BRICS Nations Plan New Bank to Bypass World Bank, IMF

Mike Cohen & Ilya Arkhipov - Mar 26, 2013
http://www.bloomberg.com/news/2013-03-25/brics-nations-plan-new-bank-to-bypass-world-bank-imf.html

The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.

The leaders of the so-called BRICS nations -- Brazil, Russia, India, China and South Africa -- are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.

“The deepest rationale for the BRICS is almost certainly the creation of new Bretton Woods-type institutions that are inclined toward the developing world,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a phone interview. “There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world.”

The BRICS nations, which have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, are seeking greater sway in global finance to match their rising economic power. They have called for an overhaul of management of the World Bank and IMF, which were created in Bretton Woods, New Hampshire, in 1944, and oppose the practice of their respective presidents being drawn from the U.S. and Europe.

Reform Needed

“We need to change the way business is conducted in the international financial institutions,” South African International Relations Minister Maite Nkoana-Mashabane said in a March 15 speech in Johannesburg. “They need to be reformed.”

The U.S. has failed to ratify a 2010 agreement to give more sway to emerging markets at the IMF, while it secured Jim Yong Kim, an American, as head of the World Bank last year over candidates from Nigeria and Colombia.

Finance ministers and central bank governors from the BRICS nations, who met in Durban today, agreed to set up currency crisis fund of about $100 billion, Brazilian Finance Minister Guido Mantega told reporters today. He didn’t give details of proposed funding for the new bank, which Brazil wants established by 2014. The nation’s leaders are due to sign a final accord tomorrow.

FDI Inflows

Goldman Sachs Asset Management Chairman Jim O’Neill coined the BRIC term in 2001 to describe the four emerging powers he estimated would equal the U.S. in joint economic output by 2020. Brazil, Russia, India and China held their first summit four years ago and invited South Africa to join their ranks in December 2010.

Trade within the group surged to $282 billion last year from $27 billion in 2002 and may reach $500 billion by 2015, according to data from Brazil’s government. Foreign direct invesment into BRICS nations reached $263 billion last year, accounting for 20 percent of global FDI flows, up from 6 percent in 2000, the United Nations Conference on Trade and Development said on its website yesterday.

“If they announce a BRICS bank it will be quite something,” O’Neill said in an e-mailed reply to questions on March 15. “At a minimum it symbolizes they can achieve something as political group and means lots of other things could follow in the future. It also means that they will have their own kind of special World Bank, which may aid infrastructure and trade projects.”

Currency Pool

While BRICS leaders may approve the creation of a development bank in principle at the summit, details on funding and operations may take longer to finalize.

Russia favors capping each side’s initial contribution at $10 billion, Mikhail Margelov, President Vladimir Putin’s envoy to Africa he said in a March 15 interview in Moscow.

“It will be some time before it will be feasible for this bank to start financing say, a railway project,” Simon Freemantle, an analyst at Standard Bank Group Ltd., Africa’s biggest lender, told reporters in Durban yesterday. “That is some way out.”

Interest rates near zero in the U.S., Japan and Europe have fueled foreign investors’ appetite for higher-yielding assets, driving up currencies from Brazil to Turkey. Brazil has warned of a global currency war as nations take reciprocal action to weaken their currencies and protect export industries.

African Leaders

Brazil’s real has gained 1.9 percent against the dollar since the beginning of the year, while South Africa’s rand has dropped 8.7 percent in the period.

For South Africa, which makes up just 2.5 percent of total gross domestic product in BRICS, the summit is a way to showcase its role as an investment gateway to Africa. President Jacob Zuma has invited 15 African heads of state, including Egypt’s Mohamed Mursi and Ethiopia’s Hailemariam Desalegn, for talks with the BRICS leaders at the summit. For most of the BRICS leaders, it’s also the first opportunity to meet Chinese President Xi Jinping after his appointment on March 17.

“We will discuss ways to revive global growth and ensure macroeconomic stability, as well as mechanisms and measures to promote investment in infrastructure and sustainable development,” Indian Prime Minister Manmohan Singh said in a statement yesterday.

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net; Ilya Arkhipov in Moscow at iarkhipov@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

Venezuela Wins Against Exxon Mobil Frivolous Lawsuit

From LATimes.com:
Venezuela to pay Exxon Mobil only $255 million of ruling
State oil company Petroleos de Venezuela says debts and court action reduce an award of nearly $908 million by the International Chamber of Commerce.
Associated Press
January 2, 2012
http://www.latimes.com/business/la-fi-exxon-20120102,0,5269113.story

Venezuela said Monday that it has successfully defended itself in an international arbitration case brought by Exxon Mobil Corp. and will need to pay only $255 million of nearly $908 million awarded to the company.

State oil company Petroleos de Venezuela, or PDVSA, said in a statement that debts and court action reduce what it owes under the ruling by the International Chamber of Commerce.

PDVSA said Exxon Mobil had previously used international courts to freeze about $300 million in Venezuela's U.S. accounts and that the company also has a debt of about $191 million related to the financing of an oil project in the country, as well as $160 million that the arbitration tribunal said was owed to PDVSA.

PDVSA called it a "successful defense" and said Exxon Mobil had initially demanded about $12 billion in compensation.

There was no immediate response from the Irving, Texas, oil company. It confirmed the international chamber's decision Sunday, saying the arbitration body found that PDVSA "does have a contractual liability to Exxon Mobil."

Exxon Mobil sought arbitration after President Hugo Chavez's government nationalized an oil project in the country in 2007.

PDVSA said that Exxon Mobil's compensation demands had been "completely exaggerated."

"After four years of arbitration, the real amount determined by the ICC tribunal indeed represents less than the exorbitant sum initially demanded," PDVSA said in the statement.

Exxon Mobil still has another arbitration case pending against Venezuela before the World Bank-affiliated International Center for Settlement of Investment Disputes.

PDVSA said that Venezuela "will take all necessary steps to defend itself" in that case as well.

More than a dozen other arbitration cases involving Venezuela are pending as companies have sought billions of dollars in compensation in response to nationalizations by Chavez's leftist government.

China Number One in 2016

According to the IMF's latest projections, china will overtake the US as the world's largest economy in 2016. Mark Weisbrot of the London Guardian has some interesting observations on this:
China has been the world's fastest growing economy for more than three decades, growing 17-fold in real (inflation-adjusted) terms since 1980. It is worth emphasising that most of this record growth took place (1980-2000) while the rest of the developing world was doing quite badly by implementing neoliberal policy changes – indiscriminate opening to trade and capital flows, increasingly independent central banks, tighter (and often pro-cyclical) fiscal and monetary policies, and the abandonment of previously successful development strategies.

China clearly did not embrace these policy changes, which were promoted from Washington by institutions such as the IMF, World Bank, and later the WTO. (China did not even join the WTO until 2002.) It is true that China's growth acceleration included a rapid expansion of trade and foreign investment. But these were heavily managed by the state, to make sure that they fitted in with the government's development goals – quite the opposite of what happened in most other developing countries. China's goals included producing for export markets, promoting higher levels of technology (with the goal of transferring technology from foreign enterprises to the domestic economy), hiring local residents for managerial and technical jobs, and not allowing foreign investments to compete with certain domestic industries.

China's economy is still very much state-led, with the government controlling most of the financial system, the exchange rate, and about 44% of the assets of major industrial enterprises. That is why China was able to plow through the world recession with GDP growth of 9.8%, despite losing about 3.7 percentage points of GDP due to falling net exports...

