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Canada Seeks To Break IMF Deadlock On Voting Power
"Canada has introduced a proposal to help break a deadlock among
International Monetary Fund (IMF) shareholder nations over how to increase
the voting power of rapidly-growing countries, such as China, that would
give them a greater say in the global financial institution.
The proposal, a copy of which was obtained by Reuters, will be considered
by the IMF's 24-nation board on Wednesday. It rewards 'dynamic' economies
that have contributed to world growth over a five-year period like China,
India, Mexico, Turkey, South Korea and Vietnam. It also slightly increases
the voting shares of poor countries. 'This achieves the desired outcomes
of seeing the actual voting share of advanced economies, including the
Group of Seven, decline, that of emerging markets increase, and that of
(low income) countries increase slightly,' the proposal says. ...
The Canadian proposal would reward dynamism using an economic method
called the 'filters approach.' The proposal rewards some 14
under-represented countries that have contributed more than 0.5 percent to
global growth, in purchasing power parity terms, over a five-year period
starting in 2000. These include China, Germany, Greece, Italy, Japan,
South Korea, Malaysia, Mexico, Spain, Thailand, Turkey, the United States
and Vietnam.
Although it is considered under-represented in terms of voting shares and
the size of its economy, the United States, which is the IMF's largest
shareholder, has said it will not seek an increase in its IMF voting
power. Additionally, the proposal also tries to capture future
developments in the world economy even if the countries are
over-represented in their voting shares. Under this scenario, the voting
power of Australia, Brazil, India, Indonesia and Philippines would be
increased. ..." [Reuters (07/23)/Factiva]
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Briefly Noted…
The Paris Club of creditor countries said on Thursday it had agreed in principle to accept an early debt repayment offered by oil-rich Gabon. The Paris Club said the offer would apply to debt not granted under Official Development Assistance that had been rescheduled by the Paris Club in 1994, 1995, 2000 and 2004 and the sum eligible for early repayment was $2.182 billion. [Reuters/Factiva]
Briefly Noted……
The World Bank and Kenya on Wednesday signed an agreement for a credit of $80 million to enable the east African nation expand coverage of targeted HIV and AIDS interventions to prevent and mitigate the impact of the disease. The agreement for the Total War Against HIV and AIDS (TOWA) Project was signed in Nairobi by Kenya's Finance Minister Amos Kimunya and Colin Bruce, World Bank's Country Director for Comoros, Eritrea, Kenya, Seychelles and Somalia. Speaking during the signing, Bruce urged the country's National AIDS Control Council (NACC) to continue its progress in strengthening the governance of the HIV/AIDS program. [Xinhua(China)/Factiva]
Briefly Noted…
The Philippine government is seeking a debt-for-renewable energy arrangement with development partners like the Asian Development Bank (ADB) and the World Bank, Energy Secretary Raphael Lotilla said on Wednesday. Speaking at the Corporate Social Responsibility Expo, Lotilla said this scheme could help the Philippines with its efforts on preventing global warming, and should be favorable with ADB and World Bank, who are also concerned with global climate change. [Xinhua (China)/Factiva]
Briefly Noted…
Norway plans to call two meetings this year of the Palestinian donors group it chairs to raise funds for the new Palestinian government, a senior Foreign Ministry official said Wednesday. The committee, which has not met since 2005, is co-sponsored by the United States and the European Union, and includes Japan, Canada, Russia and several Arab states as well. [The Associated Press/Factiva]
Briefly Noted…
France will link the provision of future development assistance to "to governance issues" in recipient countries, Jean-Marie Bockel, France's state secretary for cooperation and francophonie said Monday while speaking during this year's international days for cooperation and development. He underlined four criteria, which must be used in assessing the recipient countries "is the regime in power democratically elected? Are public policies tailored to benefit the masses? Are human rights respected? Are there efforts to fight corruption?" [Xinhua (China)/Factiva]
Briefly Noted…
Senior officials from six Asia-Pacific nations representing more than half the world's carbon dioxide emissions began a two-day meeting Thursday in Tokyo focusing on increased use of energy technology to reduce greenhouse gas emissions. Delegates of the Asia-Pacific Partnership on Clean Development and Climate will consider boosting the group's tie-ups with institutions such as the World Bank, the Asian Development Bank and the Japan Bank for International Cooperation to help finance projects to promote development, deployment and transfer of cleaner, more efficient technologies in the region, Japanese officials said. [Kyodo News (Japan)/Factiva]
Briefly Noted…
Spending on health is continuing to outpace economic growth with most countries having seen a near doubling of expenditure as a share of national income over the past 25 years, the Organisation for Economic Co-operation and Development reported yesterday. Per capita health spending has increased by more than 80 percent in real terms between 1990 and 2005, outpacing the 37 percent rise in gross domestic product per head. [The Financial Times (UK)]
Briefly Noted…
Global AIDS treatment will fall far short of a universal target to have five million people being treated by 2010, due to a continued lack of access to drugs by many of the world's impoverished people, said a new report from the International Treatment Preparedness Coalition. The report analyzing AIDS treatment in 17 countries and titled "Missing the Target" said free HIV treatment was actually not free in many poor countries. [Reuters/Factiva]
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Gaza's Economy, Already Fragile, May Collapse Unless Crossings Are Reopened, UN Reports
“Gaza’s already weak economy could collapse unless its main commercial crossing with Israel is reopened, Gaza businessmen and United Nations officials warned on Wednesday.
The Karni crossing has been shut since June 12 because the Palestinians who operated it were affiliated with Fatah and fled after Hamas took over Gaza in bloody fighting. But both Israel and the Fatah leader, President Mahmoud Abbas, have been in no hurry to help Hamas by working to regularize Gaza's economic life.
Karen AbuZayd, Commissioner General of the UN Relief and Works Agency, which deals with Palestinian refugees, said in an interview, ‘Without Karni the Gaza economy will collapse unless it is opened for exports and not just for imports, so we don't punish this whole people.’ Her agency is pressing both in Ramallah, Abbas's headquarters in the West Bank, and in Israel to reopen the crossing, she said. The agency is already providing food aid to 825,000 refugees in Gaza, while the World Food Program, another United Nations agency, is feeding an additional 250,000 people who are not refugees, she said. … Her Gaza director, John Ging, said, ‘If present closures continue, we anticipate that Gaza will become nearly a totally aid-dependent society, a society robbed of the possibility of self-sufficiency and the dignity of work.’ ….” [The New York Times and The International Herald Tribune/Factiva]
The Guardian adds that “… At least 68,000 Palestinians have lost their jobs in the past month since Israel closed the crossings out of the narrow, highly populated strip of land, according to the latest Palestinian figures. The closures came after the Islamist movement Hamas seized full security control of Gaza in mid-June after months of near civil war with its rival Fatah. Around 85 percent of Gaza's private-sector employees are out of work, according to Nasser el-Helou, a prominent business leader. Thousands of factories have closed as imports and exports have halted. …” [The Guardian (UK)/Factiva]
AP notes that “… The appeal came a day before the so-called Quartet of Mideast mediators - the US, the UN, the European Union and Russia - meet in Portugal with their newly appointed emissary, former British Prime Minister Tony Blair. ‘We are asking them (the Quartet) to take consideration of what is happening here. They must take political decisions to open all the crossings, and then the operational solutions will be found,’ said UN Director Ging. …
The UN provides food aid to 80 percent of Gaza's 1.4 million people. …” [The Associated Press/Factiva]
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US, Germany, Russia Grant $1 Billion Debt Relief For Afghanistan
“The US, Germany and Russia will grant $1 billion worth of debt relief to Afghanistan under a program designed to provide relief for heavily indebted countries, the US Treasury Department said Wednesday.
