TORONTO, Canada, Dec 22 (IPS) – The year 2023 has brought so much tragedy, with incomprehensible loss of lives, whether from wars or devastating ‘natural’ disasters, while our planet has seen yet more records broken as our climate catastrophe worsens.
Farhana Haque RahmanAnd so as the clock ticks towards the (mostly western) New Year, readers are traditionally subjected by media outlets like ours to the ‘yearender’ – usually a roundup of main events over the previous 12 months, one horror often overshadowed by the next.
So forgive us if for 2023 IPS takes a somewhat different approach, highlighting how humanity can do better, and how the big depressing picture should not obscure the myriad small but positive steps being taken out there.
COP28, the global climate conference held this month in Dubai, could neatly fit the ‘big depressing’ category. Hosted by a petrostate with nearly 100,000 people registered to attend, many of them lobbyists for fossil fuels and other polluters, it would be natural to address its outcomes with scepticism.
However, while Yamide Dagnet, Director for Climate Justice at the Open Society Foundations, described COP28 as “imperfect”, she said it also marked “an important and unprecedented step forward in our ‘course correction’ for a just transition towards resilient and greener economies.”
UN climate chief Simon Stiell acknowledged shortcomings in the compromise resolutions on fossil fuels and the level of funding for the Loss and Damages Fund. But the outcome, he said, was also the “beginning of the end” for the fossil fuel era.
Imperfect as it was and still based on old structures, COP28 hinted at the possible: a planetary approach to governance where common interests spanning climate, biodiversity and the whole health of Earth outweigh and supersede the current dominant global system of rule by nation states.
As we have tragically witnessed in 2023, the existing system – as vividly reflected in the repetitive stalemate among the five veto-bearing members of the UN Security Council – is failing to find resolution to the major conflicts of this year, Russia-Ukraine and Israel-Gaza. Not to mention older and half-forgotten conflicts in places like Myanmar (18.6 million people in need of humanitarian aid) and in eastern Democratic Republic of Congo (seven million displaced).
The unrestrained destruction of Gaza and the disproportionate killings of over 17,000, (now the death toll is “at least 20,000 people” according to Palestinian officials) mostly civilians– in retaliation for 1,200 killings by Hamas and 120 hostages in captivity– have left the Palestinians in a state of deep isolation and weighed down by a feeling of being deserted by the world at large.
The United Nations and the international community have remained helpless– with UN resolutions having no impact– while American pleas for restrained aerial bombings continue to be ignored by the Israelis in an act of defiance, wrote IPS senior journalist Thalif Deen.
The hegemony of the nation-state system is surely not going to disappear soon but – without wanting to sound too idealistic — its foundations are being chipped away by civil society where interdependence prevails over the divide and rule of the existing order. And so for a few examples encountered in our reporting:
CIVICUS Lens, standing for social justice and rooted in the global south, offers analysis of major events from a civil society perspective, such as its report on the security crisis gripping Haiti casting doubt over the viability of an international plan to dispatch a Kenya-led police contingent.
Education Cannot Wait, a global fund for education in emergencies and protracted crises, lobbied at COP28 for a $150 million appeal to support school-aged children facing climate shocks, such as the devastating drought in Somalia and Ethiopia, and floods in Pakistan where many of the 26,000 schools hit in 2022 remain closed.
Leprosy, an ancient but curable disease, had been pegged back in terms of new case numbers but the onset of the COVID-19 pandemic in 2020 made it harder for patients to get treatment and for new cases to be reported. Groups such as the Sasakawa Health Foundation are redoubling efforts to promote early detection and treatment.
With 80 percent of the world’s poorest living closer to the epicenters of climate-induced disasters, civil society is hammering at the doors of global institutions to address the challenges of adaptation and mitigation.
Lobbying on the sidelines of COP28 in Dubai was activist Joshua Amponsem, co-director of the Youth Climate Justice Fund who questioned why weather-resilient housing was not yet a reality in Mozambique’s coastal regions despite the increasing ferocity of tropical cyclones.
“My key message is really simple. The clock is ticking,” Dr Simeon Ehui told IPS as the newly appointed Director General of the International Institute of Tropical Agriculture which works with partners across sub-Saharan Africa to tackle hunger, poverty and natural resource degradation.
Dr Alvaro Lario, President of the International Fund for Agricultural Development (IFAD), which has received record-breaking pledges in support of its largest ever replenishment, warns that under current trends 575 million people will still be living in extreme poverty in 2030.
“Hunger remains a political issue, mostly caused by poverty, inequality, conflict, corruption and overall lack of access to food and resources. In a world of plenty, which produces enough food to feed everyone, how can there be hundreds of millions going hungry?” he asked.
Empowering communities in a bid to protect and rejuvenate the ecosystems of Pacific communities is the aim of the Unlocking Blue Pacific Prosperity conservation effort launched at COP28 by Palau’s President Surangel Whipps who noted that the world was not on track to meet any of the 17 sustainable development goals or climate goals by 2030.
“We really have reached planetary limits and I think interest in oceans is rising because we have very dramatically reached the limits of land,” says Dr Obura, “What the world needs to understand is how strongly nature and natural systems, even when highly altered such as agricultural systems, support people and economies very tangibly. It’s the same with the ocean.”
An ocean-first approach to the fight against climate change is also the pillar of a Dalhousie University research program, Transforming Climate Action, launched last May and funded by the Canadian government. Traditional knowledges of Indigenous People will be a focus.
As Max Roser, an economist making academic research accessible to all, reminds us: for more people to devote their energy to making progress tackling large global problems, we should ensure that more people know that it is possible.
Focusing on the efforts of civil society and projecting hope amidst all the heartbreak of 2023 might come across as futile and wasted, but in its coverage IPS will continue to highlight efforts and successes, big and small, that deserve to be celebrated.
Farhana Haque Rahman is the Executive Director of IPS Inter Press Service Noram and Senior Vice President of IPS; she served as the elected Director General of IPS from 2015 to 2019. A journalist and communications expert who lived and worked in Africa, Asia, Europe and North America, she is a former senior official of the United Nations Food and Agriculture Organization FAO and the International Fund for Agricultural Development IFAD.
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Dec 20 (IPS) – The World Bank insists commercial finance is necessary for achieving economic recovery and the Sustainable Development Goals (SDGs), but does little to ensure profit-hungry commercial finance serves the public interest.
By failing to address pressing challenges within their purview, the second-ever Bretton Woods institutions’ (BWIs) annual meetings on the African continent, in Marrakech in October 2023, set the developing world even further back.
Jomo Kwame SundaramThe International Monetary and Financial Committee, which oversees the International Monetary Fund (IMF), could not agree, by consensus, on the usual end-of-meeting ministerial communique for ‘geopolitical’ reasons. The Development Committee, which governs the World Bank Group, fared little better.
New World Bank playbook
Little was achieved on crucial outstanding issues of governance reform and sovereign debt. Implicitly acknowledging past failure, World Bank Governors endorsed a “new vision to create a world free of poverty on a livable planet”.
After all, even the World Bank now acknowledges recent increases in global poverty have been the worst since the Second World War as economic stagnation, debt distress and inflation spread across the developing world.
The Bank’s new Evolution Roadmap proposes a just energy transition plan to mobilise private capital to scale up, secure and deploy climate finance. This is mainly for mitigation, rather than adaptation, let alone losses and damages.
The blueprint wants international financial institutions to help developing country governments de-risk private investments. For Muchhala, this reflects “the failure of the Bank’s wealthy shareholders to help ensure a more equitable multilateral system that is truly fit for purpose to meet the challenges of the 21st century”.
Blending finance for private profits
The strategy proposes ‘de-risking’ foreign investment with various types of ‘blended finance’ – such as co-financing, loan guarantees, political risk insurance or public equity co-investments – as well as complementary legal and other reforms.
The Bank and its allies have been promoting ‘blended finance’ for development, the environment and global warming since before the 2008 global financial crisis. Their main recommendation has been to induce profit-seeking private capital to fill growing financing gaps.
Undoubtedly, most poor developing countries have limited public resources to make needed social and environmental, including climate investments. In such arrangements, public funds are used to ‘de-risk’ or otherwise subsidise commercial finance, ostensibly to serve public policy priorities.
However, private commercial involvement in public services and infrastructure is costly and risky for the public sector and citizens, by deploying limited public resources for private gain. Civil society and other critics have already expressed grave concerns about the new Roadmap.
The World Bank Group also set up a Private Sector Investment Lab to scale up private finance in developing economies. It claims to be creating a “business enabling environment that unleashes private financing”.
Billions to trillions
The World Bank’s ‘billions to trillions’ slogan has been the pretext for privileging commercial finance as supposedly necessary to achieve the SDGs. But it has done little to ensure that such profit-seeking private investments will help achieve the SDGs or otherwise serve the public purpose.
The Bank does not consider that profit-seeking private investments expecting attractive returns may not serve the public interest and priorities. Nor do they necessarily support desirable transformations. Worse, their economic, social and environmental consequences may be for the worse.
The privatisation of previously public social services and infrastructure has worsened development and distribution. Unequal access to public services – increasingly linked to affordability and ability to pay – threatens hundreds of millions.
Such blended finance arrangements have also contributed to the debt explosion in the Global South – exacerbating, rather than alleviating developmental, environmental and humanitarian crises.
Debt distress spreading
Developing countries are in their worst-ever debt crises, with debt service obligations higher than ever before. Current debt-to-GDP ratios are more than twice those of LICs before the 1996 HIPCs’ debt relief came into effect, and even higher than for Latin American nations before the 1989 Brady plan.
Unlike the 1980s’ sovereign debt crises, market finance is now more important. Much more government debt from commercial sources involves relying on bond markets, rather than commercial bank borrowings.
With official credit much less important, commercial finance has become much more important compared to the 1980s. Unlike official creditors, most private creditors typically refuse to participate in debt restructuring negotiations, making resolution impossible.
Debt servicing costs equal the combined expenditure for education, health, social protection and climate. In Africa, debt servicing has risen by half. Debt service levels of the 139 World Bank borrowers are higher than during the heavily indebted poor countries’ (HIPCs) and Latin American debt crises peaks.
Debt service is absorbing 38% of budget revenue and 30% of spending on average by developing country governments. In Africa, the levels are much higher, at 54% of revenue and 40% of spending!
The BWIs’ joint debt sustainability framework insists debt-distressed economies must have lower debt-to-GDP ratios than other countries, limiting this LICs’ external ratio to 30% or 40%. This BWI policy effectively penalises the poorer and more vulnerable nations.
In 38 countries with over a billion people, loan conditionalities during 2020-22 resulted in regressive tax reforms and public spending cuts. Less expenditure has hit fuel or electricity subsidies and public wage bills, deepening economic stagnation.
Despite severe debt distress in many developing countries, no meaningful debt relief has been available for most. The most recent debt restructuring deals have left debt service levels averaging at least 48% of revenue over the next three to five years.
Debt distress limits government spending capacity, desperately needed to address social and environmental crises. Hence, overcoming stagnation and achieving the SDGs will require much more debt cancellation, relief and borrowing cost cuts.
Two women together in a ‘friendly space’, a woman-only zone in an IDP site in Unity State, South Sudan. Credit: OCHA-Alioune Ndiaye
by Naureen Hossain (united nations)
Inter Press Service
UNITED NATIONS, Dec 18 (IPS) – Funding humanitarian programs will continue into the new year, but the funding cuts of the previous year may impact the prioritization of the most immediate and most life-threatening needs.
The Office for the Coordination of Humanitarian Affairs (OCHA) released the Global Humanitarian Overview (GHO) for 2024. This annual assessment of the global humanitarian sector provides insight into the humanitarian action undertaken by the UN and its partners and reviews current and future trends in this sector.
Major crises have been the result of violent conflicts or global climate disasters. The economic impact of these crises has been a contributing factor to the increasing humanitarian needs in places like Afghanistan and Syria, or indicative of greater economic instability. The need for food, water, shelter, and health services, have also contributed to the assessment of needs among affected communities. As a result of these crises, 1 in 73 people have been forcibly displaced. Over 258 million people have experienced acute food insecurity. Martin Griffiths, Under-Secretary-General for Humanitarian Affairs, has remarked that the international community has not been “keeping pace with the needs” brought on by these crises.
For this year, there was a reported decrease in funding from the year prior. In the previous year, in spite of efforts and repeated calls from UN officials to increase funding, the UN received only one-third of the requested $57 billion for 2023. In 2024, the UN and its humanitarian partners are calling for USD$46.4 billion to assist 180.5 million in 72 countries. The North Africa and Middle East region, which includes the Palestinian Territory, Syria and Yemen, will require US$13.9 billion, which is the largest amount being asked. East and Southern Africa is next, requiring US$10.9 billion, followed by Central and West Africa requiring US$8.3 billion, and Asia and the Pacific, which is calling for US$5.5 billion.
Two women together in a ‘friendly space’, a woman-only zone in an IDP site in Unity State, South Sudan. Credit: OCHA-Alioune Ndiaye
The current plans from the UN and its humanitarian partners, as indicated by the report, will be to prioritize the communities dealing with the most life-threatening needs, and therefore require urgent action. The response plans that have been formulated promise a more stream-lined approach that will take into consideration the realities of the organizations’ capacity to deliver humanitarian assistance. Given that funding – or the lack therof, – was a particular concern over the last year, and resources were quickly dwindling, this pragmatic approach is founded.
Even with this focus on immediate needs, the predicted funds required for certain regions would suggest that protracted crises with long-term impacts are among the issues that will be addressed. The tragedy of humanitarian work seems to be that with multiple situations and escalations to address, attention and assistance are only further divided between today’s disaster and yesterday’s crisis. The crisis may not have been fully resolved.
For instance, under the Rohingya Joint Response Plan, which will be led by UNHCR and IOM, US$872.7 million has been requested to fund this plan that will provide ongoing humanitarian support to the Rohingya refugees in Bangladesh. It is six years since the Rohingya refugee camps have been set up. The need for food, shelter, and protection, and the pressure to keep these camps running have only exacerbated and may continue to do so the longer it persists. The prolonged presence of the camps, and the number of people still seeking refuge by crossing the border, will only leave them more vulnerable to the risks of abuse, exploitation, disease, and other security issues that developed within the settlements.
