U.S. Judge Thomas Griesa, who has repeatedly sided with vulture funds, has declared Argentina in contempt of court for its attempts to pay back over US$200 million in interest to creditors.
The Argentinian debt case reached a new landmark on Monday, as U.S. Judge Thomas Griesa ruled Argentina “in contempt” of court for attempting to pay back the debt it owes to bondholders.
Argentina defaulted in 2001 but reached debt exchanges with nearly all the creditors in 2005 and 2010, with a tiny minority refusing the deal.
Griesa justified his latest decision by saying the country is taking “illegal” steps to avoid his orders. Griesa had previously ruled that hold out creditors, known as vulture funds, had to be paid before other creditors could be settled with.
“These proposed steps are illegal and cannot be carried out,” Griesa said, during a court hearing in lower Manhattan, referring to the steps that Argentina has taken to pay back bondholders.
The judge also rejected any recognition of the newly approved law on Sovereign Debt in Argentina, passed by both its Congress and Senate.
In a further extraordinary rejection of Argentine sovereignty, Griesa warned that he will impose unspecified penalties on Argentina.
Argentine Foreign Minister Hector Timerman said in a statement late on Monday that the judge’s decision was a “violation of international law” and would have no impact other than to embolden the vulture funds against Argentina.
“The Argentine government reaffirms its decision to continue defending national sovereignty and asking the U.S. government to accept the jurisdiction of the International Court of Justice to resolve this controversy between both countries,” he said.
Report Examines Economy and Social Indicators During the Past Decade in Brazil
CEPR | September 29, 2014
The Center for Economic and Policy Research (CEPR) released a research paper today that looks at social and economic indicators, as well as policy changes that have occurred since 2003 in Brazil.
“The lives of tens of millions of Brazilians have been transformed by the economic and social policy changes of the past decade,” said CEPR Co-Director Mark Weisbrot, lead author of the paper. “A sharp increase in economic growth, combined with increased social spending, large increases in the real minimum wage, and increased bargaining power for labor allowed for greatly reduced poverty and unemployment, as well as declining inequality.”
“These changes appear to be durable, having mostly withstood the world recession and the slowdown in worldwide economic and trade growth of the past few years.”
Among the paper’s findings:
- Since the Workers’ Party (PT) won the presidency with Lula da Silva taking office in 2003, poverty has been reduced by over 55 percent, from 35.8 percent of the population to 15.9 percent in 2012. Extreme poverty has been reduced by 65 percent, from 15.2 percent to 5.3 percent over the same time period. Over the last decade, 31.5 million Brazilians were lifted out of poverty and, of that number, over 16 million out of extreme poverty.
- GDP per person grew at a rate of 2.5 percent annually from 2003-2014, more than three times faster than the 0.8 percent annual growth of the prior government (1995-2002). This was in spite of the 2008-09 world financial crisis and recession, which pushed Brazil into recession in 2009; and also including the slowdown of the past few years.
- While inequality remains high, there were large changes in how the gains from economic growth were distributed as compared with the prior decade. For example, the top 10 percent of households received more than half of all income gains from 1993-2002, but this fell to about one-third for 2003-2012.
- Social spending has consistently increased since 2003, rising from 13 percent of GDP to over 16 percent in 2011, the last year for which data is available. Education spending has increased from 4.6 percent of GDP in 2003 to 6.1 percent of GDP in 2011.
- Unemployment has decreased from 13.0 percent in 2003 to an average of 4.9 percent in the first quarter of 2014, a historic low.
The paper finds that these results were achieved due to policy choices, including often counter-cyclical fiscal and monetary policy, a reactivated industrial policy, lowered domestic interest rates and a break with IMF conditionalities following Brazil’s paying off its IMF debt early, in 2005. Economic stimulus helped Brazil rebound strongly from the 2008-2009 global recession. The government has raised the real (inflation-adjusted) minimum wage by 84 percent; this boosted pensions and public sector wages that are tied to it, as well as other wages and salaries.
Programs such as Bolsa Familia (BF) helped bring down poverty; since 2003, expenditures on the program in real (inflation-adjusted) Reais increased from 4.8 billion to 20.7 billion (0.2 percent of GDP to 0.5 percent of GDP). From 2003 to 2012 the number of individuals covered by Bolsa Familia increased from 16.2 million to 57.8 million. As a percent of the population, coverage increased from below 9 percent in 2003 to nearly 29 percent in 2012.
The PT government has aided the country’s industrial sector in part through the national development bank BNDES. Disbursements from BNDES have increased from 2.2 percent of GDP in 2005 to nearly 4 percent in 2013, with priority sectors for Brazil’s industrial policy receiving about 80 percent of BNDES disbursements between 2006 and 2012.
In the last few years the economy has slowed, although unemployment has continued to decline, and average wages have risen. The paper faults overly-tight and sometimes pro-cyclical macroeconomic policies, including monetary and fiscal policy, since 2011, for the economic slowdown; as well as the slowdown in world economic and trade growth.
A record level of $158.8 trillion in global debt, together with low economic growth is creating a serious threat of a new financial crisis, says the sixteenth annual Geneva Report.
Total world debt, excluding the financial sector, has risen from 180 percent of global output in 2008 to 212 percent last year, according to the report written by a panel of senior economists including three former senior central bankers.
“Contrary to widely held beliefs, the world has not yet begun to deliver, and the global debt to GDP ratio is still growing, breaking new highs,” the report said.
The World Bank data showed that in 2013 global GDP was $74.909 trillion.
At a world level, there was acceleration in real growth from the mid-1990s until the mid-2000s, largely driven by the impressive performance of emerging markets over this period.
However, output growth in advanced economies has been declining for decades, which accelerated after the crisis. The developed economies enjoyed only a temporary improvement in real output growth in the late 1990s which had already started gradually eroding by the mid-2000s.
A “poisonous combination of high and rising global debt and slowing gross domestic product, driven by both slowing real growth and falling inflation,” may cause a crisis, warns the report.
Despite the modest decrease in household debt in the UK and the rest of Europe, the credit binge in Asia has offset the improvements, pushing the global private and public debt to a new high in 2013.
Until 2008, the leveraging up was being led by developed markets, but since then emerging economies led by China have been the driving force in the process, thus becoming the most vulnerable to the next crisis.
“Although the level of leverage is higher in developed markets, the speed of the recent leverage process in emerging economies, and especially in Asia, is indeed an increasing concern,” says the report.
Finland – In a groundbreaking study Awara Group reveals that the real GDP growth of Western countries has been in negative territory for years. Only by massively loading up debt have they been able to hide the true picture and delay the onset of an inevitable collapse of their respective economies. The study shows that the real GDP of those countries hides hefty losses after netting the debt figures, which gives the Real-GDP-net-of-debt.
The moral of the study is that GDP growth figures as such reveal very little about the underlying dynamics of an economy if one does not simultaneously attempt to analyze what part of the growth is credited to simply artificially fueling the economy with new loans.
The study has found that the Western countries have lost the capacity to grow their economies. All they have left is a capacity to pile up debts. By massively accumulating new debt, they are able to keep up a semblance of at least sluggish growth, or of hovering around the zero growth mark.
If this massive debt would go towards investments, then there would be nothing wrong with it. But, it is not. The debt is going towards financing the losses in the national economies and essentially it all is wasted on consumption that the countries in reality cannot afford. The Western countries act like a 19th century heir to aristocratic wealth, borrowing from year to year to keep up the former lifestyle, while the estate is relentlessly dwindling. Sooner or later the prodigal heir would be forced to face reality and sell the remaining property to stave off the creditors, downgrade his dwellings, and rein in spending. Inevitably, the European countries and the USA will have to curb their excessive consumption, too, but for the time being they are putting off the final reckoning with new debt rather the way a drunkard reaches for the morning after drink to put off sobering up. In the case of the EU and the USA, we are speaking about a debt binge that has been going on for a decade.
