The European Union is calling for protectionist measures against strong emerging economies. Credit: Jim Killock/CC-BY-SA-2.0

BERLIN, Sep 28 2012 (IPS) - For many years, the European Union (EU) and its individual member states counted among the strongest advocates for free trade, arguing that it would boost economic growth and welfare both at home and abroad.

But since the global financial crisis in 2007 triggered a severe sovereign debt crisis and a general economic downturn across most European countries, EU institutions, individual governments and representatives of some industrial sectors are calling for protectionist measures, especially against competitors from strong emerging countries such as Brazil, India, the People’s Republic of China, and South Korea.

The European turnabout on international trade became evident this summer, when struggling German solar panel manufacturers and the new, Leftist French government of François Hollande urged the EU to launch protectionist measures against Chinese competitors and to suspend a recent free trade agreement (FTA) with South Korea.

French minister for industrial renewal, Arnaud Montebourg, denounced in early August “the unacceptable dumping (by) Korean auto manufacturers such as Hyundai and Kia, which are disloyal competitors to the French auto industry”.

“Europe may open its markets, but it should not give herself up” to disloyal economic competitors, Montebourg argued.

An assessment of current industrial trends suggests that Europe is indeed lagging.

The legendary French automaker Peugeot accumulated losses of 1.2 billion euros between July 2011 and June 2012, and has announced layoffs of more than 8,000 workers in France, and industrial relocations to Eastern European countries.

Meanwhile, Korean automakers have substantially increased their exports to Europe. According to European Commission figures released on Aug. 29, exports to France by Korean automobile maker Hyundai grew by 48 percent during the first half of 2012.

At the same time, European automobile exports to Korea fell by 13 percent in the same period.

However, these figures alone do not make a strong enough case for Europe’s calls for protectionism. According to the South Korean car maker Hyundai, well over half of the 400,000 automobiles it sold in Europe between January and July this year were actually fabricated in EU countries such as the Czech Republic.

Additionally, the FTA led only to a marginal fall of customs duties for small South Korean autos, from 10 percent before the agreement to 8.3 starting July 2011, and to 6.6 percent since July 2012.

Still, since other French industrial players – from manufacturers of ships and high-speed trains to constructors of nuclear power stations – have recently suffered severe contract losses against South Korean competitors, the latter has become the embodiment of a strong, allegedly disloyal competitor.

Additionally, according to the World Economic Forum’s newest global competitiveness report, South Korea’s economic performance in 2011 surpassed that of France.

But South Korea is not the only formidable threat.

Twenty-five European producers, led by German solar panel manufacturers facing bankruptcy due a strong Sino presence in the market, asked the EU to launch an anti-dumping measure against Chinese competitors, arguing that the government in Beijing gives local manufacturers illegal subsidies and allows them to sell their products below actual costs of production.

Such practices, according to the group EU ProSun – which represents the majority of solar industrial production in the region – constitute “unfair distortions” of international trade.

The World Trade Organisation itself allows governments to act against dumping where there is genuine injury to the competing domestic industry.

In 2011, the Chinese solar panel industry sold 60 percent of its global exports in Europe. On Sept. 6, the EU announced it would respond to ProSun’s demand by launching an official investigation into Chinese subsidies and trade practices.

Protectionism on the rise

The EU has also developed a new international trade concept, which, according to economic experts and analysts, clearly includes new protectionist measures likely to hurt emerging developing countries such as India, Brazil and South Africa (IBSA) as well as China, South Korea, and Vietnam.

In an analysis released last July, ‘The next decade of EU trade policy: Confronting global challenges?’, the London-based Overseas Development Institute (ODI warned, “There is a major concern that the EU is moving towards protectionism.”

The ODI paper analyses the proposals on international trade approved by the European Commission last May. This new agenda, expected to come into force in January 2014, foresees a reform of the EU’s generalised system of preferences (GSP), which has ruled European trade policies towards developing countries since 1971.

According to the new rules, several strong developing countries would be excluded from the GSP. Additionally, the new GSP would establish new standards on environment, labour, and social rules to be respected by developing countries trading with the EU.

In its analysis of this new GSP, the ODI report warns that the number of countries eligible for preferential trade with the EU will fall from 175 at present to about 80 in the near future.

Dirk Willem te Velde, head of the ODI’s International Economic Development Group and coordinator of the ODI report, is concerned that “the EU will retreat into protectionism, especially vis-à-vis the so called BRICS countries (Brazil, Russia, India, China and South Africa) with a range of trade-related economic policies.”

“Clearly, the GSP reform is likely to impose more trade barriers on a range of products and countries when they are not benefiting from a reciprocal Free Trade Agreement (FTA) with the EU,” te Velde added.

“This does not offer the best value for EU consumers or developing country exporters,” he said.

Christopher Stevens, co-author of the study, said the new GSP regime would exclude all so-called Upper Middle Income Countries (UMICs) from the GSP, even for products where these countries are not competitive.

“The justification for the change is that the UMICs are sufficiently well integrated into the world economy (that they) do not need the GSP; and it will ease pressure on less competitive developing countries and hence focus the GSP preferences on the countries most in need,” Stevens added.

But neither claim stands up well to examination, Stevens argued. “UMICs are not a very close proxy for ‘the most competitive developing countries’,” he wrote in the report, concluding with some very telling examples of the coming discriminations: “Under the new regime, China will remain in the GSP but Cuba will be excluded; Indonesia and Thailand will remain in, but Gabon and Namibia will be out.”

(END)

GENEVA, Apr 24 (IPS) – Profound discord between industrialised nations and developing countries is threatening to ruin the UNCTAD meeting being held this week in Doha, and may even endanger the survival of this United Nations body that defends the interests of the developing nations of the South.

If there is failure to reach agreement, it will be perceived as the end of the debate on development and also the end of this body itself, warned the United Nations Conference on Trade and Development (UNCTAD) Secretary-General Supachai Panitchpakdi, a Thai economist and politician.

Disagreements between the blocs, broadly identified as countries of the North and of the South, arise mainly from differing views of UNCTAD's mandate and different visions of development and how it relates to social, environmental, economic and financial variables.

For example, industrialised countries have rejected out of hand giving UNCTAD a remit to investigate the current global financial crisis and its effects on the real economy, diplomatic sources in the capital of Qatar who requested anonymity told IPS.

On Saturday Apr. 21 at the conference's inaugural session, 37 international and 137 national NGOs sent a message to participating governments, titled "Strengthen, don't weaken, UNCTAD's role in global governance" , highlighting the important role played by UNCTAD "in identifying the key causes" of the global crisis originating in 2008.