The three creditors will cancel 90 percent of the non-consessional debt payments Afghanistan would owe during its current International Monetary Fund program. As of Wednesday's announcement, the US will go beyond that standard and forgive 100 percent of all debt payments falling due. …” [Dow Jones/Factiva]
AFP writes that “… The debt relief comes under the terms of the enhanced Heavily Indebted Poor Countries (HIPC) initiative, the Treasury said in a statement. … The debt relief follows a decision by the executive boards of the World Bank and the International Monetary Fund, ‘with strong US support,’ to declare earlier in July that Afghanistan had formally qualified for the HIPC initiative, the Treasury said. ‘To achieve this, the Afghan government had to adhere to the terms of its IMF program as well as meet certain other requirements,’ it said. …” [Agence France Presse/Factiva]
Reuters adds that “… Total debt relief from the initiatives, once Afghanistan completes the HIPC program, will exceed $11 billion, representing 99 percent of its total foreign debt, the Treasury said. ‘This debt relief is a crucial step toward normalizing Afghanistan's relations with the international financial community and in helping Afghanistan move toward economic sustainability,’ the Treasury said in a statement.” [Reuters/Factiva]
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Briefly Noted
Scientists have discovered the underground remnants of an ancient lake in Sudan's arid Darfur region, offering hope of tapping a precious resource and easing water scarcity, which experts say is the root of much of the unrest in the region. The researchers hope to drill at least 1,000 wells in the dusty territory and pump the long-hidden water to ease tensions among communities living there - and strengthen efforts to restore peace in Darfur. [The Associated Press/Factiva]
Briefly Noted
Ugandasaid on Tuesday direct foreign and local investments almost tripled to $2.18 billion during the 2006/07 fiscal year partly due to growth in the hospitality sector ahead of a Commonwealth summit this year. The East African country received $758 million in investments over the same period in the previous year. The Uganda Investment Authority said 439 projects were licensed in the period between July 2006 and June 2007 compared with 347 projects the previous year. [Reuters/Factiva]
Briefly Noted
Bolivia needs to improve its investment climate to create jobs for the large numbers of poor people living in the country, the International Monetary Fund said Tuesday. "Poverty remains high in Bolivia, in part because of the limited employment impact of growth in the hydrocarbons and mining sectors," the IMF said in a summary of its annual "Article IV" review. [Dow Jones/Factiva]
Briefly Noted
China's forest coverage has risen constantly for almost two decades, increasing the nation's contribution to the world's carbon dioxide absorption, Zhu Lieke, deputy director of the State Forestry Administration, said on Tuesday. The world's forested area decreased by about 0.2 percent annually or 9.39 million hectares between 1990 and 2000, said Zhu, citing statistics from the Food and Agricultural Organization of the UN. However, forests in China had been growing by 1.2 percent or 1.81 million hectares every year in the same period, the highest growth rate in the world, said Zhu at a press conference. [Xinhua (China)/Factiva]
Briefly Noted
China is making good progress in tackling its growing AIDS problem, but deep-seated social stigmas continue to hamper the effort, the top UN official on the disease said Tuesday. Peter Piot, executive director of UNAIDS, praised China's government for adopting a more open attitude towards the disease and devoting more resources to the battle. [Agence France Presse/Factiva]
Briefly Noted
The Bangladeshi economy is expanding at the fastest pace in almost three decades as the military-backed government sells state assets and companies export more textiles and garments, according to the International Monetary Fund. "Growth is expected to remain around 6.5 percent to 7 percent over the medium term," the Fund said in a report. "The transitional government has moved forward with a number of previously stalled economic reforms." [The International Herald Tribune/Factiva]
Briefly Noted
Economic researches in the sphere of forestry and wood processing industry of Armenia, revealed a tenfold difference among the official and real indicators of annual volumes of deforestation. According to the information, given to ArmInfo by the coalition of ecological organizations "Echo-Armenia", the wood massifs in Armenia have been reducing annually by 2500 ha on average over the latest 6 years. [ARMINFO News (Armenia)/Factiva]
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UN Still Needs $2.5 Billion For Worst Crises
“The United Nations is short of $2.5 billion of the $4.4 billion it needs this year to confront the world's worst humanitarian crises, the top UN aid official said on Tuesday.
UN emergency relief coordinator John Holmes said funding had reached 43 percent of the amount the United Nations had appealed for by the middle of 2007 - a slight improvement on previous years. But he said it was inadequate given the needs in places such as Sudan, Somalia and Palestinian territories. ‘What we are talking about is really a few cents in the GDP (gross domestic product) of countries, the main donors, which are of course rich countries,’ Holmes told a news briefing after presenting a review to officials from donor countries. …” [Reuters/Factiva]
Dow Jones writes that “… The appeal, launched by the UN and 220 non-governmental organizations, covers emergency work in 19 countries including Sudan, the Democratic Republic of Congo and Somalia. Apart from the Palestinian territories, Nepal and East Timor, all of these crises are in Africa. The funds are also intended for rapid responses to natural disasters, such as the recent flooding in Bolivia and Zambia, and the cyclones which hit Mozambique and Madagascar.
Holmes said there was a big gap between some of the best-funded emergencies, such as Chad and Burundi, which have both received more than 60 percent of their appeals, and the worst-funded. The Palestinian territories, Liberia and Ivory Coast have all received less than 30 percent of the money they need, he said. ‘It's hard to explain why always some crises are better funded than others,’ Holmes said, adding that the situation in the Democratic Republic of Congo was becoming as serious as in neighboring Sudan but donors remain reluctant to give the two appeals equal weight.” [Dow Jones/Factiva]
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Swiss To Free Mobutu's Millions
“The Swiss Confederation president said Monday that Switzerland is prepared to restore to the Democratic Republic of Congo the fortune held in Swiss accounts by the late DRC dictator Mobutu Sese Seko.
Mobutu's holdings which have been blocked in Switzerland amount to about [$6.5 million], the Swiss leader Micheline Calmy-Rey told reporters in Kinshasa after meeting with the DRC president, Joseph Kabila. …” [Edmonton Journal (Canada)/Factiva]
AP adds that Calmy-Rey said that he “… asked Kabila to designate a representative in Switzerland so that a solution can quickly be found for returning the money. …” [The Associated Press/Factiva]
Meanwhile, The BBC reports that “… President Kabila briefly told reporters afterwards that he had expected the Swiss to announce they would return about $1 billion or even more. The late dictator was believed to have stashed billions of dollars embezzled from the government treasury in Swiss accounts. …” [The BBC (UK)]
Swissinfo notes that “… non-governmental organizations say they are concerned the frozen assets will be returned to Mobutu's family - which is what will happen at the end of 2008 unless their origin can be legally determined. …” [BBC Monitoring European and Swiss Radio International's swissinfo/Factiva]
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China's Roaring Economy Set To Overtake Germany
AFP reports that “China's economy grew so rapidly in the first half of 2007 that it is likely to overtake Germany as the world's third-largest by the end of this year, analysts say. …China's sizzling economy expanded even faster than originally thought last year, with the government revising 2006 growth domestic product (GDP) to 11.1 percent from 10.7 percent. Data released by China's statistics bureau last week showed the economy was worth 21.09 trillion yuan in 2006, about 2.65 trillion dollars based on last year's average exchange rate of 7.97 yuan to the dollar. The revision puts China in striking distance of Europe's largest economy within months. "With this upward revision, it is highly likely that China will bypass Germany to become the third-largest economy in the world in current US dollar terms by the end of this year," said Hong Liang, an economist at Goldman Sachs. According to the World Bank, Germany's economy was 2.9 trln usd in 2006. Economists expect GDP in the second quarter to near or equal its January to March pace of 11.1 pct growth. …” [Agence France Presse/Factiva/(07/15/07)]
Xinhua reports that “Regulators have already introduced a slew of piecemeal administrative measures [this year] to slow the economy, including two interest rate hikes, five increases in bank reserve requirements and new export curbs….” [Xinhua/factiva/(07/15/07)]
The Wall Street Journal reports that “overtaking Germany in absolute terms may not be seen as an important triumph to China's leaders, whose priority is raising incomes and living standards that remain far below those of the developed world….
China's imminent overtaking of Germany is only one instance of a broader global shift. As populous countries such as China and India become major forces in the world economy, established powers such as Europe, Japan and the U.S. are becoming relatively less important. Many economists already argue that global growth is becoming less dependent on the U.S. economy, which has slowed in the past year without greatly affecting others. ….” [The Wall Street Journal/Factiva/(07/13/07)]
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EU Envoy Warns Latvia Its Economy Is At Risk
"Latvia must do more to avoid risks posed by its overheating economy, EU
[economic and monetary affairs] commissioner, Joaquin Almunia said
Thursday, adding his voice to growing warnings about the situation in the
Baltic state.
"Global financial markets are not in the same mood as they were two years
ago," Almunia, told reporters during a visit to Latvia. An economy lacking
"stable fundamentals" is at major risk, he warned. "I'm impressed with the
dynamic growth of Latvia. But we cannot ignore that rapid growth has
created imbalances," he said. The Latvian economy grew by 11.9 percent
last year, the fastest rate since independence from the Soviet Union in
1991 and the strongest growth rate in the then 25-member EU. But Riga is
now struggling to keep inflation under control. "" [Agence France
Presse/Factiva]
FT reports that "" Latvian gross domestic product grew 11.2 percent in the
first quarter. The current account deficit, at 25.7 percent of GDP, and
inflation, at 8.8 percent in May, are also the highest in the EU and both
continue to rise. Rating agencies argue the figures are unsustainable and
fear that the economy could face a hard landing if consumer and business
confidence faltered. Standard & Poor's cut Latvia's rating to BBB+ with a
negative outlook in May, while a month earlier Fitch put it on negative
outlook.
Almunia welcomed the fact that the government had adopted a package of
measures in March to cut spending and slow credit growth, but warned "this
is not the end. More efforts are required to put inflation under control
in the medium term." "" [The Financial Times (UK)]
Reuters adds that "Latvian central bank chief Ilmars Rimsevics said on
Thursday he expected inflation to start easing this year and saw 2012 as a
realistic goal for the country to adopt the Euro currency. " Though
inflation was coming down, Rimsevics expected a slight revision higher in
the bank's forecast for inflation this year of 6.5 percent, he added. "
The European Commission and the International Monetary Fund have urged the
Latvian government to have a more restrictive budget policy, but Rimsevics
noted that Prime Minister Aigars Kalvitis was already saying he intended
to run a budget surplus this year, rather than just in balance. "
The government has said it wants to get inflation down to levels that
would allow it to meet the Maastricht criteria for Euro zone entry by 2011
and Rimsevics said that 2012 was "realistic" to adopt the single European
currency. An original goal to enter the Euro zone in 2008 has had to be
dropped. "" [Reuters/Factiva]
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Zoellick Backs World Bank's Role
“The World Bank's new boss, Robert Zoellick, has told the BBC that the
organization still has a vital role.