2016: when China overtakes the USA
Mark Weisbrot
Wednesday 27 April 2011
http://www.guardian.co.uk/commentisfree/cifamerica/2011/apr/27/china-imf-economy-2016

Vladimir Putin and World Bank chief stage summit to save the tiger

http://www.guardian.co.uk/environment/2010/nov/21/tiger-conservation-russia-world-bank

Vladimir Putin and World Bank chief stage summit to save the tiger
• Event aims to secure £220m for tiger conservation
• Leaders to sign pledges on poaching and safe areas
Jonathan Watts in St Petersburg
guardian.co.uk, Sunday 21 November 2010
Tiger numbers have declined by 97% in the past 100 years. They can be found in only 13 countries of Asia now, compared with 25 at the start of the 20th century.

A campaign to double the number of tigers in the wild by 2022 was on the agenda todayat the highest level political meeting to ever discuss a single species.

The International Tiger Forum in St Petersburg is being staged in response to a calamitous 97% decline in tigers in the wild over a century.

The Russian prime minister, Vladimir Putin, and the president of the World Bank, Robert Zoellick, were behind the four-day event, during which it is hoped that $350m (£220m) will be secured for tiger conservation.

The forum – which is taking place during the international year of biodiversity and the Chinese year of the tiger – will also include the unveiling of an international consortium to combat wildlife crime and pledges to tighten protection by the 13 countries where tigers live.

There are appeals expected from celebrities including the actor Leonardo DiCaprio and the model Naomi Campbell.

The unprecedented mobilisation of political, financial and celebrity power was welcomed by conservation groups, but there were concerns that it may prove too little too late unless the words are translated into actions.

Jim Leape, director general of WWF, said that 40 years of conservation efforts had failed to halt poaching, loss of habitat and the decline of prey species. As a result, several subspecies have already died out, the wild population has shrunk to just 3,200 tigers and the number continues to shrink every day.

"The reasons for this disaster are well known," Leape said. "Unless we take drastic action, there will be no tigers by the next year of the tiger in 2022."

The crisis was described as far deeper than the loss of a single charismatic cat. In an opening address, James Adams, the vice president of the World Bank, said the demise of the tiger was symptomatic of a broader biological crisis that imperils economic growth.

"This forces us to rethink the development paradigm. The loss of a species at the top of the food chain endangers all the creatures below," said Adams. "Past failures have proven that piecemeal approaches don't work. Action must be comprehensive."

At the end of the summit, leaders are expected to adopt a global tiger recovery programme that includes a target of doubling numbers by 2022, making core tiger areas inviolate, increasing public awareness of tiger conservation, setting up cross-boundary protected areas and cracking down on poaching and smuggling.

Ministers and officials from Asian nations spelled out the actions they are taking to address the crisis.

India, which has the largest wild population, said it planned to establish eight new reserves, while Thailand promised to spend $98.6m over five years to strengthen conservation and tackle the illegal wildlife trade.

Russia pledged to crack down on poachers and to work with China to set up a shared, cross-border protected area aimed at adding space for an extra 500 Amur tigers. Malaysia said it would increase its population, but it would need help with the expected cost of $1m per tiger.

Donors are expected to emerge in the days ahead: the World Bank website notes plans to raise $350m over the next five years, while the United States announced $400,000 in funds to help Russia protect the Amur tiger.

"Things are promising. People are really getting behind the common agenda. The question now is when will the rubber hit the road," said John Robinson, chief conservation officer of the Wildlife Conservation Society. "If we can't come together as a global community to save tigers then it's hard to imagine what we can do it for."

But without a reduction in demand for tiger products, conservationists warn that efforts to protect habitat could come to nothing.

A recent report by Traffic, which monitors wildlife trade, noted that body parts from more than 1,000 tigers had been seized in the last decade.

China remains the main destination for illegally imported bone, penis and hides. Tiger farms in China also continue to advertise "tonics" made from harvested parts. Wen Jiabao, the Chinese premier, is due to attend the final day of the summit. The country has pledged to crack down on poaching, expand international co-operation and increase investment into habitat conservation.

Jia Zhibang, the minister of the state forest administration, said China had accepted a heavy economic sacrifice by banning trade in tiger products in 1993.

International conservation groups urge China to strengthen enforcement of conservation with more undercover investigations.

"It's not difficult to encounter the traders who are selling tiger skin and bone in China. It would be relatively easy to get intelligence on them," said Debbie Banks, head of the China campaign for the Environmental Investigation Agency. "For a wealthy nation like China that could spend $31bn on the Olympics, ending the tiger trade is simple if they want to."

Not burning so bright

The demise of the tiger has been rapid. Subspecies have collapsed one after another – the Bali tiger in the 1940s, the central Asia tiger in the 1970s, the Java tiger in the 1980s, the south China wild tiger the 1990s.

While tigers once roamed in at least 25 countries at the start of the 20th century, today they are in dwindling, separated communities across just 13 nations.

The remaining populations are as follows: India 1,200-1650; Indonesia 450-700; Bangladesh 400; Nepal 350; Russia 350; Bhutan 70-80; China 40-50; Cambodia 10-50; Laos 50; Vietnam less than 30; Burma about 100; Thailand 250-500; Malaysia 300-500

Source: Global Tiger Initiative

Stiglitz Says Federal Reserve System 'Corrupt'

http://www.huffingtonpost.com/2010/03/03/stiglitz-nobel-prize-winn_n_484943.html
Stiglitz, Nobel Prize-Winning Economist, Says Federal Reserve System 'Corrupt'
3-3-10

One of the world's leading economists said Wednesday that the very structure of the Federal Reserve system is so fraught with conflicts that it's "corrupt."

Nobel laureate Joseph Stiglitz, a former chief economist at the World Bank, said that if a country had applied for World Bank aid during his tenure, with a financial regulatory system similar to the Federal Reserve's -- in which regional Feds are partly governed by the very banks they're supposed to police -- it would have raised alarms.

"If we had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure," Stiglitz said during a conference on financial reform in New York. "It's time for us to reflect on our own structure today, and to say there are parts that can be improved."

Stiglitz made the remarks at a conference held by the Roosevelt Institute. He and other speakers, including Harvard Law Professor and federal bailout watchdog Elizabeth Warren and legendary investor George Soros, had bold ideas about reforming the nation's financial system.

After the conference, Stiglitz said that his remarks on the Fed were "maybe a little hyperbole," but then again made the case that if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system, "it would have been a big signal that something is wrong."

To Stiglitz, the core issue is that regional Fed banks, such as the New York Fed, have clear conflicts of interest -- a result of the banks being partly governed by a board of directors that includes officers of the very banks they're supposed to be overseeing.

The New York Fed, which was led by current Treasury Secretary Timothy Geithner during the time leading Wall Street firms like Citigroup, JPMorgan Chase, AIG, and Goldman Sachs were given hundreds of billions of dollars in taxpayer bailouts, presently has on its board of directors Jamie Dimon, the head of JPMorgan Chase. He's been there for three years. He replaced former Citigroup chairman Sanford "Sandy" Weill.

"So, these are the guys who appointed the guy who bailed them out," Stiglitz said. "Is that a conflict of interest?" he asked rhetorically.

"They would say, 'no conflict of interest, we were just doing our job,'" he answered. "But you have to look at the conflicts of interest."

A message left for a New York Fed spokeswoman after regular business hours was not returned.