The GHO attests that humanitarian organizations will aim to deliver better results. This will include acknowledging and supporting local and national humanitarian groups through funding, increasing accountability and people-centered responses, and engaging in humanitarian diplomacy. There is also a call to promote inclusive responses that acknowledge the unique, intersecting, and complex needs of vulnerable peoples, including those from marginalized communities.
Women and girls, for instance, are particularly vulnerable during humanitarian crises. OCHA Director, Coordination Division, Ramesh Rajasingham, remarked on this during a high-level event in Addis Abbaba, Ethiopia. He stated that women are fourteen times more likely to be killed during climate disasters. Women and girls are also at a greater risk of gender-based violence; only 53 percent were able to access GBV services through groups like UN Women. Women and girls also face barriers in receiving life-saving healthcare, especially when it comes to reproductive health. Humanitarian organizations, and the international community that supports them, should be expected to improve their response to the gender-specific needs.
“We need to get better at acting on gender-specific analyses that strengthen our ability to meet the diverse and distinct needs of all the people we serve,” he said. “We need far greater investment in protection and other services in humanitarian settings that are tailored for women and girls.”
What is evident in the GHO is that the compassion and urgency to help those in need remain a driving force for the UN’s humanitarian actors. Yet, one cannot help but lament at the adjusted funding request, which is lower than last year’s. When it is now, more than ever, that millions of people are living through dire situations, through conflict or displacement, and many more are at risk of falling.
ASTANA, Kazakhstan, Dec 14 (IPS) – The European Bank for Reconstruction and Development (EBRD) is addressing the issue of youth entrepreneurship and employment in Central Asia by launching a seven-year €200 million (US$ 218 million) Youth in Business (YiB) programme.
The programme is designed to provide better access to finance and relevant training to young entrepreneurs in the region, where up to one third of the population is aged between 18 and 34 years.
The Youth in Business programme in Central Asia (YiB CA) will target micro, small and medium-sized enterprises (MSMEs) led or owned by young individuals under the age of 35.
It will consist of up to €200 million for on-lending to up to 20 partner financial institutions in Central Asia and Mongolia; targeted non-financial services for eligible small businesses will be provided by the Bank’s Advice for Small Businesses programme to help develop their entrepreneurial skills through training, advisory services and networking opportunities.
The EBRD’s investment will be complemented by a package of up to €30 million consisting of grants and concessional co-financing to stimulate inclusive lending and youth entrepreneurship.
It is expected that the first loan agreements under the YiB CA will include: a loan of up to US$ 10 million to Uzbekistan’s largest private bank Hamkorbank, a loan of up to US$ 8 million to Shinhan Bank Kazakhstan, a loan of up to US$ 4 million to Mongolia’s leading micro lender Transcapital, and a loan of up to US$ 2 million to Kazakhstan-based microfinancial organisation Arnur Credit.
A market assessment conducted by the EBRD in the region reveals that while many young people across Central Asia have a strong entrepreneurial mindset, very few have access to equal economic opportunities. Only around 10 per cent of them have access to necessary training and professional expertise.
This is very important for Central Asia, where MSMEs account for almost half of total employment and contribute to almost 40 per cent of regional GDP.
Grant support and concessional finance to the programme is provided by the government of Kazakhstan, the Small Business Impact Fund and the European Union.
The EBRD is a leading institutional investor in Central Asia. It has to date provided close to €19 billion through more than 1,000 projects.
Anton Usov is EBRD Chief Spokesman for Central Asia and Mongolia
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Dec 13 (IPS) – With the US Fed raising interest rates, the world economy is slowing as debt distress spreads across the global South, increasing poverty worldwide to pre-pandemic levels, with the poorest countries faring worst.
Extreme poverty continues to be high and is now worse than before the pandemic in low-income countries (LICs) and among those affected by fragility, violence and conflict. The promise of eradicating poverty worldwide by 2030 has become unachievable.
Jomo Kwame SundaramThe Bretton Woods institutions’ (BWIs) annual meetings in Marrakech in October were only the second-ever in Africa. But the rich nations-dominated BWIs failed yet again to rise to the challenges of our times, setting Africa and the global South even further back.
Instead of fostering cooperation to address the causes and effects of the contemporary catastrophe, neither the International Monetary Fund nor the World Bank governors could agree on joint communiques due to the greater politicisation of multilateral fora.
Indebtedness immobilises governments
Indebtedness and restrictive creditor rules prevent governments from spending more counter-cyclically to overcome the many contractionary tendencies of recent times, besides preventing them from addressing looming social and environmental crises.
The G20’s largest twenty economies have urged strengthening “multilateral coordination by official bilateral and private creditors … to address the deteriorating debt situation and facilitate coordinated debt treatment for debt-distressed countries”.
But its Common Framework to restructure debt has been roundly criticised by civil society, think tanks and even the World Bank on many grounds, including the paltry concessional credit relief offered to a few of the very poorest countries.
In contrast, the G24 caucus of developing countries at the BWIs has emphasised the need for “durable debt resolution measures while collaborating on resolving the structural issues leading to such vulnerabilities.”
But all those advocating purported solutions are not even trying to ensure fiscal space and public spending capacity for counter-cyclical efforts, let alone achieve the Sustainable Development Goals and national development objectives.
Surcharges
The IMF currently imposes additional charges on countries that do not quickly clear their debts to the Fund. Besides the usual fees and interest, borrowing countries paid over $4 billion in such surcharges in 2020-22, during the COVID-19 pandemic.
Surcharges will cost debt-distressed countries about $7.9 billion over six years. The G24 has emphasised that surcharges are pro-cyclical and regressive, especially with monetary tightening.
Governments have undertaken contractionary policies and cut imports for lack of foreign exchange. This deepens the problems of heavily indebted poor countries who cannot but count on the Fund for relief and solutions.
At Marrakech, the governing International Monetary and Financial Committee decided to “consider a review of surcharge policies”. The G24 called for “a suspension of surcharges while the review – which we hope will lead to substantial permanent reduction or complete elimination – is being conducted.”
Rich nations have been divided over surcharges. With Ukraine now among the top surcharge payers, following civil society criticisms, the Biden administration’s refusal to review surcharges in 2022 was heavily criticised by the US Congress.
Deepening austerity
IMF fiscal austerity measures of the 1980s returned with a vengeance after the 2008 global financial crisis, and then again during the Covid-19 pandemic from 2020. Most Fund loans require cutting the public sector wage bill (PSWB), the budget line to pay employees.
Most wage earners in many LICs, including nurses, teachers and other social service workers, work for the state, directly or indirectly. Although much needed, these employees have been more likely to be targeted by such budget cuts.
PSWB cuts may involve hiring or wage freezes, or limiting, or even cutting wages. These inevitably undermine government capacities and services. Fiscal consolidation has also involved raising more indirect, consumption taxes, and tax exemptions, e.g., for essential goods such as food.
In 38 countries with over a billion people, loan conditionalities during 2020-22, the three years of the Covid-19 pandemic, meant regressive tax reforms and public spending cuts. PSWB and fuel or electricity subsidy cuts are also common demands worsening economic contractions.
Austerity bound to fail
But the IMF’s own research suggests such austerity policies are generally ineffective in reducing debt, their ostensible purpose. The April 2023 IMF World Economic Outlook acknowledged austerity programmes and fiscal consolidations “do not reduce debt ratios, on average”. Yet, its Fiscal Monitor still demands “fiscal tightening” of most developing countries.
The new IMF-World Bank debt sustainability framework sets the LICs’ external debt-to-GDP ratio limit at 30% or 40%. It insists debt-distressed economies must have lower ratios than ‘strong’ countries, effectively further penalising the weak and vulnerable.
Instead of enabling consistently counter-cyclical macroeconomic frameworks, the IMF’s current short-termist approach is mainly preoccupied with annual, or worse, quarterly balances, mimicking corporate reporting practices.
Such short-termism further limits fiscal space, effectively preventing or deterring public sector investments requiring longer-term macroeconomic frameworks to realise benefits. This discourages ‘patient’ medium- to long-term investments required for national economic planning and transformation, essential for sustainable development.
Restrictive debt and fiscal targets have meant even less public investment. This is typically required of borrowing countries as a credit conditionality. Annual IMF Article IV consultations cause other countries to also accept similar constraints to avoid Fund disapproval.
While a few better-off economies enjoy full employment, most countries face further economic contraction, not least due to interest rate hikes led by the US Fed and their many effects. Instead of being part of the problem, the IMF should be part of the solution.
Fossil fuels require recurring new exploration and development expenditures, while renewables are inherently self-replenishing. Credit: Bigstock
Opinion by Philippe Benoit (washington dc)
Inter Press Service
This significant event, however, masks a more striking possible future: One in which total global energy use peaks and energy’s weight in world affairs diminishes.
The modern era has been marked by increasing energy demand, largely driven by rising populations (more people using energy) and growing economies and incomes fueling increased energy consumption per capita.
Significantly, energy use drops under the IEA’s climate scenarios, driven by more robust climate policies than currently exist. While these scenarios may eventually materialize to counter the threat of climate change, they remain uncertain.
There are, however, three forces operating largely independent of climate considerations that are likely to lead to peak global energy use before the end of this century. They are longer-term downward global population trends, structural shifts in emerging economies as their incomes rise and continued progress in energy efficiency.
Ever since Malthus coined his theory, there have been fears that exponential population growth would outstrip food supply. Now, rather than uncontrolled population growth, the projections point to a global peak around 2085 or earlier, dropping thereafter to below 9 billion people by this century’s end. This new trend removes what had been an important source of upward pressure on global energy use.
But even there, population, structural and energy efficiency dynamics are ultimately likely to have their effect. For example, China’s energy demand is now projected to peak later this decade.
Why is this “peak energy” significant? Because it will have a variety of economic, policy, geopolitical and even security impacts.
For example, it points to a future global economic landscape in which energy plays a diminished role. This includes a lower share of energy in global GDP, especially as economies continue to grow, and even potentially a peak in energy spending in absolute terms after accounting for inflation.
One dynamic likely to drive this change in spending is the shift from large capital investments involved in expanding energy systems or transitioning to a low emissions future, to the less costly maintenance and periodic replacement of assets inherent in a peaked system. Another is the ongoing displacement of fossil fuels that require recurring new exploration and development expenditures with renewables which are inherently self-replenishing.
Renewables, moreover, typically draw from national resources such as local sunshine and wind patterns rather than foreign trade. As these resources move into a leading role in a peak energy future, domestic policies and considerations should gain importance for governments relative to trade and other international ones.
Other affected areas will include diplomacy, including the lessened importance of petrostates for the U.S., China and the military, such as a possible redeployment of the U.S. Fifth Fleet from the Persian Gulf. These shifts may already begin to be triggered by peak oil and gas even before the advent of peak energy but will likely deepen under the latter.
Various developments could counter energy peaking, such as a surge in energy-intensive activities like space tourism. Another frightening possibility is widespread war as seen last century. Combat consumes a great deal of fuel and reconstructing buildings and infrastructure destroyed by war is energy-intensive. Alternatively, the discovery of a cheap, clean and accessible energy source such as fusion could lead to creative new ways to use that energy.
Conversely, more robust climate policies can accelerate peak energy. For example, the IEA’s Net-Zero Emissions by 2050 Scenario foresees a global energy use in 2050 which is 15 percent lower than today’s total. This drop is driven largely by strengthened energy efficiency programs that counteract the upward pressures of population and economic growth.
However, in contrast to peak coal or oil being potentially followed by significant declines in their use over time, peak energy is unlikely to presage a subsequent large drop in consumption as growing economies will buoy demand. In fact, as GDP growth continues through the next century and beyond, energy demand could once again start to rise as, notably, energy efficiency gains reach their limits.
In a broader sense, just as history has included the stone, bronze and iron ages, we have been living since the Industrial Revolution in an energy age. But this age, during which energy has dominated so many economic, geopolitical and other dimensions, may be coming to an end with peak energy.
Beyond the projections of oil, gas and coal demand reaching its heights this decade, and notwithstanding the current growth in renewables, overall energy use may also hit a high point later this century. This “peak energy” is a future we should now start contemplating and analyzing.
(First published in The Hill on November 19, 2023)
Philippe Benoit is an adjunct senior research scholar at Columbia University’s Center on Global Energy Policy, research director for Global Infrastructure Analytics and Sustainability 2050 and was previously division head for energy efficiency at the International Energy Agency.
Suicide rates doubled in Venezuela during the harshest years of its humanitarian crisis. Males between the ages of 30 and 50, a productive age when it is very hard to be left without employment and income, are a group particularly vulnerable to self-inflicted violence. CREDIT: Ihpi
by Humberto Marquez (caracas)
Inter Press Service
CARACAS, Nov 28 (IPS) – In the wee hours of one morning in early November, Ernesto, 50, swallowed several glasses of a cocktail of drugs and alcohol in the apartment where he lived alone in the Venezuelan capital, ending a life tormented by declining health and lack of resources to cope as he would have liked.
In the last message to his relatives, which they showed to IPS, he wrote that “I can’t stand what’s happening to my eyes, I can’t afford an ophthalmologist, my molars are falling out, it hurts to eat, I can’t afford a dentist after years of being able to pay my expenses, now my dreams, plans, goals are disappearing…”
Years ago Ernesto, a fictitious name at the request of his family, was a successful salesman in various fields, a breadwinner for family members, a supporter of causes he found just. In his last note, he scribbled rather than wrote: “I did what I could, for my family and my country, but I will not continue being dead in life.”
The cascade of crises that have placed Venezuela in a complex humanitarian emergency have given rise to many complicated cases like Ernesto’s, reflected in an increase in suicides, especially in the sectors most vulnerable to lack of resources and to uncertainty and hopelessness.
The suicide rate “doubled between 2018 and 2022 compared to 2015, and it is very likely that the complex humanitarian emergency has been a determining factor in the increase,” demographer Gustavo Páez, of the non-governmental Venezuelan Observatory of Violence (OVV), told IPS.
This country of just over 28 million people went from a rate of 3.8 suicides per 100,000 people to 9.3 in 2018, with slight declines to 8.2 in 2019 and 7.7 in 2022, according to the OVV.
The annual average number of cases registered in the last four years is 2,260.
Rossana García Mujica, a clinical psychologist and professor at the public Central University of Venezuela, told IPS that these rates, although lower than the world average of 10.5 per 100,000 inhabitants and low in relation to other countries in the region, may nevertheless conceal underreporting.
The expert pointed out that “added to our complex humanitarian crisis, the last official yearbook (on the issue) came out in 2014,” and said that the decrease in the rate “could be due to the apparent economic improvement, but 2023 has been a difficult year and most probably these figures will not remain steady.”
