Cristina Fernández and Wen Jiabao in a videoconference with Dilma Rousseff and José Mujica. Credit: Office of the president of Argentina.

BUENOS AIRES, Aug 8 2012 (IPS) - There is little likelihood that South America’s Mercosur trade bloc will take up China’s proposal to establish a free trade agreement, at least in the short term. Experts and industrialists fear an invasion of cheap Chinese goods, and unequal competition.

Although the sources consulted by IPS agreed that trade and investment between Mercosur (Southern Common Market) and China will continue to expand, they said a free trade deal was unrealistic under the present circumstances.

Chinese Premier Wen Jiabao expressed interest in such an agreement on his Jun. 25 visit to Buenos Aires, in a videoconference with Presidents Cristina Fernández of Argentina, Dilma Rousseff of Brazil, and José Mujica of Uruguay.

The four leaders welcomed the idea of forging closer trade ties between Mercosur and China.

Paraguay, Mercosur’s fourth founding member, has been suspended from the bloc since that country’s legislature removed President Fernando Lugo in a lightning-quick impeachment trial on Jun. 22.

At any rate, Paraguay is facing the dilemma of maintaining diplomatic relations with Taiwan or agreeing to cut off ties in order to negotiate with Beijing.

The fifth full member of Mercosur, Venezuela, had not yet been admitted to the bloc at the time of the videoconference. It officially joined on Jul. 31 in Brasilia.

At the last Mercosur summit, held in the Argentine province of Mendoza four days after Wen’s visit, the governments of Argentina, Brazil and Uruguay agreed to strengthen cooperation with China.

They also approved a proposal to send a joint trade mission this year to China ‘s commercial hub, Shanghai.

But they did not elaborate on the Asian giant’s suggestion of freeing up trade, which analysts agree will be a long, complex process.

Mauricio Mesquita Moreira, an Inter-American Development Bank (IDB) expert on international trade, said the conditions are not in place for reaching a free trade deal in the near future.

“On one hand, Argentina and Brazil have industries that are highly vulnerable to competition from Asia. And on the other, the state still has too much of an influence in the promotion of industry in the Chinese economy for Mercosur to accept a liberalisation of trade,” the Brazilian economist told IPS.

“The smaller partners, Uruguay and Paraguay, lack industrial structure, and could benefit from an agreement with China. But being in Mercosur also gives them benefits such as privileged access to the bloc’s larger markets,” he said.

Mesquita Moreira was in Buenos Aires this month to present a study carried out by the IDB together with experts from the Asian Development Bank Institute, which analyses the future of ties between Asia and Latin America.

The study recommends an increase in trade and investment between the two regions.

Argentine economist Guillermo Rozenwurcel, director of the Centre for Research on Economic Development in South America (IDEAS), said “the Chinese proposal is not viable in the least, over the next 10 to 15 years.

“The presidents gave a diplomatic response to the Chinese interlocutors, to show that they had listened to the proposal. But until the playing field is level, there are few prospects for real discussions on free trade,” he told IPS.

Rozenwurcel also said there was little “political margin” for considering the question.

On the other hand, “there is a challenging and complex, but possible, outlook” for boosting trade, investment and scientific and technological cooperation between this region and Asia, he added.

According to the study by the IDB and the Asian Development Bank Institute, trade between Latin America and Asia has grown by an average of 20.5 percent a year since 2000, to 442 billion dollars today.

With that sharp increase over the last 12 years, China, Asia’s biggest supplier of imports to Latin America, is now the region’s second largest trading partner, after the United States.

But the pattern of trade between the two regions is based mainly on exports of raw materials from Latin America and sales of manufactured goods from Asia, experts point out.

Abeceb, a private consultancy in Argentina, reported that trade between Mercosur and China climbed from 10.3 billion dollars a year in 2003 to 77.9 billion dollars in 2011, and could reach 200 billion dollars by 2016.

But Abeceb also noted that in the same period, Argentina’s purchases of manufactured goods from Brazil such as textiles, capital goods, plastics or pharmaceutical products fell as a result of competition from lower-cost imports from China.

In the case of textiles, for example, 56 percent of Argentina’s imports came from Brazil in 2003, but today that proportion is less than 23 percent. Meanwhile, purchases of textiles from China grew from two to 34 percent of the total.

And while footwear imports from Brazil fell from 79.2 percent to 37.5 percent between 2003 and 2011, purchases from China rose from 12.6 to 36 percent in the same period.

The president of Argentina’s toy industry chamber, Miguel Faraoni, said a free trade accord between Mercosur and China “would be very counterproductive.”

“Competition is impossible due to the differences between the policies of each one. China produces between 75 and 80 percent of the toys sold around the world, which means it would be an unequal fight,” he said.

Faraoni said the share of locally produced toys sold on the domestic market has gone up from 10 percent in 2002 to 50 percent today. He also noted that the number of foreign companies producing toys in Argentina has increased.

“Production, employment and investment in machinery and new technologies have grown, and we are exporting eight percent of what is produced to the region and to the Latino market in the United States,” he said.

Faraoni stated that Argentine industry could compete in terms of price and quality with Brazil, “which has the same rules of the game,” but that “opening up the market to China would reverse the gains made in the last few years.”

Chinese construction workers in front of new 90-million dollar five start hotel. / Claire Ngozo/IPS

China and India have caused an explosion of trade and investment in Africa in the past decade. Yet they are perceived quite differently: China has a reputation for economic ruthlessness, while India’s business interests are generally seen as beneficial to Africa.

But their investment in Africa needs to be viewed in the context of broader investment trends on the continent, trade experts said at the "Money, Power and Sex: the Paradox of Unequal Growth" conference organised by the Open Society Institute of Southern Africa, which is taking place from May 22 to 24 in Cape Town, South Africa.