Responding to suggestions in the US that its work should be taken over by
the private sector, he said many countries relied upon its expertise. He
said developing nations recognized the World Bank as ‘a neutral and very
important source of knowledge and expertise.’ … Zoellick told the BBC
World Service that a key reason why the World Bank remained vital was that
many African nations simply did not have access to private Western
capital. He said that where private money was available to African
countries, the World Bank could help deliver it.
Zoellick added that the World Bank was determined to ensure that concerns
over climate change would not divert its attention from Africa. ‘There is
real sensitivity on the part of African countries that the World Bank and
developing countries will, all of a sudden, [shift their focus] on the
concerns of basic growth and social conditions in Africa to [focus on]
that of climate change,’ he said. ‘In reality, the two need to be
interconnected […] as climate change also affects poor countries.’ …” [The
BBC (UK, 07/06)/Factiva]
Meanwhile, The Observer writes that new UK International Development
Secretary, Douglas Alexander “… will make his first foreign trip next
week … to meet new World Bank president Robert Zoellick…. ‘I will be keen
to impress on him the need to make sure that the Bank has effective aid
programs both in low and middle-income countries; secondly that it
recognizes that climate change is an emerging issue; and thirdly that the
Bank listens to the voices of developing countries,’ he says. …” [The
Observer (UK, 07/08)/Factiva]
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APEC Trade Ministers Agree On New Strategy To Boost Trade
“Asia Pacific Economic Cooperation (APEC) ministers responsible for trade
have reached an agreement on a new Trade Facilitation Action Plan to
reduce trade transactions costs in the Asia-Pacific region by 5 percent by
2010, Australian Trade Minister Warren Truss announced in Cairns Thursday.
…
Truss welcomed the new strategy to boost trade, reduce costs to business
and which will benefit consumers in the Asia-Pacific region. The
importance of this work was highlighted in a draft report prepared for
APEC by the World Bank, presented in Cairns.
The report concluded that more transparent and predictable trade
regulations for importers and exporters could boost the collective trade
performance of APEC economies by nearly 170 billion Australian dollars
($145 billion). …” [Xinhua (China)/Factiva]
AP notes that “Asia-Pacific trade ministers said Friday they support the
current round of World Trade Organization (WTO) talks but will press ahead
with plans to examine the viability of a regional trading bloc that would
encompass half the worlds economic might. …
An APEC-wide free trade zone would stretch from the US to Russia and from
Chile to Australia and cover 40 percent of the world's population and 56
percent of its gross domestic product. …” [Associated Press/Factiva]
AFP adds that “…The ministers, who have been meeting for two days in…
Cairns felt so strongly about the need to push the WTO talks forward that
they issued a separate statement on the issue. … The trade ministers
stressed that Doha remained their priority but a draft report on regional
economic integration would be prepared for the APEC leaders' summit in
Sydney in September. …” [Agence France Presse/Factiva]
Reuters writes that “…The APEC ministers agreed to do more work towards a
Free Trade Area for Asia Pacific, in line with APEC's 1994 declaration in
Bogor, Indonesia, of free trade among developed economies by 2010 and
developing economies by 2020.
But APEC ministers did not set specific proposals on how to reach the
trade goal in a region that accounts for 60 percent of global economic
activity and half of the world's trade. ‘It is still seen as a long-term
prospect,’ Truss said.” [Reuters/Factiva]
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UN Business Summit Aims To Make Companies More Responsible
“UN Secretary General Ban Ki-moon opens Thursday one of the …biggest
meetings with business leaders to try to sharpen global standards for
corporate behavior.
More than 600 senior executives are registered for the two-day meeting of
the UN's Global Compact…which is aimed at harnessing globalization by
getting the private sector to voluntarily improve social and environmental
practices. …
Government officials including French Foreign Minister Bernard Kouchner,
civil society groups and labor leaders are also due to take part in the
gathering, which will discuss issues ranging from labor relations to
climate change. …
The UN's first ever survey on the Compact published this week also
revealed major shortcomings in a sample of about 400 participants,
especially in two key fields - human rights and anti-corruption - despite
overall progress. …” [Agence France Presse/Factiva]
Reuters adds that “…Amnesty International, Greenpeace and ActionAid,
speaking ahead of a summit of the UN Global Compact… said that voluntary
rules had done little to improve companies' practices.
They said the UN should monitor adherence to the Global Compact's 10
principles, such as pledges to abolish child labor and work against
corruption, and sanction signatory companies who are not upholding them. …
In a survey of 391 chief executives of firms participating in the Global
Compact, released this week by the consultancy McKinsey & Co., 59 percent
said they were incorporating environmental, social and governance issues
into their core strategy ‘much more’ now than five years ago. …”
[Reuters/Factiva]
FT writes that an “…assessment, published in the FT’s Corporate
Citizenship and Philanthropy special report on Wednesday, highlights
companies’ growing interest in long-term partnerships to tackle an
expanding range of social issues.
This will be a key theme for discussion by more than 1,000 business
executives and representatives of NGOs and UN agencies at a two-day Global
Compact leader’s summit opening in Geneva. …
Companies questioned said the number of partnerships with NGOs and
international agencies would grow in the next few years. …About
three-quarters of the more than 3,000 companies that have signed up to the
Global Compact’s 10 core ethical principles say they have worked with NGOs
on specific projects. However, many NGOs are ambivalent about the Global
Compact.” [The Financial Times (UK)/Factiva]
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EU, Brazil Ink Strategic Partnership Pact At Landmark Summit
“The EU and Brazil Wednesday signed a ‘strategic partnership’ to cement
relations at the first ever summit of the bloc and one of the world's
major developing economies. …
The agreement aims to deepen political ties between the EU and Brazil, as
well as cooperation in fields such as technology, climate change, science,
the environment, education and culture. …
Global warming…was also on the agenda with [Brazilian President Luiz
Inacio Lula da Silva] saying that ‘at a time when the international
community is discussing solutions to meet the global warming challenge,
Brazil and the EU can bring to the table innovative solutions regarding
biofuels.’ …” [Agence France Presse/Factiva]
Reuters adds that “…Lula said…it could pave the way for a trade deal
between South American trade group Mercosur and Europe. Under the
agreement, there will be yearly summits between the EU and Brazil in order
to work together on issues like climate change and renewable energy…
In a sign of Portugal's determination to take advantage of the potential
for alternative energy, oil company Galp Energia signed on Wednesday an
agreement with Brazil's Petrobras to produce 600,000 tons of vegetable
oils in Brazil. …” [Reuters/Factiva]
Dow Jones writes that “…The 27-nation bloc proposed an agreement that
would grant Latin America's largest country the same ‘strategic partner’
status as China, India and Russia - the world's other major developing
economies.
Lula and Portuguese Prime Minister Jose Socrates…said in a
jointly-authored article published Wednesday that closer ties would allow
them to reconcile their interests. … ” [Dow Jones/Factiva]
Xinhua reports that “…Socrates said the summit also sent ‘a positive
signal’ to the re-launching of the Doha round of World Trade Organization
talks, which has been shelved due to disagreement on farm subsidies. …
Lula said farm subsidies practiced in rich countries like the US have
undermined the interest of developing countries, but a win-win solution
could be found to revive the talks. …” [Xinhua (China)/Factiva]
WSJ notes that “Brazil's exploration of a free-trade deal with the EU
highlights an important shift in the trade agenda of emerging economies:
They are drifting away from a comprehensive global compact and toward
bilateral agreements they hope will help them better compete with China's
export juggernaut. …
Nations such as Brazil…are increasingly wary of a multilateral deal
because it would mandate tariff cuts, exposing them more deeply to
low-cost competition from China. Instead, they are seeking bilateral deals
with rich countries that are tailored to the two parties' needs, say trade
officials and analysts. …” [The Wall Street Journal/Factiva]
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BANK OF NEW YORK FAILS TO APPEAR IN RUSSIAN COURT TO DEFEND $22.5 BILLION LAWSUIT
Initial Hearing Began July 5 in Moscow Without The Bank Of New York
MOSCOW - The Moscow Arbitration Court heard opening arguments regarding the Russian Federation's $22.5 billion claim against The Bank of New York, Inc., now the Bank of New York Mellon Corporation, for money laundering activities the Bank had previously admitted.
"We believe it is offensive and an arrogant slap in the face to the
judge,
the court and The Russian Federation that the Bank of New York would
fail to
show to a hearing they were well aware of," said Maxim Smal, a
Moscow-based
attorney representing Russia's Federal Customs Service.
"We feel confident in the validity and strength of Russia's claim as
well as
our prospective to prevail in court with or without the defendant," he
said.
The next hearing is scheduled for Tuesday, July 10 at noon in Moscow.
"The United States District Court for the Southern District of New York
ruled last week, consistent with prior precedent, that the Russian
judicial
system is legitimate and honest such that any award in Russia should be
fully collectible in the U.S. where the Bank of New York does business.
Therefore, the Federation remains confident not only as to receiving a
successful outcome, but also with obtaining complete satisfaction of the
damages sought, especially now that the merger has created a company
capable
of satisfying any judgment awarded," said Smal.
On May 17, the Federal Customs Service for the Russian Federation filed
a
lawsuit with the Moscow Arbitration Court against the Bank of New York,
the
world's second-largest custodian of investor assets.