A man carries a few items in his market bag in Caracas. The situation of poverty, of being unemployed and without the possibility of bringing home enough food and other products is recognized as a determining cause of crises leading to suicide. CREDIT: Provea
Humanitarian emergency
The HumVenezuela platform, made up of dozens of civil society organizations, says the crisis in the country classifies as a complex humanitarian emergency due to the combined erosion of the economic, institutional and social structures that guarantee the life, security, liberties and well-being of the population.
Starting in 2013 Venezuela suffered eight consecutive years of deep recession that cost four-fifths of its GDP, more than two years of hyperinflation, and collapsed local currency and wages, health and basic services in much of the country.
The multidimensional crisis also triggered the migration of more than seven million Venezuelans, according to United Nations figures.
In 2021 and 2022 there was a slight recovery in the economy, especially in consumption, partly due to the influx of remittances from hundreds of thousands of migrants, which came to a standstill this year.
The suicide rate “fluctuates at the pace of the complex humanitarian emergency,” said Paez, because “as the macro economy deteriorates, so does the family’s ability to access food, services, recreation and medicine. This leads to mental disorders associated with suicidal behavior.”
R. was an impoverished young woman who recorded a video that she posted on the social networks. She lived in the interior of the country, coming every month to Caracas to seek chemotherapy treatment in medicine banks provided by the government. She said that the last time, like other times, “they sent me from one end of the city to the other.”
“They were providing chemo until three in the afternoon. I arrived 15 minutes late. They refused to give it to me. I went to sleep at a relative’s house. I climbed about 200 steps (the steep hills in Caracas are crowded with poor neighborhoods). I’m so tired, my legs hurt, I give up, I don’t want to fight anymore,” she said in a quiet voice.
Paez said that another reason that may influence frustration and depression leading to self-harming behaviors is the grief in families due to migration, associated with the humanitarian emergency and impacting millions of families.
Clinical psychologists observe an increase in anxiety and depression disorders associated with suicidal behavior in adults. Among young people, self-injury and eating disorders are frequent. CREDIT: The Conversation
Ages and networks
In Venezuela “the economic issue, for those over 30 and especially for men between 40 and 50, is a determining factor,” psychologist Yorelis Acosta, who works with groups and individuals vulnerable to depression and fear, told IPS.
Acosta, who also teaches at UCV, said that “self-harm or the decision to take one’s life is closely related to ‘I don’t have a job’, ‘I’m out of work’, or ‘I have a disease and I can’t afford my treatment’.”
“During economic crises, suicides go up,” she said.
García Mujica said that “when we stop to look at which are our most vulnerable groups, men between 30 and 64 years old and young people between 15 and 24 lead the way.”
“In my practice I have observed a subjective increase in anxiety disorders and depression in adults, both closely associated with suicide and self-injury in young people, along with eating disorders,” said García Mujica.
Along with suicide, “self-harm is a way of coping with emotional pain, sadness, anger and stress that could have to do with intolerance of frustration and the immediacy associated with social networks,” said the expert.
“In my opinion, apart from our complex humanitarian crisis, we do not escape the problems also inherent to globalization and we have a very severe problem at the family level of face-to-face communication,” she added.
In this regard, she said that “it seems that family life takes place more on the phone than live, leaving the field open for adolescents to be nourished more by social networks than by real interactions.”
Between 2019 and 2022, of the cases of suicides reported in the media, 81 percent involved men and 19 percent women, according to the OVV; between 50 and 57 percent were adults between 30 and 64 years of age.
Teen suicide, meanwhile, has increased: there were 20 cases in 2020, 34 in 2021 and 49 in 2022. And 17 of the victims were under the age of 12.
View of an elevated viaduct (bridge) linking two parts of the Andean state of Merida. Authorities protect its sides with metal nets, to prevent it from being used by people to commit suicide, a phenomenon in which this mountainous region stands out since the beginning of the century. CREDIT: Government of Merida
Suicide in the mountains
One particularity is that Mérida, one of Venezuela’s 23 states, located in the Andes highlands in the southwest of the country, which has abundant agriculture and is home to some 900,000 people, has had the highest suicide rates for 20 years, reaching a peak of 22 per 100,000 in 2018.
“One of the reasons may be the character of the Merideños, especially in rural areas. They are introverted, quiet Andean people, who have a hard time letting things out, they bottle up a lot of negative feelings and thoughts or family conflicts,” said Paez.
Paez, coordinator of the OVV in Merida, also mentioned as a probable cause the widespread consumption of alcohol, and “in this state specialized in agriculture, the easy access to agrochemicals, often used to commit suicide.”
In the country 86 percent of the suicides registered last year by the OVV were carried out by hanging, poisoning or shooting.
Mérida continues to have the highest rate, 8.3 per 100,000 inhabitants, followed by the Capital District (west of Caracas) with 7.6, and Táchira, another Andean state, with 6.9.
According to the World Health Organization (WHO), there are at least 700,000 suicide deaths per year worldwide, with the most affected territories being the Danish island of Greenland (53.3 per 100,000 inhabitants), Lesotho in southern Africa (42.2) and Guyana on the northern tip of South America (32.6)
In the Americas, the countries with the highest rates, after Guyana, are Suriname (24.1), Uruguay (21.2), Cuba (14.5), the United States (14.1), Canada (10.7), Haiti (9.6), Chile (9.0) and Argentina (8.4); and the lowest rates are in the small Caribbean island states of Antigua and Barbuda, Barbados and Grenada (0.4 to 0.7 per 100,000 inhabitants).
Another aspect of the multidimensional crisis in Venezuela is the severe lack of face-to-face and family communication. According to some specialists, it seems that family life takes place more on the phone than live, leaving the field open for teenagers to feed more on social networks than on real interactions. CREDIT: The Conversation
Waiting for the government to take action
The experts consulted agree that in order to curb the rise in suicides, it is necessary to strengthen public health systems – “they are in crisis, if you call to make an appointment, you have to wait several months,” said Acosta – develop prevention programs and identify vulnerable groups or individuals with greater precision.
Paez added the need for the government to produce and maintain “updated and relevant statistics, disaggregated nationally and regionally by age, sex and other data that identify vulnerable groups and areas,” and more education “so that the issue is no longer stigmatized and taboo.”
García Mujica pointed out that “we need to direct our resources towards rescuing family values and preventing domestic violence in order to protect one of the most vulnerable groups, which are young people.”
“It is vital to take into account any comments regarding taking one’s own life and refer them to a specialist. In addition, we need to train more people in psychological first aid, so that the public is aware of the early signs of suicidal behavior,” added García Mujica.
These early signs may be followed by what become farewell messages received too late, a piece of paper or a video, traces of a humanitarian crisis.
José Lonardi stands in his tiny candy and beverage shop in downtown Buenos Aires. Customers, he says, have lost all reference points for the price of products in Argentina and so nothing surprises them anymore. CREDIT: Daniel Gutman / IPS
by Daniel Gutman (buenos aires)
Inter Press Service
BUENOS AIRES, Nov 16 (IPS) – People in Argentina have become accustomed to the fact that nothing costs the same today as it did the week before and they take price hikes in stride with resignation, says Mariano Cohen. “Almost nobody gets angry or complains anymore. They just don’t buy something if they can’t afford it,” he explains in his disposable goods store in Villa Crespo, one of Buenos Aires’ most commercial neighborhoods.
Mariano sells plastic cups, plates and bowls, cardboard packaging rolls and aluminum containers. He serves bars, restaurants and the public. He has a large sales room, about 80 square meters, and a mezzanine of the same size, which he uses as a warehouse and is a great asset for a merchant who sells non-perishable products.
The business owner tells IPS that he buys and stocks as much merchandise as he can, to anticipate price hikes.
“If I don’t have more, it’s because there’s no more coming in or because they don’t want to sell me large quantities. The other day a supplier suspended a very important delivery from one minute to the next and gave me back the money I had already paid him,” he comments, with the same gesture of resignation that, he says, his customers make when faced with the prices in his store.
The economy of this South American country, with a long history of imbalances and inflation, has entered a spiral of permanent price increases that has already squelched the capacity for amazement of its 46 million inhabitants.
In Argentina, the absurd has been normal for some time: here you can buy a pair of shoes in six installments without interest, with financing subsidized by the government or even by private banks, but to buy a house you must pay in cash, because mortgages are almost non-existent. Today, price rises are so common that people are surprised the few times that a price is the same from one week to the next.
In 2021, there was concern when inflation climbed to 50 percent per year, partly attributed to the impact of the COVID-19 pandemic, which forced an increase in currency issuance to meet social assistance needs. However, people soon became nostalgic for this figure: in 2022 the index climbed to 95 percent, the highest since 1991.
Even so, the economy of this nation – where more than 40 percent of the population is poor and practically no private sector employment has been created for the last 12 years – seems to be determined to prove that it can always get worse.
This year inflation climbed again, to an accumulative 103 percent in the first nine months alone, reaching 138 percent in the interannual index (from September 2022 to September 2023), according to official data. Projections indicate that 2023 will end with an increase in consumer prices of around 150 percent.
An employee uses a machine to count banknotes in a store in Patagonia in southern Argentina. The constant increase in prices has meant that many products must be paid for with dozens of bills of the devalued Argentine peso and has forced stores to buy counting machines to save time. CREDIT: Daniel Gutman / IPS
Emerging and drowning again
“I feel that the day I get paid my salary is the best day of the month, but also the worst,” Ariel Machado tells IPS, laughing bitterly.
“I’m happy when I get paid, but when I set aside the money for fixed expenses and calculate how much I’ll have left, I feel like I’m drowning again,” says Ariel, who has a son and is separated from his wife, and who is employed by a well-known public relations agency in Buenos Aires and also sells selected wines over the Internet to supplement his income.
A typical member of the strong middle class of Buenos Aires, used to going on vacation to the beaches of Brazil and dining in restaurants a couple of times a week, Ariel says that those things are now just memories and that today he sometimes feels like he’s spinning “on a wheel of unhappiness, because of the amount of things I want to do and can’t.”
He tries to forget about it, but doesn’t succeed. “Worrying about money consumes a lot of energy. Three years ago I couldn’t save either, but this didn’t happen to me. Now there are days when even having a cup of coffee outside the office seems like a wasteful luxury,” he says.
By his own admission, Ariel is not even remotely among the most vulnerable segments of the population, who spend practically all their income on food, prices of which have been rising more than average.
Latin America’s third largest economy is immersed in a process of stagnation and deterioration that began in 2012 and caused the governing parties to lose the last two presidential elections, in 2015 and 2019.
On Sunday Nov. 19, the next president will be chosen in a runoff election in which the ruling party’s centrist candidate Sergio Massa will compete against the far-right opposition candidate Javier Milei.
Only the extravagant proposals of Milei, who calls for the free carrying of arms and the creation of a market for the sale of organs, in addition to immediate dollarization and the elimination of the local peso from the Central Bank, have made Massa, who since 2022 is the Minister of Economy, competitive.
Elections always generate even more instability in the economy and situations that are difficult for visitors to understand.
Those who can afford to do so stock up on items in anticipation of what will happen to prices and consumption after the elections.
Thus, September, the month prior to the first round of elections, showed a strong increase in consumption in supermarkets (eight percent above the previous month, according to private sector data), comparable only to March 2020, when the pandemic confinement began.
In any case, the impact of inflation on the poorest is especially visible in the outskirts of the capital. Greater Buenos Aires is home to 15.5 million people, or one third of Argentina’s population, where more and more people sleep on the streets or wander around in search of something to eat.
The poor suffer from a decline that is measured not only in terms of income but also with respect to access to basic services and to environmental conditions.
A paper published in October by the Argentine Catholic University’s (UCA) well-respected Observatory of Social Debt found that since 2018 a process of reduction of the inequality gap began in Greater Buenos Aires, but due to the worsening living conditions of the middle class rather than to improvements in households in the most impoverished neighborhoods.
Members of these vulnerable sectors of Buenos Aires told IPS that the escalation of inflation is more a problem of the middle class people living in the city, who have to lower their standard of living and who are becoming poorer, while in their case “we were and are so bad off that a jump in inflation of 100 to 150 percent does not change anything for us.”
In addition, part of the poorest population of Buenos Aires and its outlying areas receives social assistance from the central or city governments, or from non-governmental organizations.
A supermarket in Buenos Aires displays a sign from the “Fair Prices” program, which consists of an agreement between the Argentine government and companies to curb the prices of basic products. People frequently complain that the products are often not available, due to the reluctance of the companies to comply with this commitment. CREDIT: Daniel Gutman / IPS
No reference point
José Lonardi owns a tiny shop selling candy, beverages and cigarettes on Paraguay Street, a few blocks from the Obelisk, an icon of downtown Buenos Aires. The prices of the merchandise, he tells IPS, increase almost every week, sometimes by three to five percent, and sometimes by 20 to 30 percent.
“Two or three years ago, customers still complained when prices went up, because they had some point of reference. Today, inflation has picked up so fast that nobody knows how much things are worth and nobody says anything anymore,” he remarks.
Against this backdrop, contradictory advice is rampant. The value of pesos is melting like ice cream under the sun and people want to get rid of them. On afternoon TV programs, a steady parade of economists advise people to buy large quantities of toilet paper to beat inflation.
Many people, however, do not pay attention to them: in different neighborhoods of Buenos Aires restaurants are always full, even on weekdays. “In the Argentine economy nobody knows what might happen next week. So pesos are burning holes in people’s pockets, and people, as long as they have them, spend them,” says José.
MONTEVIDEO, Uruguay, Nov 03 (IPS) – For many of Argentina’s voters the choice in the 19 November presidential runoff is between the lesser of two evils: Sergio Massa, economy minister of a government that’s presiding over a once-in-a-generation economic meltdown with a whopping 140-per cent inflation rate, or Javier Milei, a far-right libertarian who admires Donald Trump, wants to shut down the Central Bank and wields a chainsaw in public as a symbol of his willingness to slash the state. Many will rue that it ever came to this.
A peculiar outsider
A post-modern media celebrity, Milei’s performance style is a perfect fit for social media. He’s easily angered, reacts violently and insults copiously. He’s unapologetically sexist and mocks identity politics.
Milei bangs the drum for ‘anarcho-capitalism’, an ultra-individualistic ideology in which the market has absolute pre-eminence: earlier this year, he described the sale of human organs as ‘just another market’.
