June service notice

I will be guest blogging at Global Dashboard throughout June.

A curiosity

Courtesy of Wordle. I notice there is a naughty word in there – I didn’t write it, it was a quote from the potty-mouthed Jeff Jarvis. Anyway, I think it’s an interesting way of looking back over the last few months of From Davos to Seattle.

The crisis in quotes: part III

According to IMF calculations, emerging economies will account for 100 per cent of the growth in world output in the three-year period 2008-10. And even assuming that the US and European economies return to their long-term growth paths from 2011 onwards, the IMF expects emerging markets to account for 70 per cent of global growth for the following five years.

– Anatole Kaletsky, writing in yesterday’s Times.

Doha prospects, Pangloss-style

The new USTR, Ron Kirk has announced that he’s interested in pushing ahead on Doha and is aware of a need for a ‘new approach’. However, the FT reports that:

WTO members have given a cool reception to a proposal by the US and Canada that negotiators should drop their so far unsuccessful efforts to agree a general formula for cutting tariffs on farm and industrial goods in favour of a bilateral “request-offer” procedure used in past trade rounds.

This procedure would overcome objections by US farmers and business groups that the myriad flexibilities and exceptions for developing countries built into the present approach make it impossible to see what market access they will gain in practice.

He’s right, at least, that a new approach is necessary. That the WTO needs reforming is not in doubt, but even in the shorter-term, the style of negotiations will have to change in order for Doha to get anywhere.

According to Reuters:

Kirk took up a Canadian proposal to move beyond the current focus of talks which aim to reach an outline deal on the formulas for cutting tariffs and subsidies, known in WTO jargon as modalities, and go straight into detailed bilateral negotiations on cutting individual tariffs, known as scheduling.

U.S. ambassador Peter Allgeier told Wednesday’s meeting this was not about skipping modalities or dropping multilateral talks but supplementing them in the interests of transparency…

It could work like this. A U.S. negotiator sits down with her Indian counterpart to get a sense of how many U.S. tractors India would be willing to import, and at what duty. In return, the Indian diplomat would make clear how many temporary work visas India would seek in return.

But as IPE Zone rightly asks, ‘if you’re just going to have a noodle bowl of bilateral deals, scheduling, or whatever you call it, doesn’t that render a multilateral round superfluous?’ I’ve always tended to lean to the view that a multilateral trading regime is preferable to an ad hoc, bilteral one. That may be just some idealistic liberal internationalism in me. But despite its flaws, the WTO is in principle democratically constituted and provides the best chance for developing countries to make their case. It’s a lot easier to get bullied if it’s just you and the other guy and he’s got you over a barrel.

Whatever Ron Kirk might think about the pragmatism of his new approach, we are faced with the old question: is a bad deal better or worse than no deal at all?

Pre-European election activism

War on Want are running a campaign to encourage voters to lobby their local candidate for the European parliament on the subject of the EU’s trade politics. Their template looks like this:

I am writing to you as a constituent deeply concerned that European trade policies are exacerbating poverty and misery across the world. I would like to see a major change in the EU’s approach to international trade, so that it puts the needs and rights of poor people before commercial advantage for European companies.

As such, I want to vote for a candidate that will take action to help bring about a full-scale rethink of the EU’s trade policy and to ensure that it prioritises development, environmental sustainability and human rights in the world’s poorest countries. Please sign the pledge below to show your commitment to take action.

“If elected as a Member of the European Parliament in June 2009, I pledge to undertake some or all of the following activities:

• Write to the Trade Commissioner Baroness Ashton, and to the President of the European Commission, José Manuel Barroso, urging them to commit to a rethink before the end of 2009.
• Demand a cross-committee investigation in the European Parliament of the development, environment and human rights impacts of EU trade policies in developing countries.
• Sign a resolution in the European Parliament in support of a rethink of the EU’s trade strategy and policies.
• In Autumn 2009, actively participate in scrutiny of the new European Commission and its trade and development strategies.
• Write to the President of the European Commission, José Manuel Barroso and to the Commissioner of Administrative Affairs, Audit and Anti-Fraud, Siim Kallas, to call for a mandatory register of lobbyists.”

Aside from the manifest righteousness of the cause itself, it is pleasing to see an NGO asking its supporters to do something more than just sign an electronic petition. War on Want’s campaign is asking us to enagage in some real interaction with our (would-be) elected representatives. That’s how it’s meant to work in a democratic society. More of this sort of thing, please!

Media and the World Economic Forum on the Middle East 2009 in Jordan

This is a guest post by Kyle Christie, a blogger, political analyst and student of journalism. He writes at The Christie Communiqués and Through the Middle East.