The lawsuit stems from a 2005 U.S. Department of Justice investigation
that
ended with a non-prosecution agreement forcing the Bank to pay $38
million
to the U.S. government to settle two criminal probes and admitting it
failed
to report $7.5 billion in illegal Russian transactions.
Federal investigators determined several accounts that existed at the
Bank
were part of an illegal network that allowed Russian businesses to
defraud
their government of customs duties and tax revenues by transferring
funds in
and out of Russia in violation of currency controls.
Although the suit is being heard in a Russian court, it will be tried in
accordance with U.S. law. Under accepted and clear legal principles, the
Bank of New York has already made signed admissions to its criminal
responsibility and its officers have been criminally convicted.
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Millennium Targets At Risk Without New Funds – UN
“The world will struggle to meet the Millennium Development Goals (MDGs)
on eradicating extreme poverty unless rich countries boost their
international aid budgets, UN Secretary-General Ban Ki-moon said on
Monday. Presenting a report at the mid-point to the international targets'
deadline, the UN chief faulted a lack of development funds for ‘mixed’
progress toward the commitments made in 2000…
Ban said it should be possible to reach the much-trumpeted international
goals by 2015 if wealthy countries ‘act now’ to bolster international aid
flows, and the G8 … meet their pledge to double aid to Africa by 2010. …
Only five countries - Denmark, Luxembourg, the Netherlands, Norway and
Sweden - have met a long-standing UN target of devoting 0.7 percent of
gross national income to development aid. Last year, donors gave net aid
disbursements worth $103.9 billion, or 0.3 percent of their combined
national income. …” [Reuters (07/02)/Factiva]
AFP adds that “…some 20 UN agencies released a report showing progress to
date and areas where more efforts are needed - saying the results are
‘predictably, uneven.’ …
Worldwide, the number of people in developing countries in extreme poverty
fell to 980 million in 2004 from 1.25 billion in 1990. However, this
success is ‘unequally shared,’ and due mostly to rapid economic growth in
south and eastern Asia. …” [Agence France Presse (07/02)/Factiva]
Xinhua writes that “…According to the report, although impressive
reductions in extreme poverty have been achieved in Southern, Southeastern
and Eastern Asia, the poverty rate in Western Asia actually doubled from
1990 to 2004. And despite the gains in sub-Saharan Africa, the region's
poverty gap remains the highest in the world.
Great challenges also remain in the fight against AIDS, reducing women
deaths in pregnancy and childbirth and providing access to basic
sanitation in poor countries. …” [Xinhua (China, 07/02)/Factiva]
AP reports that “…Some countries, such as China, have made great strides
over the past 7 1/2 years, the report says. But success has remained
elusive in other places, such as sub-Saharan Africa, where no country is
on track to meet goals of halving extreme poverty, ensuring universal
primary education or stemming the AIDS pandemic by 2015. …
Other worrying data show more than 500,000 women still die each year from
treatable and preventable complications during pregnancy or childbirth.
Half the population in the developing world lacks basic sanitation, and
carbon-dioxide emissions rose to 29 billion metric tons in 2004, from 23
billion in 1990. …” [Associated Press (07/02)/Factiva]
The Guardian notes that “…The UN study coincided with a report from the
British charity WaterAid which said attempts to hit the MDGs were being
hampered by under-investment in clean water and proper sanitation.
WaterAid warned Britain and the other big donors that investment in health
and education would be undermined if almost 5,000 children a day continued
to die from diarrhea and miss school to fetch water. …” [The Guardian (UK,
07/02)/Factiva]
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Cooperation Needed to Address Caribbean Economic Challenges, CIGI Studies Conclude
Waterloo – Caribbean nations need more robust cooperation within the region and with outside partners in order to address the pressing challenges of globalization. This recommendation flows from the first two studies of a new publication series launched today by the Centre for International Governance Innovation (CIGI). Called ‘The Caribbean Papers,’ this series is based on work that brings together researchers and practitioners to provide policy advice on current economic governance challenges facing the region.
The first paper, “Repositioning the Caribbean within Globalisation,” is written by Anthony Payne, professor at the University of Sheffield, and international expert Paul Sutton at the University of Hull. Payne and Sutton warn that the current crisis in the Caribbean results from the region’s failure to establish a viable role for itself within the global economy. For real progress to be made, the authors argue, countries in the region need to restructure the Caribbean Community (CARICOM). This will involve, at the very least, establishing a Caribbean Commission charged with leading a region-wide development strategy to become more innovative, proactive and directive than has been the case to date.
The second paper, “Brain Drain, Brain Circulation, Remittances and Development: Prospects for the Caribbean,” is written by Laura Ritchie Dawson, senior associate with the Centre for Trade Policy and Law at Carleton University/University of Ottawa. She assesses the debate on south-north migration, observing that discussion is moving beyond the brain drain to focus on remittances and brain circulation – where workers move abroad temporarily and return to invest newly acquired skills and capital in their local economy. Dawson makes the case that with domestic reforms and international cooperation, it is possible to both improve the returns of skilled emigration and avoid dependence on remittances in the Caribbean.
As the latest addition to the research institute’s publication programme, the Caribbean Papers discuss substantive issues such as trade, human capital, fiscal outlook, and others relevant to the region’s economic future. The Caribbean Papers are a product of CIGI’s major research project on Caribbean Economic Governance and are available online at: http://www.cigionline.org/publications
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Desertification Threat To Global Stability-UN Study
“Desertification could drive tens of millions of people from their homes,
mainly in sub-Saharan Africa and central Asia, the UN study [Re-thinking
Policies to Cope with Desertification] warned on Thursday. People
displaced by desertification put new strains on natural resources and on
other societies nearby and threaten international instability…
The study urged governments to work out ways to slow the advance of
deserts, from the Sahara to the Gobi, caused by factors such as climate
change and land over-use. Better plantings of crops and forests in nearby
dry lands were simple measures to help. …” [Reuters/Factiva]
BBC notes that “…The study was produced by more than 200 experts from 25
countries.
This report does not pull any punches - desertification is an
environmental crisis of global proportions, it says, and one third of the
Earth's population is potential victims of its creeping effect. …[It]
suggests that new farming practices, such as encouraging forests in dry
land areas, were simple measures that could remove more carbon from the
atmosphere and also prevent the spread of deserts. …” [BBC News (UK)]
AP writes that “…The report said about 2 billion people… are potential
victims of desertification… If the problem is left unchecked, some 50
million people could be forced from their homes over the next decade, the
report said. …
Policies on preventing desertification are often inconsistent, frequently
not implemented at local levels or inadvertently fuel conflict over land,
water and other resources. Funding is also a problem, with major donor
nations cutting funding by 29 percent at the last Conference of the
Parties to the UN Convention to Combat Desertification in 2005, the report
said. …
Along with reforming land use policies, [UN University's International
Network on Water, Environment and Health Director and lead author of the
report Zafar] Adeel said, governments could provide financial incentives
for herders and other dry land users to preserve threatened land while
giving them greater authority over what often is communal land. …”
[Associated Press/Factiva]
IHT and NYT add that “…The report's authors say that governments and
international groups must collaborate to solve what has so far been an
under-recognized crisis-in-the-making.
Water resources are over-exploited because poor people have no other
options and climate change has exacerbated the cycle. Governments and
wealthier nations must aid these populations to develop more sustainable
livelihoods, or themselves suffer future consequences, the report says. …
In an interesting twist, the report's authors suggests that dry marginal
lands can be partly restored and utilized as carbon traps, helping to
absorb emissions from the developed world. Developed nations might invest
in programs to prevent desertification as a way to compensate for the
emission their cars and factories create through emissions trading schemes
that already operate in Europe, for example. …” [The International Herald
Tribune and The New York Times]
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Former British Prime Minister Tony Blair Is Joining the Foundation Board of the World Economic Forum
Geneva, Switzerland – The former British Prime Minister Tony Blair is joining the Foundation Board of the World Economic Forum. The Forum, based in Geneva, Switzerland, is a foundation under the supervision of the Swiss government; the Foundation Board is its highest governance body.
“Tony Blair brings to the Forum a tremendous wealth of experience and knowledge in all areas of the global agenda and he certainly will be very essential to shape our activities. The Forum’s role as a catalyst for major global public-private partnerships, such as the Global Health Initiative and the Global Education Initiative, will be enhanced by his presence in the Board,” said Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.
While he was prime minister, Tony Blair participated in several Annual Meetings of the World Economic Forum in Davos, Switzerland. In his speech in January 2007 in Davos, he emphasized particularly the role that multistakeholder platforms, such as the World Economic Forum that brings together leaders from all walks of life, could play in addressing global challenges.
“Nations, even the most great, are realizing that they cannot pursue their narrow national interests without invoking broader global values. They are obliged to recognize that interdependence is the defining characteristic of the early 21st century,” Blair said, adding, “The shifting power equation is, in part, obviously about emerging new powers; but it is equally about the fact that power over global issues can only be effectively wielded today by global alliances, in turn based on global values.”
Peter Sutherland, a long-standing Foundation Board Member and Chairman of Goldman Sachs International and BP, United Kingdom, said, “Tony Blair will make an enormous contribution to the World Economic Forum’s objective of ‘improving the state of the world’. His great experience, commitment and energy is such that his impact on the World Economic Forum will be decisive in its future.”