UNCTAD has assisted developing countries in seeking solutions to the impacts of the crisis, and has advocated the reform of global economic and finance policies in order to prevent similar crises from recurring, the NGOs said.

"UNCTAD is well known for having predicted the crisis in advance, a fact that is to be commended, particularly given its paucity of resources compared to institutions such as the International Monetary Fund (IMF), the World Trade Organization (WTO), and the Organisation for Economic Co-operation and Development (OECD), which failed to do so," the message says.

Signatories of the message to the governments at the UNCTAD meeting include ActionAid International, the African Trade Network, the Arab NGO Network for Development, CIDSE – an international alliance of 16 Catholic development agencies – , the European Network on Debt and Development, and Friends of the Earth International.

The Hemispheric Social Alliance, the International Trade Union Confederation, Oxfam International, Public Services International, the Third World Network, the Transnational Institute and the World Council of Churches also signed the declaration.

In the negotiations of the conference's outcome document, UNCTAD's role is being defended by China and the Group of 77 (G77), the developing world bloc that came into being as a result of the first UNCTAD conference, held in Geneva in 1964, and today is made up of 132 member countries.

The G77 maintained that UNCTAD was established in response to the current and emerging challenges faced by developing countries, and underscored the need to strengthen the role of the U.N. in international economic and financial governance.

In contrast, the European Union has attempted to eliminate a paragraph from the outcome document that refers to UNCTAD's role in contributing to U.N. investigations of the causes and effects of the global economic crisis.

In addition to the EU, industrialised countries at the Doha conference are represented by the JUSCANZ (JZ) group, made up of Japan, the United States, Switzerland, South Korea, Canada, Australia, New Zealand, Norway and Liechtenstein.

Both the EU and JZ are demanding the elimination of two paragraphs from the draft text, one on the global crisis and one on the link between the financial sector and the real economy.

They are also opposed to a reference to the need to regulate financial markets and to adopt mechanisms to prevent and overcome crises.

Supachai's view clashed with that of the industrialised country groups, as his report, presented to the conference on Saturday, warned against the dangers of globalisation and development processes driven by international finance.

The disagreements between developing and industrialised countries are even more acute in the debate about the accords reached at the previous UNCTAD session four years ago, held in Accra, Ghana.

The G77 wants to reaffirm and strengthen the Accra Accord, so that UNCTAD can continue with its present work, following the direction laid down by its secretariat.

But the JZ wants all reference to reaffirming the Accra agreement eliminated from the outcome document, and proposes that the accord be reviewed.

The industrialised countries also reject paragraphs about the management and resolution of national debts, the responsibilities of lenders and borrowers, and an orderly solution to the debt crisis.

The JZ group opposed a section of text ratifying the continuance of UNCTAD services for the Global System of Trade Preferences Among Developing Countries (GSTP), the first scheme of preferential trade between nations of the South.

The GSTP was created in 1988 and comprises 42 countries and the Southern Common Market (Mercosur), made up of Argentina, Brazil, Paraguay and Uruguay, which are also individual members of the global system.

The industrialised countries are also questioning the assistance UNCTAD provides developing nations on the negotiation of regional trade agreements and their consequences.

The JZ group wants to delete reference in the outcome document to the role of industrialisation policies in development processes.

It also wants to alter text saying foreign direct investment should contribute to development according to the priorities and laws of recipient countries, insisting that it simply state that developing nations need to attract investment.

The sources at the Doha meeting said the industrialised world's initiatives would deprive UNCTAD of any participation on trade and environment issues, as well as in the United Nations Conference on Sustainable Development (Rio+20) to be held in Rio de Janeiro in June, and on work in the area of the green economy and research on climate and development.

On intellectual property rights in relation to development, the EU and JZ requested the deletion of a reference to UNCTAD's role in research into benefit sharing in the areas of traditional knowledge and genetic resources.

The industrialised countries are making extremely high demands, and they will not accept leaving Doha empty-handed on Thursday Apr. 26 when the 13th UNCTAD session ends, the sources said.

Therefore, Supachai's fears about the possible fate of UNCTAD may not be exaggerated, they said.

(END/2012)

/ UNCTAD

If there is failure to reach agreement, it will be perceived as the end of the debate on development and also the end of this body itself, warned the United Nations Conference on Trade and Development (UNCTAD) Secretary-General Supachai Panitchpakdi, a Thai economist and politician.

Disagreements between the blocs, broadly identified as countries of the North and of the South, arise mainly from differing views of UNCTAD's mandate and different visions of development and how it relates to social, environmental, economic and financial variables.

For example, industrialised countries have rejected out of hand giving UNCTAD a remit to investigate the current global financial crisis and its effects on the real economy, diplomatic sources in the capital of Qatar who requested anonymity told IPS.

On Saturday Apr. 21 at the conference's inaugural session, 37 international and 137 national NGOs sent a message to participating governments, titled "Strengthen, don't weaken, UNCTAD's role in global governance", highlighting the important role played by UNCTAD "in identifying the key causes" of the global crisis originating in 2008.

UNCTAD has assisted developing countries in seeking solutions to the impacts of the crisis, and has advocated the reform of global economic and finance policies in order to prevent similar crises from recurring, the NGOs said.

"UNCTAD is well known for having predicted the crisis in advance, a fact that is to be commended, particularly given its paucity of resources compared to institutions such as the International Monetary Fund (IMF), the World Trade Organization (WTO), and the Organisation for Economic Co-operation and Development (OECD), which failed to do so," the message says.

Signatories of the message to the governments at the UNCTAD meeting include ActionAid International, the African Trade Network, the Arab NGO Network for Development, CIDSE – an international alliance of 16 Catholic development agencies – , the European Network on Debt and Development, and Friends of the Earth International.

The Hemispheric Social Alliance, the International Trade Union Confederation, Oxfam International, Public Services International, the Third World Network, the Transnational Institute and the World Council of Churches also signed the declaration.

In the negotiations of the conference’s outcome document, UNCTAD's role is being defended by China and the Group of 77 (G77), the developing world bloc that came into being as a result of the first UNCTAD conference, held in Geneva in 1964, and today is made up of 132 member countries.

The G77 maintained that UNCTAD was established in response to the current and emerging challenges faced by developing countries, and underscored the need to strengthen the role of the U.N. in international economic and financial governance.

In contrast, the European Union has attempted to eliminate a paragraph from the outcome document that refers to UNCTAD's role in contributing to U.N. investigations of the causes and effects of the global economic crisis.