Yesterday saw the end of the World Economic Forum’s meeting on the Middle East, held on the banks of the dead sea in Jordan. A range of panel discussions took place, and you can find reports on ‘Sustainability in the Middle East, Middle East E-Living‘ and ‘Closing the food gap among them.

If you really want, you can also see photos from Flickr of the conference.

There was also a panel discussion on ‘Race for an Audience: Media in the Middle East‘, the (hour and a half long) video of which can be seen here (sorry, embedding didn’t work).

By the end of the forum, the participants challenged themselves in two areas, as the Dubai Chronicle reports:

Energy – increase conservation; develop alternative energies; and utilize smart grids.

Youth – with 65% of the Arab world’s population under the age of 25, the region must develop this bulge by “providing them with education and developing, retaining and attracting talent,” said Samir Brikho, Chief Executive Officer, Amec, United Kingdom, and Co-Chair of the meeting.

For a critical opinon of the World Economic Forum, see ‘Leftist Youth’ writing at 7iber.com, a Jordanian website for young citizen journalists.

Unfortunately, there was little talk of micro-payment projects or, beyond the above discussion which is well worth watching, much discussion of the role of the media in the Middle East. Obviously the World Economic Forum can be expected to have other things on it’s mind – petrodollars and the wider recession – but press freedom and a focus on developing the Middle East (where there is still widespread poverty) are issues worthy of greater, more expansive debate.

Interlude

Coffee, aid and trade

Whilst I am still working on various projects before the end of formal teaching, my thoughts have begun to turn to my dissertation, which will address the topic of trade justice – what it means, how it works and so on. If that sounds vague, that’s because (at this stage at least) it is. This video should give you some idea of what I might be looking at and why I’m going to be looking at it: because trade is more important than aid.

If that piques your interest, you can find out more and take action at the film’s website.

The new transatlantic dialogue, trade wars, China and the IMF

I’m currently snowed under with work (Czechoslovakian democratisation, the prognosis for US hegemony, miscellaneous presentations and dissertation planning, since you ask), so apologies for the lack of posts. Things should even out from the beginning of June. In the meantime, there’s a few things I’d like to flag up.

• The Friedrich Naumann Stiftung für die Freiheit is running another online conference, this time on ‘The New Transatlantic Dialogue’. It is ongoing until 16 May and looks sure to be informative and useful.
• The epic beef-hormone conflict looks like it is coming to an end, while the nascent cheese war seems to have been nipped in the bud too.
• The Financial Times has an interesting profile of President Obama’s trade brinkmanship.
• The Guardian’s business section on Monday contained the headline ‘Europe accused of protectionism‘.
• The Catholic Times reports that ‘Pope accused of Catholic leanings’.
• Ngaire Woods discusses the influence of China on Bretton Woods reform.

‘There is no act, however virtuous, for which ingenuity may not find some bad motive.’

News from Kenya, care of the Daily Nation:

According to Dr Elizabeth Juma, who is the head of malaria control under the Ministry of Public Health and Sanitation, there has been evidence of people turning [mosquito] nets into fishing gear especially in Nyanza Province. Now a different group has discovered another lucrative business venture, and are using the nets to make wedding dresses.

I guess you have to give credit to the business acumen of it. Del Boy could learn a thing or two from these guys. Unfortunately, there are no pictures of the bridal wear available as yet.

(H/T: Aid Watch. Title quote courtesy of Thomas Jefferson.)

Leopards and spots

Marc Weisbrot of the Center for Economic and Policy Research has written an op-ed on the IMF’s increased funding and possibilities of reform. At the core of his argument is the belief that the Fund simply hasn’t changed since the bad old days so excoriated by the likes of Stiglitz and Sachs:

in spite of the depth of the world recession, the Fund is too willing to sacrifice employment, and increase poverty, in pursuit of other goals. A country can always reduce a trade deficit by shrinking its economy, since that causes households and businesses to import less. The main purpose of IMF lending in the current crisis should be to enable low- and middle-income countries to do more of what the rich countries are doing: adopt stimulus packages that counter the downturn.

It’s not often that an article comes along with that you can agree with without reservation or qualification, but I think that this might be one of them. In the meantime, The Economist worries that all the attention the IMF is getting runs the risk of sidelining the World Bank. Over at the Bank, Shanta Devarajan insists that ‘even though it is the least integrated with the global economy, Africa may be the worst hit region by the global economic crisis’, due to falling private capital investment inflows, falling remittances, falling commodity prices and falling foreign aid. Owen Barder addresses this last point when he notes that while Wednesday’s Budget didn’t cut aid, it didn’t raise it either. Duncan Green is right to suggest that with Britain’s fiscal condition the way it is, this demonstrates the Prime Minister’s genuine (and somewhat exceptional) commitment to international development.