Ultimately, it is the responsibility of African governments to set firm ground rules for foreign investment flow and ensure a direct relationship between trade and development, the experts said.

"We are not leveraging our regional economic communities or the African Union (AU) to get better deals and the kind of investment that we need," lamented Buddy Kuruku, policy advisor at the African Centre for Economic Transformation in Liberia.

If Africa would make development its priority, with the support of the AU, its 54 nations would quickly gain more control over emerging economies’ investments in their territory.

"World powers compete for a presence on the continent, and Africa can benefit from that. If the AU countries would work in solidarity, they wouldn’t need to fear India’s or China’s presence," said Zhongying Pang, professor of international relations at the Renmin University of China in Beijing.

Although it is still too early to tell what China’s and India’s impact on Africa will be, "it’s potentially more positive than negative," says Howard French, former New York Times bureau chief in China and a fellow with the Open Society Foundation researching Chinese migration to Africa.

"Africa has for a long time been stuck in a position with few options of whom it wants to trade with," French said.

With China and India competing for investment opportunities alongside Europe and North America, African nations now have a multitude of potential trading partners to choose from. And more leverage to set the rules.

According to the World Bank, Indian and Chinese foreign direct investment in Africa has grown dramatically. To date, China has been the largest single investor, aid-giver and trade partner on the continent, with 127 billion dollars in resource extraction and infrastructure deals in 2010.

India has much less financial muscle than China, but its influence in Africa is on a rapid rise. It currently accounts for 46 billion dollars in trade deals on the continent and has announced it will invest 70 billion dollars by 2015.

"The Chinese state is surely a major motor of economic activity in Africa. But India is equally striving to boost its investment in resource extraction on the continent," said French.

At the same time, exports from Africa to Asia tripled in the last five years, to 27 percent of total Asian imports, according to 2010 World Bank data, showing a clear trend towards rapidly growing South- South commerce.

This tendency has been heightened since South Africa joined the Brazil, Russia, India and China (BRIC) group of emerging economies in December 2010, now called BRICS.

China’s push into Africa is viewed more critically because it is largely based on massive state companies pursuing major public works and infrastructure projects, such as stadiums, highways and railroads, very often with state and multilateral funding.

"China has a very formalised policy to encourage Chinese interests and investment in Africa. India has no such policy," explained Kuruku. India instead follows a short-term investment outlook, with a two- to five-year strategy.

India’s engagement with the continent is primarily driven by private businesses and focused on acquisitions.

"That means Indian companies tend to generate more jobs and facilitate skills transfer, while only a very small component of Chinese investment in Africa creates jobs," Kuruku noted.

China says it is committed to reversing its negative image. The Asian giant plans to revise its Africa foreign policy, hoping this will provide further political advantages in Africa.

"We have learnt from criticism levelled at our investment policy. If China wants to continue to play a role in Africa, it needs to maintain its principle of non-interference, but also add others, such as multilateral interventions and careful policies on land ownership," said Pang.

Chinese enterprises in Africa also need to comply more strictly with local labour and environment regulations, facilitate the transfer of skills to African countries and upgrade their industries.

Others argue that India is getting off too lightly.

"India has invested in buying off agricultural land to fight food price inflation in its own country. India doesn’t have better labour standards than China. Exploitation, corruption and bribery are rife in India," argued Aniket Alam, a senior editor of the Mumbai-based journal Economic and Political Weekly.

Like China, India has been particularly interested in Africa to help meet its rising energy requirements, investing in nations with crude oil resources like Nigeria, Sudan, and Angola, he said.

China and India both have rapidly modernising industries and burgeoning middle classes with rising incomes and purchasing power. They have therefore demand not only for natural resource-extractive commodities and agricultural goods but also for diversified exports, such as processed commodities, light manufactured products, household consumer goods and food. All of which Africa can offer.

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RIO DE JANEIRO, May 23 (IPS) – China's voracious demand for energy has prompted it to embrace Brazil as a major oil partner, fuelling the dramatic expansion of Chinese companies in this South American country. But while some see this as a boost to the Brazilian economy, others fear that it poses a risk to this country’s future self-sufficiency.

China has been Brazil's principal oil investor in the last three years, through China Petrochemical Corporation (Sinopec) and Sinochem Corporation (Sinochem), energy expert Adriano Pires told IPS.

The Asian giant, which is now Brazil's main trading partner, has invested some 15 billion dollars, especially in purchases of assets in companies already operating in Brazil in offshore oil exploration and production.

"China's strategy is to secure oil reserves to guarantee its supply," said Pires, the director of the Brazilian Centre for Infrastructure (CBIE). It is following the same plan in other Latin American countries, such as Argentina and Venezuela, and in other regions, like Africa, he added.

The Brazilian Export Promotion Agency (APEX) reported that China intends to increase its strategic oil reserves by 60 percent, and is willing to go anywhere in the world to do this.

According to CBIE, China’s involvement in Brazil’s oil industry started in 2010 when Sinochem bought 40 percent of the shares of Norwegian company Statoil in the Peregrino field, in the Atlantic ocean off the southern port city of Santos, in a deal worth 3.1 billion dollars.

The same year, Sinopec invested 7.1 billion dollars to take over 40 percent of the Brazilian subsidiary of the Spanish transnational Repsol.

In March this year, Sinopec acquired a 30 percent stake in Petrogal Brasil, which is responsible for the oil and gas exploration and production activities of Portugal’s Galp Energia in Brazil, for 4.8 billion dollars.

Chinese capital also teamed up with Brazilian state oil giant Petrobras to develop offshore areas in the northern Pará-Maranhão basin, and with Anglo-French oil company Perenco in the southeastern Espirito Santo basin.

Pires said the Chinese firms are also interested in acquiring shares in OGX, an oil company owned by Brazilian millionaire Eike Batista, who already has Chinese partners in his mining and metal businesses.