"The reason you talk about governance is because in a democracy you want people to have confidence," Stiglitz said. "This is a structure that will undermine confidence in a democracy."

Take a Look in the Mirror, America

http://blackagendareport.com/?q=content/take-look-mirror-america

Take a Look in the Mirror, America
Mon, 07/13/2009
Solomon Comissiong

President Obama this week deployed his impressive oratorical skills to frame a false historical and current reality about Africa. “He used cheap rhetorical devices to essentially deny that his own country and other Western nations are equally, if not more, responsible for the destabilized condition in which so many African nations find themselves.” What's needed is a “real alteration in American governance,” to replace a system that thrives on exploitation and death.

“Obama spoke as if America and Europe had nothing to do with much of the 'bad' governance that Mama Africa has seen since European invaders began their rape, murder and plunder.”

Almost six months into the “Change you can believe in” Cult (I mean administration), and I am regrettably remain unpleasantly surprised at the number of people who still, despite strong facts, escape reality by thinking that President Obama is some kind of progressive messiah. He is not progressive much less a messiah. I am surprised at the unmitigated hubris President Obama shows each time he spews forth disingenuous, insulting and “coded” rhetoric. However, most regrettable, I am surprised that I am surprised.

President Obama has just concluded his first presidential visit to Sub-Saharan African (second trip to Africa, including Egypt) and, if you listen close enough, you can still hear the echoes of him chastising and scolding Africans for the destabilization of their mineral rich continent. He curiously reminded Africans, and the world, that they (Africans) could not longer blame colonization and slavery for their problems. Previously this month, Obama had said in an interview with AllAfrica.com that “excuses” about neo-colonialism had hindered progress on the world’s “poorest” continent. He sounded eerily like some white American liberal or conservative when they feel the need to lecture black Americans that they can all simply pull themselves up from their proverbial “bootstraps.” They, and Obama, deliberately fail to mention, 1) that many people have no bootstraps by which to pull themselves up, and 2) the role institutional racism played and continues to play in maintaining the equality divide between blacks and whites.

Obama’s speech in Ghana was reminiscent of the time, during his campaign, that he impressed his white “handlers” by stepping into a black church and exclusively scolding black men for being irresponsible fathers, as if this was an issue restricted to that demographic. Obama knew very well that he could not go into a white church with that rhetoric despite the fact that philandering and deadbeat fathering exists in every community. You see, to do that Obama would have to have some semblance of moxie. He is much more comfortable taking the easy “road” when it comes to social issues. Honestly addressing all of the intersectional sides of an issue, including the root causes, appears to be much too difficult for President Obama.

“He impressed his white handlers by stepping into a black church and exclusively scolding black men for being irresponsible fathers, as if this was an issue restricted to that demographic.”

When Obama embarked upon his superficial 24-hour “trip” to Ghana and lectured black Africans about corruption, bad governance, and tyranny, strongly intimating that these were the sole reasons why the vast majority of its people are immersed in a quagmire of poverty and death, he was taking the very easy road: an exercise in false and self-serving logic that his so-called liberal European-American constituents love to hear. He was taking a road that his white conservative European-American adversaries more than agree with. He used cheap rhetorical devices to essentially deny that his own country and other Western nations are equally, if not more, responsible for the destabilized condition in which so many African nations find themselves. He spoke as if America and Europe had nothing to do with much of the “bad” governance that Mama Africa has seen since European invaders began to rape, murder and plunder her soil and her people.

If my memory serves me correctly it was America, via the CIA, that funded a coup that murdered the great Congolese Leader Patrice Lumumba and installed the corrupt Mobutu Sese Seko who, with the aid of the US, cast death, plunder, and destruction upon the people of Congo for more than three decades. The US, on the direct orders of President Eisenhower, caused the assassination of Lumumba because he had the “bold” idea that the vast mineral resources of Congo should primarily benefit its people and not the West. Coincidentally, it was also a US supported coup that was responsible for the overthrow of one of Africa’s most progressive leaders, Kwame Nkrumah, in 1966.

“The US, on the direct orders of President Eisenhower, caused the assassination of Lumumba.”

President Obama knows very well about these American atrocities, and many more, yet omitted them from his speech in Ghana. It would take courage to admit the role Washington has played in the destabilization of Africa – the kind of courage this president lacks.

Instead of providing an honest context for the current conditions confronting Africa, Obama selectively focuses on “bad” African governance and corruption, all the while turning a blind eye to the role the US has played and continues to play. However, can fans of imperialism blame the guy? Obama is reading from the same page of the US imperialist playbook as his presidential predecessors. The rules of the playbook forbidsa US head of state from allowing America to accept any culpability in the violation of other nations' sovereignty. So while all of the good Obamanistas continue to drink their spiked kool-aid he and his minions, like Susan Rice, Kipp Ward, and Johnnie Carson, will continue to build the case for imperial programs such as Africom (African-Command).

Obama can be counted on to advocate for more fettered (structural adjustment-laden) aid from the likes of the World Bank, IMF and USAID. Don’t expect Obama to discuss how nefarious structural adjustment polices have prevented African nations from directing money towards education, healthcare and infrastructure. You best believe that the $20 billion in agricultural aid pledged by the rich G8 member nations comes with some very sticky strings attached. The US president also won’t tell you how these policies induce Western privatization and the hindrance of sales of African exports. He also wont tell you how politically motivated sanctions on Zimbabwe have crippled its economy and its people. Nor will he mention how US sanctions on Iraq contributed to the loss of one million lives, over half of them children. But why would he? That would take courage and a real alteration in American governance. Dare I say that would take good governance?

“You best believe that the $20 billion in agricultural aid pledged by the rich G8 member nations comes with some very sticky strings attached.”

Until America has a leader that is willing to take a long, honest and hard look in the mirror we can expect continuity in US policy at home and abroad. American “leaders” will point fingers at others while evading any recognizable mea culpa in the role they have played in the destabilization of other nations, and continue to play. Just like a well-oiled sports franchise that only acquires players who are best suited for the system, Barack Obama is perfectly suited for the US imperialist system. So when Obama closed his speech in Ghana by saying that America with be with Africa every step of the way, he very much meant it…and that’s not necessarily a good thing.

Solomon Comissiong is an educator, community activist, author, public speaker and the host of the Your World News radio program (http://www.blogtalkradio.com/Your-World-News). He may be reached at: sunderland77@hotmail.com.

World's Elite Visit Davos in Doubt

http://online.wsj.com/article/SB123291975787013521.html

JANUARY 26, 2009
World's Elite Visit Davos in Doubt
Leaders, CEOs Seek New Model at Forum, as IMF Prepares to Lower Growth Forecast
By MARC CHAMPION

In the 38 years that business and political leaders have been trekking to the Swiss ski resort of Davos to talk about the world economy, the outlook hasn't been bleaker or global capitalism more racked with self-doubt.

Forty heads of state -- compared with 27 last year -- have signed up to attend the annual meeting of the World Economic Forum that begins Tuesday evening with two questions dominating: Just how bad will this global recession get? And what will provide the growth needed to end it?

The International Monetary Fund is recalculating its estimate of global growth and on Wednesday is likely to lower it to less than 1%, similar to what the World Bank estimated last month, according to people familiar with the IMF calculations. The IMF is refining its estimates in light of lower-than-anticipated growth figures last week from China.

"Why are we surprised all the time, almost weekly" by bad financial news, said Victor Halberstadt, professor of economics at Leiden University in the Netherlands and a veteran of the Davos event. "Do we really understand too little about the economy? I'm afraid the answer may be 'yes,' and that is why policy makers are going to Davos."