While the situation has been generally bad for the last decade or so, it took a dramatic turn for the worse, or should we say for the catastrophic, following the onset of the global financial crisis in 2008. The shocking figures depicting the virtual crippling of the Western economies from 2009 to 2013 are illustrated in Chart 1. It depicts the development of real-GDP-growth per country in years 2005 to 2013. The chart shows that during this period Russia has been able to deliver real non-debt fueled GDP growth, whereas the Western countries are running huge deficits. The accumulated growth of the Russian economy from 2005 to 2013 was 147% while the Western countries accumulated losses from 16.5% (Germany) to 58% (USA). In the case of Russia, the real-GDP-net-of-debt figure is also corrected to adjust for the calculation error caused by an erroneous GDP deflator that Russian Statistics Agency (Rosstat) has used. We have discussed the persistent problem of Russia’s GDP growth having been underestimated due to the use of a wrong GDP deflator in the study Awara Group Research on the Effects of Putin’s Tax Reforms 2000-2012 on State Tax Revenue and GDP
Chart 2 shows the real GDP growth net-of-debt after deducting the growth of public debt from the GDP figure. Net of debt we see the scale of the Western economies, for example the Spanish economy, which amounts to the staggering figure of minus 56.3%. This while the conventional official method of crediting GDP growth with growth of debt would give only minus 6.7%.
The analysis shows that by these measures Russian economic growth, unlike that of the Western countries, has been comparatively healthy and not debt-driven. Russia has in fact a resoundingly positive ratio by these measures, where GDP growth has exceeded growth of debt by a staggering 14 times (1400%). The figure is astonishing when compared with the Western countries that have been flooded with new debt.
Chart 3 shows how much the accumulation of debt in the Western countries exceeds the official GDP growth. The USA is leading the pack with an increase in the debt load in years 2004 to 2013 of USD 9.8 trillion (in the chart in euros, EUR 7 trillion). In those years, the growth of the USA public debt exceeded the GDP growth 9 times (900%), which is illustrated by Chart 4, comparing the proportion of growth of debt to that of growth of GDP.
The comparison of growth of debt to growth of GDP reveals the UK, as the country that has amassed the most amount of new debt relative to GDP growth, having a new-debt-to-GDP-growth ratio of 9 to 1; in other words UK has taken on 900% new debt relative to the GDP growth. But the picture is grim for all the Western countries surveyed, less so for Germany, while Russia’s debt increase amounts to only a fraction of the GDP growth.
The analysis shows that by these measures Russian economic growth, unlike that of the Western countries, has been comparatively healthy and not debt-driven. Russia has in fact a resoundingly positive ratio by these measures, where GDP growth has exceeded growth of debt by a staggering 14 times (1400%). The figure is astonishing when compared with the Western countries that have been flooded with new debt.
The above figures are adjusted taking into account public debt (general government debt), but the situation is even worse when we consider the effect of private debt on the GDP. New debt of corporations and households have at least doubled private debt of most of the Western countries since year 1996 (Chart 5).
Reviewing these figures, it becomes evident that in reality Western economies have not grown in the past decade, rather the countries have massively inflated their debt load. With these levels of debt reached this cannot continue for long. There is a real risk that the bluff will be called sooner rather than later dropping the Western economies to GDP levels that they can carry without debt leverage. But in that situation they will not be able to serve the accumulated debts leading to catastrophe scenarios.
We have not included Japan and China in the analysis due to the difficulties attributed to finding consistent data for all the input variables. For those countries we have come across problems of fractured data that do not capture all the relevant years; inconsistent data across the samples we looked at; and uncertainties about conversion of the input data into euros. (We are sure that major research houses could overcome such problems, having greater and more sophisticated resources than ours). This exclusion of Japan and China is regrettable as Japan is the country worst affected by the problem of debt-fueled GDP growth, having a public debt to GDP ratio of well above 200%, and would therefore have been very instructive for our purposes.
Japan has been essentially living on debt since the early 1990’s. However, some of the more irrational Western analysts want to take Japan as a prime example to follow, arguing that since Japan has been able to pile up debt for some 25 years now, all the Western countries would be able to do it as well for the foreseeable future. In this they fail to grasp that Japan earlier had the luxury of being the sole country living on such exorbitant levels of debt. Japan has enjoyed great support from the Western countries to be able to continue that practice, not least for political reasons. Another important consideration against the idea that Western countries could continue to accumulate debt is that they have, since the early 1990’s, rapidly lost their economic hegemony in terms of share of world trade and global GDP. I have written about this in a recent article entitled Why the West is Destined to Decline.
The West is fast shrinking in economic significance relative to the rest of the world. This is demonstrated by comparing the GDP of the Western powers as represented by the G7 countries (USA, Japan, Germany, France, UK, Italy and Canada) with the GDP of emerging powers. As recently as 1990, the combined GDP of the G7 was overwhelming in relation to that of today’s 7 emerging powers: China, India, Russia, Brazil, Indonesia, Mexico and South Korea (not necessarily constituting one political block). In 1990, the G7 countries had a combined GDP of USD 14.4 trillion and the emerging 7 had a GDP of USD 2.3, but by 2013 the tables had been turned, as the G7 had USD 32 trillion and the emerging 7 had USD 35 trillion. (Chart 6).
With the challenge of the ever increasing share of world economy belonging to the emerging countries, it becomes clear that the Western countries will not be able to profit sufficiently from world trade to service their debt loads.
For the time being the Western countries benefit from the privilege of having currencies that the rest of the world still largely trusts as reserve currencies. In essence, the USD and the euro enjoy a kind of monopoly status. This is what allows Western countries to gain access to cheap debt and fuel their economies with central bank financing (quantitative easing or “printing of money”). But the risk is that, with the deteriorating debt situation and diminishing share of the global economy, they will forfeit this privilege, perhaps even in the near future. What would follow from this is sharply more expensive financing and inflation, with hyperinflation as the eventual outcome. In this scenario – which I consider inevitable over the next 5 to 10 years – the economies of Western countries would essentially collapse.
The problem is that there is no way of averting this scenario, because the Western powers have lost their competitive advantages as economic powers. Eventually, their economies must shrink to match their resource and population bases. (I have written about this in the article referred to above). But it seems that the ruling Western elites have no intention of facing up to these realities. They will try to keep up a semblance of prosperity with ever new debt, as long as they can. The political parties of the West have been essentially converted into voting machines with one singular concern – that of winning the next elections. To do that they will continue to engage in what amounts to bribing of the electorate – creating new debt that fuels the national economy.
But there is no way to turn back this historical tide. Just as the aristocrat of the old regime eventually squandered his legacy, so will the Western powers. This inevitability of the process is what makes it really scary, because I am afraid that the Western elite might be tempted to bail itself out from this doomsday scenario with a war of epic proportions. We are now truly approaching the Armageddon between the West, with its desperate economic circumstances, and the emerging world powers.
Jon Hellevig is a business consultant and economic and political observer. He is the co-editor and co-author of Putin’s New Russia and several books on philosophy and political and social sciences.
The coalition of developing countries at the United Nations has categorically condemned unilateral sanctions against Iran over its civilian nuclear energy program.
In a resolution issued on the sidelines of the 69th annual session of the UN General Assembly in New York on Friday, foreign ministers of the Group of 77 plus China for the first time explicitly rejected as unacceptable the imposition of unilateral economic sanctions against Iran.
Such sanctions would have adverse consequences on the development of the Iranian nation, the resolution said, calling for the immediate removal of the bans.
The illegal US-engineered sanctions on Iran have been imposed based on the accusation that Tehran is pursuing non-civilian objectives in its nuclear energy program.
Iran rejects the allegation, arguing that as a committed signatory to the Non-Proliferation Treaty (NPT) and a member of the International Atomic Energy Agency (IAEA), it has the right to use nuclear technology for peaceful purposes.
The 133-member Group of 77 plus China strongly rejected any unilateral punitive moves such as sanctions against developing countries and called for the removal of all such measures.
The foreign ministers of the member states noted that such measures would not only undermine the UN charter-based international law, but also would leave a negative impact on the freedom of trade and investment.
They further called on the international community to take an effective collective action to stop unilateral economic sanctions against developing states.
The Group of 77 was founded on June 15, 1964, by the “Joint Declaration of the Seventy-Seven Developing Countries” issued at the conclusion of the United Nations Conference on Trade and Development (UNCTAD) in Geneva.
The Group of 77 holds a one-year and rotating presidency among Africa, Asia and Latin America. Bolivia holds the chairmanship for 2014.
It began with a call from his distraught daughter, writes Harvard professor Ricardo Hausmann. On national television, Nicholas Maduro, Venezuela’s president, had threatened the good professor with a legal investigation. And the professor’s daughter was worried. So too were the Harvard Crimson, whose editorial staff challenged President Maduro’s alleged “bullying,” and the Boston Globe, which promptly published a Hausmann missive. Lest one fears for the professor’s wellbeing, he assures us that he is free and unafraid, adding that he has “the protection of the U.S… the protection of Harvard.” Now we can all feel good, the USA’s robust free press, together with its august academic institutions, and the state itself, appear to be standing for academic freedom and empowering a lowly professor to speak truth to presidential power. Closer scrutiny suggests that quite the opposite may be true.