Across the pond, Simon Johnson argues that the current financial crisis is a similar one to those that plagued middle-income countries in the 1990s:

In each of those cases, global investors, afraid that the country or its financial sector wouldn’t be able to pay off mountainous debt, suddenly stopped lending. And in each case, that fear became self-fulfilling, as banks that couldn’t roll over their debt did, in fact, become unable to pay. Just as in emerging-market crises, the weakness in the [U.S.] banking system has quickly rippled out into the rest of the economy, causing a severe economic contraction and hardship for millions of people.

It’s been widely observed that the US (and other western countries) are now engaging in the very economic recovery strategies denied to the likes of Argentina, Malaysia, Thailand and South Korea. (See Marc Weisbrot’s article for more on this – even now, El Salvador’s agreement with the IMF prevents it from using expansionary fiscal policy.) But for Johnson the financial sector has learnt little from the crisis:

there’s a deeper and more disturbing similarity: elite business interests—financiers, in the case of the U.S.—played a central role in creating the crisis, making ever-larger gambles, with the implicit backing of the government, until the inevitable collapse. More alarming, they are now using their influence to prevent precisely the sorts of reforms that are needed, and fast, to pull the economy out of its nosedive.

Plus ça change, plus c’est la même chose.

Boutros-Ghali: IMF reform flagging

Youssef Boutros-Ghali, chair of the IMF’s policy steering committee has spoken out against what he sees as the failure of G20 members to act on their commitments earlier this month to reform of the Fund.

Around the time of the London Summit, both the Financial Times and the Economist spoke out against reforming international financial institutions. They argued that the first concern should be dealing with the financial crisis, not dealing with ‘peripheral’ issues. As Boutros-Ghali puts it, ‘in a crisis, you want to put out the fire and not bother with plans to redecorate the living room.’ Nonetheless, he added that ‘reform needs to be done in a time of crisis’. This is the position I myself have taken.

A recent CEPR report is also far from sanguine:

the proposed quadrupling of IMF resources will have implications for many years to come, even after the world economy recovers. Although the new resources are unlikely to reverse the trend of governments avoiding, whenever possible, the Fund’s lending and influence, they will help to re-establish an unreformed IMF as a major power in economic and decision-making in low-and-middle income countries, with little or no voice for these countries in the IMF’s decisions. This could have long-term implications for growth, development, and social indicators in many countries.

The will to reform the Fund’s wildly disproportionate voting rights seems to be flagging already. This is both concerning and, if we’re honest, unsurprising. Those countries that gain from the status quo have little incentive to push for change. It is easier and more beneficial to sideline these issues of global governance while they focus solidly on domestic economic recovery. This is the kind of short-sighted attitude that has become par-for-the-course when it comes to global governance. Domestic politicians have no need to look beyond the next election and will therefore never side with long-term gain over short-term pain. The same phenomenon can  be seen in climate change negotiations or social security reform at the domestic level.

Aside from a benign world dictatorship, or politicians showing genuine leadership, both of which I think we can dismiss, perhaps it is necessary to use a system whereby unpopular or disadvantageous reforms are agreed, locked in and then ‘grandfathered’ into practice some time later, thus—to a degree—reducing the immediate disincentive for politicians to make hard decisions. Politicians do not need to worry so much about upsetting their constituents if the changes they agree are scheduled to come into force some years later. This is by no means a perfect plan – it is slow and open to abuse. But it might be one of the only ways to get around the short-termism of the politics of global governance.

On a more postivie note, Boutros-Ghali also said that:

In future, [the IMF] should vary its policy recipes… “I want an institution that is more involved not only as a global policeman but as a global witchdoctor.”

This is an encouraging confirmation of the Fund’s increasing tendency towards more heterodox economic thinking, though I’m in two minds about whether a ‘witchdoctor’ is quite what we’re looking for.

IMF’s latest World Economic Outlook

The IMF’s latest biannual World Economic Outlook has been (partially) published online. (Hat tip: Paul Mason.) As far as recovery goes, the Fund finds that:

expansionary fiscal policy seems particularly effective in shortening recessions associated with financial crises and boosting recoveries. However, its effectiveness is a decreasing function of the level of public debt.

That is to say, the more indebted the country, the less powerful Keynesian stimuli are likely to be. According to the IMF, the massive debts now held by leading economies mean that ‘the current recession is likely to be unusually long and severe and the recovery sluggish.’  For the record, the UK’s government debt is now 49% of GDP. Both historically and comparatively, this is huge.

The New York Times has been talking in quasi-serious tones about Britain seeking an IMF loan, alongside countries such as Ukraine,  Berlarus, Serbia, El Salvador and Armenia.

Wednesday is Budget Day.