"Brazil is a source of oil and gas, which are strategic resources for sustainable growth in China, but we are also very interested in the Brazilian market," Tang Wei, the head of the Brazilian-Chinese Chamber for Economic Development (CBCDE), told local media.

Pires said this interest is due to China's need to supply its rising demand for fuel, partly to fill the tanks of the cars driven by the growing middle class.

As he said, the Asian giant is today the world's second largest oil consumer, at 9.5 million barrels per day (bpd), following the United States, which uses between 18 and 20 million bpd. In a few years time, China is expected to take the lead.

In parallel with its economic activities in Brazil, China's oil purchases have also grown.

CBIE statistics indicate that China is the second largest importer of Brazilian crude, after the United States, and again the trend predicts that China will overtake the U.S. in the near future.

The Foreign Trade Secretariat of the Brazilian Ministry of Development, Industry and Commerce said exports of crude to China increased from 1.6 million barrels in 2001 to 50.6 million barrels in 2011.

But China wants still more, and has set its sights on the recently discovered deposits below the salt layer at the bottom of the Atlantic ocean off the Brazilian coast, at a depth of over 7,000 metres.

The 55 billion barrels of estimated recoverable oil in these reserves could make Brazil one of the world's major oil exporters.

"China has no experience operating offshore oil platforms, so it leaves that side of things to Petrobras or Repsol," which have more technical know-how for deep water drilling, Pires said.

Beijing's strategy became plain in 2009, when the China Development Bank agreed with the government of then president Luiz Inácio Lula da Silva (2003-2011) to lend Petrobras 10 billion dollars in return for guaranteeing Sinopec's exports of crude to China, initially 150,000 bpd, rising later to 200,000 bpd, at market prices.

The Brazilian business community takes a positive view of China's prominent role, saying it makes the market more dynamic.

China is also partnering Brazilian companies in the refinery sector and in production and distribution of equipment for crude oil exploration and extraction.

"There is no risk (in doing business with China). It suits Brazil because it brings in money. It's good business," said Pires.

In contrast, the head of the Association of Petrobras Engineers (AEPET), Silvio Sinedino, is concerned that China's insatiable appetite for oil and gas may lead to rapid exhaustion of these finite resources.

AEPET advocates a return to monopoly status for Petrobras, which has been partly opened up to foreign capital. The association believes Brazil should not aim to be a big oil exporter; instead, it should ensure its own self-sufficiency, and any exports "should be marginal."

"Countries like China and the United States are avid consumers of oil," said Sinedino. "With such voracious, growing demand, our pre-salt reserves could run out in 15 or 20 years, when we could make them last at least 30 years.

"Brazil cannot become another Middle East for crude exports. We have to meet our own needs first, and sell oil as and when possible, protecting our national wealth," he said, recalling the campaigns that led to the creation of Petrobras over half a century ago with the slogan "O petróleo é nosso!" (The Oil is Ours!)

"Oil is not just any commodity. It has great geopolitical importance," Sinedino emphasised. He said AEPET "is sympathetic" towards the Argentine government's expropriation of Repsol shares in order to take control of YPF, the biggest Argentine oil company.

China's interests in Brazil include other sectors that are key to supplying its appetite for commodities, like soybeans and iron ore.

(END/2012)

GENEVA, May 23 (IPS) – Ahead of the Universal Periodic Review (UPR) of India, a coalition of NGOs denounced the gap between the country’s growth rate and the rate of poverty, malnutrition and lack of health and sanitation.

They charged that even when laws and policies exist, their implementation is unsatisfactory and assessment of efforts is a difficult undertaking.

"According to official figures, the average growth rate between 2007 and 2011 was 8.2 percent but poverty declined only by 0.8 percent. While this is already disturbing, standards used to measure poverty are very suspect. They are based on a poverty level of 50 cents a day, which is an insult to the poor," said Miloon Kothari, convenor of the Working Group on Human Rights in India (WGHR) and former United Nations rapporteur on the right to housing.

The WGHR was set up three years ago by leading human rights NGOs to prepare for the second Universal Periodic Review (UPR), an inter-governmental review of the human rights record of every single state, that will take place on May 24 at the Human Rights Council in Geneva.

Indian NGOs compiled their concerns about the country’s uneven development in a 170-page report, which said that standards for measuring poverty were not consistent with international standards and did not follow a human rights approach.

Kothari claimed that if the country followed the standards set by the 2012 Human Development Report, its poverty rate would be close to 55 percent of the population.

"There is an obsession with growth and the 11th five-year plan does not depart from this. Growth should not be an end in itself, but a way to achieve goals like education and health. Even scholars like Amartya Sen have argued that India’s poverty statistics are very controversial and unreliable. There must be a radical change."

Delhi currently ranks 134 out of 187 countries on the U.N. human development index.

The first consequence of poverty is the violation of the right to food. India has the world’s highest number of malnourished people, amounting to 21 percent of the population. A full 42 percent of the country’s children under the age of five are underweight.

"True, in our country the right to food is justiciable, but the reality is that we have excessive grain and a very unsatisfactory distribution mechanism," Kothari told IPS. "There is a lack of support of the agricultural sector and shocking starvation that biotechnologies make even worse."

He sees a new threat in free trade agreements (FTAs) for which there is no consultation of the public and parliament. "FTAs are not at all consistent with human rights obligations," he added. In this context, the government’s refusal to universalise the public distribution of food grains despite overflowing food stocks is "unacceptable."

On the water and sanitation front India holds another appalling record: the largest number of people in the world – 51 percent of the population – that defecate in the open. Sixty percent of rural households lack access to toilets, an issue that particularly affects Dalits, who comprise 16.3 percent of the population, said Asha Kotwal, general secretary of the All India Dalit Women’s Rights Forum.