So how did the professor come to do the Joropo with the president? The latter was most outraged by an opinion piece Professor Hausmann co-wrote for Project Syndicate, “Should Venezuela Default?” President Nicholas Maduro recognized that Hausmann is an influential actor on the international banking scene and that his default prescription would only cause more fear, uncertainty and doubt.
And risk perception has a price. Hausmann’s article opens with exactly that measure. “Markets fear” that Venezuela may default on its debt and the price of this fear is that the interest rates on Venezuelan bonds are significantly higher than those on Mexico or Nigeria. This, in turn, has a negative impact on the lives of regular folk. Although Hausmann fails to note effective government countermeasures to protect the poor, the thrust of his remarks are true – higher interest rates hurt ordinary people… while the creditors’ returns are all the more secure.
In a man-bites-dog like inversion of roles, Hausmann, a JPMorgan Chase consultant and former chief economist at the Inter-American Development Bank, concludes that to “default on 30 million Venezuelans, rather than on Wall Street, is a… signal of moral bankruptcy.” The article had its all too predictable outcome. Interest rates shot up even more, settling back somewhat only after vigorous assurances from President Maduro.
All of this should immediately dispel any image of Hausmann as a cloistered academic analyzing reams of computer printouts in some basement office or lost in the stacks of Widener Library. In fact, Hausmann is a power player on the global scene and his dance with Venezuela’s revolutionary leadership began long ago.
Not immediately apparent from his Harvard CV is the gravity of his 1980s involvement in the Venezuelan government. Specifically, in the late 1980s, Hausmann was part of President Carlos Andres Perez’s economics cabinet. They implemented an IMF-style austerity program setting off the 1989 Caracazo—a popular rebellion put down by a massacre claiming over a thousand lives. Surely, given the resolve it demonstrates, this is an impressive fact meriting its own CV entry!
This success was followed by his promotion to Minister of Planning in the early 1990s and then, after Carlos Andres Perez was forced out of office for embezzlement, Hausmann’s career advanced with him becoming the Chief Economist of the Inter-American Development Bank. Today, in addition to his Harvard gig, Hausmann is an advisor to many banks, governments and inter-governmental bodies.
Besides the massacre, none of this is particularly objectionable. Indeed these are the hallmarks of a successful career within the international mandarinate that governs the global economy. Of course, this belies the image of the innocuous and vulnerable professor that opens Hausmann’s Globe piece. There he also suggested the improbability of an American president attacking a professor; were it to happen, he speculates that an impeachment could follow. But there is precedent involving a powerful president attacking a real professor.
Ronald Reagan and the Professor
Consider the case of Ronald Reagan and E. Bradford Burns. A UCLA historian of Latin America, Burns debunked Ronald Reagan’s claims about Sandinista Nicaragua in a short 1985 article. At a dangerous moment in the Cold War, this was a truly brave act, one that could damage careers and worse. In fact, a well-known, award-winning actor, Edward Asner, had his CBS series, the Lou Grant Show, cancelled in 1982 after criticizing Reagan’s Central America policies. Solidarity activists in Burn’s Los Angeles lived in a charged atmosphere facing the real threat of thuggish repression from any number of sources. By 1988, activists reported death threats and alleged cases of kidnapping and rape. At the same time, the establishment in Southern California thrived on federal investment in Reagan’s war economy. Burns’ dissent, which undermined the rationale for Central American intervention and therewith part of the justification for the lucrative arms build-up that made Reagan so popular with regional elites, was therefore a real example of a humble professor speaking truth to power.
Ronald Reagan’s response was a televised attack that labeled Burns a purveyor of disinformation, and in vintage Reagan, the President promised to “pray for [Burn’s] students.” It also fueled the re-emerging academic McCarthyism and Oedipal resentments of folks like David Horowitz, who would later publish his infamous, The Professors: The 101 Most Dangerous Academics in America. But people fought back; with good humor, Burns recalled a student’s response, “As a citizen, I ask God to help President Reagan; Professor Burns’ students are doing fine.”
As we weigh the differences between Burns and Hausmann, it is worth noting the way in which each exercised power. Two years after Reagan’s attack, Burns won a distinguished teaching award. Notwithstanding his well-received research, Burns’ passion was for teaching. A former student recalls Burns’ view that, “We must learn to teach better… We must constantly transfer our conviction of the significance and relevance of history to the young. Tedium has no place in our lecture halls… We must convey that excitement.” And this was part of a broader perspective on social change, “Go ahead and do your research, publish your books,” he advised fellow academics, “A few of your colleagues will read and enjoy it, but if you want to change the world… teach undergraduates.” For the cynical, this idealism may be the long game of a presently enfeebled left, but it is certainly true to the picture that one imagines on hearing the word, “professor.”
More than a suave professor or deceptive editorialist, Hausmann is a man of action. No teaching awards adorn his CV. Perhaps he received some, but these are not deemed important enough to add. Since the early 2000s, he has been associated with the Venezuelan opposition’s hard right. Working for María Corina Machado’s Súmate to routinely predict the defeat of the Chavistas via statistical analyses anticipating election outcomes only to have their claims falsified by real world voters, Hausmann is a partisan actor. Having failed at running the Venezuelan economy in the late 80s and into the 90s, he now attacks from the secure parapets of Harvard. As noted, his essay impacted the markets in entirely predictable ways.
Harvard as an Imperial Enterprise
It would behoove those interested in the development of the global economy to more closely, indeed, to forensically, examine the connections between Harvard, its faculty, and the economic policies of many governments. Beyond the scope of this article and the capacity of this author, such scrutiny should go beyond mere intellectual influence to uncover the interests involving the institution, its investments, its faculty, the advice they offer, and the actual flow of material benefits.
One gets a glimpse of what these may be in VERITA$: Everybody Loves Harvard, a documentary that explores the connections between Harvard and Russian economic policies. The late director Shin Eun-jung examined the relationship between the Harvard Institute for International Development and Russia’s conversion to a market economy. This was the Harvard Institute’s largest project. Earlier, it was involved in the financial liberalization of Indonesia and helped extend the Washington Consensus to Zambia, Kenya and Pakistan.
Receiving in excess of $40 million in grants for its Russia work, the Harvard Institute’s policies were adopted by end running the democratic process and helped enrich the privatizer of the Russian economy, Anatoly Chubais. Today a wealthy entrepreneur, Chubais is also an advisor to JPMorgan Chase. Together with Chubais, the Institute established the Russian Privatization Center which received more than $147 million in foreign funding that would have to be repaid at some point by the Russian people. With no constitutionally-defined role, the Center soon became fully embroiled in Russia’s corrupt transition to a market economy… and in benefiting the Harvard Management Company in the order of millions of dollars until the Asian banking crisis of the late 90s. So extreme was the corruption that even the US Justice Department investigated the mess. It later caught up with Harvard and the Institute, alleging false claims and conflicts of interest. It sued for $1.2 billion and settled in 2005 for $31 million, the largest suit in Harvard’s history according to Shin.
None of the foregoing suggests any kind of similar behavior on the part of Chubais’ fellow JPMorgan Chase advisor, Hausmann. But it does dispel the myth of Harvard as a purely academic institution. Instead, Harvard is clearly an economic actor on a global scale. Its faculty, especially those with Hausmann’s CV, have to be assessed in this light.
For those of us who respect Venezuelan sovereignty and admire that country’s attempt to transform its economy into one that works for working people, we have to acknowledge that this is a difficult time. Venezuela’s Revolución Bolivariana faces difficult choices between deepening the economic transformation with its attendant dislocations and accommodating parts of the splintering opposition. In this context, Hausmann’s intervention and feigned concern for “30 million Venezuelans” is a deft move likely aimed at aggravating an acute hard-currency shortage and provoking a political crisis.
If there are any doubts as to Hausmann’s concerns for the poor, we must ask where those rested when he was in power and implementing a harsh austerity program. Hausmann’s own values are hinted at when he castigates Nicholas Maduro by calling the president a “tropical thug.” One can and should denounce thuggish behavior, but his adding the adjective “tropical” casts things in a different light. Those of us from the Global South or familiar with ruling class racism readily recognize what is intended by the word.