To expand his appeal beyond this extreme economic niche he forged an alliance with the culturally conservative right. His running mate, Victoria Villarruel, represents the backlash against abortion – legalised after decades of civil society campaigning in 2020 – and sexual diversity and gender equality policies, along with reappraisal of the murderous military dictatorship that ruled Argentina between 1976 and 1983.
In the run-up to primary elections in August, the two mainstream coalitions – the centre-left incumbent Union for the Homeland (UP) and the centre-right opposition Together for Change (JxC) – displayed a notable lack of leadership and indulged in internal squabbles that showed very little empathy for people’s daily struggles. All they had to offer in the face of widespread concerns about inflation and insecurity were the candidacies of the current minister of the economy and a former minister of security. They made it easy for Milei to hold them responsible for decades of corruption, ineffectiveness and failure.
In Milei’s discourse, the hardworking, productive majority is being bled dry by taxation to maintain the privileges of a parasitic and corrupt political ‘caste’. His proposal is deceptively simple: shrink the state to a minimum to destroy the caste that lives off it, clearing their way for individual progress.
Milei gained traction among young voters, particularly young men, via TikTok. He found fertile ground among a generation that no longer expect to be better off than their parents. While many of his followers concede that his ideas may be a little crazy, they appear to be willing to take the risk of embracing the unknown on the basis that the really crazy plan would be to allow those long in control to retain their power and expect things to turn out differently. Milei has capitalised on the despair, hopelessness and accumulated anger so many rightfully feel.
Surprise after surprise
The first surprise came on 13 August, when Milei won the most votes of any candidate in the primaries.
Milei only entered politics in 2021, when the 17 per cent vote he amassed in the capital, Buenos Aires, sent him and two other libertarians to the National Congress. In the 2023 primaries he went much further, winning 30 per cent of the vote. He placed ahead of JxC, whose two candidates received a joint 28 per cent, and UP, the current incarnation of the Peronist Party, which took 27 per cent. The bulk of the UP vote, 21 per cent, went to Massa. That Peronism, once the dominant force, came third was a historic first.
The second surprise came on 22 October. Following the primaries, all talk was of Milei winning the presidency. He trumpeted his intent to win the first round outright. Measured against these expectations, his second place looks like an underperformance. But the fact that a candidate who wasn’t on the radar before the primaries has made the runoff shows how quickly the political landscape can shift.
In the October vote Milei took almost the exact share he’d received in the primaries. Massa finished above him with almost 37 per cent, displacing JxC, which lost four points on its second-place performance in the primaries.
The fact that the economy minister was able to distance himself from the government he’s part of – one often described as the worst in 40 years – to come first was viewed as a notable victory, even though his share was just about the lowest Peronism has ever received.
One explanation for Massa’s improved performance was turnout, which increased by eight points to almost 78 per cent – still low for a country with compulsory voting, but enough to make a difference. Much of the increase could be credited to the political machinery that mobilised voters on election day, aided by the minister-candidate pulling as many levers as he could to improve his chances. This included putting lots of instant cash into voters’ pockets, including through tax breaks benefiting targeted groups of workers and consumers.
An unpalatable decision
There’s still much uncertainty ahead. Economic failure is Milei’s best propaganda, so much will depend on how the economy behaves over the next couple of weeks. Milei and the destruction he represents can’t be written off.
Neither those currently in power nor those in the mainstream opposition recognise the obvious: Milei is their fault. They’ve held power for the best part of the past 40 years without effectively tackling any of the issues that concern people the most.
Many voters now feel they face an unpalatable choice between a corrupt and failing government and a dangerous disruptor. They fear that if they choose to keep Milei out, their votes may be misinterpreted as a show of active support for a continuity they also reject. What’s at stake here is more than one election. If Milei is kept at bay, the political dynamics leading to the current economic dysfunction will still need to be addressed – or the far-right threat to democracy won’t end with Milei.
A farmer tends to his tomatoes. Because of the risks in the agricultural sector, including climate change, many farmers were not able to get finance. Now several non-profits have come into the market to assist. Credit: Geoffrey Kamadi/IPS
by Geoffrey Kamadi (nairobi)
Inter Press Service
NAIROBI, Oct 30 (IPS) – Smallholder agricultural enterprises in Africa face a lot of challenges getting loans from financial institutions like banks due to the stringent requirements they can hardly fulfil. Investor confidence is usually lacking, given the risks involved in this sector of the economy.
Climate change has not helped matters either. Prolonged droughts and unreliable rainfall patterns have made them less resilient. And since a paltry 1.7 percent of climate finance goes to small-scale agriculture (according to the Climate Policy Initiative), small-scale farmers are left particularly vulnerable.
However, innovative financial solutions targeted at these farmers are transforming the sector in tangible ways in Africa. Organisations like Root Capital are working with small-scale agricultural enterprises using a financial model that is accommodative to their unique needs while addressing the climate change component on the ground.
Root Capital is a nonprofit that supports agricultural enterprises working directly with small-scale farmers. On the other hand, Mercy Corp – an international NGO – through its venture capital arm, supports entrepreneurs who are developing transformative technologies, innovative business models and effective climate adaptation resilience solutions which are usually tech-enabled.
Users of these technologies are in 35 most climate vulnerable countries, according to Scott Onder, the chief investment officer at Mercy Corp. In Kenya, for example, the NGO has partnered with Safaricom, the largest mobile network operator in the country through its DigiFarm product.
The product bundles together a range of solutions for smallholder farmers, helping them become more productive, increase their yields and grow their income.
Batian Nuts Ltd, an edible nuts processing enterprise based in Meru County in central Kenya has seen its operations expand, ever since it started working with Root Capital. This enterprise exports macadamia nuts internationally but also deals in peanuts processing for the local market. It has a base of 8,000 small-scale farmers.
“We chose to work with Root Capital because their interest rates are below what you would normally get from the financial market, plus their terms are very accommodative to a start-up like ours,” says James Gichanga the co-founder of Batian Nuts Ltd.
He explains that commercial banks require considerable collateral, such as parcels of land or other assets, which they do not have.
On the other hand, Root Capital will provide the finances they need, based on the commitment made by the overseas buyer of their produce. The buyer need only provide a letter of intent, committing to purchase macadamia nuts from Batian Nuts Ltd, and “Root Capital will give us money based on that alone,” says Gichanga.
In other words, the buyer of farm produce based in the US, Europe or Asia and the borrower (it could be a coffee cooperative in, say, Rwanda) – or Batian Nuts Ltd in this case – signs an agreement with Root Capital. And when the time comes for payment, the buyer pays Root Capital directly.
“We take our principal interest and then pass the rest of the payment to the coffee cooperative,” explains Elizabeth Teague, the senior director of Climate Resilience at Root Capital.
Even though this type of financing has existed before, their innovation involves applying it to the smallholder agricultural context. This, explains Teague, is a way of mitigating risk without requiring collateral from smallholder farmers.
In addition, they provide small and medium sized agricultural enterprises with technical assistance through a programme known as “agronomic and climate reliance advisory.”
Prior to its partnership with Root Capital, Batian Nuts Ltd used to handle between 300-400 tonnes of produce per year. However, since 2017 when the collaboration begun, the business has more than doubled this capacity to 1,000 tonnes, and its workforce has grown from 26 permanent employees to 55 currently. Its seasonal workforce has increased as well from a couple dozen to 160, who are engaged seven months in a year.
Investors have traditionally shied away from putting their monies in small-scale farmers in sub-Saharan Africa, due in large part to higher cost and risk involved, thus creating an estimated USD 65 billion financing gap for small businesses in the region, according to Teague.
“And then climate change exacerbates that and makes it even riskier for investors,” she adds.
Root Capital works with a network of 200 businesses and 500,000 farmers in Africa, Latin America, and Indonesia.
Fermina Quispe (fourth from the right, standing) poses for photos together with other farmers from the Women’s Association of Huerto de Nueva Esperanza, which she chairs and with which she promotes crop irrigation with solar pumps in her community, Llarapi Chico, located more than 4,000 meters above sea level in the municipality of Arapa in the southern Peruvian highlands of the department of Puno, a region badly affected by drought. CREDIT: Courtesy of Jesusa Calapuja
by Mariela Jara (lima)
Inter Press Service
LIMA, Oct 26 (IPS) – The lack of water is so severe in Peru’s highlands that farming families are forced to sell their livestock because they cannot feed them. “There is no grass or fodder to feed them,” says Fermina Quispe, a Quechua farmer from a rural community located at 4,200 meters above sea level.
Llarapi Chico, the name of her community, belongs to the district of Arapa in the southern Andean department of Puno, one of the 14 that the government declared in emergency on Oct. 23 due to the water deficit caused by the combined impacts of climate change and the El Niño phenomenon.
Arapa is home to 9,600 people in its district capital and villages, most of whom are Quechua indigenous people, as in other districts of the Puna highlands.
With a projected population of more than 1.2 million inhabitants, less than four percent of the estimated national population of over 33 million, Puno has high levels of poverty and extreme poverty, especially in rural areas.
According to official figures, in 2022 the poverty rate in the department stood at 43 percent, compared to 40 percent and 46 percent in 2020 and 2021, respectively – years marked by the impact of the COVID-19 pandemic. The recession of the Peruvian economy could drive up the poverty rate this year.
In addition, Puno was shaken by the impunity surrounding nearly 20 deaths during the social protests that broke out in December 2022 demanding the resignation of interim President Dina Boluarte, who succeeded President Pedro Castillo, currently on trial for attempting to “breach the constitutional order”.
The United Nations issued a report on Oct. 19 stating that human rights violations were committed during the crackdown on the protests, one of whose epicenters was Puno.
Fermina Quispe is president of the Women’s Association of Huerto de Nueva Esperanza, which is made up of 22 women farmers who, like her, are getting involved in agroecological vegetable production with the support of the non-governmental organization Cedepas Centro.
The 41-year-old community leader spoke to IPS in Chosica, on the outskirts of Lima, while she participated in the Encuentro Feminismos Diversos por el Buen Vivir (Meeting of Diverse Feminisms for Good Living), held Oct. 13-15.
With a soft voice and a face lit up with a permanent smile, Quispe shared her life story, which was full of difficulties that far from breaking her down have strengthened her spirit and will, and have helped her to face challenges such as food security.
Pumps fueled by 180-watt solar panels draw water from rustic wells to irrigate vegetable crops in the highland greenhouses of Peruvian farming communities. In the picture, farmer Fermina Quispe is helping to move the solar panels. CREDIT: Courtesy of Fermina Quispe
As a child she witnessed the kidnapping of her father, then lieutenant governor (the local political authority) of the community of Esmeralda, where she was born, also located in Arapa. Her father and her older brother were dragged away by members of the Maoist guerrilla group Sendero Luminoso (Shining Path), which unleashed terror in the country between 1980 and 2000.
“A month later we found my father, they had tortured him and gouged out his eyes. My mother, at the age of 40, was left alone with 12 children and raised us on her own. I finished primary and secondary school but I couldn’t continue studying because we couldn’t afford it, we had nowhere to get the money,” she recalls calmly. Her brother was never heard from again.
She did not have the opportunity to go to university where she wanted to be trained as an early childhood education teacher, but she developed her entrepreneurial skills.
After she married Ciro Concepción Quispe – “he is not my relative, he is from another community,” she clarifies- they dedicated themselves to family farming and managed to acquire several cattle and small livestock such as chickens and guinea pigs, which ensured their daily food.
Her husband is a construction worker in Arapa and earns a sporadic income, and in his free time he helps out on the farm and in community works.
Their eldest daughter, Danitza, 18, is studying education at the public Universidad Nacional del Altiplano in Puno, the departmental capital, where she rents a room. And the youngest, 13-year-old Franco, will finish the first year of secondary school in December. His school is in the town of Arapa, a 20-minute walk from their farm.
Fermina managed to build “my own little house” on a piece of land she acquired on her own and outside of her husband’s land, in order to have more autonomy and a place of her own “if we have conflicts,” she says.
She also began to look for information about support for farming families, bringing together her neighbors along the way. This is how the association she now presides over came into being.
However, the drought, which has not let up since 2021, is causing changes and wreaking havoc in their lives, ruining years of efforts of families such as Fermina’s.
“We have a water crisis and the families are very worried. We are not going to have any production and the cattle are getting thin, we have no choice but to sell. A bull that cost 2,000 soles (519 dollars) we are selling off for 500 (129 dollars). The middlemen are the ones who profit from our pain,” she says.
During her participation in the Encuentro Feminismos Diversos por el Buen Vivir held in Chosica, near Lima, Fermina Quispe, a farmer from the Andes highlands of the department of Puno, in southern Peru, dresses in a colorful lliclla, a handmade Quechua blanket. She is working on solutions in her community to mitigate the impact of a severe drought on subsistence agriculture and livestock production. CREDIT: Mariela Jara / IPS
Solar water pumps
In the face of adversity, “proposals and action” seems to be Quispe’s mantra. She wants to strengthen her vegetable production for self-consumption and is thinking about growing aromatic herbs and flowers for sale. To do so, she needs to ensure irrigation in her six-by-thirteen-meter highland greenhouse where she uses agroecological methods.
During her participation in Cedepas Centro’s training activities, she learned about solar water pumps, which make it possible to pump water collected in rustic wells called “cochas” to gardens and fields. She has knocked on many doors to raise funds to set up solar water pumps in her community.
“Fermina’s gardens and those of 14 other farmers in her community now have solar pumps for irrigation and living fences made of Spanish broom (Cytisus racemosus),” José Egoavil, one of the experts in charge of the institution’s projects, told IPS.
“They are small pumps that run on 120- to 180-watt solar panels,” he says in a telephone interview from Arapa.
He explains that the solar panel is connected to the pump, which sucks the water stored in the wells that the families have dug, or in the “ojos de agua” – small natural pools of springwater – present on some farms. Thus, they can irrigate the vegetable crops in their greenhouses, and the living fences.
“It is a sustainable technology, it does not pollute because it uses renewable energy and maintenance is not very expensive. In addition, the families give something in return, which makes them value it more. Of the total cost of materials, which is about 900 soles (230 dollars), they contribute 20 percent, in addition to their labor,” he says.