Davos could mark an opportunity to seek a new economic model, he and others say. "Everyone is at a loss, this is the start of a period of huge improvisation. There is no longer any best practice around to refer to," Mr. Halberstadt says.

Over the years, Davos has become as much a marketing event, where companies look for business and polish images, as the intimate brainstorming venue of the event's early years, when a few hundred executives attended.

The five-day confab, which has signed up about 2,500 participants, will be a more sober affair than usual, organizers say. There are fewer gimmicks -- such as scents pumped into session rooms last year by a high-profile perfumer -- fewer movie stars have been invited, and fewer lavish parties are being thrown by governments and companies. Goldman Sachs won't be holding its usual party this year. "In the current environment, we didn't think it was appropriate," says spokesman Lucas van Praag.

Still, more than 1,400 chief executives and chairmen of companies are making the trip despite the deep slump in corporate revenues and stock markets.

And Davos doesn't come cheap. The annual corporate membership required in order to send executives costs 42,500 Swiss francs ($36,768), plus 18,000 francs to attend the meeting, not including accommodations, according to a Forum spokesman.

There have been gatherings during other economic crises, in the 1980s and 1990s, that seemed severe at the time. But none was so global or open-ended, says Klaus Schwab, who founded the World Economic Forum in 1971 and runs it through a nonprofit organization.

"This is absolutely new in Davos. The only parallel would be in 2002, where people were similarly concerned about terrorism," he says, referring to the Forum meeting that followed the Sept. 11, 2001, attacks on the U.S.

This year, big government looks set to seize the Davos limelight from the banks, hedge funds and sovereign wealth funds that attracted attention in recent years. The reason for this change, economists say, is simple: The taxpayer now holds what money and power remain in an ailing global economy. Many big banks are on government life support and even state-controlled sovereign wealth funds aren't offering capital to struggling Western corporations.

"This may be the first Davos where capitalism is widely viewed as a failure, rather than something to be admired," says Ethan Kapstein, professor of economics and political science at French business school Insead, who has been going to Davos since 1994.

In a sign of the times, many of the financial elite present at past sessions won't be coming this year. Richard Fuld Jr., former CEO of Lehman Brothers Holdings Inc., which filed for bankruptcy in the fall, won't be back this year, according to the organizers. Nor will John Thain, former CEO of Merrill Lynch & Co., who was forced to resign by Merrill's new owner Bank of America last week. One point of contention was that he had scheduled a trip to Davos, even though Bank of America had signaled it wouldn't be a good idea for him to attend.

Citigroup Chief Executive Vikram Pandit and Lloyd Blankfein of Goldman Sachs have chosen to stay home, though they will send other executives. Sir Win Bischoff, Citi's chairman, is scheduled to come, but was told last week he is being replaced at Citi by former Time Warner Inc. CEO Richard Parsons.

B. Ramalinga Raju, former chairman of India's Satyam Computer Services Ltd., was to have been on a panel this year at the Forum, but instead is in jail, arrested in connection with a massive fraud. One banker scheduled to attend, Edgar de Picciotto, chairman of Union Bancaire Privée, lost big -- to the tune of $700 million -- for clients by investing in Bernard Madoff's alleged Ponzi scheme.

The U.S. is likely to be the subject of finger-pointing at Davos, as the country where the global financial crisis started. It is also the focus of most hopes for recovery. Yet the Obama administration is planning to send just one official, White House senior adviser Valerie Jarrett. Ms. Jarrett, a longtime friend of President Barack Obama, is subbing for Lawrence Summers, head of the National Economic Council, and National Security Adviser James Jones, who are remaining in Washington "to advise the president on the near-term issues he must address," according to an administration official.

The headline governmental names this year instead come from emerging markets. China's premier, Wen Jiabao, and Russian Prime Minister Vladimir Putin are to give speeches on Wednesday, at a time when their economies, too, are getting hit hard. Mr. Wen will be the first Chinese leader to go to Davos. The leaders of Japan, Germany and the U.K. speak later in the event.

"The capitalist myth is lovely and youthful. It kicked off the industrial revolution, but maybe we need a new one," says Richard Olivier, son of the late British actor Sir Laurence Olivier. Mr. Olivier, who owns a company that gives seminars, will give a dinner talk on business leadership at Davos, based on Shakespeare's tragedy Macbeth. The tale shows a heroic soldier turned bad, led to self-delusion by his own ambition and greed -- think Lehman Brothers, says Mr. Olivier.

German novelist Thomas Mann called Davos "the Magic Mountain" back when it was a center for tuberculosis cures. Whether people will find the medicine they are looking for at this meeting is doubtful. But Mr. Halberstadt believes it is a good sign politicians want to meet and talk informally at a moment when the globalized economy and its institutions will be under growing stress from protectionism and other threats, as governments respond to domestic pressures.

Amid the bad economic news, Mr. Schwab and others such as philanthropist and Microsoft Corp. Chairman Bill Gates will be pressing governments and CEOs to continue to address and fund other global challenges from climate change to dwindling water supplies to Third World disease. That, say Davos regulars, could prove to be a much tougher sell than a ticket to the Magic Mountain.

Write to Marc Champion at marc.champion@wsj.com

Printed in The Wall Street Journal, page A6

World Food Program warns of 'silent tsunami' of hunger

http://ap.google.com/article/ALeqM5gVMIPi3dMFpmC3mUr_kNyximdCvwD9074TR00

World Food Program warns of 'silent tsunami' of hunger
By DAVID STRINGER
4-22-8

LONDON (AP) — Ration cards. Genetically modified crops. The end of pile-it-high, sell-it-cheap supermarkets.

These possible solutions to the first global food crisis since World War II — which the World Food Program says already threatens 20 million of the poorest children — are complex and controversial. And they may not even solve the problem as demand continues to soar.

A "silent tsunami" of hunger is sweeping the world's most desperate nations, said Josette Sheeran, the WFP's executive director, speaking Tuesday at a London summit on the crisis.

The skyrocketing cost of food staples, stoked by rising fuel prices, unpredictable weather and demand from India and China, has already sparked sometimes violent protests across the Caribbean, Africa and Asia.

The price of rice has more than doubled in the last five weeks, she said. The World Bank estimates food prices have risen by 83 percent in three years.

"What we are seeing now is affecting more people on every continent," Sheeran told a news conference.

Hosting talks with Sheeran, lawmakers and experts, British Prime Gordon Brown said the spiraling prices threaten to plunge millions back into poverty and reverse progress on alleviating misery in the developing world.

"Tackling hunger is a moral challenge to each of us and it is also a threat to the political and economic stability of nations," Brown said.

Malaysia's embattled prime minister is already under pressure over the price increases and has launched a major rice-growing project. Indonesia's government needed to revise its annual budget to respond.

Unrest over the food crisis has led to deaths in Cameroon and Haiti, cost Haitian Prime Minister Jacques Edouard Alexis his job, and caused hungry textile workers to clash with police in Bangladesh.

Former U.N. Secretary-General Kofi Annan said more protests in other developing nations appear likely. "We are going through a very serious crisis and we are going to see lots of food strikes and demonstrations," Annan told reporters in Geneva.

At streetside restaurants in Lome, Togo, even the traditional balls of corn meal or corn dough served with vegetable soup are shrinking. Once as big as a boxer's fist, the dumplings are now the size of a tennis ball — but cost twice as much.

