóttir, guest bloggers

Firms subject to a regulator generally use one of three tactics to render the regulator ineffective: emasculate, capture or discredit it – or some of all three. Iceland’s financial regulatory agency, the FME (with similar functions as the UK’s Financial Services Authority), has experienced all these tactics since its creation in 1998. A sustained campaign has recently been waged to discredit the CEO appointed in the wake of Iceland’s Great Crash in October 2008, culminating in his firing at the beginning of March 2012. His case illustrates wider issues in the relations between regulators and powerful interest groups subject to their regulation and supervision, in Iceland and beyond.

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The oil price conundrum

C. P. Chandrasekhar

All eyes are on the world’s oil market, with prices threatening once again to find a new high. The immediate cause for increased attention is a spike in oil prices since the beginning of the year.  With that 20 per cent rise taking Brent crude to $128 a barrel in early March 2012, there are fears that the price of oil may soon touch the peak $140-a-barrel it had reached in July 2008. The IMF’s Managing Director, Christine Lagarde, has declared that rising oil prices were now a bigger global worry than the debt crisis in Europe. Ali Naimi, Saudi Arabia’s oil minister also stoked fears rather than assuaging them when he said that Saudi Arabia was willing to ramp up its production to the tune of 25 per cent to bring down the “unjustified”, high price of oil.

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Why José Antonio Ocampo Should Be the Next World Bank President

Edward B. Barbier

José Antonio Ocampo, Professor at the School of International and Public Affairs, Columbia University, has just been officially put forward by the Dominican Republic and Brazil as a candidate for the Presidency of the World Bank.

Two of my fellow Triple Crisis bloggers, Kevin Gallagher and Stephany Griffith-Jones have endorsed Professor Ocampo’s candidacy for World Bank President, citing his many diplomatic and scholarly credentials.  I would like to second their “Triple Crisis” nominations, and also endorse his candidacy.

Although I have been familiar with Professor Ocampo’s contributions to policy and economics research for years, and both of us have participated in Professor Joe Stiglitz’s Initiative for Policy Dialogue at Columbia University, I did not have the pleasure of meeting Professor Ocampo until earlier this month, when we both were speakers at the Mount Holyoke Conference “Development in Crisis: Changing the Rules in a Global World”.

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Why Ocampo – not Kim – should be next World Bank president

Kevin P. Gallagher

Emerging countries have gone on the offensive to put an end to the “wink-wink” succession rule whereby Europeans get to choose who heads the International Monetary Fund and the US picks the president of the World Bank.

On Friday, developing countries are expected to nominate at least two candidates – Ngozi Okonjo-Iweala, the Nigerian finance minister, and José Antonio Ocampo, former finance minister of Colombia. If the decision is finally based on merit, as it should be, Ocampo will win: he is far and away better than any on the list of credible names, including President Barack Obama’s nominee, Jim Yong Kim.

Ocampo has the utmost credibility as a policy-maker and diplomat; he works well with the US and developing countries alike; and he is one of the leading academic economists in the field of development.

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Can Americans Trust Government Again?

Jeff Madrick

Contrary to what we hear from Republicans, America did not lose its way in the past few years. It lost its way a generation ago when it abandoned its faith in government.

Conventional wisdom has it that come November the 2012 presidential election will be determined by the state of the economy. Actually, the real battle will be over a much older fundamental ideological issue in American politics: what role government should play in shaping our future. This special issue of The Nation is dedicated to bringing the debate about government front and center as the presidential race heats up.

Anti-government ideologues are on a tear, passionately advocating austerity and smaller government as the cure for the worst economic downturn since the Great Depression. Apparently following the dictum that you should never let a crisis go to waste, they are spinning the recession to promote their pet causes, such as destroying “Obamacare” and weakening public sector unions. As a result, the stakes this November are higher than in any election since Ronald Reagan unseated Jimmy Carter in 1980.

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What makes Jose Antonio Ocampo a good candidate for President of the World Bank

Stephany Griffith-Jones

It is excellent news that developing countries are putting forward such outstanding candidates for the Presidency of the World Bank. I have been lucky to have worked closely with one of the two candidates, Jose Antonio Ocampo. He would be an excellent choice for many reasons.

Jose Antonio provides the rare combination of an experienced and successful policy-maker at the highest level (he was Minister of three portfolios in Colombia, including Finance, but also Agriculture and Planning), an outstanding international civil servant again at the highest level (including as Under Secretary General at the United Nations, as well as well as Head of the UN Commission for Latin America and the Caribbean), and a leading academic researcher in key issues relating to development and macro-economic policy.

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Alarm over damage from mining and resource use

Martin Khor

That the world faces multiple environmental crises is widely acknowledged. Much attention has been paid to climate change in recent years, as well as deforestation and biodiversity loss.

But also worthy of concern is how the extractive sector – mining, oil, gas – is running out of resources, and the often immense ecological damage caused in getting these resources out of the ground.

And there are also social consequences, as when the lands of local communities are poisoned, or when local people have to move out to make way for the industry.

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New business for new renewables

Sunita Narain

It was a trade exhibition abuzz with the restrained chatter of busy suited executives at company stalls making contacts and finalising deals. Nothing out of place except that this trade was about renewable energy technologies, which have unconventional reasons for growth. First, these technologies are seen as the most economical and feasible source of energy for millions of people unconnected to the electricity grid and having no electricity to light their houses or cook their food. This energy poverty is disabling and needs to be eradicated. Introduction of decentralised and improved technologies paves the way to catapult the poorest of the households into the most modern systems. Secondly, these technologies—from wind and solar to biomass—provide cleaner low-carbon energy options to combat climate change. These are future systems critical for survival of all.

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Remembering Alice Amsden: Alice Amsden and Asian Development

Matías VernengoAlice Amsden

Professor Amsden, author of Asia’s Next Giant: South Korea and Late Industrialization (1989), has passed away. Her contributions to the understanding of the Asian late development experience were essential to debunk the neoliberal views, already dominant by the late 1980s, according to which the export-led experience in Asia was market driven, in contrast with the State-led Import Substitution Industrialization (ISI) in Latin America. She argued that South Korea actually distorted prices (with tariffs, quotas and credit subsidies), that is, got prices wrong, and growth did not result from efficient allocation of resources by market forces. Further, the state intervened directly in production, as a banker and did active industrial policy picking up winners and promoting the consolidation of big national groups, the chaebols.

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India's Bilateral Investment Treaties: Worst fears realised

Jayati Ghosh

The Government of India has signed at least fifty Bilateral Investment Treaties – we do not know exactly how many because the information is still not in the public domain. In addition, there are at least ten ”Free trade” agreements or ”Economic Partnership” agreements that include investment chapters or clauses relating to bilateral investment protection, and more than twenty more such agreements are currently being negotiated, according to the website of the Ministry of Commerce.

Bilateral investment treaties have been viewed with serious reservations by independent analysts for several reasons. They can have far-reaching and typically negative implications for host country governments and citizens, because of the sweeping protections afforded to investors at the cost of domestic socio-economic rights and environmental standards.

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