Egoavil, a 45-year-old anthropologist, has lived in Arapa for three years. He is from Junín, a department in the center of the country where Cedepas Centro, an organization dedicated to promoting food security and sustainable development in the Andes highlands of central and southern Peru, is based,
“The focus of our work is on food security and a fundamental issue is water for human consumption and production. There have already been two agricultural seasons in which we have harvested much less and we are about to start a new one, but without rain the forecasts are not encouraging,” he says.
Given the water shortage, they have promoted the community participation of families in emergency projects such as solar pumps, which help to ensure their food supply.
In addition, long-range water seeding and harvesting works are underway, such as the construction of infiltration ditches at the headwaters of river basins.
The participation of small farming families is the driving force behind the works and they are responsible for identifying the natural water sources for their conservation and the construction of the ditches that will prevent the water from flowing down the hills when it rains.
“The ditch is like a sponge that retains water, but if it doesn’t rain, we don’t know what will happen,” says Egoavil.
A veterinarian by profession, Jesusa Calapuja, born in the Peruvian highlands, participated in the Encuentro Feminismos Diversos por el Buen Vivir, held on the outskirts of Lima, where she spoke about the reality of peasant families in a context of poverty and water shortages due to drought. CREDIT: Mariela Jara / IPS
Learning to harvest water
Jesusa Calapuja, a 27-year-old veterinarian born in Arapa, is one of the people in charge of technical assistance in agroecological production, planting and water harvesting at Cedepas Centro.
Using the Escuela de Campo (countryside school) methodology, she travels by motorcycle to the different communities where she interacts with farming families. She came with Fermina Quispe to the feminist meeting in Chosica, where IPS interviewed her.
Calapuja also notes changes in the dynamics of the population due to water scarcity. For example, their production no longer generates surpluses to be sold at the Sunday markets; it is barely enough for their own sustenance.
“They don’t have the income to buy what they need,” she says.
She also notices that at training meetings, women and men no longer bring their boiled potatoes or soup made with the oca tuber, or roasted corn for snacks, but only chuño (dehydrated potatoes) or dried beans. The scarcity of their tuber and grain production is evident in their diets.
But Fermina Quispe hastn’t lost her smile in the face of adversity and is confident that her new skills will help the women in her community.
“Our great-great-grandparents harvested water, made terraces and dams; we have only been harvesting, collecting and using. But it won’t be like that anymore and we are taking advantage of the streams so the water won’t be lost. We only hope that the wind does not carry away the rain clouds,” she says hopefully.
On residential streets of Caracas with little traffic it is possible to see cars that have been abandoned by their owners for years. They probably migrated from Venezuela or cannot afford to repair and sell their vehicles. CREDIT: Humberto Márquez / IPS
by Humberto Marquez (caracas)
Inter Press Service
CARACAS, Oct 23 (IPS) – Diego has just enrolled to study journalism at a university in the Venezuelan capital and, with 2,000 dollars that his family members managed to gather, has bought his first car, a small 2007 Ford that can take him to class from his home in the neighboring Caribbean port city of La Guaira.
Tomás, an experienced physiotherapist who sold Diego the car, is leaving for Spain where a job awaits him without delay, “so I’m quickly selling off things that will give me money to settle there, such as furniture, household goods and appliances, but for now I sold only one of my two cars,” he told IPS.
“This Ford Fiesta was my first car, I loved it very much, but it doesn’t make sense for me to hold on to two vehicles. I’m keeping a 2011 pickup truck that is in good condition, just in case I don’t do well and I have to return,” added the professional who, like other sources who spoke to IPS, asked not to disclose his last name “for safety reasons.”
The migration of almost eight million Venezuelans in the last 10 years, and the general impoverishment of the population, have led to the deterioration of what was once a shiny fleet of vehicles, with one out of every four vehicles left standing now due to lack of maintenance and leaving much of the rest aging and on the way to the junkyards.
In the basements of parking lots, and in the streets of towns and cities, thousands and thousands of vehicles are permanently parked under layers of dust and oblivion, because their owners have left or because they do not have the money to buy spare parts and pay the costs of repairs.
Along the streets of any Venezuelan city can be seen old rundown vehicles with no sign that the necessary repairs will be made. The impoverishment of the population is at the root of this decline. CREDIT: RrSs
Aging vehicle fleet
Omar Bautista, president of the Chamber of Venezuelan Automotive Manufacturers, told IPS that “the vehicle fleet in Venezuela – a country that now has 28 million inhabitants – is about 4.1 million vehicles, with an average age of 22 years, and 25 percent of them are out of service.”
“The loss of purchasing power of the owners has caused most of them to delay the maintenance of their vehicles and the replacement of the spare parts that suffer wear and tear, such as tires, brakes, shock absorbers and oil,” Bautista said.
Moreover, in contrast to the immense oil wealth in its subsoil, gasoline in Venezuela is scarce and, after more than half a century being the cheapest in the world, it is now sold at half a dollar per liter, a cost difficult to afford for most owners of private vehicles or public transportation.
The country needs some 300,000 barrels of fuel per day and for several years it has had less than 160,000 barrels, according to oil economist Rafael Quiroz, who added that interruptions in the work of Venezuela’s refineries are frequent.
There is almost no residential building that does not have at least one vehicle in storage waiting for its owners to return from abroad. They are part of the 1.5 million vehicles that are permanently parked in the country. CREDIT: Humberto Márquez / IPS
Not enough money
The minimum wage in Venezuela is four dollars a month. Most workers receive up to 50 dollars in non-wage compensation for food, and the average income according to consulting firms is around 130 dollars a month.
Luisa Hernández, a retired teacher, earns a little more giving private English classes, but “the situation at home is very difficult. I can’t afford to pay for the repair of my Toyota Corolla, but a mechanic friend agreed to do the work, and I can pay him in installments,” she told IPS.
Mechanics have their finger on the pulse of the situation. “People leave and the cars often sit idle for years, and then the owners end up selling them, from abroad. Quite a few of those I have gone to pick up and have fixed them, to sell them,” Daniel, who runs a garage in the capital’s middle-class east side, told IPS.
He said that “many people do not sell their cars before leaving the country, thinking that they’re just going abroad to ‘see how it goes’. But they stay there and then decide to sell their vehicle before it further deteriorates and depreciates.”
Another mechanic, Eduardo González, told IPS that “There are people who go away and leave their cars in storage and from abroad they contact us so that from time to time we can check them and do some maintenance. Or they entrust their vehicle to a relative. There are people who travel and come back, but most of them end up selling.”
This situation “has favored buyers, who can get cars at a low price. But the problems come later, because that very used car will require spare parts and maintenance, and that is expensive and often the parts are difficult to get,” added González.
The same difficulty is also a concern for owners of cabs, buses and private vans that transport passengers, as well as cargo trucks.
“At least half of the truck fleet in the region is affected by the shortage and scarcity of spare parts,” said Jonathan Durrelle, president of the Chamber of Cargo Transportation of Carabobo, an industrial state in the center of the country.
Large and small buses for passenger transport in Venezuelan cities, including Caracas, as well as cargo vehicles, also suffer from the lack of sufficient revenue, as well as spare parts, to keep them in proper working condition. CREDIT: Humberto Márquez / IPS
Industries have closed down
Elías Besis, from the Chamber of Spare Parts Importers, attributed this to the closure of companies that “years ago manufactured 62 percent of the spare parts needed in the country, and now that production has plunged to two percent.”
Thousands of manufacturing companies closed down in Venezuela during the eight years (2013-2020) in which the country was in deep recession, suffering a loss of four-fifths of its GDP according to economic consulting firms.
Financial and banking activity has also declined, as has the vehicle loan portfolio, which peaked at 2.3 billion dollars in 2008 and plummeted to just 227,000 dollars by late 2022, according to economist Manuel Sutherland.
Vehicle assembly plants, of which there were a dozen until recently, also closed their doors. In addition to selling to hundreds of dealerships, they used to export vehicles to the Andean and Caribbean markets.
Their production peaks were recorded in 1978, with 182,000 new vehicles – Venezuela then had 14 million inhabitants and 2.5 million vehicles – and in 2007, when 172,000 cars were assembled.
In 2022 only 75 vehicles – trucks and buses – were assembled, and in the first six months of this year just 22.
Newer vans and cars drive through middle and upper class neighborhoods, but are part of the “bubble,” the small segment of the population less impacted by the deep economic crisis that Venezuela has suffered over the last decade. CREDIT: Motorpasión
Farewell to the bonanza
The result of this scenario is the aging and non-renewal of the vehicles circulating on Venezuela’s roads.
The new ones, Daniel pointed out, “are SUVs, crossovers and off-road vehicles that cost a lot of money and can only be bought by those who live in the bubble,” the term popularly used to refer to the segment of high-level officials and businesspersons whose finances are still booming in the midst of the crisis.
In addition, in view of the almost total closure of automotive plants, individuals are opting to import new vehicles directly from the United States, favored by the elimination of tariffs for the importation of most models.
For that reason, said Bautista, “there is no shortage of new vehicles, what there is is a shortage of consumers with the necessary purchasing power and conditions to buy new vehicles.”
These consumers were part of the hard-hit middle class – nine out of 10 families in that socioeconomic category had fallen below the middle class by 2020 according to the consulting firm Anova – and they no longer buy new or newer cars because they have swelled the legion of migrants, selling or leaving behind their main assets.
Since the days of the oil boom (1950-1980), Venezuelans developed a sort of sentimental relationship with their vehicles, associating them with comfort and enjoyment that favored cheap gasoline and a network of paved roads that made it easier to travel to places of recreation.
In middle class and even lower middle class families, it was quite common to change cars every two years and to give one to their children when they turned 18. They were helped by credit facilities, and were encouraged to buy cars in cities where public transportation has always fallen short.
They have had to say goodbye to their easy past on wheels, like migrants have said farewell to their country and homeland. Or at least “see you later”.
Credit: European Press Agency for Glasgow Actions Team
Opinion by Andrew Nazdin (london)
Inter Press Service
LONDON, Oct 19 (IPS) – It’s official: The World Bank officially has a mission to combat climate change. At least on paper.
This week, the World Bank governing body approved a new vision statement that clarifies that the Bank can tackle climate change as part of its mission to alleviate global poverty on “a livable planet.” Also this week, the new World Bank President Ajay Banga suggested that he’ll be consider redirecting subsidies away from fossil fuels and towards climate action.
This is not nearly enough. The World Bank is still funneling billions of dollars to the fossil fuel industry each year, through direct and indirect finance mechanisms. Urgewald estimates that they funded $3.7 billion towards oil and gas last year.
This is despite the fact that they’ve made a commitment to align with the Paris Climate Agreement and do what it takes to keep global warming under 1.5 degrees Celsius. In order to do so, experts with the International Energy Agency warned that there is ‘no room’ for new fossil fuel development if we’re going to reach this goal.
The IEA also said that fossil fuel subsidies are an inefficient way to help consumers. Yet despite this, Banga admitted he didn’t plan to “get rid of all” fossil fuel subsidies. Just that the topic “needs discussion.”
Still – it’s hard to imagine this new vision statement coming out one year ago, under the helm of former climate change-denying president David Malpass. After his climate change denial caused public outrage–and protests around the world–he stepped down, and US President Joe Biden appointed a new president.
Credit: European Press Agency for Glasgow Actions Team
Banga started with a clear societal mandate to accelerate climate action at the World Bank. He was given a 100-day plan to end fossil fuel finance, fund a just and green transition, and promote transparency.
Last week, Banga’s opportunity arrived during the World Bank Group and International Monetary Fund Annual Meetings in Marrakech. The first meetings run by Banga after months of him talking up his climate change credentials.
Organizations from around the world teamed up with local Moroccan activists to put on the pressure. It started before the meetings began, with billboards blanketing the city. They had two key demands: End Fossil Finance and Drop the Debt.
Why end fossil finance?
Because the World Bank, despite its commitments to the Paris Climate Agreement, has continued funneling billions of dollars to fossil fuel projects through direct and indirect mechanisms.
And why drop the debt?
Because global debt is at a decades-long high, with people in 54 countries currently living in debt crisis, and unless these colonial debt deals can be fixed, many developing countries can’t afford to invest in the climate solutions they so desperately need.
The action continued all week long. On the first day of the meetings, we stood outside the meeting venue to greet every World Bank delegate on their way inside. Many groups joined the meetings and delivered a petition to Banga himself, with 40,000 people calling on him to end fossil finance.
Last Thursday, hundreds marched through the streets of Marrakech. And on the final day of the conference, activists returned to the conference venue for one last rousing rally and day of action.
Meanwhile, the Bank must consider the intertwined relationship between debt relief for developing nations and environmental sustainability. Offering debt relief can free up resources, enabling these nations to explore and invest in green technologies.
This would not only aid in their fight against climate change but also propel them toward a sustainable economic trajectory. Banga has outlined a few steps to greatly increase funding that can flow through the World Bank.
But we must make sure such increased funding doesn’t continue to force developing countries into deals they can never get out of. It’s true that the world needs vastly more funding into clean energy industries if we are to transition to a sustainable economy. We need funding that helps those in need, not harms.
The World Bank acknowledging that it must do its job on a “livable planet” is the absolute bare minimum. It’s like an employee setting his printer on fire but telling his manager, “At least I didn’t burn the whole office down.”
Decades after the world’s top scientists have agreed that climate change is an existential threat, the Bank has a place for climate change in its vision statement. But what is a vision without a plan? And what is a plan on a dead planet?
The protestors have done their part, articulating a vision for a greener, fairer world economy. The ball now lies firmly in the court of institutions like the World Bank. As the drums of activism fade and the placards are put away, the world awaits their next move.
What will it be?
Andrew Nazdin is Director of Glasgow Actions Team
The Glasgow Actions Team formed around the UN Climate Conference in 2021 in Glasgow, which led to a landmark deal putting the world on the trajectory to ending financing for fossil fuels. The organization is committed to pushing the world’s climate champions to go farther, calling out the blockers, and exposing the deniers. Throughout the 2023 Annual Meetings of the World Bank Group, they ran several actions calling on the World Bank to get in line with the Paris Climate Goals — to stop funding fossil fuels, invest in renewables, and become a more transparent and democratic institution.
To learn more, follow Glasgow Actions Team on Twitter, Instagram, , or check out the website.
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Oct 18 (IPS) – A senior manager of the world’s largest investment firm has ‘blown the whistle’ on ESG (environment, social and governance) ‘greenwashing’, especially on supposed climate finance.