In Yaounde, Cameroon, civil servant Samuel Ebwelle, 51, said he fears food prices will rise further.

"We are getting to the worst period of our life," he said. "We've had to reduce the number of meals we take a day from three to two. Breakfast no longer exists on our menu."

Even if her call for $500 million in emergency funding is met, food aid programs — including work to feed 20 million poor children — will be hit this year, Sheeran said.

President Bush has released $200 million in urgent aid. Britain pledged an immediate $59.7 million on Tuesday.

Even so, school feeding projects in Kenya and Cambodia have been scaled back and food aid has been cut in half in Tajikistan, Sheeran said.

Yet while angry street protesters call for immediate action, long term solutions are likely to be slow, costly and complicated, experts warn.

And evolving diets among burgeoning middle classes in India and China will help double the demand for food — particularly grain intensive meat and dairy products — by 2030, the World Bank says.

Robert Zoellick, the bank's head, claims as many as 100 million people could be forced deeper into poverty. U.N. Secretary-General Ban Ki-moon said rising food costs threaten to cancel strides made toward the goal of cutting world poverty in half by 2015.

"Now is not too soon to be thinking about the longer-term solutions," said Alex Evans, a former adviser to Britain's Environment Secretary Hilary Benn.

He said world leaders must help increase food production, rethink their push on biofuels — which many blame for pushing up food prices — and consider anew the once taboo topic of growing genetically modified crops.

But Evans, now a visiting fellow at New York University's Center on International Cooperation, said increasing the amount of land that can be farmed in the developing world will be arduous.

"It's almost like new oil or gas fields; they'll tend to be the hardest to reach places, that need new roads and new infrastructure to be viable," he said.

The will to increase food production exists, as does most of the necessary skills, but there are major obstacles, including a lack of government investment in agriculture and — in Africa particularly — a scarcity of fertilizers, good irrigation and access to markets.

"Many African farmers are very entrepreneurial, but they simply aren't connected to markets," said Lawrence Haddad, an economist and director of Britain's Institute of Development Studies. "They find there are no chilling plants for milk and no grinding mills for coffee."

Haddad said the likely impact of food price increases should have been anticipated. "The fact no one has previously made the link between agriculture and poverty is quite incredible," he said.

Just as new land for farming is available in Russia and Brazil, new genetically modified crops resistant to drought, or which deliver additional nutrients, could be better targeted to different regions of the developing world, Evans said. "The solutions are more nuanced than we previously thought," he added.

Sheeran said developing world governments, particularly in Africa, will need to dedicate at least 10 percent of future budgets to agriculture to boost global production.

Some experts predict other countries could follow the example of Pakistan, which has revived the use of ration cards for subsidized wheat.

The production of biofuels also needs to be urgently re-examined, Brown said.

He acknowledged that Britain this month introduced targets aimed at producing 5 percent of transport fuel from biofuels by 2010, but said his government and others should review their policies.

Production of biofuel leads to the destruction of forests and takes up land available to grow crops for food.

Brown said the impact of the food crisis won't just be felt in the developing world, but also in the checkout lane of Western supermarkets. "It it is not surprising that we see our shopping bills go up," Brown said.

Many analysts, including Britain's opposition leader David Cameron, claim that people in the West will need to eat less meat — and consume, or waste, less food in general. Some expect the shift in attitudes to herald the end of supermarket giveaways and cost-cutting grocery stores that stack goods to the ceiling and sell in bulk.

Citizens in the West, China and India must realize that the meat on their plate and biofuels in their expensive cars carry a cost for those in the developing world, Evans said.

Sheeran believes many already understand the impact. "Much of the world is waking up to the fact that food does not spontaneously appear on grocery store shelves," she said.

AP writers Ebow Godwin in Lome, Togo; Emmanuel Tumanjong in Yaounde, Cameroon; Anita Powell in Addis Ababa, Ethiopia, and Eliane Engeler in Geneva contributed to this report.

Riots, instability spread as food prices skyrocket

http://edition.cnn.com/2008/WORLD/americas/04/14/world.food.crisis/

Riots, instability spread as food prices skyrocket
Story Highlights
Rise in food prices is "the world's big story," development official warns
World Bank chief warns that rise in prices could set anti-poverty efforts back
Crisis also spurs debate on whether ethanol production is to blame
Riots have occurred in numerous countries recently

(CNN) -- Riots from Haiti to Bangladesh to Egypt over the soaring costs of basic foods have brought the issue to a boiling point and catapulted it to the forefront of the world's attention, the head of an agency focused on global development said Monday.

"This is the world's big story," said Jeffrey Sachs, director of Columbia University's Earth Institute.

"The finance ministers were in shock, almost in panic this weekend," he said on CNN's "American Morning," in a reference to top economic officials who gathered in Washington. "There are riots all over the world in the poor countries ... and, of course, our own poor are feeling it in the United States."

World Bank President Robert Zoellick has said the surging costs could mean "seven lost years" in the fight against worldwide poverty.

"While many are worrying about filling their gas tanks, many others around the world are struggling to fill their stomachs, and it is getting more and more difficult every day," Zoellick said late last week in a speech opening meetings with finance ministers.

"The international community must fill the at least $500 million food gap identified by the U.N.'s World Food Programme to meet emergency needs," he said. "Governments should be able to come up with this assistance and come up with it now."

The White House announced Monday evening that an estimated $200 million in emergency food aid would be made available through the U.S. Agency for International Development.

"This additional food aid will address the impact of rising commodity prices on U.S. emergency food aid programs, and be used to meet unanticipated food aid needs in Africa and elsewhere," the White House said in a news release.

"In just two months," Zoellick said in his speech, "rice prices have skyrocketed to near historical levels, rising by around 75 percent globally and more in some markets, with more likely to come. In Bangladesh, a 2-kilogram bag of rice ... now consumes about half of the daily income of a poor family."

The price of wheat has jumped 120 percent in the past year, he said -- meaning that the price of a loaf of bread has more than doubled in places where the poor spend as much as 75 percent of their income on food.

"This is not just about meals forgone today or about increasing social unrest. This is about lost learning potential for children and adults in the future, stunted intellectual and physical growth," Zoellick said.

Dominique Strauss-Kahn, managing director of the International Monetary Fund, also spoke at the joint IMF-World Bank spring meeting.

"If food prices go on as they are today, then the consequences on the population in a large set of countries ... will be terrible," he said.

He added that "disruptions may occur in the economic environment ... so that at the end of the day most governments, having done well during the last five or 10 years, will see what they have done totally destroyed, and their legitimacy facing the population destroyed also."

In Haiti, the prime minister was kicked out of office Saturday, and hospital beds are filled with wounded following riots sparked by food prices. Watch Haitians riot over food prices »

The World Bank announced a $10 million grant from the United States for Haiti to help the government assist poor families.

In Egypt, rioters have burned cars and destroyed windows of numerous buildings as police in riot gear have tried to quell protests.

Images from Bangladesh and Mozambique tell a similar story.

In the United States and other Western nations, more and more poor families are feeling the pinch. In recent days, presidential candidates have paid increasing attention to the cost of food, often citing it on the stump.

The issue is also fueling a rising debate over how much the rising prices can be blamed on ethanol production. The basic argument is that because ethanol comes from corn, the push to replace some traditional fuels with ethanol has created a new demand for corn that has thrown off world food prices.