“Tony Blair will be an outstanding addition to the World Economic Forum Board. The Forum has been an innovator in public-private partnerships, which represent a new way to tackle the most urgent issues of our time. Tony Blair is uniquely qualified to take the World Economic Forum to an even higher level of impact in this arena, focusing on the singular capabilities that each party can bring to shaping an effective partnership and to advancing a common agenda. I very much look forward to working with him at the Forum,” said Rajat Gupta, Foundation Board Member and Chairman of the Board of the Global Fund for AIDS, Tuberculosis and Malaria.
The World Economic Forum’s Members include the 1,000 foremost global companies. The Foundation works together with governments, NGOs and top experts to address the key challenges of our world. It has been particularly active in the areas of climate change, interreligious dialogue, poverty eradication, education and the fight against AIDS, tuberculosis and malaria. With its 300 collaborators in Geneva, New York and Beijing, it has for many years played an important role in regional development, such as in Asia and Africa. It has been active in reconciliation efforts in many conflict areas. The World Economic Forum is particularly known for its regional meetings and, above all, for the World Economic Forum Annual Meeting in Davos, Switzerland, which in 2008 will be chaired by Tony Blair in his new capacity.
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Inflation-Ravaged Zimbabwe Orders Prices Slashed
“President Robert Mugabe's government has ordered prices of basic goods
and services to be slashed to protect Zimbabweans battling with the
world's highest inflation rate, official media reported on Tuesday.
The measure is intended to return prices to the levels of June 18 - since
when the price of many basic goods has risen by up to 300 percent. But it
will be only a limited help for consumers when prices of basic goods such
as cooking oil, flour and milk are marked up every day. Official data put
annual inflation at 3,700 percent in April, and the figure now is certain
to be far higher. …” [Reuters/Factiva]
AP reports that “… Industry Minister Obert Mpofu announced price cuts of
up to two-thirds on a range of basic goods and services, from commuter
transportation to bread, sugar, meat, milk, corn meal and even newspapers,
state radio reported Tuesday. Official inflation is running at 4,500
percent, the highest in the world, but independent financial institutions
calculate real inflation on essential goods at closer to 9,000 percent. …
Mpofu ordered gasoline prices reduced from about $4 a gallon to about
$1.20. Prices of cooking oil, tires, soap and bus fares were to be more
than halved. State controlled newspapers were to reduce their cover price
by one-third, Mpofu said. …” [The Associated Press/Factiva]
IHT writes further that “Mugabe, has moved to require that virtually all
public companies cede controlling interests to ‘indigenous citizens… .’
The proposal, issued in draft legislation published Monday, would transfer
a 51 percent stake in the companies to Zimbabweans who were ‘disadvantaged
by unfair discrimination on the grounds of his or her race’ before April
1980, when the nation won independence from white rule. The proposal would
establish a government fund to help citizens finance stock purchases, and
would allow the government to reject any corporate mergers, acquisitions,
investments and other transactions in which Zimbabweans did not hold a 51
percent stake. It was unclear, however, how Zimbabwe's bankrupt
government, beset by hyperinflation and a currency crisis, would finance
the transfers. Nor was it apparent how the new owners of the companies
would be chosen. …” [The International Herald Tribune]
Meanwhile, AFP notes that “The UN children's agency warned Tuesday that
the hardship endured by families in Zimbabwe was entering a new and more
severe phase as the country slumps deeper into an economic crisis. Rampant
inflation, an unemployment rate of 70 percent, critical shortages of key
education, health staff and medicines, and another drought were driving
families into ‘colossal hardship,’ said a UNICEF statement. … The agency
warned that extended families who already had to endure poverty, the
effects of the country's 20 percent rate of HIV/AIDS and had taken in
orphaned grandchildren, were coming to the end of their tether. …” [Agence
France Presse/Factiva]
In related news, Dow Jones notes that “Fourteen Dutch farmers have
launched a compensation claim for $1 million each against Zimbabwe after
their farms were seized in a series of violent land invasions they say
were backed by Mugabe's government, The Financial Times reports Wednesday.
The lawsuit has been launched at the International Centre for Settlement
of Investment Disputes, an arbitration tribunal housed at the World Bank
in Washington.
The farmers allege that Mugabe's government breached its international law
obligations by failing to provide adequate police protection for Dutch
property owners in Zimbabwe between 2000 and 2002 and by actively
supporting a series of violent land invasions that led to their farms
being abandoned. They add that the Zimbabwean government subjected them to
unlawful racial discrimination by targeting white farmers. …” [Dow
Jones/Factiva]
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China Launches $1 Billion African Trade And Investment Fund
"China launched a $1 billion fund Tuesday to finance trade and investment
by Chinese companies in Africa as part of efforts to nurture commercial
ties with the resource-rich continent. The fund is part of Chinese aid and
loans to Africa promised by President Hu Jintao at a November meeting with
dozens of African leaders in Beijing. ..." [The Associated Press/Factiva]
AFP writes that vice-governor of the China Development Bank (CDB) and
chairman of the new fund, Gao Jian, told reporters at the fund's opening
ceremony "... 'The China-Africa Development Fund will aim mainly at
supporting the strategic cooperation in the political, economic and
diplomatic fields. Unlike other profit-making organizations which seek to
maximize profits, the objective of the fund is ... to avoid losses and
earn just enough profit to enable the running of the fund.' But he also
noted that Africa could be a big market for Chinese products that are no
longer popular at home, as the domestic processing industry is
experiencing overcapacity while moving up towards higher-value goods. ..."
[Agence France Presse/Factiva]
Reuters reports that this "... is the first phase of [the] $5 billion
China-Africa Development Fund, promised by President Hu Jintao at [the]
summit last November ... . The fund, financed by CDB, one of the country's
three policy lenders, will expand to $3 billion in the second phase and
eventually grow to $5 billion, said Gao.
Gao gave no details on the timetable for expanding the fund, but said it
might enlist the participation of other institutional investors in future.
..." [Reuters/Factiva]
FT notes that "The much-trumpeted $5 billion fund, portrayed by Beijing as
economic assistance, will be used to invest exclusively in Chinese
enterprises and their projects in the continent. Such policy of 'tying'
aid to purchasing goods and services from the donor country has been
attacked by development experts as wasteful and inefficient, and most
donor governments have been abandoning the practice. ... Tied aid has been
a feature of European, American and Japanese assistance to poor nations
for decades. But more recently they have been dropping such conditions,
given the evidence that tying aid reduces its effectiveness by as much as
a quarter. ..." [The Financial Times (UK)]
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Financial Services’ Transformation Explored in Technology and Innovation in Financial Services: Scenarios to 2020 in New Report from the World Economic Forum
Three scenarios explore how globalization and innovation will reshape the financial services sector over the coming years
Singapore – The pace of technology-led innovation and globalization is fundamentally changing the financial services landscape. Today, on the occasion of the World Economic Forum on East Asia in Singapore , the Forum launched its latest scenario report, aimed at exploring how these accelerating forces will transform the financial services sector through 2020. The scenarios draw on the views of over 150 practitioners and experts from both within and outside the IT, telecoms and financial services sectors, examining issues such as the development of emerging technologies, trust in cyber security, the role of specialized new players and the broadening access to financial services. Commissioned by the CEOs of the World Economic Forum Industry Partners of the Financial Services, IT and Telecoms industries, the report is the result of 12 months of research aimed at developing a tool to challenge business leaders and policy-makers with a set of plausible and provocative “alternative futures” of the financial services industry by 2020.
“Technological innovation will bring new opportunities for incumbent financial institutions, but also enable new entrants to reshape markets and disrupt value chains,” said Kevin Steinberg, Chief Operating Officer of the World Economic Forum USA and Head of its Financial Institutions Team. “These scenarios are designed to enable firms to stress-test their strategies; to think about possible futures where their current assumptions may no longer hold true.”
At a session bringing together leading financial services and IT firms at the World Economic Forum on East Asia , Jim Goodnight, Chief Executive Officer of SAS, noted: “There is no question that technology is accelerating innovation in financial services. The Forum’s scenario work is critical to establishing a clearer picture of the potential of technology to create increased value in both industries”.
The new report describes three scenarios, “Global Ivy League”, “Next Frontier” and “Innovation Islands”, each distinguished by the degree to which innovation is incremental vs fundamental, as well as the level of regionalization vs globalization of financial services markets. The scenarios examine a range of emerging technologies and innovations including peer-to-peer financial services platforms, biometric authentication, Internet-based identity protection solutions, as well as low-cost channels and solutions to bank the four billion people currently unbanked.
“One of the key insights of this report is that, due to innovation, a great variety of operating models will emerge, ranging from global industrialized manufacturers, last-mile distributors to component specialists,” explained Bernd Jan Sikken, Associate Director, Financial Services Industries, World Economic Forum, and project manager for the scenarios. “We may move from competition between financial institutions to competition between financial services ecosystems.”
ICICI Bank was one of the key contributors to the development of the scenarios. Referring to the impact of technology innovations on the developing world, K. V. Kamath, ICICI Managing Director and Chief Executive Officer, explained: “ Could banking the unbanked end broadened access to financial services become reality" Advances in technology and innovations will percolate down and make this possible. ”
These scenarios were commissioned as part of the World Economic Forum Industry Partnership Programme. Simon Mulcahy, Associate Director and Head of IT Industry, World Economic Forum, stated: “While the financial services and IT industries have been collaborating for years, we are only now seeing the possibility of fundamental discontinuities in business models and value chains. Future leaders of the financial services industries will be those that can continuously innovate at the speed of technology change.”