"Over 700,000 of our people are involved in the cleaning of toilets using their bare hands, this is a huge shame on our country. From 2008-2010 over 100,000 acts of violence were committed against (Dalits), such as murder, rape, or (forcing women) to parade naked, particularly women asserting their rights."

While on paper Dalits and Adivasis have been allocated a large share of state budgets, they were denied almost 30 billion dollars of that money in the last five years alone.

"It is time to expose the cruelty of the caste system," Kotwal said. "The culture of impunity has affected all of Indian society. The state, the judiciary and the media (discriminate based on caste). Faster growth has meant faster exclusion for us. We need anti-discrimination legislation or an equality act to prevent any (more) discrimination."

India’s development process, which relies heavily on the exploitation of natural resources, has also displaced and dispossessed millions of tribal people throughout the country, said Prafulla Samantra, president of the People’s Empowerment Movement.

"In Central India, states like Orissa and Andhra Pradesh are being increasingly targeted by multinationals for investment. The Forest Rights Act of 2006 recognises some rights, but it has not been fully implemented and companies keep taking over forest and land. Many tribal people were shot by police defending the multinationals."

The draft land acquisition, rehabilitation and resettlement bill does not take a full human rights approach, nor does it state that evictions should take place only in exceptional circumstances.

"With increasing land acquisition and land grabbing, public interest must be redefined," NGOs say. But even when laws exist, studies on their impact, particularly on women and children, are scarce, according to Madhu Mehra, director of Partners for Law in Development.

An example is the recent change in the religious-based family laws that allow women to inherit. "We keep hearing that women have begun to get inheritance, but is it a fact or wishful thinking?" she asked.

"Women’s groups have asked for this change, but in the paradigm of multiculturalism, their voices are not seen as the voices of the communities." In fact, women are often represented by religious leaders. The same holds true for the Protection of Women from Domestic Violence Act of 2005, which lacks effective implementation.

Another example of the gap between rights on paper and rights in practice is the 2009 Delhi High Court ruling that supposedly decriminalised homosexuality. Despite legal protection, rampant discrimination in health services, employment, education and housing continues virtually unabated, forcing many homosexuals into invisibility.

NGOs are also concerned about India’s non-compliance with international human rights obligations.

"India has still not ratified the convention against torture," said human rights lawyer Vrinda Grover, "and this is worrisome because torture is routinely practiced by law-enforcement agencies across the country. Its use is particularly systematic and brutal in conflict areas like the Northeast, Jammu and Kashmir and Central India. Enforced disappearances, arbitrary arrests and detentions, extrajudicial killings and sexual violence remain entrenched in these areas. India must ratify the convention against enforced disappearances," she stressed.

"India faces enormous human rights challenges," concluded Kothari, "and the second UPR offers a major opportunity to admit its shortcomings and move from a defensive to a collaborative approach with the U.N."

(END/2012)

Professor Thandika Mkandawire says Africa needs to mobilise its domestic resources. / Kristin Palitza/IPS

"Africa has become a place where you will make money, not lose money," said Graca Machel, the wife of former President Nelson Mandela and a renowned women and children’s rights activist.

She addressed delegates at the "Money, Power and Sex: the Paradox of Unequal Growth" conference organised by the Open Society Institute of Southern Africa May 22 to 24 in Cape Town, South Africa.

Africa’s richness in natural resources should give the continent’s governments a strong position at global negotiating tables, said Machel.

"African governments have to radically change the way they see the potential of the resources we have," she said.

She added that they needed to create real partnerships, refuse to be patronised and ensure that economic gains benefited all people on the continent.

Machel warned that Africa’s exceptional economic growth over the past decade had not resulted in more equity, equality and fairness for all. To achieve this, countries needed to collaborate more intensely on a sub-regional or continental level, she suggested.

"Africans need to have a more inward focus to benefit our continent as a unit. We must not continue in a scattered, territorial way. No one will make it alone. We will make it when we’re united," said Machel. This also means moving away from a "hand-out mentality" and a focus on aid, she added.

"We need to mobilise domestic resources," agreed Thandika Mkandawire, a professor of African development at the London School of Economics in the United Kingdom and a former director of the United Nations Research Institute for Social Development, who hails from Malawi.

If African countries continued to rely on external funding, they would be turned into "choice-less democracies", he warned, because dependency on foreign aid means that political and economic agendas are partially set overseas.

Mkandawire conceded, however, that foreign aid could be useful if it was linked to economic growth.

"The problem is the model of aid, not aid in itself. In the last 20 years, aid ceased being developmental. It is used for political stabilisation purposes, it is conditional and welfarist instead of being focused on creating jobs or performing developmental functions," he said.

The good news is that foreign aid for Africa is already on a steady decline in relative terms. Because the continent is experiencing economic growth at seven to eight percent annually, and foreign aid makes up on average between three to four percent of a nation’s GDP, aid will over time decrease in proportion of total resources spent.

But African governments will have to use the additional income effectively to translate monetary gains into development, Mkandawire said.

"We have to make governments much more efficient. We need better taxation systems and a more restrained consumption culture, a savings culture," he suggested.

Although domestic savings can play a key role in financing development in any economy, for example by providing resources for investment, boosting financial market development and stimulating growth, sub-Saharan African countries are only saving on average about 15 percent of their GDP. This is down from 20 to 25 percent in the 1970s, according to the United Nations Economic Commission for Africa.

African countries compare poorly to other major developing blocs like China and India, which currently save 35 to 40 percent of their GDP. Such differences in savings rates can ultimately make the difference between thriving and stagnant economies.

"Africa is not poor. We just don’t know how to manage the resources we have," said Dr. Nkosana Moyo, executive chair of the South African Mandela Institute for Development. Too much of Africa’s capital continues to leave the continent in the form of raw materials, instead of contributing to the development of the continent by adding value through manufacturing, production and services, he said.