Jean Ziegler, U.N. special rapporteur on the right to food, has called using food crops to create ethanol "a crime against humanity."

"We've been putting our food into the gas tank -- this corn-to-ethanol subsidy which our government is doing really makes little sense," said Columbia University's Sachs.

Former President Clinton, at a campaign stop for his wife in Pennsylvania over the weekend, said, "Corn is the single most inefficient way to produce ethanol because it uses a lot of energy and because it drives up the price of food."

Some environmental groups reject the focus on ethanol in examining food prices.

"The contrived food vs. fuel debate has reared its ugly head once again," the Renewable Fuels Association says on its Web site, adding that "numerous statistical analyses have demonstrated that the price of oil -- not corn prices or ethanol production -- has the greatest impact on consumer food prices because it is integral to virtually every phase of food production, from processing to packaging to transportation."

Analysts agree the cost of fuel is among the reasons for the skyrocketing prices.

Another major reason is rising demand, particularly in places in the midst of a population boom, such as China and India.

Also, said Sachs, "climate shocks" are damaging food supply in parts of the world. "You add it all together: Demand is soaring, supply has been cut back, food has been diverted into the gas tank. It's added up to a price explosion."

Nobel laureate estimates wars' cost at more than $3 trillion

http://www.mcclatchydc.com/homepage/story/28891.html

Nobel laureate estimates wars' cost at more than $3 trillion
Kevin G. Hall McClatchy Newspapers
last updated: February 27, 2008

WASHINGTON — When U.S. troops invaded Iraq in March 2003, the Bush administration predicted that the war would be self-financing and that rebuilding the nation would cost less than $2 billion.

Coming up on the fifth anniversary of the invasion, a Nobel laureate now estimates that the wars in Iraq and Afghanistan are costing America more than $3 trillion.

That estimate from Noble Prize-winning economist Joseph Stiglitz also serves as the title of his new book, "The Three Trillion Dollar War," which hits store shelves Friday.

The book, co-authored with Harvard University professor Linda Bilmes, builds on previous research that was published in January 2006. The two argued then and now that the cost to America of the wars in Iraq and Afghanistan is wildly underestimated.

When other factors are added — such as interest on debt, future borrowing for war expenses, the cost of a continued military presence in Iraq and lifetime health-care and counseling for veterans — they think that the wars' costs range from $5 trillion to $7 trillion.

"I think we really have learned that the long-term costs of taking care of the wounded and injured in this war and the long-term costs of rebuilding the military to its previous strength is going to far eclipse the cost of waging this war," Bilmes said in an interview.

The book and its estimates are the subject of a hearing Thursday by the Joint Economic Committee of Congress.

The White House doesn't care for the estimates by Stiglitz, a former chief economist of the World Bank who's now a professor at Columbia University.

"People like Joe Stiglitz lack the courage to consider the cost of doing nothing and the cost of failure. One can't even begin to put a price tag on the cost to this nation of the attacks of 9-11," said White House spokesman Tony Fratto, conceding that the costs of the war on terrorism are high while questioning the premise of Stiglitz's research.

"It is also an investment in the future safety and security of Americans and our vital national interests. $3 trillion? What price does Joe Stiglitz put on attacks on the homeland that have already been prevented? Or doesn't his slide rule work that way?"

Rep. John Murtha, D-Pa., a decorated Marine Corp colonel and Vietnam veteran, welcomed the effort by Stiglitz and Bilmes to quantify how much the wars will cost taxpayers.

"It's astounding that here we are about to mark the fifth anniversary of the invasion of Iraq, and this administration still refuses to acknowledge the long-term costs of the war in Iraq," he said.

By any estimate, the Bush administration's predictions in March 2003 of a self-financing war have proved to be wildly inaccurate. Stiglitz cites operational spending to date of $646 billion for the wars in Iraq and Afghanistan, and, working off estimates from the nonpartisan Congressional Budget Office, presumes that spending on these wars over the next decade probably will amount to another $913 billion.

Pentagon officials had no immediate comment on Stiglitz's book or his estimates.

Stiglitz and Bilmes first estimated war costs of $1 trillion in January 2006. Their research proved controversial and sparked debate about the costs of replacing equipment used by the regular armed forces and National Guard. In the new book, they offer a figure of $404 billion for replacing equipment, planes and tanks and bringing military hardware back from Iraq and Afghanistan.

In an interview, Stiglitz said that too much of the public debate had been over the wars' operational costs while the real budget strains would show up only years from now.

"The peak expenditures are way out," he said, noting that the peak expenditures for World War II vets came in 1993.

The pair estimated that future medical, disability and Social Security costs for veterans of the conflicts in Iraq and Afghanistan range from a best-case $422 billion to what they call a more probable long-term expense of $717 billion.

It's why the two call in the book for creating a Veterans Benefits Trust Fund to set aside money in a "lock box" to pay for future health-care needs of Iraq and Afghanistan vets. Although veterans' health care amounts to a future promise, they said, it isn't an entitlement and instead is funded through discretionary spending. In the future, funding for vets will compete with other government programs.

"We should not have an unfunded entitlement program like this," Stiglitz said. "This is more like deferred compensation. . . . We require corporations to put money away but we don't require the government to put money away, and we should be doing that . . . so when the focus turns away to some other problem, veterans aren't given the shaft."

The book divides war costs into two main categories: budgetary and social. The budgetary costs are the more quantifiable spending on operations, equipment, future benefits paid to veterans and the like. In a best-case scenario they total about $1.7 trillion; in a more probable scenario almost $2.7 trillion.

The social costs that Stiglitz and Bilmes offer are more theoretical, and represent the thought-provoking part of their war-cost argument.

When a soldier is killed in combat, they said, the U.S. armed forces pay a $100,000 death gratuity and make a $400,000 payment to his or her survivors in the equivalent of insurance for an unexpected death.

If these men and women had died in private-sector employment or in some kind of disaster, compensation to family members generally would be settled in court after determining what economists and lawyers call "the value of statistical life." This measures the economic contribution that a person would have made over the rest of his or her life if they hadn't died.

Stiglitz and Bilmes settled on a statistical value of life that they say the Environmental Protection Agency uses when people are killed in environmental disasters: $7.2 million.

There have been 4,456 U.S. military fatalities in the wars in Iraq and Afghanistan from 2001 to Feb. 26, 2008. The direct cost to the Pentagon from these deaths has been $2.2 billion, but if lives are valued as they are outside the armed forces, the researchers conclude, the hypothetical economic cost rises to more than $30 billion. Include contractors killed while working for U.S. operations and the number rises to more than $50 billion.

In a best-case outlook, the social and societal costs of the Iraq and Afghanistan wars would be $295 billion; $415 billion in a moderate-realistic case scenario.

Venezuela, Allies to Start New Bank

http://ap.google.com/article/ALeqM5iMCLEISU-Nv0nIUJnH1WkxcabXYgD8UDAQ7G0

Venezuela, Allies to Start New Bank
By IAN JAMES
1-25-8

CARACAS, Venezuela (AP) — Venezuelan President Hugo Chavez and three of his closest allies are teaming up to create a regional development bank intended to strengthen their alliance and promote independence from U.S.-backed lenders like the World Bank.

The bank is to be launched Saturday as Chavez hosts a summit with leaders from Nicaragua, Bolivia and Cuba — members of the Bolivarian Alternative for the Americas, or ALBA.

The left-leaning regional trade alliance is intended to offer an alternative, socialist path to integration while snubbing U.S.-backed free-trade deals.