Note to the Media: The Executive Summary of the Technology and Innovation in Financial Services Scenarios to 2020 project, is available at http://www.weforum.org/pdf/scenarios/financial_services_executive_summary_lowres.pdf
The Industry Partnership Programme
Industry Partners are select member companies of the World Economic Forum who strongly support the Forum's commitment to improve the state of the world. The Industry Partnership leverages the unparalleled convening power of the Forum in a unique way, bringing together select Members of the Forum through a series of integrated modules throughout the year. The Industry Partnership will facilitate strategic decision-making for its participants by providing privileged access to industry-specific and cross-industry insights.
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Singapore Senior Minister: "Good Leadership Is Critical"
2007 World Economic Forum on East Asia Closes
Singapore – Good leadership is critical to achieving strong economic growth, Goh Chok Tong, Singapore’s Senior Minister, told participants at the closing session of the 16th World Economic Forum on East Asia. “If you don’t have a government that understands the importance of macroeconomic policies, investment in education, and how to manage socioeconomic divisions in a country, it would be difficult for an economy to thrive,” Goh said. Asia is fortunate to have had “courageous” leaders such as China’s Deng Xiaoping and Singapore’s Lee Kuan Yew, who steered their nations through difficult times, added Goh, who is also Chairman of the Monetary Authority of Singapore. “If you have a bad or ugly government, then we would not be here to discuss the finer points of development.”
The World Economic Forum on East Asia brought over 300 business, government and civil society leaders from 26 countries to Singapore to discuss the key challenges facing East Asia. Under the theme “The Leadership Imperative for an Asian Century”, the two-day meeting was held in partnership with the Singapore Economic Development Board (EDB).
During the closing session, Goh and other panellists discussed the results of a survey of participants aimed at identifying the top priorities for East Asia. Selecting one priority for each of the meeting’s four sub-themes, participants shaped the following agenda which will be used to guide further discussions on regional and global issues at the Forum’s Inaugural Annual Meeting of the New Champions in Dalian, People’s Republic of China, on 6-8 September 2007, and the World Economic Forum Annual Meeting in Davos, Switzerland, on 23-27 January 2008:
Asian Leadership: Building a common agenda shared by China, Japan, India, Korea and ASEAN on key regional challenges
Risk Management: Putting energy and environmental issues at the top of the agenda of regional institutions
Sustainable Growth: Improving energy security and efficiency in major consuming countries in Asia
Competitiveness: Adapting to the continued growth and rising economic influence of China and India
At the conclusion of the session, Nor Mohamed Yakcop, Malaysia’s Second Minister of Finance, invited participants to take part in the next World Economic Forum on East Asia in Kuala Lumpur on 15-16 June 2008.
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Complacency May Be Asia’s Greatest Risk it Surely is Ontario's
Singapore – With Asia enjoying the kind of economic growth and investment it hasn’t seen in a decade, the greatest risk to its stability and prosperity may be simple complacency – complacency over growing financial pressures, over the growing cost of climate change, and over the potentially explosive results of yawning income disparities across the region.
“It’s precisely because everyone’s feeling so good that we know something’s coming,” Tharman Shanmugaratnam, Minister of Education, Member of the Board of Directors, Monetary Authority of Singapore, told participants at the World Economic Forum on East Asia, which opened today in Singapore. The meeting brings together over 300 leaders from business, politics, government, civil society and the media from 26 countries to discuss East Asia ’s agenda under the theme “The Leadership Imperative for an Asian Century”. The meeting will be held from 24 to 25 June in partnership with the Singapore Economic Development Board (EDB).
Ten years after the Asian financial crisis wracked the region, Asia has been radically transformed. The region is again awash in cash and the countries most affected by the Asian financial crisis – Thailand, Indonesia, Malaysia and South Korea – appear to have moved far beyond the problems that fuelled the crisis. Bankruptcy laws have been tightened. Regulators now exercise much greater oversight over the banking sector, current account deficits have been turned into surpluses, and foreign exchange reserves are at all-time highs. Asia is now producing millionaires at a faster rate than any other region.
Yet, within this very success lies the seeds of new threats – from terrorism and trade protectionism to climate change and natural disasters. What policy-makers must fear most, Tharman said paraphrasing now-famous remarks by former US Defense Secretary Donald Rumsfeld about Iraq , are not the “known unknowns,” but the “unknown unknowns.”
Recalling his nation’s experience in touching off the crisis, Thailand ’s Minister of Finance, Chalongphob Sussangkarn, said global capital flows again pose a threat to stability. Asia ’s vast savings and trade surplus, juxtaposed with immense deficits in the United States , have created a global imbalance that has no apparent remedy. “We’re in a situation where there’s no real correction mechanism, and we’re hoping one day that the market will perform the correction,” Chalongphob said. “If you let the market correct the mechanism, it will snap and bring about a huge amount of economic chaos.”
Tharman pointed to asset price bubbles in stock and property markets as evidence of the growing pressures caused by the massive flood of capital into Asia . If a shock were to come, he said: “We can’t really tell how this unwinding is going to play out. Emerging markets have to brace themselves and put into place the shock absorbers needed to prepare for this event.”
One potential shock could come from the environment. Climate change is a growing threat to economic well-being and indeed to life itself. Yet pollution and environmental problems are no longer issues that any one nation can confront alone. Pollution, whether smog from Chinese factories or haze from burning Indonesian rainforests, has become a transnational issue, said Masaharu Kohno, Deputy Minister for Foreign Affairs of Japan. “As long as we make use of conventional technology, we cannot overcome these issues,” he said. “We need innovation. Innovation is crucial.”
As globalization spreads, it is also raising the spectre of resurgent economic nationalism, warned E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA , and Co-Chair of the World Economic Forum on East Asia . The governments and businesses hindering progress in the Doha Round of global free trade talks, he said, have forgotten just what trade has done to usher in the kind of prosperity the world is enjoying at present. “Free trade is what has allowed the global economy to grow,” he said.
Businesses don’t just have a role to play, they are critical to the future, said Isdell. “These problems are not just in the hands of one player,” he said. “It’s about what we do for society, about how we build that social license, how we remember that the value we add back to society is what allows us to operate." Companies can make a long-term difference by taking responsibility for their own impact, environmentally and socially. They can make a long-term advance by investing in education and improving its relevance in an increasingly competitive world, said James T. Riady, Chief Executive officer, Lippo Group of Companies, Singapore , and Co-Chair of the World Economic Forum on East Asia . “The educational system is not responsive enough to the new world that we are facing,” he said.
Perhaps the greatest risk to Asia , however, is a direct result of its rapidly growing prosperity. As more and more Asians are able to seize the opportunities presented by globalization, more and more Asians are being left behind. Social safety nets need to be improved so that the underprivileged can take advantage of economic opportunities equally and are equally insulated from the kind of shocks that may be forthcoming. “While one Asia is growing and growing very well, the other Asia that is falling behind has in it the seeds of social and political tensions that can threaten the prosperity that we’re seeing,” said Rajat M. Nag, Managing Director-General, Asian Development Bank, Manila. “The two faces of Asia that we’re seeing need to converge.”
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Emerging Market Countries Becoming Big Investors Elsewhere: OECD
Brazil - "Companies from emerging market countries such as China and Brazil invested a record $115 billion in cross-border transactions last year, half of which flowed to western industrialized powers, the Organization for Economic Cooperation and Development (OECD) reported Thursday.
The OECD [Trends and Recent Developments in Foreign Direct Investment
report] also found that the presence of countries in world rankings of
emerging market companies had increased markedly. ...The OECD attributed
the surge in overseas investment by emerging market nations to 'rapid
economic growth... high prices for raw materials and continuing investment
liberalization' in certain countries.
The OECD determined that overall, foreign direct investment into OECD
countries reached its highest level, $910 billion, in 2006, up 22 percent
from $747 billion in 2005 and its best showing since 2000. It said the
trend was buoyed by 'high corporate profits, low interest rates and robust
macroeconomic growth." [Agence France Presse/Factiva]
Dow Jones adds that "Foreign investment in the 30 countries of the OECD is
set to rise more than 20 percent in 2007, buoyed by high corporate
profits, low interest rates and robust economic growth, an OECD report
said Thursday.
The rise - which would see levels of cross border investment top $1
trillion for the first time since 2000 - is being driven by high-value
merger and acquisition deals, OECD Senior Economist Hans Christiansen told
Dow Jones.
Such deals have prompted an increase in hostile attitudes towards foreign
investors, the report said, but so far this hasn't affected appetite for
investment. ...And they are set to continue, Christiansen said, with the
US tightening its legislative framework and other OECD countries, such as
Japan and Canada, likely to follow suit. Christiansen also pointed out
that governments are becoming increasingly sensitive to deals which might
affect access to raw materials and energy. ...." [Dow Jones/Factiva]
AFX notes that "The US was by far the world's largest recipient of foreign
direct investment in 2006 partly as a result of the decline of the dollar,
the OECD said ...The US attracted $183.6 billion of FDI inflows in 2006,
up from $109.8 billion in 2005 ...Most of the US FDI inflows went into
takeovers of existing firms, it said.