In addition to the EU, industrialised countries at the Doha conference are represented by the JUSCANZ (JZ) group, made up of Japan, the United States, Switzerland, South Korea, Canada, Australia, New Zealand, Norway and Liechtenstein.

Both the EU and JZ are demanding the elimination of two paragraphs from the draft text, one on the global crisis and one on the link between the financial sector and the real economy.

They are also opposed to a reference to the need to regulate financial markets and to adopt mechanisms to prevent and overcome crises.

Supachai's view clashed with that of the industrialised country groups, as his report, presented to the conference on Saturday, warned against the dangers of globalisation and development processes driven by international finance.

The disagreements between developing and industrialised countries are even more acute in the debate about the accords reached at the previous UNCTAD session four years ago, held in Accra, Ghana.

The G77 wants to reaffirm and strengthen the Accra Accord, so that UNCTAD can continue with its present work, following the direction laid down by its secretariat.

But the JZ wants all reference to reaffirming the Accra agreement eliminated from the outcome document, and proposes that the accord be reviewed.

The industrialised countries also reject paragraphs about the management and resolution of national debts, the responsibilities of lenders and borrowers, and an orderly solution to the debt crisis.

The JZ group opposed a section of text ratifying the continuance of UNCTAD services for the Global System of Trade Preferences Among Developing Countries (GSTP), the first scheme of preferential trade between nations of the South.

The GSTP was created in 1988 and comprises 42 countries and the Southern Common Market (Mercosur), made up of Argentina, Brazil, Paraguay and Uruguay, which are also individual members of the global system.

The industrialised countries are also questioning the assistance UNCTAD provides developing nations on the negotiation of regional trade agreements and their consequences.

The JZ group wants to delete reference in the outcome document to the role of industrialisation policies in development processes.

It also wants to alter text saying foreign direct investment should contribute to development according to the priorities and laws of recipient countries, insisting that it simply state that developing nations need to attract investment.

The sources at the Doha meeting said the industrialised world's initiatives would deprive UNCTAD of any participation on trade and environment issues, as well as in the United Nations Conference on Sustainable Development (Rio+20) to be held in Rio de Janeiro in June, and on work in the area of the green economy and research on climate and development.

On intellectual property rights in relation to development, the EU and JZ requested the deletion of a reference to UNCTAD's role in research into benefit sharing in the areas of traditional knowledge and genetic resources.

The industrialised countries are making extremely high demands, and they will not accept leaving Doha empty-handed on Thursday Apr. 26 when the 13th UNCTAD session ends, the sources said.

Therefore, Supachai's fears about the possible fate of UNCTAD may not be exaggerated, they said.

(END/2012)

China could be the biggest beneficiary of a BRICS development bank. Credit: Kit Gillet/IPS

Analysis by Kester Kenn Klomegah

MOSCOW, Mar 19 (IPS) – India’s proposal to set up a bank of the BRICS nations (Brazil, Russia, India, China and South Africa) will top the agenda at the summit of the group in New Delhi Mar. 28.

India believes a joint bank would be in line with the growing economic power of the five-nation group. The bank could firm up the position of BRICS as a powerful player in global decision-making.

“The BRICS bank does not need much capital for a start,” Alexander Appokin, senior expert at the Moscow- based Centre for Macroeconomic Analysis and Forecasting tells IPS. “What is more important is that the BRICS development bank presents a unique opportunity for indirect investment of central bank foreign reserves inside the countries.”

A BRICS bank could for example issue convertible debt, which would arguably be top-rated and can be bought by central banks of all BRICS countries. BRICS countries would thus have a vessel for investment risk-sharing.

“China will be the biggest beneficiary of that,” says Appokin. “Moreover, infrastructure investment mostly needs not just long-term financing but external monitoring for more transparency and efficiency increases. Here, a BRICS development bank could offer some advice for successful implementation of regional projects.”

But, he cautions, “development structures like a BRICS bank are effective only in case they are given independence in project financing decisions from the governments, or at least room to operate in long- term development framework.”

Yuhua Xiao, assistant professor at the Institute for African Studies in the Zhejiang Normal University (ZNU) in China says the idea of setting up a development bank for financing projects in these countries is a sign of the growing self-assertiveness and of independence or interdependence of emerging economies.

“As the emerging powers’ approaches to development may differ from established norms, such an institutional set-up will test the possibility of cooperation in a different framework which might generate new ideas,” Yuhua tells IPS in an emailed comment.

India’s proposal for a BRICS bank was long overdue, says John Mashaka, financial analyst at Wells Fargo Capital Markets. “It is a way the emerging nations are trying to pull out of the western dominated World Bank and the IMF,” he tells IPS.

“Basically India, China and perhaps Russia are trying to show off their economic clout; they are trying to demonstrate to the west that they can do without them. Above all they need freedom from western financial influence.”

Mashaka says the joint bank besides being a financial institution for BRICS member countries can also support infrastructural projects in developing countries in Africa, Asia and Latin America. But it has a long way to go, he says.

“The effectiveness of the bank is yet to be seen; this plan is not going to be cakewalk. China has already said it wants permanent presidency. Russia and India may demand the same. We know that Africa is a lucrative market for China in terms of natural resources and as a market for industrial products.

“Africa being such a strategic region, China may want the bank to finance many of its projects in the African region, or simply cooperate with the African Development Bank.”

Mashaka says there are also unanswered questions about capital structure, such as which BRICS member state will foot the bigger bill needed to establish the bank, and the role of various countries.

Albert Khamatshin from the Centre for Southern African Studies at the Russian Academy of Sciences believes South Africa will benefit most because the primary focus of the bank will be development projects within BRICS.

Dr. Alexandra A. Arkhangelskaya, head of the Centre for Information and International Relations at the Institute for African Studies at the Russian Academy of Sciences says a bank like this could shift the weight of economic power even though the creation of such an institution would be difficult.

“It is a good in terms of a multilateral framework of cooperation,” Arkhangelskaya tells IPS. “But the BRICS states have differing economic weight, and to find the right balance to avoid one or some members dominating can pose a challenge. The threat of marginalisation of members in comparison to China is evident.

“BRICS is unity in diversity, and to take new steps towards mutual cooperation can be challenging. Therefore, it is interesting to see the development of this idea and to clearly understand the mechanism of its implementation.”

She further believes the bank could greatly benefit countries outside BRICS if it supports least developed countries in ways similar to the IBSA (India, Brazil, South Africa) Development Fund, which has a number of successful projects.

Prof. Adams B. Bodomo from the School of Humanities at the University of Hong Kong, who has researched BRICS extensively, tells IPS that Brazil proposed that developing countries would be willing to contribute money to solve the Eurozone problems in return for more power in the International Monetary Fund (IMF). But he warned that the “International” Monetary Fund is not really for developing countries. He called it a Western Monetary Fund.