Rather than suggesting any debate over academic freedom and the rights of Professor Hausmann, the media would be best advised to look at his intervention and President Maduro’s rebuke in the light of an extended class war playing out on a global stage. A critical media analysis will reveal that the partisan Hausmann knows how to navigate between the super-charged rhetoric of a country in the throes of an intense class struggle and the placid world of his university on the banks of Cambridge’s Charles River. Venezuelan rhetoric reflects the class struggle and also a different political rhetoric. Alma Llanera, Venezuela’s “second” anthem, celebrates claveles de pasión – “carnations of passion” – while Hausmann’s numbers games on the Charles River speaks to a coiffed banker’s calm exercise of power protected by the United States, protected by Harvard.
Suren Moodliar lives in Boston and finds much to admire at Harvard University. He may be contacted at suren <a.t> fairjobs >d o t< org. Although they are not responsible for any errors, Suren is grateful to Dave Burt, Umang Kumar, Mirna Lascano, Ben Manski, Jorge Marín, Christine O’Connell, Jason Pramas and Sandra Ruiz-Harris for their pre-publication comments.
Links included in this article:
On E. Bradford Burns: https://www.h-net.org/~latam/threads/thrdburns.html
Ricardo Hausmann and Miguel Angel Santos, “Should Venezuela Default?” Project Syndicate, September 5, 2014, https://www.project-syndicate.org/print/ricardo-hausmann-and-miguel-angel-santos-pillory-the-maduro-government-for-defaulting-on-30-million-citizens–but-not-on-wall-street
Ricardo Hausmann, “Venezuela’s president is crafting a disaster.” Boston Globe, September 18, 2014, http://www.bostonglobe.com/opinion/2014/09/18/amid-venezuela-economic-woes-president-attacks-harvard-academic/j6H2tUj4vGLuKaf0yStfQL/story.html
Ricardo Hausmann, CV http://ksgfaculty.harvard.edu/faculty/cv/RicardoHausmann.pdf
Ricardo Hausmann, Transparent Engagement, http://ksgfaculty.harvard.edu/Faculty/PublicDisclosure.asp?id=102152
Harvard Crimson, “Maduro Madness” September 19, 2014, http://www.thecrimson.com/article/2014/9/19/harvard-maduro-madness/
Along one of the roads in the city of Ariha in the north of the occupied West Bank, merchants Khaldoun and Hassan regularly receive 30 tons of dates produced in the neighbouring Israeli agricultural settlements, in preparation for their transfer to one of the packaging factories built on the outskirts of the city, Anadolu news agency reported.
Inside the factory, about 13 minors are working on “screening” the dates and repackaging them in bags that read “dates of the Holy Land” in both Arabic and English and “Made in Palestine” in order to market them locally, in the Arab states and in Europe.
This is what one of the farms that is owned by Israeli settlers does in order to market its produce of dates to customers of European Union countries after the enforcement of a decision earlier this year to boycott any products of settlements in the West Bank.
Anadolu cited a statement issued by the Palestinian national economy minister saying that members of the ministry have found dozens of tons of produce coming from the settlements in this way, on its way to either the local market or to the packaging factories in the city of Ariha and the neighbouring villages.
Merchant Khaldoun, 45 years, told Anadolu’s reporter, “We do trade in dates of the settlements, which we buy at prices that are 40 per cent lower than the market price. And in order to be able to market the dates, we clean and re-package them and choose the best in preparation for selling them in the local market, as well as the Arab and European markets.”
He added that the annual volume of his seasonal sales of dates is nearly 350 tons, pointing out that other merchants who work in this field and in other varieties of vegetables and fruits, such as citrus fruits, nuts, and medical herbs have similar practices.
His fellow trader Hassan said that he has a licensed company that is registered officially. The export process takes place after the official bodies check the quality and specifications of the product, ensuring the product’s conformity with European specifications and international standards. It is then exported under the “Made in Palestine” label.
The minister of economy said in its statement that any truck carrying dates must also be carrying a transfer permit to move the dates from inside the farm of production to the factory that will process the packaging, noting that it has begun to take stricter steps over the trade of dates through listing the names of the farmers who grow dates, the number of trees they own and their annual average production.
Palestine enjoys customs exemptions and export-related facilities in trade with the countries of the European Union, so the Israeli companies cooperate with Palestinian merchants to export the dates produced in the settlements illegally established in the West Bank to the European Union, while benefiting from such exemptions.
In the beginning of 2014, the European Union announced its decision to boycott economic, scientific and academic relations with institutions, factories and farms that have any investments or presence in the Israeli settlements established in the occupied Palestinian territories.
Earlier, the ministry of economy confiscated more than 20 tons of corrupt and damaged dates coming from the Israeli settlements while on their way to one of the factories for repackaging to later sell them as a product of Palestine.
In a press conference last week, UN Secretary-General Ban-Ki Moon stated: “Action on climate change is urgent. The more we delay, the more we will pay in lives and in money.” The recently appointed UN Messenger of Peace Leonardo DiCaprio stated “The debate is over. Climate change is happening now.”
These statements reflect a misunderstanding of the state of climate science and the extent to which we can blame adverse consequences such as extreme weather events on human caused climate change. The climate has always changed and will continue to change. Humans are adding carbon dioxide to the atmosphere, and carbon dioxide and other greenhouse gases have a warming effect on the climate. However, there is enduring uncertainty beyond these basic issues, and the most consequential aspects of climate science are the subject of vigorous scientific debate: whether the warming since 1950 has been dominated by human causes, and how the climate will evolve in the 21st century due to both natural and human causes. Societal uncertainties further cloud the issues as to whether warming is ‘dangerous’ and whether we can afford to radically reduce carbon dioxide emissions.
At the heart of the recent scientific debate on climate change is the ‘pause’ or ‘hiatus’ in global warming – the period since 1998 during which global average surface temperatures have not increased. This observed warming hiatus contrasts with the expectation from the 2007 IPCC Fourth Assessment Report that warming would proceed at a rate of 0.2oC/per decade in the early decades of the 21st century. The warming hiatus raises serious questions as to whether the climate model projections of 21st century have much utility for decision making, given uncertainties in climate sensitivity to carbon dioxide, future volcanic eruptions and solar activity, and the multidecadal and century scale oscillations in ocean circulation patterns.
A key argument in favor of emission reductions is concern over the accelerating cost of weather disasters. The accelerating cost is associated with increasing population and wealth in vulnerable regions, and not with any increase in extreme weather events, let alone any increase that can be attributed to human caused climate change. The IPCC Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation found little evidence that supports an increase in extreme weather events that can be attributed to humans. There seems to be a collective ‘weather amnesia’, where the more extreme weather of the 1930’s and 1950’s seems to have been forgotten.
Climate science is no more ‘settled’ than anthropogenic global warming is a ‘hoax’. I am concerned that the climate change problem and its solution have been vastly oversimplified. Deep uncertainty beyond the basics is endemic to the climate change problem, which is arguably characterized as a ‘wicked mess.’ A ‘wicked’ problem is complex with dimensions that are difficult to define and changing with time. A ‘mess’ is characterized by the complexity of interrelated issues, with suboptimal solutions that create additional problems.
Nevertheless, the premise of dangerous anthropogenic climate change is the foundation for a far-reaching plan to reduce greenhouse gas emissions. Elements of this plan may be argued as important for associated energy policy reasons, economics, and/or public health and safety. However, claiming an overwhelming scientific justification for the plan based upon anthropogenic global warming does a disservice both to climate science and to the policy process. Science doesn’t dictate to society what choices to make, but science can assess which policies won’t work and can provide information about uncertainty that is critical for the decision making process.
Can we make good decisions under conditions of deep uncertainty about climate change? Uncertainty in itself is not a reason for inaction. Research to develop low-emission energy technologies and energy efficiency measures are examples of ‘robust’ policies that have little downside, while at the same time have ancillary benefits beyond reducing greenhouse gas emissions. However, attempts to modify the climate through reducing CO2 emissions may turn out to be futile. The hiatus in warming observed over the past 16 years demonstrates that CO2 is not a control knob on climate variability on decadal time scales. Even if CO2 mitigation strategies are successful and climate model projections are correct, an impact on the climate would not be expected until the latter part of the 21st century. Solar variability, volcanic eruptions and long-term ocean oscillations will continue to be sources of unpredictable climate surprises.
Whether or not anthropogenic climate change is exacerbating extreme weather events, vulnerability to extreme weather events will continue owing to increasing population and wealth in vulnerable regions. Climate change (regardless of whether the primary cause is natural or anthropogenic) may be less important in driving vulnerability in most regions than increasing population, land use practices, and ecosystem degradation. Regions that find solutions to current problems of climate variability and extreme weather events and address challenges associated with an increasing population are likely to be well prepared to cope with any additional stresses from climate change.
