Daniela Schwarzer
The current crisis in the euro area, the reforms governments have to implement, and the high unemployment levels in many member states are weakening the legitimacy of European integration. In my last post, I described how this output legitimacy crisis unfolds.
The debate about legitimacy and democratization in the EU traditionally focuses on the input side. As crises have surfaced, the flaws in the governance structures have also fuelled this old debate. In fact, it can hardly be argued that citizens have the chance to effectively influence the developments that deeply affect them, given the national fragmentation of decision-making and the resulting hazardous nature of macro-economic developments.
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C.P. Chandrasekhar
If the international media are to be believed the world, still struggling with recession, is faced with a potential new threat emanating from China. Underlying that threat is a rapid rise in credit provided by a “shadow banking” sector to developers in an increasingly fragile property market. Efforts to address the property bubble or reduce fragility in the financial system can slow China’s growth substantially, aggravating global difficulties.
The difficulty here is that the evidence is patchy and not always reliable. According to one estimate, since the post-crisis stimulus of 2008, total public and private debt in China has risen to more than 200 per cent of GDP. Figures collated by the World Bank show that credit to the private sector rose from 104 per cent of GDP in 2008 to 130 per cent in 2010, before declining marginally in 2011. The evidence suggests that 2012 has seen a further sharp increase.
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Nick Buxton and Cecilia Olivet, Guest Bloggers
“There is little use in going to law with the devil while the court is held in hell.” These words from an unlikely source – Humphrey O’Sullivan, a 19th Century Irish schoolmaster – became a widely used argument by multinational companies in the last decade as they justified the construction of an international arbitration system to decide state-investor disputes.
Agreeing with the questionable premise that national courts could not be expected to make unbiased decisions regarding investments by foreign parties, and believing that it was the only way to attract investment, governments worldwide signed 3000 international investment treaties over the last few decades. These treaties all relied on international tribunals such as the World Bank-hosted International Center for Settlement of Investment Disputes. With these treaties came a boom in cases and the emergence of a powerful new industry of arbitration lawyers that earn up to $1000 dollars an hour.
A new report by Transnational Institute (TNI) and Corporate European Observatory (CEO), Profiting from Injustice: How law firms, arbitrators and financiers are fuelling an investment arbitration boom, has decided to turn the spotlight on this hitherto secretive industry.
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Robert H. Wade and Jakob Vestergaard, Guest Bloggers
The International Monetary Fund staff and delegates gathered in Tokyo for the Annual Meetings of the Fund and the World Bank have the Eurozone crisis as their biggest headache. But they also have to decide how to proceed with another equally obstinate issue that is even more important for the future of the Fund: the organization’s governance model. In April 2012 Brazil, China, India, Russia and South Africa (BRICS) agreed to commit another $75 bn of extra resources for the Fund, via a channel which did not increase their share of the votes. But in return they made it clear that they want substantial changes in Fund governance, including a larger share of votes on the executive board.
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Robin Broad
Let me introduce myself as does my business card: I am a professor of development. I am aware that most mainstream economists – and even many so-called development professionals — define progress primarily through the lens of aggregate economic growth. Yet, my recent research in El Salvador shows why this definition of progress is wrong.
El Salvador is poor by almost any economic measure, be it per capita gross domestic product or per capita income. But a rich vein of gold lies buried beneath its mountains. This has led some prominent individuals in that country to argue that gold mining is the ticket to economic growth and therefore “development.” Former Salvadoran finance minister and mining company advisor Manuel Hinds said that renouncing mining would be “globally unprecedented” and “unjustifiable.”
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Robert Wade and Jakob Vestergaard, Guest Bloggers
In 1999, in the wake of the East Asian financial crisis, the US Treasury and the German finance ministry chose another 12 states to join the existing G7 as a new G20 of “systemically important” countries to forge agreements on global economic and financial issues. Otherwise, the G7 states calculated, they would be like the captain of a ship who stands at the wheel moving it from side to side, knowing that the wheel was not connected to the rudder. Of the newcomers, 11 were developing countries. So the formation of the G20 represented a significant expansion of country representation at the top table of global economic governance.
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Martin Khor
Food security and sustainable agriculture was one of the most important topics at the recent Rio+20 Summit, for the simple reason that all of us have to eat to survive, and agriculture has to be ecologically sustainable for production to continue into the future.
While the negotiators were busily hammering out a quite satisfactory text on this topic in a small room, a more interesting discussion was taking place on Food and Nutrition Security in the huge plenary hall sitting 2,000 people.
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Robin Broad, guest blogger
Today’s trivia category is how global mining corporations undermine democracy.
First a bit of background. The way licensing for mining works is that a company first gets an “exploration license.” With that license, that company gets the right to explore – or test – the area to get a better sense of the extent of the gold or whatever the relevant mineral is. After that, the company can move on to apply for an “exploitation” or “extraction” license — that is, an actual mining license. Different countries have different requirements for both licenses but typically a company would be asked to present an environmental impact assessment and a feasibility assessment among other things.
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Aldo Caliari, guest blogger
Part of the Triple Crisis Spotlight G-20 series.
At the G20 Summit Leaders may not have been able to agree on a lot of things. In fact, the European crisis was, like at the Cannes Summit last year, an urgent fire to put out. Its smoke helped cover the rest of the critical issues on which the world is still anxiously awaiting for this self-appointed committee to reshape the global financial and monetary system after the most severe financial crisis since the 1930s and to prove its worth.
But on other areas creeping movement is noticeable and worrisome. One of them is the approach to investment rules and the balance between attracting foreign investment and the need to preserve host countries’ policy space to regulate it appropriately so it serves development.
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Peter Chowla, guest blogger
Part of the Triple Crisis Spotlight G-20 series.
A joint statement by Brazil, Russia, India, China and South Africa (BRICS) released in the middle of the G20 summit in Los Cabos spelled out their plans for contributing to a boost in the resources available to the International Monetary Fund. The IMF wanted more money to backstop countries from the risks facing the global economy, most notably in Europe. Did the BRICS just cave in to pressure and, through the IMF, bail out European banks who lent recklessly? Or is it part of a broader agenda of emerging markets to reform global economic institutions?
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