Wall Street whistle-blowerTariq Fancy was Chief Investment Officer (CIO) for Sustainable Investing at BlackRock, managing over $9 trillion in assets. Founded in 1988, headquartered in New York City, and with the world’s largest investment portfolio, BlackRock can move financial markets.
Jomo Kwame SundaramHence, Fancy’s insider critique of corporate ESG pretensions – often associated with ‘responsible’ and ‘impact investing’ – has had a major impact. It has been seen as confirming and even elaborating on longstanding criticisms of ESG ‘greenwashing’.
Rejecting ‘stakeholder capitalism’, shareholder capitalism guru Milton Friedman long emphasized that a corporation’s primary and sole duty is to maximize profits for shareholders.
Managers are legally required to prioritize shareholder financial interests above all else. This means corporations must never sacrifice profits or their funds, however noble the cause.
Ethical or responsible actions can only be justified if they enhance ‘shareholder value’. Thus, companies can take morally desirable actions to improve their ESG ratings only if and when they enhance profitability.
As Friedman emphasized, corporate executives have strict fiduciary responsibilities under the law in ‘shareholder capitalism’ in the US, UK and elsewhere. Their managerial obligations and conduct thus limit potentially positive ESG impacts.
Prioritizing their corporate fiduciary duties above all else, they cannot enhance social or environmental benefits without maximizing returns for shareholders. By law, social, community or national ethical duties or moral values must always be secondary.
Is green financing progressive?
Corporate practices respond to changing understandings of profit-maximization in the medium to long-term. With changing national and international requirements, companies may be able to maximize long-term financial gains by investing in sustainability.
Thus, investing in green transitions – e.g., renewable energy or re-afforestation – can become profitable in the longer-term if the regulatory environment changes soon enough to sufficiently change incentives for long-term investments.
So, long-term profitability can be enhanced at the expense of short-term gains if conducive regulations, incentives and deterrents are introduced early enough.
Companies changing to more environmentally sustainable practices – like adopting solar panels, investing in re-afforestation, or other green initiatives – may thus become more profitable over the longer-term.
But ‘business-as-usual’ investments are still likely to yield more short-term gains in the near-term. And stock markets are more interested in short-term corporate performance, undermining longer-term profitability considerations. Thus, short-termist corporate governance norms deter green transitions.
Do green bonds accelerate green transitions?Larry Lohmann has shown how difficult it is to confirm that finance raised by companies issuing ‘green bonds’ is actually additional. It is often difficult to verify such bonds are funding new projects that would not have happened anyway.
Sometimes, companies had already planned to make certain investments using conventional financing. With ready access to such finance, they would not have issued green bonds if not for the pecuniary advantages of doing so.
In such circumstances, green bonds have the same results as conventional finance if not for the incentives to claim otherwise. Hence, green bonds cannot claim credit for green investments and transitions if they would have happened anyway by other means.
This raises larger questions about the supposedly transformative impact of green bonds. Companies may even obscure environmentally unsustainable or even harmful practices by bundling them together with ostensibly ‘green’ investments.
Thus, green bonds may finance certain genuinely sustainable or environment-friendly projects without changing the rest of their investment portfolios and business practices.
Stock market discipline?
Despite lacking strong supportive empirical evidence, advocates claim ESG-compliant stocks outperform non-compliant ones in the share market. Similarly, they claim such compliance improves overall ESG indicators and contributes significantly to achieving the Sustainable Development Goals.
But there is no strong evidence that ESG-inspired stock market or corporate strategies have improved the environment, society or governance. After all, shareholders and companies prioritize short-term financial goals over longer-term considerations, including ESG and long-term profitability.
Divestment of shares in companies which are not ESG-compliant may only have limited impact if others buy non-compliant stocks, especially after their prices have fallen.
Also, even if some investors sell their shares in companies which are not ESG-compliant, it is unlikely the stock market will ‘green’ corporate behaviour more broadly.
Such stocks are mere drops in the ocean of wealth and finance, and one cannot realistically expect the tail to ‘wag the dog’. In 2021, the world economy had $360 trillion worth of wealth, with nearly $6 trillion in private equity.
Disciplining companies
Divestment means selling shares and thus losing ‘voice’ in company governance. But for shareholder engagement, it is necessary to retain stock ownership. Holding stock gives shareholders voice which can be used to try to pressure companies to be more ESG-compliant.
Without financially damaging effects for its reputation and share price, a company would not be compelled to become more ESG-compliant. Only significant stock price collapses – following massive share divestment due to reputational damage – are likely to motivate companies to become ESG compliant.
Undoubtedly, adverse publicity for particular companies hurts their stock prices, at least temporarily. And this may force companies to improve their behaviour. But such success implies a ‘name and shame’ approach – not ESG-compliance – can be effective.
And while some share prices may be more sensitive to adverse ESG publicity in some societies, there is no strong evidence this is true everywhere. Nor is there any strong evidence that systematic ESG reporting has generated desirable outcomes in most societies.
Divestment may not strongly affect company profitability or share prices. But actions such as consumer boycotts directly influence company revenue and financial performance. This may prompt strong corporate responses due to their impacts on companies’ ‘bottom lines’.
Oil workers are busy on the banks of the Tiputini river, on the northern border of the Yasuní National Park, in Ecuador’s Amazon region. CREDIT: Pato Chavez / Flickr
by Carolina Loza (quito)
Inter Press Service
QUITO, Oct 09 (IPS) – The decision reached by Ecuadorians to put an end to oil production in Yasuní National Park, in a popular referendum in August, was a triumph for civil society and a global milestone in environmental democracy. But when it comes to implementation, the result is less promising.
Despite being a democratic decision, taken by the majority of Ecuadorians, who voted to halt oil exploration and production in the park, the authorities say the verdict is not clear.
During the Aug. 20 presidential and legislative elections, 59 percent of voters voted Yes to a halt to oil extraction in one of the most biodiverse protected areas in the world, part of the Ecuadorian Amazon rainforest that has been a biosphere reserve since 1989.
At the same time, 68 percent of the voters of the Metropolitan District of Quito voted against continued mining in their territory, in order to protect the biodiversity of the Chocó Andino, a forest northwest of the capital that provides it with water.
In the midst of an unprecedented political and criminal insecurity crisis in Ecuador, the two votes were a historic landmark at a democratic and environmental level, in addition to demonstrating that Ecuadorians are increasingly looking towards alternatives that would move Ecuador away from the extractivism on which the economy of this South American country has depended for decades.
But the No vote, i.e. the answer that allowed oil extraction to continue in the Yasuní ITT block, won in the provinces where the national park is located: Orellana and Sucumbíos. This is one of the arguments of the current authorities to stop compliance with the referendum, arguing that the areas involved want oil production to go ahead.
Constitutional lawyer Ximena Ron Erráez said the Ecuadorian government cannot escape the obligation to abide by the result of the referendum.
“As far as the Ecuadorian constitution is concerned…..it must be complied with in an obligatory manner by the authorities; there is no possibility, constitutionally speaking, that the authorities can refuse to comply with the results of the referendum,” she told IPS.
One of the murals that still remain on the streets of Quito from the campaign for the August referendum on whether or not to keep the oil wealth underground in Yasuní National Park, to which voters decided “yes”: leave it untouched. CREDIT: Carolina Loza / IPS
Ron Erráez also complained about a lack of political will.
On Sept. 5, Ecuadorian President Guillermo Lasso, in a meeting with indigenous communities, described the referendum as “not applicable”.
A leaked video in which he made the statement drew an outcry from civil society groups that pushed for the referendum for more than 10 years. Yasunidos, the group that was formed to reverse the 2013 decision by the government of then President Rafael Correa (2007-2017) to begin oil drilling and production in Yasuní, has declared itself in a state of permanent assembly.
The Correa administration had proposed a project that sought to keep the oil in Yasuní ITT (Ishpingo, Tambococha, Tiputini), also known as Block 43, in the ground, on almost 2,000 hectares, part of which is within the biosphere reserve and the rest in the so-called buffer zone.
The initiative consisted of asking for international economic compensation for not exploiting the oilfield, which contains more than 1.5 billion barrels of reserves, in order to continue to preserve the biodiversity of the park and its surrounding areas. But the proposal did not yield the hoped-for results in international financing and the government decided to cancel it.
This is despite the fact that Yasuní, covering an area of 10,700 square kilometers in the northeast of the country within the Amazon basin, is home to some 150 species of amphibians, 600 species of birds and 3,000 species of flora, as well as indigenous communities, some of which are in voluntary isolation.
Environmental activists and organizations working in favor of keeping Yasuní’s oil in the ground say the management of the project showed the dilemma of finding alternatives to the extractive industry and the lack of real political will on the part of the political powers-that-be to come up with solutions.
View of one of the rivers inside the Yasuni park, in northeastern Ecuador, which preserves an incomparable biodiversity. CREDIT: Manel Ortega Fernández / Flickr
Ron Erráez mentioned an important fact: Lasso, in power since May 2021, will be an outgoing president after the second round of presidential elections is held on Oct. 15, and it will be his successor who will have to fulfill the mandate of the referendum on the national park.
One difficulty is that his successor, who will take office on Nov. 25, will only serve as president for a year and a half, to complete the term of Lasso, who called for an unprecedented early election to avoid his likely impeachment by the legislature.
Alex Samaniego, who participates in Yasunídos from Scientist Rebellion Ecuador, said it was clear from the start that the campaign for the Yasuní and Andean Chocó referendums was a long-term process, which would not end with whatever result came out of the vote.
“We know that we have to defend the result, defend the votes of the citizens and make sure that the referendums are fully complied with,” he told IPS.
According to the environmental activist, the democratic process behind the referendums will serve as an example for many countries, including Brazil, where communities are waging a constant struggle to combat climate change by seeking alternatives to the extractive industries.
Capture from a video of the Quito Free of Mining campaign, which triumphed in the popular referendum on Aug. 20. CREDIT: Carolina Loza / IPS
“We are told about all the money that oil brings to the economy, but very little money stays in the communities,” said Samaniego, who mentioned alternatives such as community-based tourism and biomedicine and bioindustries as economic alternatives to oil production.
Ron Erráez said “the referendum process sets a precedent because it is a way of establishing what is called an environmental democracy, where the people decide what to exploit and what not to exploit.”
“These principles in practice are in harmony with the rights of nature that are mentioned in the Ecuadorian constitution, to protect nature above and beyond economic profit,” she added.
Ecuadorian voters decided at the ballot box, and their decision should accelerate the possibility of a transition to alternatives for their economy. But what will the implementation look like?
The referendum on the Andean Chocó region covers a conservation area of which Quito is part, which includes nine protected forests and more than 35 natural reserves, in order to avoid the issuance of mining exploration permits, a measure that will be implemented after the vote.
There are contrasting views over the halt to oil exploration and production in Yasuni. The state-owned oil company Petroecuador highlights the losses for the State and presents figures that question the studies of groups such as Yasunidos.
The referendum gives the government one year to bring oil production activities to a halt. But Ron Erráez said it could take longer to dismantle Petroecuador’s entire operation in Yasuní ITT. Meanwhile, operations in Block 43 continue.
Sofia Torres, spokesperson for Yasunidos, said that despite all the talk during the campaign about economic losses, the vote showed that a majority of Ecuadorians question the country’s extractivist industry status quo.
In her view, although government and oil authorities insist that oil resources are indispensable for the country’s development, Ecuadorians have not seen this materialize in terms of infrastructure, social measures or services.
For this reason, they decided that “it is better to opt for the preservation of something concrete, such as an ecosystem that provides us with clean water and clean air and that is something like an insurance policy for the future,” she told IPS.
On Oct. 15, Ecuadorians will choose between left-leaning Luisa Gonzalez, the protegé of former President Correa, and businessman Daniel Noboa. It will fall to one of them to enforce the majority vote on the future of Yasuní and the halt to oil industry activity in the park.
Kentaste is a local company reviving the coconut industry along the Kenya coast. (Photo courtesy of Joanne Muchai)
Opinion by James Michel (victoria, seychelles)
Inter Press Service
VICTORIA, Seychelles, Oct 02 (IPS) – Everyone knows that small island states are on the frontline of global warming. Rising sea levels, acidification destroying fisheries and coral reefs, and changing patterns of rainfall are just some of the challenges. Some low-lying islands have already been lost to the ocean.
These challenges are real and can hardly be understated. Yet there is another side to the story, too: one that tells of a creative response and new opportunities. The fact is that small island states are on the frontline of the Blue Economy.
Several years ago, in 2016, I wrote a book (Rethinking the Oceans: Towards the Blue Economy) to show why urgent action was needed. The interconnected seas cover most of our planet and yet we have always treated them as second best, as if the riches that are found there will last forever. Instead, I have for long argued that our approach must be sustainable. It must serve not only today’s needs but also tomorrow’s generations.
A decade ago, the idea of the Blue Economy was poorly understood. Why, people would ask, is it any different from how the sea has always been used? Things have changed since then and the question is no longer ‘why’ but ‘how’. In my second book on the subject, Revisiting the Ocean: Living the Blue Economy, I show what progress has been made and where we can find some of the most important changes.
There is a great deal more to be done, not least of all in stemming the relentless flow of harmful practices. But there are already signs of progress. To show this, I look to local communities and business startups, to visionaries and philanthropists, as well as international bodies. Go to remote beaches to see how communities (often led by women) are taking matters into their own hands. Or to the workshops of inventive young entrepreneurs who are finding ways to do things better. I am a realist but also an optimist and in my new book I try to balance a pervasive sense of impending doom with a strong message of hope.
Kentaste is a local company reviving the coconut industry along the Kenya coast. (Photo courtesy of Joanne Muchai)
COP28 will bring together the great and the good, drawn by the prospect of a new approach. But it will also attract those who are not so enamoured with a sustainable approach to the ocean. Fast-growing nations with, literally, billions of mouths to feed will not so easily be persuaded that sustainability is the right approach. Nor will commercial and other interests which are poised to scrape the ocean floor for rich mineral reserves. Yet, if we are not to destroy our planet, restraint has to win the day. In the crowded rooms of the upcoming event in Dubai, we must lose no opportunity to press the case.
My own nation, Seychelles, has one of the world’s smallest populations and yet, surrounded by a vast stretch of ocean, we have pioneered new ways to sensibly manage this immense gift of nature. Planning our marine space in a rational way is how we are making progress and I commend the lessons to other small island nations. We have also been innovative in attracting funds and the ways we have done this, too, is a shared resource.