Oversimplification, claiming ‘settled science’ and ignoring uncertainties not only undercuts the political process and dialogue necessary for real solutions in a highly complex world, but acts to retard scientific progress. It’s time to recognize the complexity and wicked nature of the climate problem, so that we can have a more meaningful dialogue on how to address the complex challenges of climate variability and change.
In the midst of preparing my essay, Steve Koonin’s WSJ op-ed was published Climate Science is Not Settled. Most of Koonin’s points are very similar to what I have been saying, I would say the main difference is related to decision making under deep uncertainty. Koonin states “We are very far from the knowledge needed to make good climate policy.” I argue that there are strategies for decision making under deep uncertainty that can be useful for the climate change problem, particularly if you are not trying to solve the problem of extreme weather events by reducing carbon dioxide emissions. But overall I am thrilled by Koonin’s op-ed — since he operates higher in the scientific and policy food chain than I do, his voice adds much gravitas to the message that I think needs to get out regarding climate science and policy. I would also like to add that Koonin chairs the APS Subcommittee that is reviewing the APS climate change policy statement (see my previous post on the APS Workshop, where I met Koonin).
In the midst of the ‘mad crowd’ in New York City attending the People’s Climate March, sober people are trying to figure out ways to broaden the policy debate on climate change and do a better job of characterizing the uncertainty of climate change (both the science itself and the media portrayal of the science). There is concern that the institutions of science are so mired in advocacy on the topic of dangerous anthropogenic climate change that the checks and balances in science, particularly with regard to minority perspectives, are broken.
Richard Lindzen’s CATO essay Reflections on Rapid Response to Unjustified Climate Alarm discusses the kickoff of CATO’s new center on rapid response to climate alarmism. Anthony Watts has announced the formation of a new professional society The Open Atmospheric Society for meteorologists and climatologists, with a new open access journal. Both of these efforts emphasize public communication. I’m not sure what kind of impact either of these efforts will have, but I wish them well.
My thinking is that we need more voices from influential scientists like Steve Koonin, along with a more mature framing of the climate science problem and decision making framework that allows for dissent and examines a broader spectrum of solutions and approaches.
With all this money pouring into palm oil companies, lands for oil palm plantations are at an all time premium, wherever they can be found.
Oil palm plantations can, however, only be established on a narrow band of lands in tropical areas that are roughly 7 degrees North or South of the equator and that have abundant and evenly spread rainfall. This makes the potential area for new oil palm plantations rather limited. Plus, most of these lands are composed of forests and farmlands that are occupied by indigenous peoples and peasants, some of whom are already growing oil palms for local markets.
The expansion of oil palm plantations, therefore, depends upon companies getting these people to give up their lands. This is not an easy sell, given the meagre jobs and other benefits that an oil palm plantation generates in comparison with the destruction that it causes and the value that the lands already hold for the people. A typical oil palm plantation requires only one poorly paid worker for every 2.3 hectares, while the surrounding communities pay a high price for the deforestation, water use, soil erosion and chemical fertiliser and pesticide contamination that it causes.1 Companies trying to acquire lands from communities also run into customary forms of land governance that do not allow for a company to buy up land one parcel at a time.
The easy way for companies to get around these hurdles is to ensure that the communities do not even know that their lands have been signed away. It is very common in Africa, for instance, for companies to sign land deals directly with the national government without the knowledge of the affected communities. In many cases, the companies signing the deals are obscure companies registered in tax havens with their beneficial owners hidden from view. The managers of these companies tend to come from the mining sector or other extractive industries with long histories of shady deals in Africa. In Papua New Guinea and Indonesia, land deals are typically brokered between local elites and foreign investors, also often with obscure ownership structures registered in tax havens.
Such small shell companies are not in the business of developing plantations. Once the land contracts are signed, they immediately look to sell out to larger companies with the technical capacity and financial resources to build the plantations. And it is usually at this point that the communities come to understand that their lands have been sold.
Most of these cases eventually lead to a situation where a large multinational plantation company, backed by a national government and a multimillion dollar contract, faces off against a poor community trying desperately to hold onto to the lands and forests it needs to survive. It is incredibly difficult for communities to defend themselves against such powerful forces, and those that do risk the threat of violence, whether by paramilitaries in Colombia, police in Sierra Leone, or the army in Indonesia.
Tax havens and land grabs for palm oil in Africa
The case of Atama Resources Inc
In 2010, the Government of the Republic of the Congo signed away more than 400,000 ha to a Congolese registered company called Atama Plantation whose owners remain unknown.2 In return, this mysterious company promised to develop the Congo Basin’s largest ever oil palm plantation, converting 180,000 ha of mostly forested land in the provinces of Cuvette and Sangha while paying the government a token annual fee of $5 per hectare of planted land. The company was under no obligation to conduct environmental or social impact assessments or to consult with affected populations.
When the contract was signed, Atama Plantation was wholly owned by Silvermark Resources Inc, a company registered in the offshore fiscal paradise of the British Virgin Islands.3 The only publicly available information on Silvermark is that it is owned and directed by two shell companies registered in Brunei. Because of the rules of secrecy governing companies registered in Brunei and the British Virgin Islands, it is impossible to know who the actual owners of these companies are.
In 2011, ownership of Atama Plantation was transferred to a holding company in Mauritius, another fiscal paradise, before finally being sold, in 2012, to Malaysia’s Wah Seong Corporation, a “pipe-coating specialist” company with no history in the palm oil sector that is controlled by Malaysian businessman Robert Tan.4
Whoever the owners of Silvermark are, they pocketed an estimated $25 million, without doing anything more than orchestrate the contract with the Congolese government. And, under the deal with Wah Seong, they still hold 39% of the shares with yet another British Virgin Islands registered company with unknown owners holding the remaining 10%.
The case of Liberian Forest Products Inc. (LFPI)
On August 21, 2006 a little known London minerals exploration company announced to the world that it had taken control of 700,000 ha of land in Liberia– equal to about 7% of the country’s entire land area. The owners of Nardina Resources PLC claimed they had acquired rights over this massive chunk of land through a take over of a Liberian company called Liberian Forest Products Inc. (LFPI). Nardina then changed its name to Equatorial Biofuels PLC and then again to Equatorial Palm Oil Ltd (EPO) to reflect its new mandate as a palm oil company. Meanwhile, the original owners of LFPI walked away with £1,555,000 in shares and cash.
But how did the owners of LFPI get hold of such an obscene amount of territory in a country just emerging from over a decade of civil war? And who were these owners anyway?
EPO’s disclosure documents from its listing on the London AIM stock exchange in 2010 show that the money it paid for LFPI went to two offshore companies, Kamina Global Ltd of the British Virgin Islands and Subsea BV of Liberia, which each had 50% shares of LFPI.
Searches conducted in December 2013 through the company registry in Liberia found no record of registration for a company called Subsea BV. However, the articles for registration for LFPI of November 2006 indicate that LFPI is a Liberian company owned by Tony Smith (50%) and A. Kanie Wesso (50%), who are both trustees for a new company to be formed, called Subsea BV. The sole LFPI director named in the document is Mark Slowen, a British businessman operating from Liberia whose name also turns up as the CEO of SubSea Resources DMCC (Dubai Multi Commodities Centre), a company that acquired mineral rights in Liberia at around the same time.
A second business registry document for LFPI from August 2007 refers to LFPI as a British owned company– with ownership split between Mark Slowen (50%) and Kanie Wesso (50%). Both documents describe LFPI as a company whose sole business is logging.
Subsea BV also turns up in the UK business directory as a director of the G4 Group, which has several business interests in Liberia and is controlled by the notorious financial fraudster Lincoln Fraser.5 The G4 Group’s Liberian subsidiary, G4 WAO Inc., exports rubber tree logs and holds a phosphate exploration concession covering 36,000 ha in Bopolu. According to the company website, G4 WAO “manages in excess of one million acres of the best crop growing conditions in the world” and has partnered with the International Crops Research Institute for the Semi-Arid-Tropics (ICRISAT) “to establish trial sites on various G4 farming enterprises in Liberia, Ghana and Kenya.”6
Kamina Global Ltd, the other company that was paid by EPO for the acquisition of LFPI, is even more opaque. Legislation in the British Virgin Islands does not require companies to disclose their directors or shareholders, so it was not possible to identify the people behind Kamina Global through company records.7
When EPO acquired LFPI, the contract was under examination by Liberia’s Public Procurement and Concession Commission. It would conclude that the agreement contained “gross irregularities and non-compliance with the law” and EPO was forced to renegotiate. LFPI, now under the ownership of EPO, signed a new contract with the government in 2008, this time covering a much reduced but still valuable 55,000 ha area of land in Butaw. With this concession and another of a similar size in Liberia, EPO went public on the London AIM stock exchange, eventually attracting significant investment from the Siva Group, a Singapore-based holding company of Indian billionaire Chinnakannan Sivasankaran, who has quietly amassed one of the world’s largest land banks for oil palm in just a few years. The Siva Group started buying shares of EPO in 2010 and by 2013 it controlled 36.7% of the company and had formed a 50:50 joint venture with EPO based in Mauritius, called Liberian Palm Developments Ltd, that took control of all of EPO’s Liberian land concessions.8
In 2013, the Siva Group would sell its shares in EPO and its Mauritian joint venture to KL Kepong of Malaysia, one of the world’s largest palm oil companies.