(END/2012)

Iranian President Mahmoud Ahmadinejad in Cuba. Credit:Jorge Luis Baños/IPS

Analysis by Humberto Márquez

CARACAS, Jan 13 (IPS) – Iran’s president, Mahmoud Ahmadinejad, sought to freshen up his international image on a tour of Latin America and demonstrate that his country does have friends in the world, while almost every day events place him at the epicentre of fraught geopolitical tensions.

Ahmadinejad has visited Venezuela, Nicaragua, Cuba and Ecuador over the last week. Warmly welcomed by their heads of state, he condemned capitalism, criticised the United States and defended the advantages of economic and trade agreements between Iran and its partners in this far-off region.

“This initiative of President Ahmadinejad’s is apparently intended to improve his international position and his image at home, because his government is increasingly isolated,” Demetrio Boersner, a professor of several generations of students at the School of International Studies of the Central University of Venezuela (UCV), told IPS.

In addition to the increasing pressure and international sanctions against Iran in reprisal for its nuclear programme – which could give the country nuclear weapons, according to Western powers – Ahmadinejad may also be having difficulty holding on to power in Tehran.

“Not only is there criticism of his economic policies and abuse of power, but there are occasionally fierce political battles between Ahmadinejad and Iran’s supreme leader, ayatollah Ali Khamenei, who wants him out of the presidency and replaced by someone more modest and more amenable to management by the council of clerics (the Guardian Council of the Constitution, made up of clerics and lawyers),” said Boersner.

Meanwhile, tension has escalated in the Persian Gulf following Tehran’s warning, in combination with naval exercises, that it might close the strait of Hormuz, a vital passage for tankers carrying 40 percent of global oil exports, to which the United States responded by placing one of its aircraft carriers to guard the strait.

A warning from Iran that the aircraft carrier (temporarily absent) should not return to the Gulf was explicitly dismissed by Washington, while the United States carried out new joint manoeuvres with Israel, Iran’s arch-enemy, and tightened economic sanctions against Iran. The European Union will shortly decide whether to expand its own sanctions.

On Wednesday Jan. 11, Iranian nuclear scientist Mostafa Ahmadi Roshan was killed in Tehran when a magnetic bomb attached to his car exploded. Vice President Mohammad Reza Rahimi called it a “terrorist attack committed by the agents of oppression and the Zionist regime,” a phrase usually taken to mean the U.S. and Israel.

Ahmadinejad did not mention the bombing incident Wednesday afternoon when he received an honorary doctorate in political science from the University of Havana.

But he said “the capitalist system is in decline in different scenarios. It is at a dead end… When they (capitalist powers) lack logic, they resort to using arms to kill and destroy.” Therefore “a new order is necessary, that will respect all human beings, with thinking based on justice.”

In Venezuela, his host President Hugo Chávez joked about those who are concerned about a belligerent alliance between Caracas and Tehran. “Imperialist spokesmen say we are going to set our sights on Washington and launch an attack. It’s laughable, but it’s also a reason to be alert,” the Venezuelan president said.

“We are certainly going to work a lot for bombs and missiles, but in order to fight hunger and poverty. That is our war,” said Chávez.

Continuing in the same vein, Ahmadinejad said “Our weapons are logic, culture, human values and love. We love all people, including the U.S. people, who are suffering the domination of the arrogant.”

In Nicaragua, where he attended the swearing-in of re-elected President Daniel Ortega, Ahmadinejad said he was “very happy to be in the land of the revolution. Our two peoples, on different points of the earth, are striving to establish solidarity and justice.”

In Ecuador, President Rafael Correa welcomed Ahmadinejad with a statement that his country “will maintain relations with countries that wish to strengthen ties of friendship, within a framework of mutual respect.”

“I will not permit outsiders to dictate what we do” in terms of international relations, Correa said.

Last week, Washington warned Latin American countries against deepening their ties with Iran, and the day Ahmadinejad arrived in Caracas, Livia Acosta, the Venezuelan consul in Miami, Florida, was declared persona non grata, without any explanation.

In each of the countries Ahmadinejad visited, economic and trade agreements were discussed. In Venezuela, ongoing agreements in the automotive, petrochemical and construction sectors were reviewed, while the Caracas newspaper El Universal reported that the Iranian delegation requested payment of debts amounting to 298 million dollars.

In Nicaragua, the Iranian president said he would favourably consider the Central American country’s requests for aid, and in Cuba he pledged to expand Tehran’s lines of credit to the island to buttress bilateral trade, which fell from 46 million dollars in 2008 to 27 million dollars in 2009, according to the latest official figures.

Iran’s line of credit for Ecuador, currently 120 million dollars, may also be expanded, and cooperation on building power plants is being studied.

A large question mark over this tour is why Brazil was not included. Ahmadinejad visited the country at the end of former president Luiz Inácio Lula da Silva’s (2003-2011) term of office, when Lula received the Iranian leader and bilateral cooperation agreements in several fields were signed.

“I suspect Brazil let the Iranians know that it did not consider the timing of the proposed visit by Ahmadinejad convenient,” said UCV’s Boersner.

The Council on Hemispheric Affairs, a Washington-based NGO, said in a report that Brasilia had not wanted to irritate the U.S. just when the U.S. government has cancelled taxes on imported ethanol, the biofuel from sugarcane that Brazil supplies to the U.S. market.

Boersner stressed that “Brazil’s maximum aspiration in international politics is to occupy a permanent seat on the United Nations Security Council, and to attain this it needs the support of the five powers (including the U.S.) that currently hold permanent seats and wield a veto on the Security Council, as well as of the rest of the global community.”

“Under these circumstances, Brazil must have been horrified at the idea of receiving a president who has been disowned by most of the international community,” said Boersner.

The absence of Brazil from Ahmadinejad’s itinerary is perhaps a reflection of the distancing from Iran preferred by Brazilian President Dilma Rousseff, who during her first year in office has reduced trade with Tehran by 73 percent and has bluntly condemned the Iranian government’s human rights record.

Rousseff sharply criticised the penalty of death by stoning inflicted on some Iranian women. “As a woman, I cannot accept these mediaeval practices. There is no excuse. I will not make any concessions on this point,” she said.

“Brazil is a peace-loving nation, and will only converse with other peace-loving nations,” she said.

In any event, Ahmadinejad can point to his South America tour and the political and trade agreements reached as evidence that Iran is not so isolated.