Under the auspices of the European Union, Seychelles last year hosted an event where African entrepreneurs displayed their exciting ideas and projects. Fabrics produced from leaves and fish skin gathered locally, natural fertilisers from seaweed, productive ways to recycle fishing nets, and desalination units using renewable energy. With the help of large funding bodies like the UN and EU, much more can be done to unleash creative energy. Revolutions invariably start in small ways and nothing short of an ocean revolution is needed. Urgently!
I look forward to COP28 and I know that the host nation, the United Arab Emirates, will do all that it can to lead by example. Let us go to the conference with enthusiasm, welcoming every new initiative. I will be there, along with friends from other small island states and it is up to us all to make our voice heard.
Copies of my new book will be available at the event (as well as direct from https://www.jamesmichelfoundation.org) and I hope I can share with you some of my own ideas and a record of the wonderful efforts being made around the world to save our precious ocean.
James Michel is a former president of the Republic of Seychelles and a leading international advocate of the Blue Economy.
BANGKOK, Thailand, Sep 27 (IPS) – Many nations are engaged in ambitious urban planning endeavors and the creation of new capital cities. Nusantara, Indonesia, is the latest in a series of modern cities that have sprung up across Asia.
The government aims to create a model capital city based on the principles of liveability and green urban development on the island of Borneo.
Indonesia seeks to relocate its capital due to flooding, land subsidence, overpopulation and congestion in Jakarta, located on the island of Java, where 60 per cent of the country’s population of close to 280 million lives.
Nusantara will also play a role in rebalancing the country’s economy, and redistributing economic growth outside Java. But how can the government get such a complex endeavor right?
In this article, we explore how planners of Nusantara are leveraging a UN-supported mechanism, called the Voluntary Local Review (VLR), to promote sustainability and uphold human rights. VLRs are typically performed by authorities of existing subnational administrative areas such as provinces and cities.
Nusantara will be the first VLR for a new city ever undertaken – in order for authorities to integrate sustainability actions and key principles such as leaving no one behind already during the development stage.
Valuable lessons from other new Asian cities
• Malaysia’s sustainable approach: Putrajaya, just south of Kuala Lumpur, was designed as an intelligent garden city. Its planning emphasizes green and sustainable development. Rather than separating indigenous residents from their traditional land, it incorporated existing Malay villages into the plan. The lesson here is that new capital cities should prioritize local land rights and sustainability through green infrastructure. Such initiatives contribute to a better quality of life and environmental preservation. • Republic of Korea’s phased development: Sejong City’s incremental approach to its development as an administrative capital is a testament to the advantages of not rushing construction and drawing from lessons learned throughout the process. It was created to decentralize economic and political power away from Seoul. It also showcases the importance of designing new capital cities with resilience to climate change in mind, given the increasing threats of extreme weather events. • Kazakhstan’s sustained investments: Astana’s development and transformation as a capital city involved substantial investment in infrastructure, including the futuristic Norman Foster-designed Khan Shatyr Entertainment Center and the Bayterek Tower. One key lesson is that comprehensive urban planning, including spatial integration of transportation, housing, green spaces and public services, are crucial. Astana’s transformation into a thriving city of 1.3 million demonstrates the importance of having a clear, long-term vision.
Credit: Asian Development Bank
Seven key takeaways for Nusantara’s way forward
Nusantara is learning from these examples by leveraging sustainability in its master planning and closely working with ESCAP, the UN Country Team in Indonesia and the Asian Development Bank to prepare a baseline VLR report as a tool for fostering inclusive, sustainable and rights-based development.
1. Transparency and accountability: The VLR promotes transparency by providing detailed information about the progress and challenges faced in implementing the new capital. This transparency can help build trust among stakeholders, including the public, investors and government agencies. The VLR can demonstrate how the new capital’s development aligns with global goals. 2. Assessment of progress: The VLR can evaluate the sustainability of the new capital, including its expected environmental impact and efforts to promote sustainable practices. Nusantara aims to be a “sustainable forest city” with 25 per cent built up urban area, 65 per cent tropical forest through reforestation and 10 per cent parks and food production areas. The plan aims to conserve much of Nusantara’s tropical forest, allowing the city to be a net carbon sequestration sink before 2030 along with the goal to be a carbon neutral city by 2045. 3. Data-driven decision making: By collecting and presenting data on the new capital’s development in one place, the VLR can facilitate integrated data-driven decision-making. It can help policymakers identify trends and make informed choices regarding resource allocation and policy adjustments. In this process, the VLR requires municipal government departments to effectively work together and break down silos. 4. Stakeholder engagement: Indigenous communities live on the site, including approximately 800 families of the Balik people. The VLR can highlight the importance of involving local communities in the planning and implementation process. It can document community feedback and demonstrate how their input has been considered and make recommendations for institutionalizing stakeholder engagement processes. 5. Attracting investment: The cost estimate for Nusantara is $33 billion (Rp466 trillion), with the state budget only able to cover up to 19 per cent of the cost. Investors often look for transparent and well-documented information when considering investments. A VLR can serve as a tool to attract both domestic and international investors by showcasing the potential and progress of the new capital. 6. International collaboration: Sharing a VLR report with international organizations and other countries can open avenues for benchmarking, collaboration and support. This can include financial aid, technical assistance, and knowledge exchange. 7. Risk mitigation: Identifying risks and challenges in the VLR allows for proactive mitigation strategies. This can help prevent delays and cost overruns in the development process.
While significant attention is focused on Nusantara, it’s clear that relocating administrative functions may not address all social and environmental problems in Jakarta, especially for those most vulnerable.
The development of Nusantara has the potential to help Jakarta address its longstanding problems by relieving population pressure, improving infrastructure and setting an example for sustainable urban development. However, the success of this endeavor will depend on careful planning, infrastructure investment, and effective governance.
Omar Sidique is Economic Affairs Officer, UN Economic and Social Commissions for Asia and the Pacific; Diani Sadiawati is Special Staff to the Head, Nusantara Capital City Authority, Government of Indonesia; and Diandra Pratami is Development Coordination Officer, UN Resident Coordinator’s Office, Indonesia
Opinion by Jomo Kwame Sundaram (kuala lumpur, malaysia)
Inter Press Service
KUALA LUMPUR, Malaysia, Sep 27 (IPS) – In recent years, public-private partnerships (PPPs) have spread rapidly. While usually profitable for the private partners, PPPs have generally not served the longer-term public interest.
PPPs as miracle all-purpose solution
As Eurodad has shown, PPP financing has grown in recent years, particularly in the Sustainable Development Goals (SDGs) funding discourses. Adopted by the UN in September 2015, the SDGs endorsed PPP financing.
Jomo Kwame Sundaram
Earlier, the mid-2015 Third UN Conference on Financing for Development in Addis Ababa had failed to ensure adequate financing. This was mainly due to rich nations opposing a UN-led international tax cooperation initiative.
Instead, PPPs were strongly endorsed in the 2015 Addis Ababa Action Agenda. Weeks later, SDG17 referred to PPPs as ‘means of implementation’. This all sought to “encourage and promote effective public, public-private and civil society partnerships”.
PPPs have been promoted as a means to finance and deliver infrastructure, social services and, increasingly, climate-related projects. Advocates claimed PPPs would also help overcome other problems besides funding. PPPs, they claimed, would help improve project selection, planning, implementation and maintenance.
PPP promotion
Some advocates even claim only the private sector can deliver high-quality investment and efficiency in infrastructure and social service delivery. Private financing reduces budget-constrained governments’ need to raise funds upfront to finance, develop and manage projects.
Increased private financing supposedly also overcomes public sector incapacity to deliver high-quality infrastructure and public services. Undoubtedly, many government capacities have been diminished by decades of structural adjustment, austerity and less public finance.
This has been worsened by rich countries’ unmet commitments to contribute 0.7% of national income as official development assistance (ODA) on concessional terms. The global North has also been unwilling to effectively stem illicit financial outflows, e.g., due to tax dodging.
PPP promotion has involved many means, media and institutions, including ‘donor’ agencies, multilateral development banks (MDBs), UN agencies, international consultants, transnational accounting firms, and the World Economic Forum (WEF).
The World Bank has long promoted private financial investments in development, as well as ‘blended finance’ and PPPs more recently. In 2022, the influential WEF even proclaimed PPPs as essential for pandemic recovery.
Promoting private finance
Such promotion of private finance has implications far beyond the actually modest amount of funds raised through ‘blended finance’ and PPPs. Almost every project so funded is touted as proof that private finance should be privileged, including by guaranteeing returns using public finance.
The World Bank and other MDBs are devoting considerable effort to advise governments on the use of PPPs. By contrast, they have not put comparable efforts into improving the quality and effectiveness of publicly financed infrastructure and social services.
Over the years, the World Bank Group has produced different tools – including model language for PPP contracts, which favour private sector interests – often to the detriment of the public partner, ultimately governments in need of financing.
Regional development banks – such as the Asian Development Bank, the African Development Bank and the Inter-American Development Bank – have strategic frameworks, networks and dedicated offices to support countries implementing PPPs.
National PPP promotion
PPP advocacy has led to changes in laws, regulatory frameworks and policy environments at international, national and local levels. Developing countries have also started including PPPs – to scale up infrastructure and public service provision – in national development plans.
Many developing countries have enacted laws enabling PPPs and set up ‘PPP Units’ to implement PPP projects. The World Bank, International Monetary Fund (IMF) and regional development banks work closely with private partners to provide policy guidance advising governments on how to best enable PPPs.
All this has transformed policy formulation for public service provision to attract private investors – an agenda Daniela Gabor dubs the ‘Wall Street Consensus’. This implies “an elaborate effort to reorganize development interventions around partnerships with global finance”.
PPPs have not delivered
But actual experiences have not confirmed this favourable impression promoted by PPP advocates. Instead, PPPs have become a major cause for concern. Reliable data on international PPP trends are hard to find. Also, different PPP definitions and terminology have confused reporting.
The World Bank’s Private Participation in Infrastructure Projects Database reports on economic infrastructure – such as for energy, transport, water and sewerage – in 137 low- and middle-income countries.
The Covid-19 pandemic undoubtedly disrupted PPP planning, preparation and procurement. But even the World Bank admits that delays and cancellations were not only due to Covid-19 as the pandemic exposed projects already in trouble for other reasons.
Nonetheless, PPPs’ financial impacts to date have been small, as the public sector continues to dominate. But little private investment – including PPPs – goes to low-income countries. Most such projects are concentrated in a few countries.
PPPs tend to be found in countries with large and developed markets allowing faster cost recovery and more secure revenues. This implies market ‘cherry-picking’ – a selection bias – with private investments going to more affluent urban areas rather than to the needy.
The major setbacks to both the SDGs and climate progress in the last decade are not only due to financing. But they are more than enough to underscore that recent reliance on blended finance and PPPs has worsened, rather than helped the situation. The empire of private finance has no clothes!
The state-owned Petróleos Mexicanos (Pemex) oil company is completing its seventh refinery on a 600-hectare site at Dos Bocas in the municipality of Paraíso, in the southeastern state of Tabasco. The plant will process some 290,000 barrels of fuels per day when it reaches full capacity. CREDIT: Erik Contreras-Gerardo Morales / IPS
But the monument lacks another element that has been vital to the region: oil, which has damaged the other three symbols through pollution. Marine animals have been affected by the oil and the mangroves have almost been cut down in a territory that had ample reserves of crude oil.
Despite the fading bonanza, the Mexican government decided to build the Olmeca refinery in the industrial port of Dos Bocas, in Paraíso, to refine some 290,000 barrels per day of oil from the Gulf of Mexico and thus reduce gasoline imports.
It will be the seventh installation of the National Refining System in the country, in a port area that already has a crude oil shipping and export center of the state-owned oil giant Petróleos Mexicanos (Pemex), which controls the exploitation, refining, distribution and commercialization of hydrocarbons in the country.
Construction of the new infrastructure on an area of 600 hectares began in 2019, and although it was officially opened in 2022, the work has not been completed and it is expected to be fully operational in 2024.
But the plant has already provided revenue for the local economy, in the form of rents, transportation and food. However, there are also fears about its impact on a city of more than 96,000 inhabitants.
Genaro, a cab driver who preferred not to give his last name and is married with three children, said there is a sensation of risk. “We know what has happened in other places where there are refineries, with all the pollution. Besides, accidents occur,” he told IPS.
Near the plant is the Lázaro Cárdenas neighborhood, home to hundreds of people and named after the president who nationalized the oil and electric industry in 1936.
There is an uneasy feeling among the local population. Irasema Lozano, a 36-year-old teacher who is a married mother of two, is one of the residents who is apprehensive about “the newcomer” to the city.
“Look around, there are houses, schools, stores. The government says it is a modern plant and that there is no danger, but we don’t feel safe with this huge plant,” she said.
Cab driver Genaro owns a house in the area, which he rents out. But he is now seriously thinking of selling it.
Construction of the plant has altered the life of the sprawling city around Dos Bocas. The “orange people”, referring to the color of the uniforms worn by everyone who works at the facility, are a permanent reminder of the changes as they move around town.
Talking about oil in Tabasco is a delicate matter, since the state is used to living with the exploitation of a light, low-sulfur, cheap and easy-to-extract hydrocarbon. It is also the home state of President Andrés Manuel López Obrador, a staunch defender of fossil fuels.
Pemex has financed the Olmeca megaproject with public funds, through its subsidiary Pemex Transformación Industrial. Its subsidiary PTI Infraestructura y Desarrollo has overseen construction.
The project has already had a high cost overrun, as the initial investment was estimated at seven billion dollars, a figure that has climbed to 18 billion dollars, according to the latest available data.
On this occasion, PTI ID has not turned to the international market to finance the work, according to the response to a public information access request from IPS.
The Olmeca refinery has a cost overrun, escalating from a planned initial investment of seven billion dollars to 18 billion dollars. The Mexican government expects the plant, located in Dos Bocas, in the southeastern municipality of Paraíso, to be fully operational by 2024. CREDIT: Erik Contreras-Gerardo Morales / IPS
The support of international banks
Traditionally, Pemex has depended on financial flows from international private banks. Between 2016 and 2022, 17 institutions gave nearly 61.5 billion dollars to the state-owned oil company, according to annual reports under the heading of “Banking on Climate Chaos” produced by a group of NGOs.
The British bank HSBC was the main financial backer of Pemex during this period, contributing 7.6 billion dollars, followed by the U.S.-based Citi (6.9 billion) and JP Morgan Chase (6.0 billion).