Are Chinese companies grabbing land for palm oil?
China runs neck and neck with India for the world’s number 1 palm oil importer. So it would only make sense that Chinese companies would be involved in the current rush for lands for oil palm plantations. But while there have been several reports of massive land grabs for palm oil by Chinese companies, few of these have materialised.
China’s telecom giant ZTE, which has a biofuels division, was said to have signed an agreement with the Democratic Republic of the Congo to develop 2 million hectares of oil palm plantations. The numbers were later scaled down to 100,000 ha and it now seems like the project has been scrapped entirely.
In 2005, Indonesia’s President Yudhoyono announced a plan to develop 1.8 million hectares of land along the Kalimantan border into oil palm plantations. Several Chinese companies including state-owned investment company CITIC Group were offered one third of the area in return for building roads and railways and details were released of a $600 million project between CITIC and Indonesian palm oil giant Sinar Mas to develop a 100,000 ha plantation in the area, with a $380 million dollar loan from the China Development Bank.9 Sinar Mas’ subsidiary Golden Agri Resources is one of the main suppliers of palm oil to China. The plans, however, were never put into operation.
In 2012, Sinar Mas, which is controlled by Indonesia’s Widjaja family, announced a new partnership for oil palm development with China, this time with state-owned China National Offshore Oil Corp. and another Widjaja controlled company, HKC Holdings of Hong Kong. Wang Jun, the former chairman of CITIC Group, is the honorary chairman and a director of HKC. The companies said the project would be rolled out over eight years in Papua and Kalimantan, “where regional governments had reserved about one million hectares of land for it.”
Less than a year later, the Widjajas cemented another major palm oil deal with China. This time in Africa. In March 2013, Golden Agri Resources’ wholly-owned subsidiary Golden Veroleum Limited procured a $500 million term loan facility from the China Development Bank to support the construction of its 220,000 ha oil palm plantation project in LIberia. Typically the CDB only loans to overseas companies or projects when Chinese companies are directly involved.10
For now, China appears to be channeling most of its investments in palm oil through Asian palm oil companies, such as Sinar Mas, that dominate the global palm oil trade. The only Chinese company making significant direct investments in oil palm plantations has so far been China’s state-owned oil company Sinochem. In April 2012, Sinochem paid 193 million euros to acquire 35% of the Belgian plantations company SIAT, which has oil palm plantations in Gabon, Ghana and Nigeria. It also announced that its rubber company in Cameroon would be expanding its plantations and starting to move into palm oil production.
1 UNEP, “Oil palm plantations: threats and opportunities for tropical ecosystems,” December 2011
2 See the excellent report, “Seeds of Destruction“, Rainforest Foundation UK, 2013
3 Silvermark is owned by Tinaldi Ltd and the Director is Greenland Ltd. Greenland Ltd is reported to be controlled by Benny Lum (who may just be a proxy). It controls Lamington Capital Inc (maybe Singapore) which is also a shareholder in African Petroleum Corporation Limited. It was also used to direct a transfer of funds to a Thai company that is linked to Thaksin. Both Tanaldi Ltd and Greenland Ltd (Brunei) are registered in Brunei to the address of HMR Trust Ltd (which is involved in offshore financial services). Other documents indicate that Tanaldi Limited is owned by Tan Sri Barry Goh Ming Choon of Malaysia and the company acts as a trust for other Malaysian businessmen. Barry Goh controls B&G Capital Resources Berhad (“BCGR”) which he started in 1994. BGCR has served as the principal contractor to Tenaga Nasional Berhad (TNB), one of the largest government link companies in Malaysia
4 Atama Resources Inc was registered in Mauritius in July 2011, as 100% owned by Silvermark. In 2012, Wah Seong purchases 51% of Atama Resources Inc. through its 100% owned subsidiary WS Agro Ind Pte Ltd (Singapore). 39% remains with Silvermark. 10% is taken by Giant Dragon Group (BVI), which is 100% owned by Marston International Ltd. (BVI), who’s director is Eastern Sky Ltd. (Hong Kong). Eastern Sky is a nominee director for several other companies. The Wah Seong Corporation is largely controlled by Malaysian businessman Robert Tan. Marston International Ltd. is the owner of Pergenia International Limited (PIL) incorporated in British Virgin Island on 10 January 2007 and Netstar Holdings Limited registered in BVI in 2003. Marston International Ltd is also the controlling shareholder of PT Jaya Pari Steel Tbk. (Indonesia). Reports from PT Jaya Pari Steel Tbk say that Marston International Ltd is owned by John Matthew Ashwood (50%) and Brian Whiteman and Robinson McKinstry (50%), who seem only to be proxies and John Ashwood likely works for Vistra, an offshore financial company based in Hong Kong. PT Jaya Pari Steel is a company of the Gunawan family of Indonesia, which is involved in finance and steel. The family controls 46 percent of Indonesia’s PT Bank Panin. Marston International Limited is also a major shareholder in another Gunawan steel company, Betonjaya Manunggal Tbk PT, through its ownership of Profit Add Limited (Samoa). Marston International is listed as a shareholder of Best Dragon Enterprises Limited, alongside Tito Sulistio, who is connected to the Suharto family.
5 Fraser is described by Offshore Alert as a “British conman who masterminded the $400 million Imperial Consolidated fraud” which robbed thousands of pensioners and others of their savings when it went bankrupt in 2002.
7 Kamina’s company registration information indicates that it was registered on 17 March 2006 and struck off on 2 November 2009. It’s registered agent is TMF (BVI) Ltd, a company which manages numerous shell companies on behalf of clients around the world. As written on the same document: “Under the BVI Business Companies Act, 2004 companies are not required to file information on Directors and Shareholders of a company.”
8 Siva Group’s 36.7% share of EPO is held by way of several subsidiaries: Biopalm Energy Limited (16.62%), The Siva Group (16.62%) and Broadcourt Investments Ltd (3.46%).(The joint venture is between EPO’s wholly-owned subsidiary Equatorial Biofuels (Guernsey) Limited and Biopalm Energy Limited, a wholly owned subsidiary of Geoff Palm Ltd based in the offshore city of Labuan, Malaysia, and which is owned by Broadcourt Investments Ltd, a British Virgin Islands registered holding company with Chinnakannan Sivasankaran, the Siva Group’s founder and owner, listed as its only director and shareholder since January 2007.
9 “The Kalimantan border oil palm project,” Milieudefensie – Friends of the Earth Netherlands and the Swedish Society for Nature Conservation, 2006; “China’s investment foray into Indonesia,” Asia Sentinel, 6 June 2013
The rush to develop oil palm plantations in Africa is a double whammy for the continent. Not only does it involve a huge land grab of peoples’ lands and food producing resources, it also directly undercuts the livelihoods of millions of people involved in Africa’s traditional oil palm sector.
This is not the first time foreigners have pushed an expansion of oil palm in Africa. During the the colonial occupation of the continent, the European powers became interested in palm oil as an industrial lubricant and for making candles. African families were forced to pay a special tax, known as the “takouè” to the colonial authorities, in the form of palm oil and palm nut. King Léopold II of Belgium forced every farmer in the province of Equateur in the Congo to plant 10 palms a year.1
The European powers also established their own oil palm plantations around this time. Plantations were created in West and Central Africa as well as in Southeast Asia. Research stations and collection missions were launched to develop high yielding varieties of oil palms through the cross breeding of traditional or wild varieties.