The ALBA Bank will be started with $1 billion to $1.5 billion of capital, Venezuelan Finance Minister Rafael Isea said Friday, according to the state-run Bolivarian News Agency.

Venezuela, with its plentiful oil earnings, is expected to be the leading financier. The funds will go toward social programs and other joint efforts, from farming projects to oil ventures.

Chavez and the leaders of six other South American countries last month launched a similar venture, the Bank of the South, which is projected to have as much as $7 billion in startup capital and offer loans with fewer strings attached than those given by the World Bank or the International Monetary Fund.

Nicaraguan President Daniel Ortega said he believes the ALBA Bank will bring "mutual benefits." For instance, he said, Nicaragua's farm projects could "start supplying Venezuela with milk, with beef" — which could help Chavez's government stem recent shortages of such products.

The two governments Friday signed a series of accords, including one for "food security" under which Nicaragua pledged to help supply milk, corn, beans and beef to Venezuela.

"I want to thank Daniel and all of Nicaragua," Chavez said. "We still have to depend on a lot of imported foods."

In turn, Chavez's government is selling oil under preferential terms to Nicaragua and has sent the country fertilizers, tractors and electric generators.

Ending Famine, Simply by Ignoring the Experts

http://www.nytimes.com/2007/12/02/world/africa/02malawi.html

December 2, 2007
Ending Famine, Simply by Ignoring the Experts
By CELIA W. DUGGER

LILONGWE, Malawi — Malawi hovered for years at the brink of famine. After a disastrous corn harvest in 2005, almost five million of its 13 million people needed emergency food aid.

But this year, a nation that has perennially extended a begging bowl to the world is instead feeding its hungry neighbors. It is selling more corn to the World Food Program of the United Nations than any other country in southern Africa and is exporting hundreds of thousands of tons of corn to Zimbabwe.

In Malawi itself, the prevalence of acute child hunger has fallen sharply. In October, the United Nations Children’s Fund sent three tons of powdered milk, stockpiled here to treat severely malnourished children, to Uganda instead. “We will not be able to use it!” Juan Ortiz-Iruri, Unicef’s deputy representative in Malawi, said jubilantly.

Farmers explain Malawi’s extraordinary turnaround — one with broad implications for hunger-fighting methods across Africa — with one word: fertilizer.

Over the past 20 years, the World Bank and some rich nations Malawi depends on for aid have periodically pressed this small, landlocked country to adhere to free market policies and cut back or eliminate fertilizer subsidies, even as the United States and Europe extensively subsidized their own farmers. But after the 2005 harvest, the worst in a decade, Bingu wa Mutharika, Malawi’s newly elected president, decided to follow what the West practiced, not what it preached.

Stung by the humiliation of pleading for charity, he led the way to reinstating and deepening fertilizer subsidies despite a skeptical reception from the United States and Britain. Malawi’s soil, like that across sub-Saharan Africa, is gravely depleted, and many, if not most, of its farmers are too poor to afford fertilizer at market prices.

“As long as I’m president, I don’t want to be going to other capitals begging for food,” Mr. Mutharika declared. Patrick Kabambe, the senior civil servant in the Agriculture Ministry, said the president told his advisers, “Our people are poor because they lack the resources to use the soil and the water we have.”

The country’s successful use of subsidies is contributing to a broader reappraisal of the crucial role of agriculture in alleviating poverty in Africa and the pivotal importance of public investments in the basics of a farm economy: fertilizer, improved seed, farmer education, credit and agricultural research.

Malawi, an overwhelmingly rural nation about the size of Pennsylvania, is an extreme example of what happens when those things are missing. As its population has grown and inherited landholdings have shrunk, impoverished farmers have planted every inch of ground. Desperate to feed their families, they could not afford to let their land lie fallow or to fertilize it. Over time, their depleted plots yielded less food and the farmers fell deeper into poverty.

Malawi’s leaders have long favored fertilizer subsidies, but they reluctantly acceded to donor prescriptions, often shaped by foreign-aid fashions in Washington, that featured a faith in private markets and an antipathy to government intervention.

In the 1980s and again in the 1990s, the World Bank pushed Malawi to eliminate fertilizer subsidies entirely. Its theory both times was that Malawi’s farmers should shift to growing cash crops for export and use the foreign exchange earnings to import food, according to Jane Harrigan, an economist at the University of London.

In a withering evaluation of the World Bank’s record on African agriculture, the bank’s own internal watchdog concluded in October not only that the removal of subsidies had led to exorbitant fertilizer prices in African countries, but that the bank itself had often failed to recognize that improving Africa’s declining soil quality was essential to lifting food production.

“The donors took away the role of the government and the disasters mounted,” said Jeffrey Sachs, a Columbia University economist who lobbied Britain and the World Bank on behalf of Malawi’s fertilizer program and who has championed the idea that wealthy countries should invest in fertilizer and seed for Africa’s farmers.

Here in Malawi, deep fertilizer subsidies and lesser ones for seed, abetted by good rains, helped farmers produce record-breaking corn harvests in 2006 and 2007, according to government crop estimates. Corn production leapt to 2.7 million metric tons in 2006 and 3.4 million in 2007 from 1.2 million in 2005, the government reported.

“The rest of the world is fed because of the use of good seed and inorganic fertilizer, full stop,” said Stephen Carr, who has lived in Malawi since 1989, when he retired as the World Bank’s principal agriculturalist in sub-Saharan Africa. “This technology has not been used in most of Africa. The only way you can help farmers gain access to it is to give it away free or subsidize it heavily.”

“The government has taken the bull by the horns and done what farmers wanted,” he said. Some economists have questioned whether Malawi’s 2007 bumper harvest should be credited to good rains or subsidies, but an independent evaluation, financed by the United States and Britain, found that the subsidy program accounted for a large share of this year’s increase in corn production.

The harvest also helped the poor by lowering food prices and increasing wages for farm workers. Researchers at Imperial College London and Michigan State University concluded in their preliminary report that a well-run subsidy program in a sensibly managed economy “has the potential to drive growth forward out of the poverty trap in which many Malawians and the Malawian economy are currently caught.”

Farmers interviewed recently in Malawi’s southern and central regions said fertilizer had greatly improved their ability to fill their bellies with nsima, the thick, cornmeal porridge that is Malawi’s staff of life.

In the hamlet of Mthungu, Enelesi Chakhaza, an elderly widow whose husband died of hunger five years ago, boasted that she got two ox-cart-loads of corn this year from her small plot instead of half a cart.

Last year, roughly half the country’s farming families received coupons that entitled them to buy two 110-pound bags of fertilizer, enough to nourish an acre of land, for around $15 — about a third the market price. The government also gave them coupons for enough seed to plant less than half an acre.

Malawians are still haunted by the hungry season of 2001-02. That season, an already shrunken program to give poor farmers enough fertilizer and seed to plant a meager quarter acre of land had been reduced again. Regional flooding further lowered the harvest. Corn prices surged. And under the government then in power, the country’s entire grain reserve was sold as a result of mismanagement and corruption.

Mrs. Chakhaza watched her husband starve to death that season. His strength ebbed away as they tried to subsist on pumpkin leaves. He was one of many who succumbed that year, said K. B. Kakunga, the local Agriculture Ministry official. He recalled mothers and children begging for food at his door.

“I had a little something, but I could not afford to help each and every one,” he said. “It was very pathetic, very pathetic indeed.”