Pemex’s data gives a broader picture, as it shows more players in its lending field. Through direct loans, bond issuance, revolving credits (with automatic renewals) and project financing, 16 financial institutions have granted it 78.9 billion dollars since 2015.
In doing so, the international markets allow Pemex to obtain money for its operations and development, but in exchange they have turned it into the oil company with the highest debt in the world, some 100 billion dollars, which poses a great threat to Pemex and, by extension, to the country.
The main mechanism used is the insurance coverage or underwriting of Pemex’s financial operations by charging a commission.
Maaike Beenes, leader of banking and climate campaigns at the non-governmental BankTrack, told IPS that the large flow of financing means that banks feel confident that Pemex can repay the debt.
“Apparently it is because they think there are guarantees because it is a state-owned company. There is a lot of financing for the expansion of fossil fuel activities,” she said from the Dutch city of Amsterdam.
In 2020, Mexico was the 13th largest oil producer in the world and 19th largest gas producer. In terms of proven crude oil reserves, it ranked 20th and 41st respectively, according to Pemex data.
Two flares burn gas in the Nuevo Torno Largo neighborhood, in the municipality of Paraíso, in the vicinity of the Olmeca refinery. The southeastern state of Tabasco, on the coast of the Gulf of Mexico, has suffered the effects of pollution generated by oil production for more than 50 years through spills, contaminating gases, and water, air and soil pollution. CREDIT: Erik Contreras-Gerardo Morales / IPS
Fueling the crisis
By raising Pemex’s debt rating, the international banks risk their own voluntary climate targets for greenhouse gas (GHG) emission reductions, since the Mexican company’s GHG emission reduction targets are low.
For example, HSBC aims to achieve zero net emissions – where neutralized emissions equal those released into the atmosphere – in its operations and supply chain by 2030 and in its financing portfolio by 2050.
The bank says it is working with its clients to help them reduce their emissions. Its energy policy states that it will not finance new oil and gas fields.
But HSBC’s net zero goal has some gaps. According to the international Net Zero Tracker platform, its strategy lacks a detailed plan to achieve it, and has no reference on equity investment and no specification on formal accountability for monitoring progress, even though it covers Scope 1 (A1), 2 and 3 emissions.
A1 emissions come directly from sources under the polluter’s control, A2 emissions are indirect emissions from purchased energy, and A3 emissions are those originating in the final use of energy, not covered in A1 and A2, according to the Greenhouse Gas Protocol standard, the most widely used in the world.
By 2022, Citi committed to achieving a 29 percent absolute reduction in emissions for the power sector and a 63 percent reduction in the intensity of its portfolio pollution for the electricity sector by 2030, addressing A1, A2 and A3 levels.
In this regard, Net Zero Tracker says the bank does not have a complete detailed plan for these decreases and makes no reference to investment in fossil fuel companies.
Another major player, JP Morgan Chase, has a target of a 69 percent reduction in the carbon intensity of power generation, which accounts for most of the sector’s climate impact, by 2030.
In the oil and gas segment, the company aims for a 35 percent decrease in operational carbon intensity, as well as a 15 percent drop in end-use energy carbon intensity for the same year.
But its net zero targets are in doubt, as Net Zero Tracker points out that they have shortcomings, such as a complete detailed plan, and no reference to equity investment and only partial coverage of A3.
Louis-Maxence Delaporte, fossil-free finance campaigner at the non-governmental Reclaim Finance, said that international financing for companies like Pemex is problematic as it is not aligned with the 2015 Paris climate change agreement, which sets out to keep global warming below 1.5°C.
“By not meeting these targets there is only greenwashing, like net zero. Their commitments are not credible. It is said there is no room for new fossil fuel projects, but the banks continue to support oil companies, like Pemex,” she told IPS from Paris.
“In Mexico there are perverse incentives because the country depends on extractive activities. There is a vicious circle, as these activities demand a greater share of the public budget and the banks channel money into them,” she told IPS from London.
A photo taken at the entrance to the Olmeca refinery, which the Mexican government expects to start up by the end of the year and to be fully operational in 2024. The plant is located next to the Lázaro Cárdenas neighborhood which is home to hundreds of people, in the Paraíso municipality of the southeastern state of Tabasco. CREDIT: Emilio Godoy / IPS
Dirty money
Pollution from Pemex’s activities has grown since 2018, a reality to which its financiers turn a blind eye.
In 2019, the Mexican oil company released 48 million tons of carbon dioxide (CO2) equivalent into the atmosphere, an increase of 3.3 percent, compared to 2018 levels, according to the report that Pemex sent to the Securities and Exchange Commission, a requirement for the company to sell bonds in the U.S. market.
In 2020, that pollution increased to 54 million tons, a rise of 12.5 percent, and the following year, to 70.5 million, an increase of 7.1 percent.
The main drivers of these increases have been the expansion of exploration, production and refining activities, plus drilling and flaring.
As of October 2022, Pemex was not in compliance with the 10-point framework of Climate Action + 100, a platform dedicated to measuring companies’ approach to the Paris Agreement goals. These aspects are related to short- and long-term reduction targets (2025 and 2050), decarbonization strategy and climate policies.
Therefore, the oil company, the eighth-largest global polluter as of 2017, according to the ranking of the non-governmental U.S. Climate Accountability Institute, is in breach of the Paris Agreement, adopted in 2015 and in force since 2021.
This also makes Mexico a country in non-compliance, as Pemex accounts for 10 percent of its GHG emissions.
Pemex has projected the reduction of pollution from its oil and gas production and extraction from 22.9 tons per 1000 barrels of crude oil equivalent in 2021 to 21.5 in 2025. For oil refining, the target is 39.6 tons per 1000 barrels in 2035, compared to just under 45.2 tons in 2021.
Delaporte criticized these targets as weak and insufficient, as they address only exploration and production (A1) emissions and leave out A2 and A3, the latter being the most polluting.
The Olmeca refinery is located in a coastal area of southeastern Mexico prone to flooding and exposed to rising sea levels due to increasing temperatures, one of the consequences of burning fossil fuels. CREDIT: Erik Contreras-Gerardo Morales / IPS
The national buttress
Another facet of the financial movement is related to national development banks, which have been pushing fossil fuel expansion without respecting their own social and environmental safeguards.
Since 2019, Bancomext has delivered 895 million dollars to the oil and gas industry, including Pemex, although the specific amount that went to the company itself is not public knowledge.
Banobras has been a great support for the oil company. In 2021, it provided over 1.1 billion dollars for the total acquisition of the Deer Park refinery in the U.S. state of Texas, of which Pemex already owned half and Shell the other 50 percent.
In addition, the bank shelled out 299 million dollars for the renovation of the Miguel Hidalgo refinery in the central state of Hidalgo.
Nafin lent Pemex 200 million dollars to upgrade the plant in 2021.
One phenomenon is the participation of the National Infrastructure Fund (Fonadin), which until now had never financed the fossil fuel sector. Last year, the fund contributed 346 million dollars for the renovation of diesel and gasoline processing technology at the Hidalgo refinery and at the Antonio M. Amor refinery, located in the central state of Guanajuato.
The latest operation involves 2.5 billion dollars in financing for the acquisition of the 13 production plants owned in the country by the Spanish company Iberdrola, 12 gas plants and one wind farm, in what has been described as part of “a new nationalization process.”
This maneuver also shows that international banks are still interested in financing fossil fuels, as the Spanish banks BBVA and Santander, as well as the U.S. Bank of America, have expressed a willingness to provide financing for the already agreed acquisition.
Climate activists stress that Mexican development banks have had social and environmental standards in place since 2017, but argue that they have been reluctant to apply them when it comes to Pemex.
Banobras has no safeguards assessments with respect to oil and gas projects, according to responses to information requests submitted by IPS. The same applied to Nafin, which did not carry them out in 2022 and 2023. The bank conducted one in 2021, classified as a bank secret. Bancomext also keeps information on this matter classified.
In the municipality of Paraíso, when the refinery begins to fully operate sometime in 2024, the pace will slow down, contrary to what the government wants. “We hope it will be profitable because it has cost a lot. And we hope nothing serious happens,” said Lozano, the teacher.
Beenes said Mexican and foreign banks should respect the Paris Agreement and abandon fossil fuels.
“State-owned banks can offer guarantees or insurance for credits. That is worrying, it is a problem for the transition. We are asking them to support the transition with specific investment conditions. It is in their best interest to stay away from fossil fuels, because they run the risk of having stranded assets in their portfolios,” she said.
The expert believes that banks are aware of the need for change, but the question is how fast they can do it.
Delaporte said development banks should finance green and non-oil companies.
“The change must be global, including commercial banks, development banks and hedge funds. Shareholders should ask Pemex not to build more facilities. If it refuses, they should divest and put the money into renewable companies,” she said.
Guzman, for her part, warned that if the current trend continues, it will be difficult for Mexico not only to meet its own climate targets, but also its contribution to the overall goal of keeping the global climate increase down to 1.5 degrees Celsius.
“There is talk of the need to continue mobilizing financing through national development banks for climate change. They should take advantage of this to allow the channeling and mobilization of funds” for the energy transition, she said.
What Africa needs is deep systematic changes in land governance. Communities need to control the disposition of their territories; peace will never happen if populations are stuck in economic instability. Credit: Tommy Trenchard/IPS
Opinion by Solange Bandiaky Badji (washington dc)
Inter Press Service
WASHINGTON DC, Sep 25 (IPS) – When the heads of state of all United Nations members spoke in front of the UN General Assembly last week, a number of African leaders were not be able to attend, having been removed from office in military-led coups.
On the surface, these nations do not share many similarities outside of geography and colonial histories. Consider Gabon and Niger, the most recent countries to experience “regime change.” Gabon is a small, biodiverse nation; the president under house arrest and his father before him have been in power since 1967. Niger is a much larger, mostly desert country; the president under house arrest had been elected in 2021.
This instability, taking place across West and Central Africa, has drawn plenty of attention, both regionally and internationally. But missing in the debates on which international power is behind each coup or whether they should be tolerated is the far more basic question on resources.
While France, the U.S., Russia, and China have condemned or worried about the wave of coups, they have mainly focused on the need to restore “constitutional order” and democracy. The root cause of the coups and conflicts in Africa is about resource extraction that drives poverty and human rights violations.
There are now seven African countries whose militaries have removed national governments, and all of their economies are largely dependent on resource extraction. Mali and Burkina Faso are among the world’s leading producers of gold. Chad and Sudan depend on oil extraction. Niger is the world’s fourth largest producer of uranium. Guinea holds between one quarter and half of the world’s bauxite reserves, the primary source of aluminum. Gabon is the second biggest producer of manganese in Africa and its economy also depends on oil and gas extraction, even as the government was exploring ways to tap emerging carbon credit markets for the tropical forests that cover almost 90% of its land.
The land needed for resource extraction, and the labor needed for the mines, drilling operations, or refineries—this economic activity comes at a cost. Families eking out a livelihood based on agriculture or forest products have little recourse when larger economic interests swoop in and take their land and resources.
In these countries, the rural communities have lived on and tended the land for generations—far longer than the governments have been in power. Land and property ownership is the basis of individual wealth in the Global North. But in the Global South, legal systems that disenfranchise rural communities are accepted because of the resources that their land contains.
The resource extraction sector does not provide a suitable replacement for the livelihoods that community members lose when their lands are taken. We have yet to see an example where miners, for example, are adequately compensated and protected from workplace hazards.
In the Sahel, Niger is often commended for its recognition of customary tenure rights. Niger has a progressive Rural Code adopted in 1993 that set innovative land governance systems, legislation and institutions.
A Rural Land Policy was adopted in 2021 with provisions to recognize rights and prevent land conflicts. Niger also has the most progressive pastoral law in the Sahel, adopted in 2010, that recognizes the rights of nomadic communities dependent on livestock. Burkina Faso and Mali also have strong protections for community rights, but enforcement was lacking in all three countries.
Foreign investors are always happy to exploit these countries’ resources; enforcing community rights is never their priority. Equitable sharing of the benefits from the extractive sector, to provide local youth with gainful employment or land ownership, and respecting rural land ownership arrangements, are rarely on the table.
I look at Senegal, where I was born and raised, and all the ingredients are there for the country to join this string of coups. Government revenues depend on resource extraction—phosphate mines drive most of the economy.
Natural gas and oil have been discovered off the coast and the government ambition is to make Senegal an oil, gas, and hydrocarbon giant. While Senegal has been the most stable country in the Sahel, we are seeing democratic rollback with arrests of opposition political leaders and citizens, which triggered massive street protests.
And, Senegal’s legal system does not protect the land rights of rural communities—leaving them without a basis for wealth. Senegal has struggled to come up with a new land policy and law to take into account the current political and economic context and give ownership rights to the communities. The land law in force is the “Loi du Domaine National,” adopted immediately after we gained independence from France in 1964.
Ultimately, it’s not about who is in power and is certainly not limited to former French colonies. This is all about how resource extraction is prioritized. What Africa needs is deep systematic changes in land governance. Communities need to control the disposition of their territories; peace will never happen if populations are stuck in economic instability.
“Africa is a beggar sitting on a gold mine,” said Birago Diop, the 20th century Senegalese poet and storyteller. Despite their natural riches, four of these seven countries—Mali, Niger, Sudan and Chad—scored in the bottom 10th of the global “Prosperity Index;” the other three score in the bottom 40%.
The challenge before all of us—for Africa’s regional bodies like ECOWAS and the African Union, and for global institutions like the UN—is how we can leave these outdated economic models in the 20th century. Two decades into this century, we still haven’t embraced the need for a more equitable approach to natural resources. Until we do so, no government is safe.
Dr. Solange Bandiaky-Badji, PhD is Coordinator of the Rights and Resources Initiative (RRI). She holds a PhD in Women’s and Gender Studies from Clark University, Massachusetts, and an MA in Environmental Sciences and in Philosophy from Cheikh Anta Diop University, Senegal.
Clinical psychologists observe an increase in anxiety and depression disorders associated with suicidal behavior in adults. Among young people, self-injury and eating disorders are frequent. CREDIT: The Conversation
Another aspect of the multidimensional crisis in Venezuela is the severe lack of face-to-face and family communication. According to some specialists, it seems that family life takes place more on the phone than live, leaving the field open for teenagers to feed more on social networks than on real interactions. CREDIT: The Conversation