With independence, most of these plantations and research stations were nationalised, and the new African governments reenergised the expansion of national production. In Bénin, for example, the state-owned Société Nationale du Développement Rural (SONADER) led an expansion of oil palm plantations in the south immediately after independence, while another state-owned company, the Société Nationale pour l’Industrie des Corps Gras (SONICOG) built new palm oil refineries and palm nut processing factories.
But, at the end of the 1990s, World Bank and donor imposed structural adjustment programmes forced African governments to privatise their national palm oil companies and to sell off their mills and plantations. While many national companies simply crumbled away, European companies with old colonial connections captured the most lucrative operations. SOCFIN, controlled by billionaires Vincent Bolloré of France and Hubert Fabri of Belgium, took over national companies in Cameroon, the DRC, Guinea and Nigeria. SIAT, controlled by the family of South African diamond magnate Ernest Oppenheimer and the Belgian Vandebeeck family, took plantations in Gabon, Ghana and Nigeria, while another old money Belgian company, SIPEF took over a chunk of the state-owned oil palm plantations of Côte d’Ivoire. Unilever, one of the world’s largest and oldest food companies, scored plantations too – in the DRC, Ghana and Côte d’Ivoire.
Today there is a second wave of foreign interest in oil palm plantations in Africa. With land for oil palm plantations becoming more difficult and expensive to acquire in Malaysia and Indonesia, companies and speculative investors are keen to open up new frontiers for export production. Some investment is going to Papua and to Latin America, but the biggest target is Africa. A long list of companies, from Asian palm oil giants to Wall Street financial houses, are scrambling to get control over lands on the continent that are favourable to oil palm, especially in the West and Central regions.
Over the past five years, vast areas of land in Africa have been allocated to foreign companies for oil palm plantations by African governments, with minimal if any consultation with the affected populations and many allegations of corruption. Table 1 lists 60 deals covering nearly 4 million hectares over the past decade and a half.
A number of different actors are involved. There are established Asian plantation companies, like Wilmar and Sime Darby, and multinational palm oil traders, like Cargill and Olam, both looking to establish a new basis of palm oil supply for global markets in Africa. But many of the first movers are in fact small obscure companies, typically domiciled in tax havens, whose owners intend only to sign land deals and then sell their companies as soon as possible to larger players with the capacity to develop the plantations. In many cases it is difficult to work out who the owners of these companies are.
The communities facing land grabs from palm oil companies are under tremendous pressure to accommodate them, with pressure coming from the companies, the government, the local chiefs and even the army and paramilitaries. Those who resist face arrest, harassment and violence. And yet communities in Africa and around the world, from Papua New Guinea to Sarawak, from Cameroon to Guatemala, continue to struggle to stop palm oil companies from entering their lands.
Communities in southwest Cameroon have been involved in a three year struggle to stop the US company Herakles Capital from setting up an oil palm plantation in their area. Despite support from the president of Cameroon, Herakles has been unable to move forward with its plans because the communities are united in their total opposition to the plantation and because of the creative actions that they have undertaken, with support from national and international partners, to put pressure on the company to leave. The company and the government keep coming back and presenting new terms, the latest being a presidential decree that reduces the land allocated to Herakles from 73,000 ha to 20,000 ha and boosts the rent that the company must pay. Community leaders have been arrested and harassed with lawsuits. Yet the communities are sticking to their bottom line demand – no oil palm plantations on their lands.
Cameroon is also a target for the Luxembourg based company SOCFIN, owned by billionaires Vincent Bolloré of France and Hubert Fabri of Belgium. Over the past decade and a half, SOCFIN has taken over lands for oil palm and other crops in several African countries, including Cameroon, DRC, Guinea, Nigeria, Sao Tome & Principe, and Sierra Leone. The company is notorious for human rights abuses and land conflicts at its operations, and for its aggressive tactics against those who oppose it. In the past few years, the company has slapped defamation suits on several organisations and journalists in Africa and Europe that have spoken out against it.
On June 5, 2013, communities affected by SOCFIN plantations in four African countries held simultaneous protest actions against the company, as a delegation of diaspora from these countries and supported by the French group Réseaux d’Action Transnationale (ReAct) presented a joint letter from the various communities to the Annual General Meeting of the Bolloré Group, which is a major shareholder in SOCFIN.
“This initial international protest is just the beginning. We are committed to upholding our rights and Mr. Bolloré will have to understand that,” said Emmanuel Elong, spokesperson for Synaparcam, the Socapalm resident farmers’ union in Cameroon.2
Strong community resistance combined with national and international, well targeted pressure, can roll back land grabs. The Jogbahn Clan in Liberia provides an inspiring example. When the British company Equatorial Palm Oil began surveying their lands as part of a deal it signed with the Liberian government, the communities took action to stop the work crews. They then marched to the local government offices to make it clear that they had never been consulted about the deal and that they would never give up their lands for the project. Along the way they were beaten, arrested and thrown in jail. But the communities refused to back down. Local and international NGOs joined their struggle, and exposed what was happening to the world. Finally, in March 2014, community leaders met with the Liberian President, Ellen Johnson Sirleaf, and secured a commitment from her to stop the company from expanding on their lands. Now Liberian groups are hoping to replicate these efforts with other affected communities in the country.3
The many different efforts to resist land grabs and maintain local control over palm oil production in Africa, Asia and Latin America demonstrate how committed local communities are to maintaining control over their ancestral lands and their biodiversity, for themselves and for future generations.
1 World Rainforest Movement, “Oil palm in Africa: past, present and future scenarios,“ 2010
2 Synaparcam, SoGB residents committee, Concern Union Citizen, and MALOA, “West African farmers stand up against Bolloré,” 5 June 2013
3 For more information about the case see: http://sdiliberia.org/node/263
The costs of the mainstream U.S. media’s wildly anti-Moscow bias in the Ukraine crisis are adding up, as the Obama administration has decided to react to alleged “Russian aggression” by investing as much as $1 trillion in modernizing the U.S. nuclear weapons arsenal.
On Monday, a typically slanted New York Times article justified these modernization plans by describing “Russia on the warpath” and adding: “Congress has expressed less interest in atomic reductions than looking tough in Washington’s escalating confrontation with Moscow.”
But the Ukraine crisis has been a textbook case of the U.S. mainstream media misreporting the facts of a foreign confrontation and then misinterpreting the meaning of the events, a classic case of “garbage in, garbage out.” The core of the false mainstream narrative is that Russian President Vladimir Putin instigated the crisis as an excuse to reclaim territory for the Russian Empire.
While that interpretation of events has been the cornerstone of Official Washington’s “group think,” the reality always was that Putin favored maintaining the status quo in Ukraine. He had no plans to “invade” Ukraine and was satisfied with the elected government of President Viktor Yanukovych. Indeed, when the crisis heated up last February, Putin was distracted by the Sochi Winter Olympics.
Rather than Putin’s “warmongering” – as the Times said in the lead-in to another Monday article – the evidence is clear that it was the United States and the European Union that initiated this confrontation in a bid to pull Ukraine out of Russia’s sphere of influence and into the West’s orbit.
This was a scheme long in the making, but the immediate framework for the crisis took shape a year ago when influential U.S. neocons set their sights on Ukraine and Putin after Putin helped defuse a crisis in Syria by persuading President Barack Obama to set aside plans to bomb Syrian government targets over a disputed Sarin gas attack and instead accept Syria’s willingness to surrender its entire chemical weapons arsenal.
But the neocons and their “liberal interventionist” allies had their hearts set on another “shock and awe” campaign with the goal of precipitating another “regime change” against a Middle East government disfavored by Israel. Putin also worked with Obama to resolve the dispute over Iran’s nuclear program, averting another neocon dream to “bomb, bomb, bomb Iran.”
The Despised Putin
So, Putin suddenly rose to the top of the neocons’ “enemies list” and some prominent neocons quickly detected his vulnerability in Ukraine, a historical route for western invasions of Russia and the scene of extraordinarily bloody fighting during World War II.
National Endowment for Democracy president Carl Gershman, one of the top neocon paymasters spreading around $100 million a year in U.S. taxpayers’ money, declared in late September 2013 that Ukraine represented “the biggest prize” but beyond that was an opportunity to put Putin “on the losing end not just in the near abroad but within Russia itself.”
The context for Gershman’s excitement was a European Union offer of an association agreement to Ukraine’s elected President Viktor Yanukovych, but it came with some nasty strings attached, an austerity plan demanded by the International Monetary Fund that would have made the hard lives of the average Ukrainian even harder.
That prompted Yanukovych to seek a better deal from Putin who offered $15 billion in aid without the IMF’s harsh terms. Yet, once Yanukovych rebuffed the EU plan, his government was targeted by a destabilization campaign that involved scores of political and media projects funded by Gershman’s NED and other U.S. agencies.