But the countries the Iranian president did visit, because of their size, power and location, are not capable of offering him much help in the event of a military confrontation.

(END/2012)

Suape Industrial Port Complex in the Northeast is in a process of constant expansion. / Mario Osava/IPS

RIO DE JANEIRO, Jan 4 (IPS) – In 2011, Brazil’s economy grew by less than half the 7.5 percent it attained in 2010. However, this result would be miraculous in any other country with the barriers to productivity and competitiveness that prevail in Brazil.

The base interest rate of 11 percent is the highest in the world in real terms, and the tax burden amounts to 35 percent of GDP, much higher than in the rest of Latin America and closer to that of European states, but without providing a similar level of social welfare.

Moreover, the enormous bureaucratic apparatus is a hindrance to business, and costs are also raised by the precarious transport infrastructure and the high price of energy, contradicting the official discourse on modest electricity costs based mainly on hydroelectric power.

To add to the difficulties in the international marketplace, the local currency, the real, has been in recent years the most overvalued with respect to the dollar. Consequently, the exports of several industries have fallen and imports have increased.

Manufacturers are issuing warnings about “premature deindustrialisation” because of the exchange rate imbalance, which is being accentuated now that Brazil is becoming an oil exporter, thanks to huge deep water reserves in the Atlantic ocean.

Luiz Aubert Neto, head of the Brazilian Machinery and Equipment Association (ABIMAQ), said that in 2005, 60 percent of the machinery sold on the domestic market was made in Brazil, compared to just 40 percent today. The sector’s exports fell by 27.7 percent between 2008 and 2010, while imports rose by 14 percent.

A “currency exchange war” is under way, Finance Minister Guido Mántega said just over a year ago. Some countries are devaluing their currency to boost their competitiveness, a matter that should be addressed by the World Trade Organisation (WTO), he said at the time.

Faced with pressure from manufacturers and evidence that Brazilian exports are increasingly made up of agricultural and mineral commodities, the government has been adopting protectionist measures, such as requiring that at least 65 percent of auto parts be of national origin for the vehicles to qualify for tax breaks.

But in spite of all the disadvantages, Brazil is one of the countries attracting most foreign investment, and it has just been recognised by the British Centre for Economics and Business Research (CEBR) as the sixth largest global economy, displacing the UK.

As one of the emerging powers grouped in BRICS (Brazil, Russia, India, China and South Africa), this South American country does not really stand out for its GDP growth, which averaged four percent a year between 2003 and 2010 during former president Luiz Inácio Lula da Silva’s two terms of office.

This indicator is close to the world average for the period, and has been outstripped by several other South American countries. But the interest of investors, economists and international authorities in Brazil is explained by the size of its internal market of 192 million people, and the level of economic development already achieved.

In some areas of the country, like the Northeast and the Amazonian state of Rondônia, it is practically a joke to speak of deindustrialisation. By contrast, industrialisation there is proceeding full-tilt, although in the old-fashioned way, driven by oil and metallurgy rather than electronics or new technologies.

In the arid, impoverished Northeast, construction of oil refineries, steel mills and shipyards – closely linked to ports designed as industrial and logistics complexes – is driving economic growth at a rate above the national average.

Inadequate infrastructure diminishes competitiveness but also acts as a galvanising factor, especially for the construction industry. Roads, railways, ports and bridges are being built, enlarged or repaired in every region of Brazil, along with social housing.

The number of projects has brought to a head the need for skilled labour, and there is a consensus that poor quality education is an additional hindrance to development and competitiveness.

Among the 65 countries assessed by the Programme for International Student Assessment (PISA), Brazil is always near the bottom of the ranking, especially in mathematics.

In order to meet demand, federal and state governments are rushing to provide technical schools, and companies are themselves undertaking training of local workers to work on infrastructure projects.

The Santo Antônio hydroelectric complex on the Madeira river in the Amazon region is being built with over 80 percent local labour, according to the consortium responsible for the project, and two-thirds of the workers on the Belo Monte complex on the northern Xingu river, on which work is just beginning, are local people.

“Now education is progressing, because there is a demand for it,” said Fernando Freire, head of the Joaquim Nabuco Foundation, a Ministry of Education social science research institute in Recife, the capital of the northeastern state of Pernambuco which is industrialising at the fastest rate in the country.

But economists say Brazil has another Achilles’ heel: the lack of technological innovation. Although it has recently expanded its scientific production, as measured by published academic papers, in terms of patents the country is far behind others at a similar stage of development.

There is much that can be said about the inconsistencies of the Brazilian economy, especially in some sectors being buffeted by competition from Chinese products. Nevertheless, Brazil is now close to what economists call full employment.

Unemployment fell to 5.2 percent in November, the lowest figure since 2002 when the statistics institute adopted its present methodology. All the indicators point to a reduction in inequality, and migration from poor regions like the Northeast to more developed areas like the southern state of São Paulo has ceased.

The economy is growing in spite of the hurdles, and the positive social and political effects are deeply felt, although GDP growth may not be as spectacular as that of China or some South American countries like Peru, where president Alan García left office in July 2011 with a low approval rating, in spite of the country’s high rate of economic growth.

In contrast, President Dilma Rousseff has an astronomical approval rating, as did former president Lula.

(END/2012)

WASHINGTON, Nov 12 (IPS) – While experts are hopeful that blocs of emerging market economies like BRICS – Brazil, Russia, India, China and South Africa – will play a major role in the upcoming aid effectiveness conference in Busan, South Korea, others fear that the new players do not yet have the fiscal power to make a serious intervention in fora generally dominated by rich donor states.

For instance, while the BRICS pledged just 26 billion dollars in loans to low-income countries over the last decade, traditional donors from the Organisation for Economic Cooperation And Development (OECD) committed 269 billion dollars in the same timeframe.

Moreover, many observers fear that rising South-South partnerships are merely a slightly distorted mirror image of the old exploitative relationships between the developed and developing worlds.

According to Jayati Ghosh, a leading international development economist, “Groupings (like BRICS) do not so much change patterns of trade and investment as reflect them. We have seen the emergence of multinational corporations from the South, which have affirmed the universal tendencies of capital rather than (produce) any massive difference based on location.”

“On the other hand, it is also true that, while capital is increasingly footloose and transnational in its orientation, it is also still relies heavily upon state support and therefore nation- states (including in the South) continue to make efforts on behalf of capital originating in their own countries,” she told IPS.

“Ironically, despite this interdependence, states are increasingly subservient to capital (especially finance capital) than the other way around. This is as true of capital from Northern countries as from Southern ones.”