The next step is to link economic growth to social inclusion, to ensure development for all.

"That’s a problem only African governments can solve," said Neville Gabriel, the executive director of Southern Africa Trust, an independent agency that supports regional policy dialogue to overcome poverty.

He believes one of the continent’s key assets is its emerging and young middleclass. They have in the past couple of years already shown their political force – most prominently during the Arab Spring – and now need to demonstrate their economic force, Gabriel said.

"The young middle class will be the engine for Africa’s development in the medium to long term," said Gabriel.

African governments therefore need to make sure that natural resources are used adequately so they can lead to job creation to turn this new middle class into a productive part of society. Currently, between seven and 10 million young Africans on the continent are looking for jobs.

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BRIDGETOWN, Barbados, May 22 (IPS) – The Caribbean Community bloc (Caricom) is lobbying Mexico to use its influence as chair of the G20, which controls 90 percent of world trade, to promote the interests of the Caribbean and other small island developing states when it meets in June.

Of special interest to the Caribbean is reform of the international financial institutions (IFIs) such as the International Monetary Fund and the World Bank.

Last month, Caribbean leaders met briefly with Calderon in Cartagena to express concern that since many Caricom members are now classified as small, highly indebted middle-income countries, they are prohibited from accessing the concessional facilities and instruments from the IFIs.

Arriving here for a one-day summit Monday, Mexican President Felipe Calderon vowed that the region could "count on Mexico as a friend and partner who will represent them actively and proudly in the G20".

"For us, it is very important that the perspectives of other developing countries be heard on the issue of moving forward on the world economic issues," he said.

Host Prime Minister Freundel Stuart criticised the "slow and uneven" pace of reform of the IFIs and the "continued lack of representativeness and transparency of the G20".

"As the Commonwealth secretary general has recently said, (the G20) may represent 90 percent of global GDP (gross domestic product) but certainly not 90 percent of the world's countries," he noted.

Stuart cited "the worrying signs that we have moved from the rich man's club of the G7 to the big man's club of the G20, whose members are more united in telling non-G20 countries what they should do than in prescribing to those within their own fold."

He also lamented "the constant tilting of the playing field and moving the goalpost in the G20's response toward Caribbean-based international financial centres, notwithstanding the fact that the bulk of proven money laundering, inadequate regulation and tax avoidance has occurred in the financial centres of Europe and the United States of America."

Caricom chair Desi Bouterse, who is also the president of Dutch- speaking Suriname, said that there was agreement to collaborate with Mexico on a range of areas, from tourism and transport to trade, investment and national security.

Mexico, which in 1974 became the first country to sign a Joint Commission with Caricom, has also signed two agreements to boost cooperation on largely high-tech education and rebuilding earthquake- devastated Haiti.

President Calderon also promised to aid the Caribbean in combating natural disasters and climate change.

"In the environment, we committed to continue to fight climate change and to take into account in particular the impact of climate change on small island states, global warning and growth of the level of the sea, as well as to renew serious international long term action in terms of mitigation and adaptation," Calderon said.

"Also to improve the life of our people and to preserve their natural legacy, we have also agreed to Mexican support to Caricom countries to support them in projects in prevention of natural disaster. Mexico committed to donate computer equipment to contribute to establishing a territorial system for information for management of disaster risks."

Stuart was hopeful that Mexico would adopt and promote the Barbados Declaration reached at the recent United Nations-sponsored Small Island Developing States (SIDS) Achieving Sustainable Energy for All conference here, which calls for universal access to modern and affordable renewable energy services, while protecting the environment, ending poverty and creating new opportunities for economic growth.

The Barbados Declaration emphasises that there are commercially feasible options in many small island states for providing energy such as wind, solar, geothermal, and oceans energy.

"However, these technologies must be made accessible, affordable and adaptable to the needs and particular circumstances of SIDS communities," states the declaration. "In this regard, we strongly urge the international community, particularly developed countries, to ensure the provision of financial resources, technology transfer and capacity building to SIDS."

"We need to reassert the grave threat posed by climate change and the urgency of agreeing on a comprehensive and ambitious response and here we know that Mexico through its national commitments and domestic legislation has already led by example," Stuart said this week.

"Our hope that Mexico will champion and promote the recently adopted Barbados Declaration on achieving sustainable energy for all in the small island developing states," he added.

Calderon said there was also agreement with the regional leaders to exploit the "huge potential" for trade, noting "in terms of economics, we agreed to foster integration amongst our nations to heighten regional competitiveness.

"The potential for growth is huge and we agreed to continue to work to unleash that potential," he told reporters.

(END/2012)

Canoa Quebrada dam on the Verde River in the west-central Brazilian state of Mato Grosso. / Mario Osava/IPS

Promoting the development of an integrated regional energy system, which will be "an example for the world," is a policy focus in Brazil, Ventura Filho said at the second Latin American hydropower summit, organised May 9-10 in the southern city of São Paulo by Business News Americas, an online business information service based in Santiago, Chile.

The process has already begun among the Mercosur (Southern Common Market) countries – Argentina, Brazil, Paraguay and Uruguay – with binational projects and interconnections that "avert conflicts," promote energy security, and bring down costs because they more than compensate for investment in power lines and plants, Ventura Filho said.

And integration with Argentina will be given an enormous boost with the construction of two binational hydroelectric plants, Garabí and Panambí, on the Uruguay River, which forms part of the border between Brazil and Argentina and between Argentina and Uruguay. The plants will have a combined capacity of 2,200 MW by the end of the decade.

Uruguay will be ready for full energy integration with Brazil’s national grid in November 2013, said Gonzalo Casaravilla, president of UTE, Uruguay’s state electric utility.

That will reduce the vulnerability of Uruguay’s energy supply, which depends on hydropower generated by just two rivers, meaning it is hit hard when rainfall is scarce, and the country must increase oil imports, Casaravilla pointed out.