Taking the concept of diversification a little too far

According to FP Passport (via Bloomberg), Lehman Brothers’ liquidators are holding onto the firm’s stock of uranium (yes uranium), in the hope that prices will rise soon. Apparently they have ‘enough for a bomb, if you knew how to do it’.

That’s what I’d call a toxic asset.

(I’ll be here all week. And beyond, lucky for you.)

Why we should be glad of Somalian piracy

It seems like the internets are going a bit mad today about piracy.

It’s not exactly clear whether Somalian piracy is suddenly increasing and media coverage is following suit, or whether the media has decided that this makes a damn good story and so we’re all just hearing more than usual about it. I have my suspicions. It looks like the CNN effect is at work again. Remember, though, correlation does not mean causation. At any rate, it gives everyone an excuse to do this:

The subject of correlation and causation reminds me of the original point of this post: why we should be glad of Somalian piracy. The answer is simple. Piracy helps prevent global warming. The evidence is incontravertible:

Graph courtesy of the Church of the Flying Spaghetti Monster. Indeed, it’s no coincidence that Somalia has the lowest CO2 emissions in the world.

Clearly this data is out of date, though. If piracy has been on the rise since 2000 (and let’s remember, according to all appearances it’s increased, oh, around 10,000% since this February), we can expect a long-term cooling effect. Step aside, Mr Gore, it’s under control.

The return of the bancor? Chinese ascendancy and the global monetary system

I have an editorial at e-International Relations entitled The return of the bancor? Chinese ascendancy and the global monetary system.

Established in Nov 2007 by students from Oxford, Leicester and LSE, e-International Relations (e-IR) is an independent, student-run website for people who are interested in international politics.

Children and the credit crunch

Children are a demographic not normally associated with financial problems. That said, as far as vulnerable sections of the population go, they rank pretty high. The BBC has asked children around the world how the financial crisis has affected them, as well as what they think of the G20 summit and it actually makes pretty interesting reading. Video here. The Cruncharama map is best, though I wish I’d had the vision to trademark that name…

It’s good to see that the environment gets plenty of attention from these kids and that they’re thinking beyond their own households. There’s some pretty sound political analysis going on, too. A student from Bassam Schools in Ad Dammam, Saudi Arabia said of the G20 that ‘it is not a matter of money but a matter of time.’

Also, kudos to the Beeb for running decent world news for children at all. After all, everyone knows that Newsround is the only place for intelligible current affairs coverage.

Photo by BBPANTONE, via Flickr (Creative Commons).

A few thoughts on apocalypticism and the financial crisis

I don’t care if it isn’t a real word. Apocalypticism is what’s going on here. I’ve been reading the latest issue of Prospect magazine and this month’s cover story is entitled ‘After Capitalism’. I understand that this is hyperbole and that it might seem like I’m attacking a straw man, but I shudder to think how people in years to come-people who aren’t yet alive-are going to look back on this. We’re going to look very silly indeed. One financial crisis (granted, we don’t yet know how serious it will be) and we (or the mainstream media, at least) react as if the entire system has collapsed, or should. Have I not been paying attention properly? Is this the final, inevitable rise of the proletariat and I just didn’t notice?

Prospect is not alone in this. The Daily Telegraph, The Times, The Independent, The Guardian – in fact, just about all of Fleet Street have been at it. Even the Davos delegates joined in, while the normally sober FT declared that this is a matter of survival.

There is an important distinction to be made between a crisis of capitalism (or capitalism being in a state of crisis) and a discrete crisis occurring within capitalism. There is no doubt that we are experiencing a systemic crisis, but capitalism isn’t just a system. At the risk of sounding overdramatic, capitalism is an idea and no-one really thinks that the idea itself is at risk.

Shrill alarmism might sell newspapers, but as well as reinforcing fear, it does a disservice to intellectual fidelity. Or to put it another way, what we have here is a classic case of Chicken Licken syndrome.

Postgrad geekiness warning: IMF statistics gripe

For reasons passing understanding, I have spent this afternoon wading through statistics on Chinese foreign direct investment. After several endless pdfs and more than a few really badly-built Chinese websites later, I arrived where I should have begun: the IMF. When I found what I was looking for, I was notified that full access to the statistical database would set me back $610.00. (Though it is free to developing countries.) Lucky for me, the Fund kindly offered me a five day free trial.

Am I missing something, or is this generosity somewhat misplaced, given that the IMF is a publicly funded body?

High horse? Moi?

Photo by Pink Sherbert Photography, via Flickr (Creative Commons).

The crisis in quotes (part two)

I must have missed this one first time around:

I always lived very frugally. I flew around in a private jet, I had a boat, but I always lived very frugally

– Allen Stanford

H/T: Outside the Beltway