This prognosis raises serious questions about both the capacities and desires of BRICS countries to significantly alter development assistance, or trade, in ways that benefit the global South.

A recent working paper put forward by Nkunde Mwase, an economist at the strategy, policy and review department of the International Monetary Fund (IMF), examined the BRICS’ increased development financing flows to low income countries (LICs) and found that “BRICs lend more to LICs with weaker institutions. Land-locked, resource- scarce LICs receive significantly less financing than other resource- rich LICs.”

Most of this development lending over the past few years has been driven by China, Mwase told IPS.

“We do not find any evidence suggesting that LICs with good governance are rewarded with more financing. While these findings are not unique to BRIC financing, the rapidly growing BRIC-LIC ties have ‘raised the stakes’ and underscore the need to ensure that the financing does not undermine efforts to improve governance in LICs,” she stressed.

“Such loans could lead countries into debt traps if the risks are not fully taken into account,” Mwase added. “LICs need to ensure that the financing is allocated to projects with high returns and does not lead them (down) unsustainable debt paths.”

This trend is compounded by a pronounced lack of transparency in transactions – be they aid, development assistance, loans or even corporate contracts – between BRICS and poorer countries.

“Countries like China and India do not yet publish any country- specific data on their concessional and non-concessional loans,” according to a paper from the Centre for Chinese Studies at the Stellenbosch University in South Africa.

“This makes it difficult for partner countries’ parliaments and civil-society actors to assess the impact that money has on their development. Greater transparency is needed if we are to make a general assessment of the effect of (BRICS’) development ‘packages’.”

Susan Thomson, a postdoctoral fellow in contemporary politics at Hampshire College, is one of many observers concerned about the negative impacts of development aid in the hands of BRICS countries.

“BRICS as a donor begs the question of what conditionalities, if any, will be placed on recipient countries,” she told IPS. “The U.S., Canada and the EU traditionally make human rights requirements and human security requirements part of their aid package, but it is unlikely that the BRICS will do the same.”

“China provides a particularly pernicious example of direct aid, particularly to Africa, with no strings attached and through this we see systemic human rights abuses by governments across the continent,” she added.

She pointed to the example of Zambia, where Chinese development projects force local workers to labour seven days a week, with scant regard for international or domestic labour, human and social rights.

“The fact that African governments are actively seeking additional channels of aid is going to lead to an increasing economic gap, where the winners are the BRICS and the losers are the subsistence farmers, women, people living with HIV/AIDS and all the traditional ‘losers’ of this system,” Thomson said.

A 2011 study by GRAIN and the Economic Research Foundation unearthed a recent trend of Indian corporations buying up vast tracts of land in Africa, essentially “outsourcing” its food production into low- income countries across the continent.

In the year 2010, “more than 80 Indian companies have invested about 2.4 billion dollars in buying or leasing huge plantations in countries such as Ethiopia, Kenya, Madagascar, Senegal and Mozambique that will be used to grow foodgrains and other cash crops for the Indian market.”

This practice, which many in the agricultural and food justice movement refer to as “land grabbing”, has hitherto been decried as a neocolonial tool of the West to exert corporate control over the global South.

India’s new venture thus highlights the limits of South-South cooperation as a way out of systemic inequality and exploitation for many countries.

According to Ghosh, “South-South partnerships do have the potential to change the current exploitative and inefficient global economic order, but only if they are based on very different premises of co- operation – currently, they (like North-South economic relations) are also driven by corporate needs and operate very much within a broadly market-driven system that privileges the interests of large companies over citizens.”

“What is surprising is that in this moment of global crisis there is still no serious attempt in any of the global economic groupings (including BRICS) to consider alternatives that would lead to sustainable resolutions – for example, the need to move from credit bubble-led growth or export-led growth to more sustainable forms of growth based on expansion of domestic wages and employment are simply not considered seriously,” she stressed.

“Most significant of all, the need to identify alternative forms of production and consumption that will involve a more sustainable and less damaging approach to nature is still not at the top of national or international policy agendas,” Ghosh added.

*This is the second of a two-part series on the BRICS countries and how their development and political agendas will influence the future of aid.

(END/2011)

WASHINGTON, Nov 11 (IPS) – As shock waves from Greece’s economic crisis emanate across the Eurozone and the Occupy protests in the U.S. grow bolder in their critique of the dominant neoliberal system, it seems clear to many observers that the old hegemonic economic order is fading fast.

Still, promises made years ago by these afflicted developed and industrialised nations – such as aid pledged to the global South – remain intact and the question of who will honour these commitments has become the veritable elephant in the global economic arena.

As over 2,000 government delegates and experts gear up for the fourth high-level conference on aid effectiveness slated to run from Nov. 29-Dec. 1 in Busan, South Korea, calls for emerging market economies – particularly South-South cooperative groupings like BRICS (Brazil, Russia, India, China and South Africa) – to take the reins of global development are reverberating across continents.

According to the World Bank, the BRICS countries pledged 26 billion dollars in loan commitments to the developing world between 2000- 2008, the bulk of which came from China.

Between them, the BRICS hold roughly 4.3 trillion dollars in hard cash reserves, three-quarters of which sit in Chinese banks. By 2014, these countries will account for 60 percent of world economic growth.

Yet they have hitherto been slighted by the traditionally wealthy Northern economies, particularly in the realm of development aid and assistance.

According to the Centre for Chinese Studies (CCS) at the Stellenbosch University in South Africa, “The 2005 Paris Declaration was issued against the background of the North-South divide; the Accra agenda in 2008 was extended only slightly to include some weak statements on South-South cooperation.”

This year, while the U.S. and the European Union are busy slashing their official development assistance (ODA) to low income countries, the BRICS will likely be called upon to fill the commitment gaps.

For example, aid to Africa will be a priority item on the menu in Busan, since the continent is home to 33 of the planet’s 48 least developed countries (LDCs). According to the U.N.’s most recent estimates, 50 percent of sub-Saharan Africa lives on less than 1.25 dollars a day.

This situation has been exacerbated by developed nations’ failure to comply with the 1970 U.N. General Assembly Resolution mandating rich countries to allocate 0.7 percent of their gross national income to developing countries. In the midst of severe domestic crises, the developed world is unlikely to pick up the tab now, adding more pressure on the BRICS to foot the bill.

“The significantly increased importance of China in global trade and investment is widely recognised. Russia matters not only because of its size but also because of its role as oil exporter and therefore ability to build up sizeable reserves,” Jayati Ghosh, a leading international development economist based at the Jawaharlal Nehru University in New Delhi, told IPS.