The OECD also noted the emergence of a number of major international
investors domiciled in developing countries, such as India's Tata Steel
which bought Corus and Brazil's CVRD which acquired Inco of Canada.
...companies from emerging economies now have a more significant place in
world rankings, it said. ..." [AFX (Hong Kong)/Factiva]
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Singapore's Recommendations to Foster Innovation and Competitiveness
Singapore – Sharing Singapore’s recipe for always being ranked highly for competitiveness, Lim Siong-Guan, Chairman, Singapore Economic Development Board, recommended a heavy dose of “LSD” or “Lead, Speed and Differentiation” to encourage innovation in Asia. He said his country’s desire to always stay in the “lead” lends a sense of urgency to its people to innovate. Speed, through government agencies working in partnership to meet the needs of businesses, helps shorten the lead time for companies, he added. And differentiation, through identifying niche areas where few are staking their claim, helps sustain a country’s competitive advantage, he explained.
Lim was speaking at a session entitled “The Innovation Mantra: The Key to Asian Competitiveness"” on the second day of the World Economic Forum on East Asia in Singapore .
Borrowing from the Singapore experience, Lim stressed that these three aspects must be supported by other factors such as trust, through laws protecting intellectual property rights (IPR), and building knowledge, by promoting research in companies and universities.
Supporting Lim’s point on the close research partnership between universities and industry, Kiyoshi Kurokawa, Science Adviser to the Prime Minister, said innovation clusters – pointing to the example of Silicon Valley and the MIT campus – are very important sources of new ideas. But more important is the ability to commercialize these ideas and deliver products and services to the market. Chiming in, Jim Goodnight, CEO of SAS, USA , added that innovation clusters are becoming a trend in the US with companies building research and development facilities adjacent to campuses. He also stressed the importance of government policies in promoting and restricting innovation. “In the US we have an R&D tax credit that gives us extra money. If we increase our R&D activities, we get a credit that helps to stimulate us to put more money into research. Government polices can be restrictive and prevent innovation. One example is Europe . Pharmaceutical companies are no longer interested in producing new drugs in Europe , so they have moved their clinical trials and related activities to other countries such as India .”
Lamon Rutten, Joint Managing Director, Multi Commodity Exchange of India, said for innovation to flourish, there has to be room for serendipity. “You must provide space for coincidental innovation. Asia is very well placed for disruptive innovation and that will give Asia a global competitiveness. Many in Asia live on less than two dollars a day, and to reach those people, you have to be very innovative.”
Addressing the poor track record of IPR protection in some Asian countries as a stumbling block to innovation, Liu Jiren, Chairman and CEO, Neusoft, People's Republic of China , agreed that while software piracy is still a problem in China , he believed the country is making strides on the issue. Citing his company’s experience as an example, he said the reduction in piracy in China has enabled his software company to command greater market share than when he first started in 1991.
Speaking on IPR protection in India , K. V. Kamath, Managing Director and CEO, ICICI Bank, India , said the situation has been the same in his country. He noted that there has been greater awareness of IPR through education but pointed out that the ultimate solution lies with technology itself. “An Indian company recently bought a library of some 10,000 Indian movies and started selling them at less than a dollar each. That has removed the need for consumers to buy pirated movies.”
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UN Report: Universal Pension Of $1 A Day Would Reduce Old Age Poverty In Developing Countries
“A universal pension offering benefits equivalent to the extreme poverty line of $1 a day would reduce old age poverty in developing countries which are expected to see the most rapid population aging in coming decades, according to a new UN report launched Tuesday.
In most developing countries, even those with low incomes, the World
Economic and Social Survey 2007 said a basic pension ‘represents an
affordable option.’ …
At current trends, by 2050 almost 80 percent of the world's population
over the age of 60 - nearly 1.6 billion people - is expected to live in
what are now developing countries. That compares with 63 percent - or 422
million people - in 2005, the report said. …At the global level, the most
rapidly growing age group is aged 80 and over, the report said. …The
report documents the link between poverty and the lack of pensions. …
The UN Department of Economic and Social Affairs, which prepared the
report, said its researchers conducted an exercise to assess the cost of a
$365 annual pension to all those over age 60 in 100 countries and found
that for 66 countries the cost would be less than 1 percent of GDP in
2005. …” [Associated Press/Factiva]
PTI writes that “… pension systems in developing nations are significantly
underdeveloped and an estimated 342 million older people in these
countries currently lack adequate income security. …While the report
doesn’t advocate a one-size-fits-all solution, it stresses that future
pension systems should aim at universal access, be equitable and ensure
enough benefits to avoid old-age poverty. …
[The report] emphasizes that ageing is not the most important factor in
driving up the future cost of health care. Rather, rising costs can be
attributed to inefficiencies in the delivery of health services, the
introduction of new medical technologies, and price increases of
pharmaceuticals and health insurance policies.” [The Press Trust of India
and Asia Pulse (Australia)/Factiva]
St. Louis Post-Dispatch notes that “…At a news conference, [Jose Antonio
Ocampo, UN Undersecretary-General for Economic and Social Affairs]said
…’although the [aging population] phenomenon is more advanced in the
industrial economies, it's going to grow at a much faster rate in the
developing world’. ..
Ocampo said it is unlikely the economic challenge of an aging and
declining work force can be solved through increased fertility and
migration. The world, he said, will have to bring more women into the work
force, to lengthen the work lives of all workers, ‘and finally and very
importantly to increase labor productivity. …” [St. Louis Post-Dispatch
(US)/Factiva]
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| World Bank Warns Of Hidden Dangers From Aging Population In Eastern
Europe, Former Soviet Union
“By 2025, many countries in Eastern Europe and the former Soviet Union will have populations that are among the oldest in the world, according to a World Bank report released in Washington.
This will pose a threat to the region's recent economic success if pension
and health care reforms are not adequately tackled and policies are not
put in place to promote productivity growth, World Bank warned in the From
Red to Gray: The ‘Third Transition’ of Aging Populations in Eastern Europe
and the Former Soviet Union report. …
The most difficult challenges stem from concerns that the aging
populations will exert new - and possibly unaffordable - pressures on
public spending, especially for pensions and long- term care for the
elderly. These concerns are underscored by the reality that in many of the
former communist countries, financing for these systems is already
inadequate. …” [Xinhua (China)/Factiva]
WSJ writes that “…The median age of populations in Europe will increase
from 38 today to 49 in 2050, more than 20 years beyond the median age in
Africa, the Bank said. …. The fastest-aging countries over the next two
decades will be in those of Eastern Europe and the former Soviet Union.”
[The Wall Street Journal/Factiva]
AP notes that “…The region is projected to see its total population shrink
by almost 24 million over the next two decades, the report said. Russia
alone is projected to lose 17 million from its current level of around 145
million people. …
The analysis said growing older does not have to mean growing slower.
Aging is not a stop sign for national growth, it said, if countries enact
policies that boost productivity and labor force participation. …
Mukesh Chawla, World Bank Lead Economist and co-author of the report, said
though some increase in public spending is inevitable, it is possible to
reduce the blow. …” [Associated Press/Factiva]
In an interview with Radio Free Europe, Gordon Betcherman, World Bank Lead
Economist and co-author of the report says that “… The two things [these
countries] need to do are: implement a set of policies to ensure they
continue to grow strongly…and get their pension and health-care systems on
a much more sustainable footing…
We're hoping that this kind of report brings to the fore a number of
challenges that… will mobilize people to action. ...If countries don't
start acting now, it's going to be too late.” [Radio Free Europe
(US)/Factiva]
Sofia News Agency writes that “…It is this interaction of the three
transitions - demographic, economic, and political - that makes the
region, and its challenges, unique,’ said Arup Banerji, Human Development
Economist at the World Bank and co-author of the report. …
Strong productivity will be absolutely essential if the Eastern European
and former Soviet countries are to continue growing rapidly and converge
to EU incomes and living standards, the report concludes.” [Sofia News
Agency (Bulgaria)/Factiva]
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16th World Economic Forum on East Asia to Open This Weekend in Singapore
Singapore – At a June 21, 2007 press briefing, the World Economic Forum announced the names of the key participants who will take part in the 16th World Economic Forum on East Asia taking place from 24 to 25 June 2007 in Singapore. The meeting, held in partnership with the Singapore Economic Development Board (EDB), will bring together 300 leaders from business, politics, government, civil society and the media from 25 countries to discuss East Asia’s agenda under the theme “The Leadership Imperative for an Asian Century”.
“International attention has focused mostly on Asia's growth story," remarked Lee Howell, Director, Head of Asia at the World Economic Forum. "But the leadership imperatives linked to this impressive growth also need to be understood," observed Howell. “ Through the theme, “The Leadership Imperative for an Asian Century”, the World Economic Forum on East Asia will look at how Asia is shifting the global power equation and the implications going forward. The meeting will explore in depth the many facets of the region’s economic, social and political transformation in this emerging new context. Through the programme pillars – Asian Leadership, Risk Management, Sustainable Growth and Competitiveness – we hope to identify the leadership opportunities and challenges that will shape an ‘Asian Century’.”