Assistant Secretary of State for European Affairs Victoria Nuland, a neocon holdover who had been an adviser to Vice President Dick Cheney, reminded a group of Ukrainian business leaders that the United States had invested $5 billion in their “European aspirations.” Nuland, wife of prominent neocon Robert Kagan, also showed up at the Maidan square in Kiev passing out cookies to protesters.
The Maidan protests, reflecting western Ukraine’s desire for closer ties to Europe, also were cheered on by neocon Sen. John McCain, who appeared on a podium with leaders of the far-right Svoboda party under a banner honoring Nazi collaborator Stepan Bandera. A year earlier, the European Parliament had identified Svoboda as professing “racist, anti-Semitic and xenophobic views [that] go against the EU’s fundamental values and principles.”
Yet, militants from Svoboda and the even more extreme Right Sektor were emerging as the muscle of the Maidan protests, seizing government buildings and hurling firebombs at police. A well-known Ukrainian neo-Nazi leader, Andriy Parubiy, became the commandant of the Maidan’s “self-defense” forces.
Behind the scenes, Assistant Secretary Nuland was deciding who would take over the Ukrainian government once Yanukovych was ousted. In an intercepted phone call with U.S. Ambassador Geoffrey Pyatt, Nuland crossed off some potential leaders and announced that “Yats” – or Arseniy Yatsenyuk – was her guy.
On Feb. 20, as the neo-Nazi militias stepped up their attacks on police, a mysterious sniper opened fire on both protesters and police killing scores and bringing the political crisis to a boil. The U.S. news media blamed Yanukovych for the killings though he denied giving such an order and some evidence pointed toward a provocation from the far-right extremists.
As Estonia’s Foreign Minister Urmas Paet said in another intercepted phone call with EU foreign affairs chief Catherine Asthon, “there is a stronger and stronger understanding that behind snipers it was not Yanukovych, it was somebody from the new coalition.”
But the sniper shootings led Yanukovych to agree on Feb. 21 to a deal guaranteed by three European countries – France, Germany and Poland – that he would surrender much of his power and move up elections so he could be voted out of office. He also assented to U.S. demands that he pull back his police.
That last move, however, prompted the neo-Nazi militias to overrun the presidential buildings on Feb. 22 and force Yanukovych’s officials to flee for their lives. Then, rather than seeking to enforce the Feb. 21 agreement, the U.S. State Department promptly declared the coup regime “legitimate” and blamed everything on Yanukovych and Putin.
Nuland’s choice, Yatsenyuk, was made prime minister and the neo-Nazis were rewarded for their crucial role by receiving several ministries, including national security headed by Parubiy. The parliament also voted to ban Russian as an official language (though that was later rescinded), and the IMF austerity demands were pushed through by Yatsenyuk. Not surprisingly, ethnic Russians in the south and east, the base of Yanukovych’s support, began resisting what they regarded as the illegitimate coup regime.
To blame this crisis on Putin simply ignores the facts and defies logic. To presume that Putin instigated the ouster of Yanukovych in some convoluted scheme to seize territory requires you to believe that Putin got the EU to make its reckless association offer, organized the mass protests at the Maidan, convinced neo-Nazis from western Ukraine to throw firebombs at police, and manipulated Gershman, Nuland and McCain to coordinate with the coup-makers – all while appearing to support Yanukovych’s idea for new elections within Ukraine’s constitutional structure.
Though such a crazy conspiracy theory would make people in tinfoil hats blush, this certainly is at the heart of what every “smart” person in Official Washington believes. If you dared to suggest that Putin was actually distracted by the Sochi Olympics last February, was caught off guard by the events in Ukraine, and reacted to a Western-inspired crisis on his border (including his acceptance of Crimea’s request to be readmitted to Russia), you would be immediately dismissed as “a stooge of Moscow.”
Such is how mindless “group think” works in Washington. All the people who matter jump on the bandwagon and smirk at anyone who questions how wise it is to be rolling downhill in some disastrous direction.
But the pols and pundits who appear on U.S. television spouting the conventional wisdom are always the winners in this scenario. They get to look tough, standing up to villains like Yanukovych and Putin and siding with the saintly Maidan protesters. The neo-Nazi brown shirts are whited out of the picture and any Ukrainian who objected to the U.S.-backed coup regime finds a black hat firmly glued on his or her head.
For the neocons, there are both financial and ideological benefits. By shattering the fragile alliance that had evolved between Putin and Obama over Syria and Iran, the neocons seized greater control over U.S. policies in the Middle East and revived the prospects for violent “regime change.”
On a more mundane level – by stirring up a new Cold War – the neocons generate more U.S. government money for military contractors who bestow a portion on Washington think tanks that provide cushy jobs for neocons when they are out of government.
The worst losers are the people of Ukraine, most tragically the ethnic Russians in eastern Ukraine, thousands of whom have died from a combination of heavy artillery fire by the Ukrainian army on residential areas followed by street fighting led by brutal neo-Nazi militias who were incorporated into Kiev’s battle plans. [See Consortiumnews.com’s “Ukraine’s ‘Romantic’ Neo-Nazi Storm Troopers.”]
The devastation of eastern Ukraine, which has driven an estimated one million Ukrainians out of their homes, has left parts of this industrial region in ruins. Of course, in the U.S. media version, it’s all Putin’s fault for deceiving these ethnic Russians with “propaganda” about neo-Nazis and then inducing these deluded individuals to resist the “legitimate” authorities in Kiev.
Notably, America’s righteous “responsibility to protect” crowd, which demanded that Obama begin airstrikes in Syria a year ago, swallowed its moral whistles when it came to the U.S.-backed Kiev regime butchering ethnic Russians in eastern Ukraine (or for that matter, when Israeli forces slaughtered Palestinians in Gaza).
However, beyond the death and destruction in eastern Ukraine, the meddling by Nuland, Gershman and others has pushed all of Ukraine toward financial catastrophe. As “The Business Insider” reported on Sept. 21, “Ukraine Is on the Brink of Total Economic Collapse.”
Author Walter Kurtz wrote:
“Those who have spent any time in Ukraine during the winter know how harsh the weather can get. And at these [current] valuations, hryvnia [Ukraine’s currency] isn’t going to buy much heating fuel from abroad. …
“Inflation rate is running above 14% and will spike sharply from here in the next few months if the currency weakness persists. Real wages are collapsing. … Finally, Ukraine’s fiscal situation is unraveling.”
In other words, the already suffering Ukrainians from the west, east and center of the country can expect to suffer a great deal more. They have been made expendable pawns in a geopolitical chess game played by neocon masters and serving interests far from Lvov, Donetsk and Kiev.
But other victims from these latest machinations by the U.S. political/media elite will include the American taxpayers who will be expected to foot the bill for the new Cold War launched in reaction to Putin’s imaginary scheme to instigate the Ukraine crisis so he could reclaim territory of the Russian Empire.
As nutty as that conspiracy theory is, it is now one of the key reasons why the American people have to spend $1 trillion to modernize the nation’s nuclear arsenal, rather than scaling back the thousands of U.S. atomic weapons to around 900, as had been planned.
Or as one supposed expert, Gary Samore at Harvard, explained to the New York Times : “The most fundamental game changer is Putin’s invasion of Ukraine. That has made any measure to reduce the stockpile unilaterally politically impossible.”
Thus, you can see how hyperbolic journalism and self-interested punditry can end up costing the American taxpayers vast sums of money and contributing to a more dangerous world.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his new book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).
China will never support any sanctions against Russia and will never join them, Valentina Matviyenko, speaker of the Russian parliament’s upper house said, citing Chinese President Xi Jinping, with whom she met on Tuesday.
Both Russia and China believe the sanctions are illegal, ineffective and counterproductive, according to Matviyenko. They are nothing but an attempt “to exert pressure on sovereign states to change their position and to weaken them and suppress their development,” she stressed.
Matviyenko thanked Beijing for its public position towards Western sanctions imposed on Russia over the Ukrainian conflict. China has offered an “absolutely objective” assessment of what is now going on in Ukraine. Moreover, no sanctions will affect the long-term strategic partnership between Moscow and Beijing, which reflects the interests of both peoples, she noted.
Cooperation of Russia and China remains a serious factor in international politics, Matviyenko said, adding that the two states have no disputable issues. Their positions are either close or coincide on major problems, including how to settle international and regional conflicts or deal with new challenges and threats.