“India’s potential role is much greater than its current one, (and) South Africa and Brazil are not only the largest economies in their respective regions but also closely involved in major regional networks like Mercosur and Nepad,” Ghosh said.

“Their coming together at present indicates their greater recognition of the need to connect independent of the nodal points earlier provided by the USA, Europe and Japan.”

In a rare example of collective action between BRICS’ two biggest rival, India and China issued a bilateral statement Wednesday urging Western countries to “adopt responsible macroeconomic policies to handle the issues of debt and financial stability properly”.

Published by Beijing’s finance ministry, the document (scroll down for English) encapsulated the outcome of the Fifth India-China Financial Dialogue, which closed Tuesday in New Delhi.

The statement recognised that, “The global economy is in a critical phase.” Criticising Eurozone for mismanaging its sovereign debt crisis and allowing ripple effects to touch the developing world, the statement added, “In emerging markets, where growth is relatively stronger, there are clear signs of a slowing as developments in advanced economies begin to weigh on (our) countries.”

However, this unity between the BRICS superpowers disintegrated quickly, as India’s finance ministry hastened to distance itself from the joint-statement’s sharp admonition of the West.

The document has since been conspicuously absent from any Indian media outlet, prompting many observers to reiterate lingering scepticism that the BRICS will be able to flex a collective muscle in the international arena, particularly since the countries’ geopolitical and socioeconomic strategies and priorities diverge so greatly.

“I see no basis for lumping these countries together,” Rajan Menon, chair of the department of international relations at Lehigh University told IPS. “Calling the BRICS a ‘grouping’ is an interesting sleight of hand – it gives the illusion of an entity capable of acting together. But I see no history of these countries being a cohesive collective.”

“If you take China out of the mix, what would be the residual capacity of the remaining countries to shape global outcomes? It would be hardly be comparable to other centres of power,” he added.

Indeed, trade patterns between the BRICS over the last decade bolster Menon’s analysis.

A recent study by the Brookings Institution found that Brazilian exports to China soared from 1.1 to 21 billion dollars between 2000 and 2010, while imports from China rose from 1.2 billion to 15.9 billion dollars in just nine years.

But while China is now Brazil’s primary trading partner, Brazil does not even rank in the top 10 of China’s partners.

“The BRICS have not yet demonstrated a collective agenda,” Menon said, “and until they do, positing them as a pressure group seems to be a little overdone.”

*This is the first of a two-part series on the BRICS countries and how their development and political agendas will influence the future of aid.

(END/2011)

UNITED NATIONS, Jun 17 (IPS) – When the U.N. Security Council, the only political body empowered to declare war and peace, decided to include climate change on its agenda back in 2007, the 131-member Group of 77 (G77) launched a vociferous protest.

Ambassador Munir Akram of Pakistan, then chairman of the G77 – the largest single coalition of developing nations – said climate change was not a threat to "international peace and security" and therefore should not find a place on the Council agenda.

"The concept of the Security Council, as I read the U.N. charter, is that the Council comes into action when there are actual threats to peace, and breaches of the peace," he argued.

But over the years, and even before the G77 protest, the political landscape has been changing, slowly but steadily, as the U.N.’s most powerful body has continued to take up several "non-security" related issues, including children and armed conflict (Aug. 1999), women, peace and security (Oct. 2000), climate change (Apr. 2007) and for the second time last week, HIV/AIDS.

Addressing the Security Council last Tuesday, Secretary-General Ban Ki-moon said that more than 10 years ago, then U.S. Ambassador Richard Holbrooke, pushed for the first discussion of HIV/AIDS in the Council chamber.

"Ambassador Holbrooke was the consummate diplomat," said Ban, "but he was determined to raise the issue of HIV and AIDS even when it was undiplomatic."

"We have come a long way since health issues were first discussed in this Council," Ban added, hinting at the changing agenda of the Council.

Ambassador Hardeep Singh Puri, India’s Permanent Representative to the United Nations, was sceptical about the impact of HIV/AIDS on international peace and security.

The July 2000 Security Council resolution (1308) stressed that "the HIV/AIDS pandemic, if unchecked, may pose a risk to stability and security".

"With the highest prevalence rates and disease burdens being in societies that have nothing to do with conflict," Puri told delegates, "HIV and AIDS has not created conditions of instability and insecurity, notwithstanding the apprehensions in U.N. Security Council resolution 1308."

Asked about the growing trend, Ambassador Anwarul Karim Chowdhury, who presided over the Security Council (SC) meeting which adopted the historic resolution 1325 on women, peace and security, told IPS: "I surely believe that the SC has to change the way it looks at the threats to peace and security and how those threats could be addressed effectively".

Chowdhury said that this is a major challenge to the Council which is predominantly influenced by the P-5 (the United States, Britain, France, Russia and China) which are the traditionalists in this context.

"But that militaristic approach to peace and security has to change and would change," he added.

Also, the concept of human security has to be considered very seriously by the Council, said Chowdhury, a former U.N. Under-Secretary-General and High Representative of Least Developed and Land-locked Developing Countries and Small Island Developing States.

The so-called "non-security" issues that the SC has taken up so far, particularly resolution 1325 for the involvement of women in all decision-making levels, has the potential of making a real difference in the opportunities for success in the efforts of the SC in a substantive way, he declared.

Ambassador Colin Keating, executive director of the Security Council Report that closely monitors the activities of the Council, told IPS that the Security Council for many years now – well over a decade – has been actively addressing a wide range of thematic issues.

During that period, he said, a very large number of thematic Council resolutions and statements have been adopted by consensus.

"So there is clearly very wide support for this. And it is clearly not new [but] is a long established practice," said Keating, a former Permanent Representative of New Zealand to the United Nations.

He pointed out that many leading members of all regional groups, during their terms as elected members of the Council, have supported this thematic agenda.

And in many cases, he said, G77 members have taken the lead in promoting new thematic issues: South Africa on women, during its last term on the Council, is one example; Brazil this year on the importance of development to achieving security, is another example; and Gabon this month on HIV/AIDS is another.

"It is fair to say from analysing statements of members of the General Assembly participating in open Council debates on thematic issues – that there is a wide acceptance in the U.N. generally that it is both important and legitimate for the Council to enter into these thematic areas, provided that there is a genuine connection with peace and security," Keating added.

Chowdhury told IPS it is not appropriate to call these issues ‘non-political’. "All these issues – women, HIV/AIDS – all have political elements inherent in them."

It is the SC’s mindset that refused to accept these issues that its permanent members (P-5) thought were not "hardcore" peace and security issues, he added.