But Mr. Kakunga brightened as he talked about the impact of the subsidies, which he said had more than doubled corn production in his jurisdiction since 2005.

“It’s quite marvelous!” he exclaimed.

Malawi’s determination to heavily subsidize fertilizer and the payoff in increased production are beginning to change the attitudes of donors, say economists who have studied Malawi’s experience.

The Department for International Development in Britain contributed $8 million to the subsidy program last year. Bernabé Sánchez, an economist with the agency in Malawi, estimated the extra corn produced because of the $74 million subsidy was worth $120 million to $140 million.

“It was really a good economic investment,” he said.

The United States, which has shipped $147 million worth of American food to Malawi as emergency relief since 2002, but only $53 million to help Malawi grow its own food, has not provided any financial support for the subsidy program, except for helping pay for the evaluation of it. Over the years, the United States Agency for International Development has focused on promoting the role of the private sector in delivering fertilizer and seed, and saw subsidies as undermining that effort.

But Alan Eastham, the American ambassador to Malawi, said in a recent interview that the subsidy program had worked “pretty well,” though it displaced some commercial fertilizer sales.

“The plain fact is that Malawi got lucky last year,” he said. “They got fertilizer out while it was needed. The lucky part was that they got the rains.”

And the World Bank now sometimes supports the temporary use of subsidies aimed at the poor and carried out in a way that fosters private markets.

Here in Malawi, bank officials say they generally support Malawi’s policy, though they criticize the government for not having a strategy to eventually end the subsidies, question whether its 2007 corn production estimates are inflated and say there is still a lot of room for improvement in how the subsidy is carried out.

“The issue is, let’s do a better job of it,” said David Rohrbach, a senior agricultural economist at the bank.

Though the donors are sometimes ambivalent, Malawi’s farmers have embraced the subsidies. And the government moved this year to give its people a more direct hand in their distribution.

Villagers in Chembe gathered one recent morning under the spreading arms of a kachere tree to decide who most needed fertilizer coupons as the planting season loomed. They had only enough for 19 of the village’s 53 families.

“Ladies and gentlemen, should we start with the elderly or the orphans?” asked Samuel Dama, a representative of the Chembe clan.

Men led the assembly, but women sitting on the ground at their feet called out almost all the names of the neediest, gesturing to families rearing children orphaned by AIDS or caring for toothless elders.

There were more poor families than there were coupons, so grumbling began among those who knew they would have to watch over the coming year as their neighbors’ fertilized corn fields turned deep green.

Sensing the rising resentment, the village chief, Zaudeni Mapila, rose. Barefoot and dressed in dusty jeans and a royal blue jacket, he acted out a silly pantomime of husbands stuffing their pants with corn to sell on the sly for money to get drunk at the beer hall. The women howled with laughter. The tension fled.

He closed with a reminder he hoped would dampen any jealousy.

“I don’t want anyone to complain,” he said. “It’s not me who chose. It’s you.”

The women sang back to him in a chorus of acknowledgment, then dispersed to their homes and fields.

CIA memo on attacking democracy in Venezuela

http://professorsmartass.blogspot.com/2007/11/intercepted-cia-memo-on-attacking.html

Professor Smartass
Thursday, November 29, 2007
intercepted CIA memo on attacking democracy in Venezuela

If you have only heard bad things about Hugo Chavez in the media, you might not have heard that his election, re-election, and triumph in a US-backed recall by wide margins were certified by international monitors, and that network whose broadcast license he refused to renew actively helped the US backed coup against Chavez and bragged about it on the air while the coup was going on. He also refused the IMF economic program that would have cut social spending and left Venezuela with only 1% of their oil income, the rest going to oil companies and the debt run up by past corrupt governments.

And if you believe the criticism of him in the media, consider what our ally, the kingdom of Saudi Arabia, is doing right now: sentencing a gang rape victim to 200 lashes for being in the company of men. There is no election of the Saudi family, recall, or referendum on their power, but the CIA isn't trying to remove them because big oil thinks they've already got the best deal they can get there.

Now there is another vote in Venezuela on amending their constitution, and even the CIA concedes 57% of Venezuelans support Chavez.

That is not stopping them from planning the kind of economic disruption and military take over that led to the coup in Chile in 1973 and decades of torture, mass executions, and economic policies that enriched a handful of the already wealthy and eroded the middle class.

The only problem with doing this in Venezuela is Chavez is FROM the military, and most of the military sided with him when a coup was attempted before because they were sick of being the bad guys and oppressing their own people.

Attacking Chavez is not only morally wrong, but economically foolish. Like Iran, the best weapon Venezuela has to retaliate is economic--they can simply accelerate the move away from trading oil in dollars, drying up the money and credit Bush needs to continue his wars.

If we were really concerned about reducing terrorism and having a stable supply of oil, we would work with leaders like Chavez and work to destabilize big oil instead.

KEY EXCERPTS:

The memo sent by an embassy official, Michael Middleton Steere, was addressed to the Director of Central Intelligence, Michael Hayden. The memo was entitled 'Advancing to the Last Phase of Operation Pincer' and updates the activity by a CIA unit with the acronym 'HUMINT' (Human Intelligence) which is engaged in clandestine action to destabilize the forth-coming referendum and coordinate the civil military overthrow of the elected Chavez government. The Embassy-CIA's polls concede that 57 per cent of the voters approved of the constitutional amendments proposed by Chavez but also predicted a 60 per cent abstention.

The US operatives emphasized their capacity to recruit former Chavez supporters among the social democrats (PODEMOS) and the former Minister of Defense Baduel, claiming to have reduced the 'yes' vote by 6 per cent from its original margin. Nevertheless the Embassy operatives concede that they have reached their ceiling, recognizing they cannot defeat the amendments via the electoral route.

The memo then recommends that Operation Pincer (OP) be operationalized. OP involves a two-pronged strategy of impeding the referendum, rejecting the outcome at the same time as calling for a 'no' vote. The run up to the referendum includes running phony polls, attacking electoral officials and running propaganda through the private media accusing the government of fraud and calling for a 'no' vote. Contradictions, the report emphasizes, are of no matter.

The CIA-Embassy reports internal division and recriminations among the opponents of the amendments including several defections from their 'umbrella group'. The key and most dangerous threats to democracy raised by the Embassy memo point to their success in mobilizing the private university students (backed by top administrators) to attack key government buildings including the Presidential Palace, Supreme Court and the National Electoral Council. The Embassy is especially full of praise for the ex-Maoist 'Red Flag' group for its violent street fighting activity. Ironically, small Trotskyist sects and their trade unionists join the ex-Maoists in opposing the constitutional amendments. The Embassy, while discarding their 'Marxist rhetoric', perceives their opposition as fitting in with their overall strategy.

The ultimate objective of 'Operation Pincer' is to seize a territorial or institutional base with the 'massive support' of the defeated electoral minority within three or four days (presumably after the elections though this is not clear. JP) backed by an uprising by oppositionist military officers principally in the National Guard. The Embassy operative concede that the military plotters have run into serous problems as key intelligence operatives were detected, stores of arms were decommissioned and several plotters are under tight surveillance.

Apart from the deep involvement of the US, the primary organization of the Venezuelan business elite (FEDECAMARAS), as well as all the major private television, radio and newspaper outlets have been engaged in a campaign of fear and intimidation campaign. Food producers, wholesale and retail distributors have created artificial shortages of basic food items and have provoked large scale capital flight to sow chaos in the hopes of reaping a 'no' vote.

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