M. Shaffaedin
The purpose of this piece is to propose a way BRICS can provide support for “unlocking Africa’s potential” for development through regional cooperation. This objective was agreed upon by BRICS countries in their recent meeting in Durban (South Africa). Let me first explain the background before making my proposal.
In their latest meeting, the BRICS countries agreed, inter alia, on discussing with African leaders the way “Africa’s potential” can be “unlocked”. They also reaffirmed their support for regional integration of Africa, and the “industrialization process through stimulating foreign direct investment”. Nevertheless, while emphasizing their willingness to help promote regional integration and industrialization of the continent, by supporting infrastructure development, they have not mentioned the mechanism by which Africa’s potential can be unlocked, nor the way BRICS could provide the necessary support. Supposedly, their proposals to establish “the BRICS Think Tanks Council” and “ a new Development Bank” are relevant in achieving the aforementioned objectives.
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Timothy A. Wise
Just when you thought the unhealthy ties between food, fuel, and financial markets couldn’t get more perverse, we get the announcement that Vitol, the world’s largest independent oil trader, is entering the grain-trading business, hiring a team from Viterra, based in Toronto, to run the show. And lest we toss this off as just another corporate deal, Javier Blas in the Financial Times reminds us that Viterra has itself recently been bought by Glencore, perhaps the world’s greatest global commodity speculator.
What could go wrong?
For the world’s poor, plenty. They’ve already endured three food price spikes in the last six years, fueled in part by financial speculators gambling on agricultural, energy, and metals commodities as they fled the wreckage of the housing and stock market crashes. This corporate deal may not change a thing, but it is a powerful symbol of what’s wrong with our broken food system.
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Robin Broad
Let’s start today’s trivia quiz with the Rome Papal conclave: Name 2 of the last 3 popes. And, for a bonus question, tell us something about the process by which a new pope is chosen.
And now let’s switch to the Geneva WTO Director General conclave – or more accurately the choosing of the new head of the World Trade Organization: Name 2 of the last 3 WTO heads. Tell us something about the process by which a new Director General of the WTO is chosen. And, wild card question, name even 1 of the 9 candidates vying to be head of the WTO.
If you are like most people I surveyed, you know more about the selection of the pope than that of the WTO head. And, even if you do know some of the WTO candidates, you probably don’t have much of a sense of who, if anyone, might be a better candidate for those of us who care about economic governance that balances social, environmental, and economic issues.
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M. Shafaeddin
This coming spring, a new Director General of the World Trade Organization (WTO) is to be chosen. Nine candidates have thrown their hats into the ring to replace Pascal Lamy, the current Director General (DG). A recent forum and debate was held with five of the candidates at the Institute of Management and development (IMD-Lausanne, Switzerland), which prompted a lively discussion as to why the press is not paying more attention to the contest to replace Lamy or the candidates vying for this position.
In my view, the main issue is not the question of awareness of the press on the appointment of the DG. Far more important are key issues surrounding the functions and the philosophy behind GATT/WTO rules.
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Kevin Gallagher
The International Monetary Fund (IMF) has officially endorsed an “institutional view” on the management of capital flows. Henceforth the IMF will advise nations, under certain circumstances, to deploy capital controls on inflows and outflows of capital. The IMF is aware that such advice may conflict with obligations that nations have under trade and investment treaties, and recommends that such treaties be reformed.
What the IMF Decided
On December 3, 2012 the International Monetary Fund made public an Executive-Board approved “institutional view” on capital account liberalization and the management of capital flows. In a nutshell, the IMF’s new “institutional view” is that nations should eventually and sequentially open their capital accounts. This is indeed in contrast with its view in the 1990s that all nations should be uniformly required to open their capital accounts regardless of the strength of a nation’s institutions. The IMF now recognizes that capital flows also bring risk, particularly in the form of capital inflow surges and sudden stops that can cause a great deal of financial instability. Under such conditions, and under a narrow set of circumstances, according to the new “institutional view” the IMF may recommend the use of capital controls to prevent or mitigate such instability in official country consultations or Article IV reports. In other words, the IMF now sanctions staff and management to recommend the use of capital controls to nations under certain circumstances.
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Robin Broad
As long ago as 1999, I argued that neoliberalism – the Washington Consensus – was cracked and that the development debate would once again open up. Now, after research in the Philippines and after studying the food prices crises of the past four years, I have become convinced that the crisis of food and farming could well be the catalyst for several countries to shift away from free- market policies. At the very least, some countries are shifting from more “vulnerable” to more “rooted” agriculture.
My most recent article on this subject, coauthored with John Cavanagh (director of the Institute for Policy Studies), was recently published in the Journal of Peasant Studies. We point out that a lot of countries have been left vulnerable in agriculture to the cruel batterings of volatile global markets.
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Mehdi Shafaeddin
In my previous blog piece I mentioned that although the member countries of BRICS have exchanged views a number of times to cooperate on trade issues, so far they have taken little concrete measures. The press in the West so far has argued that “big is not the same as cohesive,” rather than discussing how BRICS can mobilize their bargaining power to strengthen their position in trade relations with developed countries.
BRICS need to enhance access to markets for their actual and potential export products, and to obtain access to technology for developing comparative advantage in new products. In both cases, they need to enhance their negotiating/bargaining capacity. I have also shown that together they account for a significant proportion of world trade, and are a significant market for exports and source of imports for developed countries. Imports and exports can be regarded as bargaining assets as well as bargaining liabilities. While bargaining is a complicated issue involving multiple factors, I will confine myself here to the use of trade itself as a means of bargaining. In this piece, I will briefly explain how the net bargaining position of BRICS could be improved by mobilizing their bargaining assets and minimizing their bargaining liabilities. The question then is how trade itself can be used as a means of bargaining: what sort of measures can be taken? How can they shift demand and supply (not through trade restrictions) from one source of supply to another as a tool of bargaining?
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Frank Ackerman
The United States has been called “the Saudi Arabia of coal” since the energy crises of the 1970s; politicians of both parties have embraced this metaphor. It’s certainly true that both countries have more fossil fuel reserves than they can use for decades to come, located in their remote, empty regions; we call ours Wyoming.
Fossil fuel exports are also becoming a potential growth sector of the American economy. As in Saudi Arabia, energy export earnings can be used to pay for high-technology imports from more advanced economies. (And the parallels don’t stop there: does energy production somehow go along with politics based on fundamentalist religion, committed to restricting the lives of women? Let’s leave that for another day; today’s topic is economics.)
Coal use in the United States – almost exclusively for electricity production – is declining, thanks to competition from natural gas and wind power, along with stricter environmental regulation. This might seem like good news for the environment, but to the coal industry, it’s a looming disaster that can only be prevented by increased exports. Five new coal export terminals have been proposed in Oregon and Washington, leading to intense battles over the local and global impacts of increased coal shipments.
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