"In winter, we need energy from Brazil, and in spring we have energy to offer," Casaravilla explained. He forecast a major reduction in the cost of meeting the electricity needs of the country of just 3.3 million people wedged between Brazil and Argentina.

South America, "the only energy self-sufficient region" thanks to the abundance of rivers, oil, natural gas, wind and sun, can optimise its resources by promoting integration in electricity systems between two groups of countries, said Sinval Zaidan Gama, head of operations abroad in Brazil’s state-owned power company Eletrobras.

The northern group comprises Guyana, French Guiana and Suriname, small territories on the north coast of South America. The idea is to interconnect them and integrate them with the rest of the region, while developing their enormous hydropower potential, Gama said. Because they consume little energy, they would generate a large surplus to export to their neighbours.

The southern group would have far greater weight in the move towards regional integration, because it would include large Mercosur and Andean nations rich in water resources.

Harnessing the rivers in Peru, for example, would supply that country’s less-developed, energy-poor south, as well as arid northern Chile.

It would be "positive for both countries," and would also help "clean up Chile’s energy matrix," especially in the north, which currently depends mainly on fossil fuels, Gama said.

Chile, meanwhile, could export hydropower from its southern rivers to Argentina. Transmission of the energy would be cheaper and more efficient, because the power lines would stretch just 200 kilometres on average, compared to the thousands of kilometres of lines needed to reach the country’s large cities, the Eletrobras executive said.

In fact, Chile would benefit greatly from these interconnections because its hydroelectric potential is concentrated in the south of the country, while demand is highest in the centre – around the capital, Santiago, about 2,000 km to the north – and the even more distant copper-rich north, Gabriel Olguín, assistant manager of research in new technologies in Transelec, a private Chilean electricity transmission company, told IPS.

Transmission is the big problem in Chile, he said, because the unusual long, narrow shape of the country drives up the costs.

Among the Mercosur countries, integration is more advanced, with energy exchange agreements and binational hydroelectric dams like Itaipú, which Brazil shares with Paraguay; Yacyretá between Argentina and Paraguay; and Salto Grande, the first one built by two South American partners, Argentina and Uruguay, in the 1970s.

"Building a hydroelectric dam in one single country is already a complex undertaking" which becomes even more difficult if an agreement between two countries is required, due to the need to respect national regulations and autonomies, said Gama. But he added that it is a "natural and intelligent" way to maximise sustainable use of resources.

Eletrobras coordinates 117 Brazilian state-owned companies, and still controls a large part of electricity generation, transmission and distribution in South America’s giant.

The company was weakened during the wave of privatisation in the 1990s, but the government has strengthened it in the last few years, so that it can operate abroad, among other objectives.

Eletrobras has 42 projects in the pipeline in 16 countries, but "many are in the embryonic stage" and just 30 to 40 percent will actually pan out, Gama admitted.

Brazil has developed an integrated national grid connecting the power generators and distributors across the country, with the exception of a few isolated areas, like the Amazon jungle in the north, which is partly supplied by Venezuela. That makes it possible to save 20 percent in power generation, said Ventura Filho.

Those benefits will be extended throughout South America, where it is only natural to meet 65 to 70 percent of electricity demand by means of water resources, the Ministry of Mines and Energy official said.

Hydroelectricity has an advantage that is not frequently mentioned, he noted: investment is recovered during the period that the concession for the dam lasts, which is 30 years in the case of Brazil.

Then in the many remaining years of the dam’s useful life, operating and maintenance costs are very low, which keeps down energy costs for society for decades. There are dams that have already been operating for over a century, he pointed out.

But binational projects do not necessarily benefit both partners equally. Itaipú, the biggest hydropower dam in the region, has made Paraguay a country rich in hydroelectricity – which, however, hardly benefits the domestic market.

Even today, 28 years after the enormous hydropower complex came on-stream, it provides only 14 percent of Paraguay’s energy needs, said Carlos Colombo, head of the committee managing the power lines that are being built to transmit electricity from Itaipú to Greater Asunción along a 350-km power line to be completed in 2013.

The power line, which will cost 555 million dollars, financed by a Mercosur fund and by the Itaipú power plant, will mark the start of "a new era" in Paraguay, he said, because it will help fuel the country’s industrialisation, will improve the quality of life of the local population, and will further bolster economic expansion, from the already high 15 percent GDP growth in 2010.

The power line was not built earlier because "there was no state policy on this," Colombo told IPS. That has kept the landlocked country of 6.5 million from taking better advantage of its part of the power generated by the dam – half of Itaipú’s 14,000 MW capacity – to boost development. Instead, most of its share has been exported at a low price to Brazil.

(END/2012)

NAIROBI, May 15 (IPS) – Economic and social growth have become the heart of the development agenda of the bloc of leading emerging economies known as IBSA (India, Brazil and South Africa) since it began focusing less on politics.

This is according to Michael Sudarkasa, chief executive officer of the African Business Group, a South African-based economic development and business consulting advisory services group.

It has been nine years since the IBSA forum was established, and it has impacted on aid effectiveness in Africa, says Sudarkasa, who has 20 years of experience in regional and international trade and business analysis, with a focus on private sector development.

"The IBSA dialogue forum has also been a catalyst for greater efforts within the South to explore ways that development aid can be mobilised from domestic resources to support developing countries."

IBSA has stimulated increased bilateral initiatives among Southern partners such as the Africa South America Strategic Partnership and the New Asian African Strategic Partnership, he says.

Excerpts of the interview follow.

Q: Are there specific examples of the impact of IBSAs success?

A: The success that the IBSA countries have had in working together has indirectly stimulated increased activity by all three nations, both independently as investors and as partners in other parts of the continent of Africa. And South Africa has emboldened efforts to engage with other Southern partners in South America and Asia.