Another similar issue which attracted Council attention is "children and armed conflict", said Chowdhury. "It was considered before the 1325 resolution, when in 1999 the SC adopted the first resolution on children and armed conflict."

For the HIV/AIDS, Chowdhury pointed out, "the driving force was U.S. Ambassador Holbrooke and, you can guess, no opposition would sustain long when he pursued something." More so, when one of the P- 5 took the initiative to bring the issue into the SC, opposition was temporary, he added.

Keating told IPS that, "when you examine the Council decisions in detail, you will see that the Council always focuses on the thematic issues in the security context." Thus its work on women and children is concentrated on the problems that emerge for women and children in conflict situations.

Similarly, he said, its decision last week on HIV/AIDS is also directly linked to the impact of HIV/AIDS in conflict situations and the role that U.N. peacekeepers can play to assist – and there was very wide support for this.

The issue of climate change, by contrast, remains controversial, said Keating.

There is not yet a consensus about the extent to which it is a threat to international security. However, one important change in recent years is that the G77 is now divided on this issue, he said.

Quite a large number of G77 members argue that climate change threatens their security in an existential sense – that their countries very survival is threatened by sea level rise.

"They strongly want the Security Council to take up the issue not for the purpose of taking decisions but to allow them to highlight the threat," Keating said. Other G77 members remain cautious, perhaps concerned about the precedent if the issue is taken up in the Council.

"I think it is fair to say that there is very wide acceptance that climate change is a potential threat to peace and security, but disagreement as to whether it is yet an actual threat," Keating pointed out.

The issue now is interpreting what is meant by the word "threat".

Some see the word as including potential risks of conflict. Others prefer a more narrow definition, Keating explained. "Clearly there is a spectrum and a threshold point along that spectrum at which consensus could emerge. It remains to be seen what level of agreement on climate change can be reached in the Council in 2011."

(END/2011)

RIO DE JANEIRO, May 25 (IPS) – The International Monetary Fund will probably continue to be headed by a European after the resignation of France’s Dominique Strauss-Kahn, but the debate over his replacement indicates this degree of Eurocentrism is unlikely to prevail the next time a successor is sought.

The persistence of the unwritten rule that the managing director of the IMF must be a European brings with it “a stench of colonialism,” Moisés Naim of the Carnegie Endowment for International Peace wrote in an article for the Brazilian newspaper Folha de São Paulo.

Since the IMF and the World Bank were founded in 1944, the heads of these institutions have come from Europe and the United States respectively, a power-sharing scheme that no longer holds water with the economic growth of emerging countries and the financial crisis that has weakened rich nations since 2008.

The new global economic reality has been recognised, for instance, by the emergence of the Group of 20 (G20) major industrial and emerging economies, which meets to discuss key financial and economic issues.

The scandal over Strauss-Kahn’s alleged sexual assault of a hotel maid and his arrest, and the subsequent debate over the appointment of a new IMF director, have not drawn attention to the nature of the unspoken rule.

If there were a choice between a “principled” Westerner, male or female, “so long as they do not support the (free market) Washington Consensus, or a servile person from an emerging country, I would prefer the former,” Celso Amorim, a former foreign minister of Brazil, told IPS.

The Brazilian government said it does not rule out accepting a European director, nor does it necessarily insist on a representative from an emerging nation, but it does want a transparent selection process based on merit and “broad consultation with the member countries,” Finance Minister Guido Mántega wrote in a letter to the G20.

The point is to put an end to the geographical, or geopolitical, criteria for the appointment, as well as the European monopoly based on agreement with the United States. According to observers in Brasilia, the Brazilian position is largely due to the conservatism of the candidates from emerging countries, in contrast with Strauss-Kahn, a socialist.

The Brazilian government looked favourably on the “democratising” changes introduced by Strauss-Kahn, such as an increase in the quotas determining the participation of emerging countries. Brazil’s quota, and therefore its voting power, was raised from 18th to 10th most influential.

Strauss-Kahn also introduced flexible lines of credit and softer loans, something developing countries have demanded since the foreign debt crisis of the 1980s and 1990s.

Among the possible candidates, Brasilia favours Montek Singh Ahluwalia, deputy chairman of India’s Planning Commission. As well as being experienced in international finance, he represents a country allied with Brazil in the IBSA Forum, along with South Africa.

However, Europe and the United States still hold 47 percent of the IMF votes between them – 30 and 17 percent respectively – and they still hold the keys to IMF decision-making. The new powers, Brazil, Russia, India, China and South Africa or BRICS, have a combined vote of only 11 percent.

The other debate, over the role of the IMF in the modern world, has also been stymied by the crisis.

Conflicts over divergent economic interests “are not played out at the IMF,” whether among the great powers or between these and other countries, Fernando Cardim de Carvalho, a retired professor from the Federal University of Rio de Janeiro who lectures at U.S. universities, told IPS.

The main arena now is the G20, although it is a battleground for rhetoric because conflicts “are solved within each country by deciding on economic policies that serve the interests of each one,” Cardim said.

In fact, the U.S. Federal Reserve’s recent decision to inject 600 billion dollars into the market, called monetary relaxation, has an impact all round the world, and the IMF can do nothing about it, said Carlos Thadeu de Freitas, a former head of Brazil’s Central Bank.

Having a representative of the emerging world at the helm of the IMF would have a purely “symbolic” value and is not feasible right now, though it could be negotiated as a commitment for the next change-over, he said.

The IMF should have “a constructive role in the creation of more stable international monetary and financial rules,” going beyond the role it has played since the 1980s as an “instrument for imposing the policies of industrialised countries on developing countries,” Cardim said.

“Brazil has always been keen on the IMF going back to its original role, from which it departed prematurely”: a forum for coordinating macroeconomic and exchange rate policies, as well as providing short term financing for countries with a balance of payments deficit, “with the least possible interference in the political autonomy of a country,” he said.

But since the 1980s, the IMF has become a sort of “school inspector” of developing and debtor nations, imposing on them the behaviour demanded by creditors, in “complete subordination to the policies of the U.S. Treasury Department,” especially in the 1990s, the professor said.

Even the changes promoted by Strauss-Kahn were cosmetic, like accepting the “legitimacy” of capital controls, which are actually in the original statutes of the IMF, and even less orthodox ideas. The voting power of the emerging countries has increased, but has not affected the “hegemony” of the bloc of wealthy nations, he said.

Furthermore, the IMF “only has effective power over the countries that ask for its help,” said Cardim. It wields no influence on China, the United States or Germany, for instance, although their economic decisions affect the entire world, devaluing the dollar and accentuating Brazilian deindustrialisation, for example, he said.

(END/2011)