Ko Kheng Hwa , Managing Director, Singapore Economic Development Board (EDB) said, "We are delighted to co-host the 2007 World Economic Forum on East Asia, an event that marks our long-standing partnership with the World Economic Forum. Asia has become a powerful driver of opportunity for global industry, technology and knowledge. Singapore's strategic position in Asia, pro-business environment and multicultural society, together with our networks and partnerships like that with World Economic Forum, make us a compelling hub for business, investment and talent. Singapore has also emerged as a key platform for companies to engage Asia, and for Asian companies to internationalize."
Prime Minister and Minister of Finance of Singapore Lee Hsien-Loong will host the welcome reception for participants at Istana, and Senior Minister and Chairman Monetary Authority of Singapore, Goh Chok Tong, will give a keynote address at the Closing Plenary. Other regional leaders participating this year include the President G loria Macapagal Arroyo of the Philippines, who is currently the Chair of the Association of Southeast Asian Nations (AS EAN), as well as Nguyen Sinh Hung, First Deputy Prime Minister of Vietnam; Ong Keng-Yong, Secretary-General, ASEAN; Najib Tun Razak, Deputy Prime Minister of Malaysia; Mari Pangestu , Minister of Trade of Indonesia; Muhammad Lutfi, Chairman, Investment Coordinating Board (BKPM), Indonesia; Chalongpphob Sussangkarn, Minister of Finance of Thailand; and Aun Porn Moniroth, Secretary of State, Ministry of Economy and Finance of Cambodia. Also joining are Kamal Nath , Minister of Commerce and Industry of India; Masaharu Kohno, Deputy Minister for Foreign Affairs of Japan; Kim Byong-Joon, Chairman, Presidential Commission on Policy Planning (PCPP), Republic of Korea; and Yi Gang, Assistant Governor, People’s Bank of China. Please click here for a List of selected participants.
The top executives co-chairing this year’s meeting are: Carlos Ghosn, President and Chief Executive Officer, Renault, France, and President and Chief Executive Officer, Nissan, Japan; E. Neville Isdell, Chairman and Chief Executive Officer, The Coca-Cola Company, USA; Jim Goodnight, Chief Executive Officer, SAS, USA; K. V. Kamath, Managing Director and Chief Executive Officer, ICICI Bank, India; and James T. Riady, Chief Executive Officer, Lippo Group of Companies, Singapore.
|
World Bank Approves $100 Million Loan To Support Micro-Business In China
“The World Bank announced on Wednesday that its executive directors have
approved a loan of $100 million to support China's efforts to finance
micro and small enterprises (MSEs).
The project would expand credit flows to MSEs on a mass-market and
commercially sustainable basis, said a World Bank statement. The project
consisted of wholesale and retail operations.
The China Development Bank (CDB), one of China's policy banks, had been
chosen as the wholesaler for the project and would lend to and arrange
technical support for participating financial institutions at the retail
level. …” [Xinhua (China)/Factiva]
Kyodo News reports that David Dollar, the World Bank's Country Director in
China said “…. ‘We hope the project will demonstrate to Chinese banks that
lending to medium and small enterprises can be commercially sustainable.’
The move follows a government announcement Tuesday that bureaucratic red
tape has been slashed to make it easier for people to set up a business.
…” [Kyodo News (Japan)/Factiva]
Reuters adds that “… The project will also be supported by a $50 million
loan from Germany's aid agency KFW and a grant from the German government
of EUR 3 million euros, the World Bank said.” [Reuters/Factiva]
Dow Jones notes that “… Most bank lending in China is to larger,
state-owned enterprises, but the government wants to increase loans to
smaller businesses to support laggard sectors and create a sustainable
economic model.” [Dow Jones/Factiva]
|
US Opens Caribbean Summit With Call To Boost Competitiveness
“The US opened a summit with Caribbean nations Tuesday with a call to some
of the poorest nations in its own backyard to strengthen competitiveness
and create a business-friendly environment. …
[US Commerce Secretary Carlos Gutierrez] said that while the World Bank
has highlighted significant progress in the Caribbean on setting rules for
business…there were wide differences on how they were implemented. …
Gutierrez said a key pillar of competitiveness was developing small
businesses, a critical element for the smaller Caribbean nations. …[He]
said he was encouraged by moves by the Caribbean nations to diversify
beyond textiles and sugar trade, to tourism and financial services -
industries which will help them better compete in the global economy. …”
[Agence France Presse/Factiva]
The Miami Herald writes that “With their stunning beaches and relatively
small populations, Caribbean nations have significant potential for
growth. But as drug traffickers increasingly target their open borders,
and trade preferences make them less competitive, they also face stark
challenges. That was the message heard Tuesday as leaders from the
15-member Caribbean Community officially began the three-day Conference on
the Caribbean…
‘While the region enjoys benefits from its natural beauty, its location
and its proximity to a large market, it can also be a victim of its
geography,’ said Graeme Wheeler, Managing Director of the World Bank.
…Wheeler complimented the region for coordinating regional policies
through the Caribbean Single Market and Economy (CSME), which allows the
free movement of certain skilled workers. But he warned that the CSME
could not achieve success for their small economies alone. …” [The Miami
Herald/Factiva]
Caribbean Media Corporation notes that “The Caribbean Tuesday called on
the US to continue assisting in the socio-economic development of the
region, warning that poverty was fuelling crime and violence in some
Caribbean states. …
Jamaica's Prime Minister Portia Simpson Miller said the situation had
become worse with the influx of guns into the region. She noted that while
the region appreciated the cooperation received from Washington in the
past, there was need for more action. …
Concerning trade in the region, Simpson Miller called for greater trade
openness in the markets of developed countries and for fewer barriers to
Caribbean exports. …
She said there was also a need to end the growing uncertainty about the
future of Caribbean Basin Initiative/Caribbean Basin Economic Recovery Act
(CBI/CBERA) and to maintain CARICOM's current access to the US for
ethanol. …” [Caribbean Media Corporation and BBC Monitoring/Factiva]
|
CJPME LAMENTS DEMISE OF PALESTINIAN UNITY GOVERNMENT -- BLAMES WESTERN GOVERNMENTS
MONTREAL – CJPME laments the apparent demise of the Palestinian Unity Government, established through long negotiations between Hamas and Fatah earlier this year. CJPME believes that lack of recognition of the Unity Government on the part of many Western governments – Canada included – helped to trigger the downfall of its promising creation. Over the weekend, Palestinian president Mahmoud Abbas unilaterally created a new cabinet and outlawed Hamas.
“With events over the weekend, we have two Palestinian governments claiming legitimacy,” said Tom Woodley of CJPME. “Given the results of the last year’s elections, it’s difficult to understand how Abbas’ new government will have legitimacy vis-à-vis the Palestinian people.” Despite the question of legitimacy, the US and Israel have been quick to give verbal support to Abbas’ emergency cabinet. Palestinian perceptions of Fatah collusion with Israel and the US, and a sense that Fatah’s previous conciliatory approaches didn’t pay off contributed to its fall in the January, 2006 Palestinian elections.
CJPME calls on Canada to ensure that Israel lives up to its responsibility under international law as military occupier of Gaza and the West Bank, ensuring the health and well-being of all Palestinian civilians.
“Beyond the political crisis, we’re especially concerned about the human situation for Palestinians, especially in Gaza,” said Rula Odeh of CJPME. Due to the Israeli military occupation over Gaza, the economy of Gaza was already in shambles. Hamas’ takeover of Gaza has now triggered an even more severe Israeli restriction of supplies into Gaza. Israel has halted fuel supplies to Gaza, and there is currently a run on bread and other basic supplies. “It’s absolutely inhumane. Once again, Israel is collectively punishing an entire population. As occupier, under international law, Israel is responsible for the health and well-being of the Palestinian civilian population.”
Earlier this year, CJPME disagreed with Canada’s rejection of the Palestinian Unity Government. “We felt the Norwegian approach was constructive, and Canada’s approach was counter-productive,” says Woodley. “The Unity Government was a sincere attempt to meet Israel and its supporters in the middle – implicitly addressing their concerns. Norway recognized the new government, yet continued to constructively engage with Hamas. When Israel and its supporters (including Canada) refused to recognize the promising steps take by the Palestinians, it was only a matter of time before the new government would disintegrate.”
“Look at the trend,” says Odeh. “Through their actions, Israel and its supporters are demonstrating that appealing to international law, and conciliatory gestures get you nowhere. This trend obviously disfavours approaches based on dialog and diplomacy. Furthermore, Palestinian democracy has been undermined and peace and security for both Palestinians and Israelis have actually been set back.”
Throughout the spring, CJPME has used various mechanisms appealing to all Canadians parliamentarians to promote support of the Palestinian Unity government, and the Saudi Peace Plan (a.k.a the Arab League Peace Plan.)
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MBEKI: TELL US YOUR PROBLEMS; WORLD ECONOMIC FORUM ON AFRICA ENDS
Cape Town - South African President Thabo Mbeki called on investors to tell government leaders about specific problems they encounter in doing business in Africa. Speaking at the closing session of the World Economic Forum on Africa, Mbeki invited the business sector to engage governments in a frank discussion about the issues and challenges they face. “It is important to know what you as investors are concerned about,” the president said. “We may not know what the problems are.” At one point, after Meeting Co-Chair Malvinder M. Singh, Chief Executive Officer and Managing Director of Indian pharmaceutical firm Ranbaxy | |