Also, South Africa's participation in IBSA has to be considered as a key reason that the country was invited to become a member of BRICS (the grouping of Brazil, Russia, India, China and South Africa) and BASIC (the block of developing countries of Brazil, South Africa, India and China).

Q: Have there been any fundamental shifts of bi- and tri–lateral engagements within IBSA in an attempt to boost its impact?

A: There are none that are glaringly apparent. At the onset of BRICS, when South Africa joined the BRIC forum, there was some speculation that the new initiative, with China as the key driver, might overshadow IBSA.

However, the institutions of IBSA are quite strong, well defined, and all the IBSA members have reiterated their support of the initiative and heralded its value as a stand-alone structure.

Nonetheless, the potential rivalry exists between the two structures and as such there will likely be continued effort to distinguish IBSA from BRICS, and this may ultimately lead to more pronounced and visible shifts, and/or dynamics within IBSA.

Q: What have been IBSA’s best practices so far?

A: They include the development of joint technical committees involving the ministries of all three governments to explore technology sharing and joint projects, and the establishment of a fund to support lesser-developed countries within the three regions.

Q: What impact has the IBSA forum had on the livelihoods of people in its member countries?

A: Economically, IBSA provided a diversification opportunity for all three nations and bilateral trade grew. This cushioned them from a sure economic contraction had they remained solely focused on engaging with their historic trade partners in the North. Q: Has the global crisis compromised IBSA's ability to achieve developmental objectives in target countries?

A: If anything, the global crisis has strengthened the resolve of the three nations to engage economically and created an opportunity to look into other South-South economic partnerships.

Q: Is the IBSA initiative an important example of South-South cooperation that could provide a blueprint for future South-South partnerships in support of development?

A: IBSA has definitely become a poster child for the benefits of South-South cooperation, and a leading forerunner for the voice of the South in global multilateral structures. However, the fact that IBSA is a tripartite initiative, aimed in part at also serving as a bridge between the regions that the three countries represent, means that it would be difficult to easily replicate IBSA with three other countries from each region.

Q: What is the key thing to take away from the IBSA initiative?

A: IBSA has encouraged and will continue to encourage Southern nations to see each other as stronger potential partners, and has definitely set the trend for future South-South partnerships in support of development.

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RIO DE JANEIRO, May 7 (IPS) – The Brazilian government of Dilma Rousseff is taking firm steps towards stronger relations with Africa, such as the creation of a special fund to finance development projects together with multilateral lenders like the World Bank.

South America’s giant is keen on establishing a strategic association with Africa, and the tool for doing that is its powerful national development bank, the National Bank for Economic and Social Development (BNDES), which will work in conjunction with the multilateral African Development Bank (AfDB).

"There is a 40-billion-dollar shortfall in financing for a spate of 50 projects, which means the African Development Bank will have to scale up its capital and its activities," said BNDES president Luciano Coutinho. He added that not only public bodies need to be involved in this cooperation, but also private banks in the capital markets.

The alliance was announced at an Apr. 3 seminar on "Investing in Africa: Opportunities, Challenges and Instruments for Economic Cooperation", organised by the BNDES in Rio de Janeiro, which drew delegates from development institutions, business leaders, and personalities like former Brazilian president Luiz Inácio Lula da Silva (2003-2011).

André Esteves, the president of the private Brazilian bank BTG Pactual, also announced the launch of a one-billion-dollar risk capital fund for investment in Africa.

"This will be the biggest private sector contribution for investment in that continent, and a show of the (Brazilian) business community’s affinity with the government strategy," he said.

Makhtar Diop, World Bank vice president for Africa, listed some of the enormous challenges in Africa: integrating the continent in terms of transportation, ports, railways, and telecommunications; managing natural resources like water; energy development; and the struggle for food security.

To boost the continent’s competitiveness in the global market and address the infrastructure deficit, Africa needs at least 68 billion dollars in investment up to 2020, according to the Programme for Infrastructure Development in Africa (PIDA).

The World Bank particularly supports PIDA, a joint initiative of the African Union Commission (AUC), the New Partnership for Africa's Development (NEPAD), and the AfDB.

"We are working together to grow the programme, which is a window of opportunities for the poorest countries," Diop said.

AfDB director Alex Rugamba explained to IPS that "PIDA covers the sectors of transport, energy, water resources and information and communication technologies (ICTs)."

"It was designed for a period of 30 years, because without infrastructure we will not be able to reach the goal for the continent of six percent economic growth," he added.

Rugamba said the programme must be given priority, in order to maintain steady growth over the next few decades. Forty billion dollars in investment will be needed in the energy sector alone, he added.

Brazil’s exports to Africa climbed from 2.4 billion dollars in 2002 to 12.2 billion dollars in 2011, while total trade – exports and imports – soared from 4.3 billion dollars to 27.6 billion dollars in the same period.

Diop and Rugamba both said that Brazil would play an important role in boosting investment in infrastructure in Africa.

"Brazil has experience in the process of harnessing water resources," said Diop. "It has been a pioneer in clean energy from this source, with large dams already operating and under construction, and it has an excellent track record in mining and oil production."

Africa is a new market, said Maria das Graças Foster, the CEO of Brazil’s oil giant Petrobras, who noted that the company is active in Angola, Namibia, Libya and Nigeria.

She pointed out that "important oil reserves have been found in Ghana and Uganda, while production now stands at 58,000 barrels a day in Nigeria, and at 2,000 barrels in Angola."

Murilo Ferreira, the CEO of Brazilian mining firm Vale, stressed that the company has 7.7 billion dollars in investments in nine African countries, in copper, coal, iron ore and nickel mines.

Ferreira also said 900 kilometres of railways and a deep-water port are being built in Mozambique.

"It’s a long-term vision, and we want to achieve environmentally sustainable and socially responsible ways of doing things," he said.

"We need to increase dialogue with local society, because we don’t want to come across as imperialists," he added. "We are willing to address the demands of each population (in the countries) where we are active, because we aren’t perfect, and sometimes we make mistakes. It’s necessary to be humble enough to admit one’s errors."

Former president Lula praised his country’s efforts in forging closer ties and cooperation with the economies of Africa. This is "a moment that requires audacity, to build a new Africa," he said.

"Peace, democracy, growth and distribution of wealth are Africa’s watchwords for the 21st century. This is a time for unity and solidarity. Today there is a wealth of opportunities to be exploited by Brazilians, other South Americans, and Africans."

Lula said "Africa cannot be looked at like it used to be seen, as a simple supplier of minerals and gas…We have to find African partners. We don’t want hegemony; we want strategic alliances."

(END/2012)

If climate change affects rice production in Vietnam’s Mekong Delta rice bowl, it will have grave national and global food security implications. / eutrophication&hypoxia/CC-BY-2.0

This nation of 86 million people – stretching down the eastern seaboard of the Indochina peninsula, its mountainous inland fringed by a broad coastal plain – shares the vast Mekong river system with Laos, Thailand, Burma, China and Cambodia.

Unprecedented climate-related catastrophes in recent years have turned government and citizen attention onto the pressing need for proactive climate change policies, although the actual speed of future global warming is beyond Vietnam’s control and depends more on major industrial nations' future greenhouse gas emission reductions agreed within the United Nations Framework Convention on Climate Change.

Vietnam's National Climate Change Strategy launched this March dramatically describes the nation as "one of the most affected countries…with the Mekong River Delta being one of the three most vulnerable deltas in the world alongside the Nile and the Ganges."

By the end of this century average temperatures could have increased by two to three degrees Celsius, the Strategy warns, with major changes in rainfall patterns threatening devastating floods and droughts, while the sea level is set to rise by between 0.75 to one metre.

The policy document adds, "About 40 percent of the Mekong River Delta, 11 percent of the Red River Delta and three percent of other regions will be submerged, with two percent of Ho Chi Minh City (Vietnam’s commercial capital, home to over seven million inhabitants) under water."

Any slump in production in the huge Mekong Delta rice bowl will have grave national and global food security implications, since Vietnam is the world's second largest rice exporter.

The Asian Development Bank's report, 'Addressing Climate Change and Migration in Asia and the Pacific', issued this March, forecasts that by 2050 some 9.5 million Vietnamese will be at risk from the impacts of sea level rise. The Ministry of Natural Resources and the Environment (MONRE) is leading implementation of the national Strategy.

"Building on a previous National Target Programme for Climate Change launched in 2008, the Strategy focuses on both adaptation and mitigation, while setting guideposts for the short, medium and long term as well as ten strategic tasks," Pham Van Tan, deputy director-general of MONRE's International Cooperation Department told IPS.

"The three action phases (go) up to the end of this year, from 2013-2025 and 2016-2050," he explained, "aiming at a careful balance between adaptation and mitigation – the latter to counter the expected rapid increase in greenhouse gas emissions implied in Viet Nam's ambitious industrialisation plans. We will also pursue regional approaches with our neighbouring countries."

Strategic tasks include developing wide-ranging actions on food and water security, sea level rise, increasing forest cover and renewable energy use, emission reductions, community capacity development for adaptation and scientific and technological development. Provinces and cities are tasked with developing their own plans, merged with national goals, involving the private sector and civil society.

Extensive support over the long term from international donors is seen as critical to the Strategy's success. However, it warns, "Since Vietnam has become a middle-income country, international support will be decreased and cooperation carried out on a win-win basis." New types of funding will hopefully emerge "through new financial and technology transfer mechanisms from developed countries."

The Strategy's ninth and 10th tasks relate to international cooperation and financial resources, to be channelled through a national Green Climate Fund to be set up by MONRE at the Prime Minister's request. An international investment conference envisions inviting foreign businesses to invest in adaptation-related infrastructure.

"A climate change donor support group (comprised of countries and multilateral institutions), set up in 2008 to interact with the government as well as coordinate our actions, is currently chaired by Germany and the United Nations Development Programme (UNDP)," Juergen Hesse, director of the Natural Resources Programme at the Vietnam office of GIZ (the German development cooperation agency) told IPS.

"GIZ is cooperating with several other donors as well as the World Wildlife Fund (WWF) and the International Union for the Conservation of Nature on coastal zone protection in the Mekong Delta, which includes restoration (and) extension of mangrove belts (and) upgrading existing dykes while determining key 'erosion hot spots' where new ones would be most needed."

Broadening existing climate change cooperation to support the new Strategy was discussed during two high-level visits to Vietnam last month, first by UK Foreign Secretary William Hague, followed by the European Development Commissioner Andris Piebalgs, as well as by the recently appointed Director- General of the Food and Agricultural Organisation (FAO) José Graziano da Silva during his visit in March.

"Non-governmental organisations, both Vietnamese and foreign, have been working on climate change for some time through field projects and their Climate Change Working Group," Vu Trung Kien, director of the Climate Change Resilience Centre, told IPS. "We talk with (the) government but don't sit on the National Climate Change Committee and have a few entry points at provincial levels so far. Lack of capacity, lack of information at all levels is a huge problem."

The government admits that its climate change actions can only succeed as part of a broad 'green economy' framework, a radical departure from the environmentally destructive growth policies followed after 1975. The related National Green Growth Strategy being drafted under the Prime Minister's leadership will hopefully be launched in time for the upcoming United Nations Conference on Sustainable Development in Brazil, known as Rio+20, from Jun. 20-22.

As the climate change strategy tellingly warns, "public awareness on climate change remains limited and one-sided: too much attention towards the adverse impacts…and too little to changing production and consumption behaviours towards…low-carbon, green growth."

(END/2012)